Yearbook of Private International Law: Volume XVI Yearbook of Private International Law Vol. XVI - 2014/2015 9783504384784

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YEARBOOK OF PRIVATE INTERNATIONAL LAW

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sellier european law publishers

YEARBOOK OF PRIVATE INTERNATIONAL LAW VOLUME XVI – 2014 / 2015

Founding Editors PETAR ŠARČEVIĆ † PAUL VOLKEN Editors ANDREA BONOMI

GIAN PAOLO ROMANO

Professor at the University of Lausanne

Professor at the University of Geneva

Published in Association with SWISS INSTITUTE OF COMPARATIVE LAW LAUSANNE, SWITZERLAND

The Deutsche Nationalbibliothek lists this publication in the Deut­sche Na­tio­nalbibliografie; detailed bibliographic data are available on the Internet at http://dnb.dnb.de. Verlag Dr. Otto Schmidt KG Gustav-Heinemann-Ufer 58, 50968 Köln Tel. +49 221 / 9  37  38-01, Fax +49 221 / 9  37  38-943 [email protected], www.otto-schmidt.de ISBN (print)  978-3-504-08004-4 ISBN (eBook)  978-3-504-38478-4

© 2016 by Verlag Dr. Otto Schmidt KG, Köln All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior per­mis­sion of the publisher. The paper used is made from chlorine-free bleached materials, wood and acid free, age resistant and environmentally friendly. Printing and binding: Friedrich Pustet, Re­gens­burg Printed in Germany.

Advisory Board TITO BALLARINO † Milan

HANS VAN LOON The Hague

JÜRGEN BASEDOW Hamburg

RUI MANUEL GENS DE MOURA RAMOS Lisbon / Coimbra

GENEVIÈVE BASTID-BURDEAU Paris

LUKAS HECKENDORN URSCHELER Lausanne

MICHAEL BOGDAN Lund

YASUHIRO OKUDA Tokyo

SIR LAWRENCE COLLINS London

GONZALO E. PARRA-ARANGUREN The Hague / Caracas

DIEGO P. FERNÁNDEZ ARROYO Paris

SYMEON C. SYMEONIDES Salem (Oregon)

HUANG JIN Wuhan

THOMAS KADNER GRAZIANO Geneva

EVA LEIN London

RICHARD FRIMPONG OPPONG Kamloops (British Columbia)

Production Editors AZADI ÖZTÜRK Ass. iur., PhD Candidate, University of Lausanne

ILARIA PRETELLI Legal adviser, Swiss Institute of Comparative Law

Assistant Editors JOANN CALOZ PhD Candidate, University of Geneva

PATRICK KEINERT PhD Candidate, University of Geneva

Production Assistants FRANÇOISE PEIGNAUD Swiss Institute of Comparative Law

GABRIELA ZURKINDEN Swiss Institute of Comparative Law

English Revision SHAHEEZA LALANI PhD, University of Lausanne VICTORIA GARRINGTON Attorney-at-Law, Fribourg

IAN CURRY-SUMNER PhD, LLB, Freelance Legal Translator / Editor

TABLE OF CONTENTS ________________ Foreword ......................................................................................................... xi Abbreviations ................................................................................................ xiii Doctrine Linda J. SILBERMAN Daimler AG v. Bauman: A New Era for Judicial Jurisdiction in the United States ................................................................................................ 1 Rui Manuel MOURA RAMOS The New Portuguese Arbitration Act (Law No. 63/2011 of 14 December on Voluntary Arbitration) ........................................................ 25 Francisco GARCIMARTÍN Provisional and Protective Measures in the Brussels I Regulation Recast......................................................................................................... 57 Martin ILLMER The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? .......................................................................... 85 Ornella FERACI Party Autonomy and Conflict of Jurisdictions in the EU Private International Law on Family and Succession Matters ............................. 105 Gian Paolo ROMANO Conflicts between Parents and between Legal Orders in Respect of Parental Responsibility .......................................................... 129 Special Jurisdiction under the Brussels I-bis Regulation Thomas KADNER GRAZIANO Jurisdiction under Article 7 no. 1 of the Recast Brussels I Regulation: Disconnecting the Procedural Place of Performance from its Counterpart in Substantive Law. An Analysis of the Case Law of the ECJ and Proposals de lege lata and de lege ferenda .............................................. 167 Michel REYMOND Jurisdiction under Article 7 no. 1 of the Recast Brussels I Regulation: The Case of Contracts for the Supply of Software .................................. 219 Jan VON HEIN Protecting Victims of Cross-Border Torts under Article 7 No. 2 Brussels Ibis: Towards a more Differentiated and Balanced Approach... 241

Surrogacy across State Lines: Challenges and Responses Marion MEILHAC-PERRI National Regulation and Cross-Border Surrogacy in France ................... 275 Konstantinos ROKAS National Regulation and Cross-Border Surrogacy in European Union Countries and Possible Solutions for Problematic Situations ....... 289 Michael WELLS-GRECO / Henry DAWSON Inter-Country Surrogacy and Public Policy: Lessons from the European Court of Human Rights............................................................ 315 Uniform Private International Law in Context Apostolos ANTHIMOS Recognition and Enforcement of Foreign Judgments in Greece under the Brussels I-bis Regulation ................................................................... 345 Annelies NACHTERGAELE Harmonization of Private International Law in the Southern African Development Community ........................................................... 365 News from Brussels Michael BOGDAN Some Reflections on the Scope of Application of the EU Regulation No 606/2013 on Mutual Recognition of Protection Measures in Civil Matters ........................................................................ 405 National Reports Diego P. FERNANDEZ ARROYO A New Autonomous Dimension for the Argentinian Private International Law System ........................................................................ 411 Maja KOSTIĆ-MANDIĆ The New Private International Law Act of Montenegro.......................... 429 Claudia LUGO HOLMQUIST / Mirian RODRÍGUEZ REYES Divorce in the Venezuelan System of Private International Law ............ 441 Maria João MATIAS FERNANDES International Jurisdiction under the 2013 Portuguese Civil Procedure Code ............................................................................... 457 Petra UHLÍŘOVÁ New Private International Law in the Czech Republic ............................ 469

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Forum Chiara MARENGHI The Law Applicable to Product Liability in Context: Article 5 of the Rome II Regulation and its Interaction with other EU Instruments ... 511 Marjolaine ROCCATI The Role of the National Judge in a European Judicial Area – From an Internal Market to Civil Cooperation ........................................ 539 Index ............................................................................................................. 567

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FOREWORD _____________

The sixteenth volume of this Yearbook is no less comprehensive and thoughtprovoking than its forerunners. Highlights of this new collection of essays include, among many others, on the commercial litigation front, a full analysis of jurisdiction in contractual and non-contractual matters with some proposals for legislative reform, a review of protective measure jurisdiction within the new Brussels Ibis, and an assessment of the intractable problem of international software contracts. On the family law side, the book offers a study on international child custody as well as a thoughtful discussion on cross-border surrogacy and the challenges posed by this increasing phenomenon. Fresh developments from the U.S., with a comment on the landmark Daimler decision by the Supreme Court on general jurisdiction, as well as reports on new national legislation from Argentina, Montenegro and Portugal, are also presented. We want to thank our contributors for their papers, our readers for their dedication, our publishers for their patience, the Swiss Institute of Comparative Law for its unwavering support, the whole staff of the Yearbook team for the energy, the faith and the devotion which they put in this endeavour. Last, but sadly not least, we have the painful task of reporting the loss of one of our most dedicated advisory board members and prolific contributors, who was also the beloved mentor of both the undersigned and of Ilaria Pretelli, one of our production editors. Tito Ballarino passed away on 31 December 2014, some months after his 80th birthday, that was celebrated by a symposium held at the Swiss Institute, of which he was also a devoted friend. His demise is a profound loss for all of us as well as for the whole academic community. Amid grief that is unimaginable, may we find some small measure of solace in knowing that Tito Ballarino’s legacy, and the ideals which he lived throughout his professional and private life, will endure. Andrea Bonomi

Gian Paolo Romano

ABBREVIATIONS ________________

Am. J. Comp. L. Am. J. Int. L. Clunet ECR I.C.L.Q. I.L.M. id. IPRax OJ PIL RabelsZ Recueil des Cours

Rev. crit. dr. int. pr. REDI Riv. dir. int. priv. proc. Riv. dir. int. RIW RSDIE

American Journal of Comparative Law American Journal of International Law Journal de droit international European Court Reports International and Comparative Law Quarterly International Legal Materials idem Praxis des internationalen Privat- und Verfahrensrechts Official Journal Private International Law Rabels Zeitschrift für ausländisches und internationales Privatrecht Recueil des Cours de l'Académie de la Haye de droit international = Collected Courses of The Hague Academy of International Law Revue critique de droit international privé Revista española de derecho internacional Rivista di diritto internazionale privato e processuale Rivista di diritto internazionale Recht internationaler Wirtschaft Revue suisse de droit international et européen = Schweizerische Zeitschrift für internationales und europäisches Recht

DOCTRINE ________________

DAIMLER AG V. BAUMAN: A NEW ERA FOR JUDICIAL JURISDICTION IN THE UNITED STATES Linda J. SILBERMAN*

I. II.

IV.

Introduction Background: Daimler AG v. Bauman in Context A. United States Case-Law before Daimler B. The Supreme Court Decision in Daimler 1. General, All-Purpose Jurisdiction Is Extremely Narrowed 2. Comity as a Factor in the Exercise of General Jurisdiction General Jurisdiction after Daimler: Implications and Future Issues A. An Assessment of the U.S. Jurisdictional Developments and the Relationship between General and Specific Jurisdiction B. Jurisdiction over Foreign Parent Corporations Based on Subsidiary Contacts C. Recognition and Enforcement of Judgments after Daimler D. Consent and General Jurisdiction Conclusion

I.

Introduction

III.

The United States Supreme Court decision in early 2014, Daimler AG v. Bauman, severely curtailed the reach of a particular type of judicial jurisdiction – that is, general jurisdiction – in the United States.1 Holding that a corporation can only be * Martin Lipton Professor of Law, New York University School of Law. My appreciation to the Filomen and Max E. Greenberg Fund for financial support for my research on this and other related projects on judicial jurisdiction. My thanks to my two research assistants, Kevin BENISH and Nathan YAFFE, who provided helpful research, editing, and proofreading assistance on this article, and to my colleague Aaron SIMOWITZ for his continuing conversations and his insights and suggestions. 1 134 S. Ct. 746 (2014). See A.T. VON MEHREN/ D.T. TRAUTMAN, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966) (“In American thinking, affiliations between the forum and the underlying controversy normally support

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Printed in Germany

Linda J. Silberman sued at home – specifically at its place of incorporation or principal place of business – on claims unrelated to forum activity, Daimler put an end to nearly 70 years of jurisprudence permitting general jurisdiction over corporate defendants that carried on “continuous and systematic activities” in the forum state.2 At the same time, the Supreme Court failed to provide significant guidance on the major issue raised in the Daimler case: whether and/or when a foreign (or out-of-state corporation) can be held subject to jurisdiction in a forum state on the basis of the activities of its subsidiaries. The Court’s decision also created other potential issues, such as whether the heightened standard for general jurisdiction would apply to actions for recognition and enforcement of foreign judgments and arbitral awards, as well as whether states can require corporations that are not subject to general jurisdiction to consent to jurisdiction as a prerequisite to doing business within their borders.

II.

Background: Daimler AG v. Bauman in Context

In some ways, the Supreme Court’s earlier 2011 decisions on personal jurisdiction (Goodyear Dunlop Tires v. Brown3 and J. McIntyre Machinery v. Nicastro4) altered the landscape of judicial jurisdiction more dramatically than Daimler itself.5 Daimler added little new to what the Court already held in Goodyear, except to say that “we really mean what we said”. The Court in Daimler did highlight the

only the power to adjudicate with respect to issues deriving from, or connected with, the very controversy that establishes jurisdiction to adjudicate. This we call specific jurisdiction. On the other hand, American practice for the most part is to exercise power to adjudicate any kind of controversy when jurisdiction is based on relationships, direct or indirect, between the forum and the person or persons whose legal rights are to be affected. This we call general jurisdiction.” (emphasis added)). 2 See generally International Shoe v. Washington, 326 U.S. 310, 317 (1945). 3 131 S. Ct. 2846 (2011). 4 131 S. Ct. 2780 (2011). McIntyre was a specific jurisdiction case in which the United States Supreme Court ultimately held that an English manufacturer who engaged a U.S. distributor in Ohio to sell its products throughout the entire United States was not subject to jurisdiction in the State of New Jersey. The dispute was based on a product liability claim by a New Jersey plaintiff who was injured while using the English manufacturer’s product in New Jersey. For further discussion of this case, see infra notes 64-71 and accompanying text. 5 For a more extensive discussion of these cases, see L.J. SILBERMAN, Goodyear and Nicastro: Observations from A Transnational and Comparative Perspective, 63 S.C. L. Rev. 591 (2012); A.R. STEIN, The Meaning of “Essentially at Home” in Goodyear Dunlop, 63 S.C. L. Rev. 527 (2012); L. BRILMAYER/ M. SMITH, The (Theoretical) Future of Personal Jurisdiction: Issues Left Open by Goodyear Dunlop Tires v. Brown and J. McIntyre Machinery v. Nicastro, 63 S.C. L. Rev. 617 (2012).

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Daimler AG v. Bauman transnational context of the case,6 a point the Supreme Court did not factor into its analysis in the 2011 cases, which also involved foreign defendants. A.

United States Case-Law before Daimler

As reflected in the Supreme Court’s decision in Pennoyer v. Neff,7 the constitutional underpinnings of judicial jurisdiction rested on territorial theories of power and consent.8 Accordingly, the reach of a forum’s adjudicatory authority extended only as far as its own borders, and applied to both individuals and corporations. For individual defendants, domicile or residence in the forum and service effected on the defendant while present within the forum state were the paradigm examples of general jurisdiction. Corporate analogues for domicile or “presence” created greater complexity.9 The corporation’s place of incorporation was considered its “domicile”, and the corporation’s presence could be established not only at its principal place of business but also where it could be said to have a certain level of systematic activity often based on physical offices and number of employees.10 Also, both individuals and corporations could consent to general Daimler AG v. Bauman, 134 S. Ct. 746, 762 et seq. (2014). 95 U.S. 714 (1877). 8 Id. at 722 et seq. (stating “no State can exercise direct jurisdiction and authority over persons or property without its territory […] [and] no tribunal established by it can extend its process beyond that territory”, and that “the defendant […] must be brought within its jurisdiction by service of process within the State, or his voluntary appearance”). 9 In a 19th century case, St. Clair v. Cox, 106 U.S. 350, 354 (1882), Justice Field observed: “The principle that a corporation must dwell in the place of its creation, and cannot […] migrate to another sovereignty, coupled with the doctrine that an officer of the corporation does not carry his functions with him when he leaves his state, prevented the maintenance of personal actions against it.” This very limited view of jurisdiction did not prevail even in the early part of the 20th century, and the expansion of interstate and international commerce gave rise to broader adjudicative authority over corporations through concepts of “presence”, “doing business” and “implied consent”. See P.B. KURLAND, The Supreme Court, the Due Process Clause, and the In Personam Jurisdiction of State Courts: From Pennoyer to Denckla: A Review, 25 U. Chi. L. Rev. 569, 573 (1958) (noting that principles of due process “which were appropriate for the age of the «horse and buggy» or even for the age of the «iron horse» could not serve the era of the airplane, the radio, and the telephone”). 10 See P. KURLAND (note 9), at 582 et seq. (noting courts’ willingness to find a corporation “present”, even in the absence of “consent” if the nonresident corporation is conducting business “as to warrant the inference that it is present there”). In support of his argument. KURLAND relied on Tauza v. Susquehanna Coal Co., 220 N.Y. 259 (1917), a case in which New York’s jurisdiction over a Pennsylvania corporation based on the defendant’s maintenance of an New York office with nine employees who regularly organized commercial shipments from Pennsylvania to New York. See also Hutchinson v. Chase & Gilbert, 45 F.2d 139, 142 (2d Cir. 1930) (noting maintenance of an office carried heavy weight in exerting jurisdiction over nonresident corporations when that office was accompanied by additional business activity). 6 7

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Linda J. Silberman jurisdiction by various means.11 A narrower type of jurisdiction involving claims that arose from the individual or corporation’s activity – that is, specific jurisdiction – was permitted on a theory that the defendant had “impliedly consented” to jurisdiction over such claims through its conduct.12 In 1945, in International Shoe v. Washington, the U.S. Supreme Court transformed the understanding of the constitutional authority for judicial jurisdiction in U.S. courts. In place of physical power, International Shoe and its progeny established the relationship between plaintiff, defendant, and the forum state as constitutionally critical in the exercise of both general and specific jurisdiction. Moving from a constitutional due process requirement of territorial presence to an inquiry of whether the defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend «traditional notions of fair play and substantial justice»”,13 the Supreme Court reconceptualized the approach to both general and specific jurisdiction.14 As to specific jurisdiction, the Court stated that the commission of single or occasional acts by a defendant out of which the particular claims arose, depending upon the nature and quality and the circumstances of their commission, justified judicial jurisdiction by a state.15 With respect to general jurisdiction, the Court noted “instances in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities”.16 Between International Shoe and Daimler, the Supreme Court heard only three cases testing the due process limits of general jurisdiction.17 Each of the cases was relatively easy under the International Shoe standard. In Perkins v. Benguet Consolidated Mining Co.,18 the Court upheld general jurisdiction as consistent with 11 See P. KURLAND (note 9), at 578 et seq. Consent may be manifest in a variety of different ways. For example, a defendants is said to consent to jurisdiction by voluntarily appearing before the court, by contractually agreeing to suit in a particular forum (express consent), or by proceeding with litigation in a court and failing to object to jurisdiction (implied consent). Corporations have been viewed as consenting to jurisdiction if they appoint a local agent for service of process. For further discussion of such consent after Daimler, see infra notes 94-110 and accompanying text. 12 Certain types of specific-act statutes were upheld on that theory. For example, in Hess v. Pawloski, 274 U.S. 352 (1927), the Supreme Court, resting on a theory of “implied consent” upheld as constitutional a Massachusetts statute that conferred jurisdiction over a non-resident who operated a motor vehicle in the state for claims arising from accidents from such conduct. Similarly, jurisdiction over corporations for claims arising out of the corporation’s activities in the forum state was justified on a theory of “implied consent”. 13 International Shoe v. Washington, 326 U.S. 310, 316 (1945). 14 A. VON MEHREN/ D. TRAUTMAN (note 1), Jurisdiction to Adjudicate, at 1136. 15 International Shoe, 326 U.S. at 318. 16 Id. (emphasis added). 17 Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984); Perkins v. Benguet Consol. Min. Co., 342 U.S. 437 (1952). 18 342 U.S. 437 (1952).

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Daimler AG v. Bauman due process. In Perkins, the defendant Philippine corporation had been closed down during the World War II occupation of the Philippines. As a result, the operations of the company, which included an office, were conducted in Ohio. For all intents and purposes, Ohio was the company’s de facto headquarters. In Helicopteros v. Nacionales de Colombia, S.A. v. Hall,19 the Court held that a Colombian corporation which purchased four million dollars worth of helicopters and equipment from a Texas company, sent prospective pilots and other personnel to Texas for training, negotiated a contract with a Texas joint venture, and received various payments from a Texas bank did not have the constitutionally requisite, systematic activities to be sued in Texas on a claim resulting from an accident in Peru.20 More recently, in the 2011 case Goodyear Dunlop Tires Operations S.A. v. Brown,21 North Carolina plaintiffs – the estates of two minors who were killed in a bus accident in France caused by allegedly defective tires – brought suit in North Carolina against the foreign manufacturers of the tires, basing jurisdiction on the defendants’ sales of similar tires in the United States, including in North Carolina. The Supreme Court’s unanimous decision, holding that an assertion of general jurisdiction on these facts was unconstitutional, was unsurprising. Prior to Goodyear, most state and federal courts had held that a defendant’s mere sales of products into a state was constitutionally insufficient as a basis for jurisdiction for claims that did not arise out of those sales (i.e., as a basis for general jurisdiction).22 But since the North Carolina intermediate state court upheld jurisdiction in Goodyear, the Supreme Court had good reason to take the case in order to ensure that these well-accepted constitutional limitations on general jurisdiction were not ignored.23 However, the Supreme Court went much further. Justice Ginsburg’s opinion for the Court stated that general or “all-purpose” jurisdiction requires that a corporation’s affiliations with a forum be “so continuous and systematic as to render it essentially at home in the forum state”.24 More specifically, the Court identified the paradigm situations of “at home” as the place of incorporation and principal place of business of the corporation,25 leaving open the question whether 466 U.S. 408 (1984). Id. at 410. 21 131 S. Ct. 2846 (2011). 22 Id. at 2857 n.6. See also Glater v. Eli Lilly & Co., 744 F.2d 213, 215 et seq. (1st Cir. 1984) (finding that product advertisements in trade journals sent into the forum and eight in-state sales representatives selling in the forum were insufficient to establish general jurisdiction); Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240, 1242 (9th Cir. 1984) (“[N]o court has ever held that the maintenance of even a substantial sales force within the state is a sufficient contact to assert jurisdiction in an unrelated cause of action.”); Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 611 (5th Cir. 2008) (collecting cases). 23 As the Court emphasized in Goodyear, “even regularly occurring sales of a product in a State do not justify the exercise of jurisdiction over a claim unrelated to those sales”. Goodyear, 131 S. Ct. at 2857 n.6. 24 Id. at 2851. 25 Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014) (citing Goodyear, 131 S. Ct. at 2851). 19 20

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Linda J. Silberman other indications of substantial corporate activity in a state might also establish general jurisdiction over a non-resident defendant.26 B.

The Supreme Court Decision in Daimler

In Daimler, the Supreme Court repeated what it said in Goodyear: general or “allpurpose” jurisdiction requires that a corporation’s affiliations with a forum be so continuous and systematic as to render it essentially “at home”. Long-accepted concepts of “doing business” and “presence” based on “continuous and systematic” activities, permitting jurisdiction for claims unrelated to those activities, were rejected.27 Curiously, the facts of the case and the issue on which the Supreme Court granted certiorari in Daimler did not require the Supreme Court to address the “at home” issue at all. In Daimler, Argentinian workers brought a lawsuit in California against the German company Daimler AG for alleged human rights violations committed in Argentina by Daimler’s Argentine subsidiary, Mercedes-Benz Argentina; the claims against Daimler were based on a theory of vicarious liability. The basis for jurisdiction over the German company was the existence of its indirect subsidiary in the United States, Mercedes-Benz USA, a Delaware corporation with its principal place of business in New Jersey, but with various facilities in California.28 Mercedes USA is Daimler’s exclusive importer and distributes cars to independent dealerships throughout the U.S. Indeed, Mercedes’ California sales accounted for 2.4% of Daimler’s worldwide sales.29 However, there were no allegations that Mercedes USA had any connection to the events in Argentina that gave rise to the claims.30 The district court granted Daimler’s motion to dismiss the action for lack of personal jurisdiction, holding (1) that Daimler’s own activities in California were insufficient to support the exercise of general jurisdiction; and (2) that the

26 In the wake of Goodyear, some scholars read the Court’s “at home” language to suggest that “continuous and systematic” business activity was no longer sufficient for establishing general jurisdiction over a corporation. See, e.g., A. STEIN (note 5); M. FEDER, Goodyear, “Home” and the Uncertain Future of Doing Business Jurisdiction, 63 S.C. L. Rev. 671 (2012). But see T.D. PETERSON, The Timing of Minimum Contacts After Goodyear and McIntyre, 80 Geo. Wash. L. Rev. 202 (2011) (arguing Goodyear’s “at home” language is merely superfluous and did not alter current doctrine). 27 The Court referred to such cases as “decided in the era dominated by Pennoyer’s territorial thinking” and stated that they “should not attract heavy reliance today”. Daimler, 134 S. Ct. at 761 n.18. 28 See generally L.S. HOFFMAN, The Case Against Vicarious Jurisdiction, 152 U. Pa. L. Rev. 1023 (2004) (analyzing contemporary forms of vicarious jurisdiction and concluding those models are flawed). 29 Daimler, 134 S. Ct. at 752. 30 Id. at 751.

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Daimler AG v. Bauman California activities of Mercedes USA were not attributable to Daimler on an agency theory.31 The main issue on appeal in the Ninth Circuit was whether the activities of Mercedes USA, which both parties had agreed was subject to general jurisdiction in California, could be imputed to Daimler. The concession by Daimler that Mercedes USA was subject to general jurisdiction was made prior to Goodyear, when most lower courts viewed the presence of a substantial office along with other activity as constitutionally sufficient grounds for asserting general jurisdiction.32 Of course, those offices were not the offices of Daimler itself, and that fact created the central issue in the case – whether the activities of Mercedes USA could be attributed or imputed to Daimler. Daimler argued Mercedes USA was an independent subsidiary, and that Mercedes USA’s amenability to jurisdiction could not be attributed to Daimler. The Court of Appeals for the Ninth Circuit rejected Daimler’s argument, holding that Mercedes was Daimler’s agent for purposes of jurisdiction, and that California could exercise jurisdiction over Daimler on the basis of Mercedes’ activities in California.33 Mercedes was said to be Daimler’s agent for two reasons: First, Mercedes was performing services that were sufficiently important to Daimler that they would be performed by other means if Mercedes did not exist.34 Second, because Daimler exercised some degree of control over Mercedes, it could be held subject to personal jurisdiction based on the contacts of its subsidiary.35 It was on the “agency issue” that the Supreme Court granted Daimler’s certiorari petition, presenting the question of “[w]hether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf

Id. at 752. In the Ninth Circuit, Daimler argued that because the concession was made prior to the Supreme Court’s decision in Goodyear, Daimler should be permitted to contest general jurisdiction over Mercedes in California at the appellate level, given the new standard suggested by Goodyear. 33 The Ninth Circuit decision was itself a bit unusual. In a 2-1 ruling, the Ninth Circuit initially affirmed the district court’s dismissal for lack of personal jurisdiction over Daimler, with the majority (Judges Mary Schroeder and Dorothy Nelson in the majority and Judge Steve Reinhardt in the dissent), holding that the contacts of Mercedes could not be imputed to Daimler, given Daimler’s lack of control over Mercedes. Bauman v. DaimlerChrysler Corp., 579 F.3d 1088 (9th Cir. 2009) reh’g granted and opinion vacated, 603 F.3d 1141 (9th Cir. 2010). The panel then granted rehearing, but without oral argument completely flip-flopped, unanimously ruling that Daimler was subject to general jurisdiction and imputing Mercedes’ California activities to Daimler. Bauman v. DaimlerChrysler Corp., 603 F.3d 1141 (9th Cir. 2010). Subsequently, a motion for rehearing en banc was denied on a 9-8 vote. Bauman v. DaimlerChrysler Corp., 676 F.3d 774 (9th Cir. 2011) (O’Scannlain, J. dissenting). 34 Bauman v. DaimlerChrysler Corp., 644 F.3d 909, 921 (9th Cir. 2011) rev’d sub nom. Daimler AG v. Bauman, 134 S. Ct. 746 (2014). 35 Id. at 924. 31 32

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Linda J. Silberman of the defendant in the forum state”.36 Although the case might have ultimately been dismissed on other grounds,37 the broad interpretation of agency was the basis of the Ninth Circuit’s holding, and the grant of certiorari reflected the Court’s concern about that issue. 1.

General, All-Purpose Jurisdiction Is Extremely Narrowed

As noted earlier, in Daimler the Supreme Court reinforced what it said in Goodyear: general jurisdiction requires a corporation’s affiliations with a forum be “so continuous and systematic as to render it essentially at home”.38 In the “at home” context, the Court pointed directly to the paradigm situations of place of incorporation and principal place of business.39 In a footnote, the Court did observe that in an “exceptional case”, a corporation’s operations in a state other than its formal place of incorporation or principal place of business may be so substantial 36 Petition for Writ of Certiorari at i, DaimlerChrysler AG v. Bauman, (No. 11-965). The personal jurisdiction issue with respect to imputation in Daimler had actually surfaced in prior litigation relating to the Alien Tort Statute that came before the Supreme Court one year earlier. Kiobel v. Royal Dutch Petroleum, 133 S. Ct. 1659 (2013), the case in which the Supreme Court restricted the extraterritorial application of the Alien Tort Statute, involved jurisdictional facts similar to Daimler. In Kiobel, the claims against Royal Dutch Shell (a Netherlands corporation) and Shell Transport (an English corporation) were based on allegations that the Royal Dutch/Shell Transport group itself had orchestrated and directed abuses that were carried out by their Nigerian subsidiaries in Nigeria against the Ogoni people. The lower courts based jurisdiction over the Shell companies on the New York activity of the Nigerian subsidiaries. In the related companion case against the same defendants, Wiwa v. Royal Dutch Petroleum Company, 226 F.3d 88 (2d Cir. 2000), the Second Circuit upheld jurisdiction on the presence of U.S. direct and indirect subsidiaries that did business in New York and in particular, on an indirect subsidiary’s maintenance of an Investor Relations Office in New York that conducted work for Royal Dutch and Shell Transport in New York. Although the Wiwa case eventually settled, the same jurisdictional issue was present in Kiobel. However, there was some question as to whether the jurisdictional issue was properly raised in the district court in Kiobel, and it was not before the Supreme Court on the grant of certiorari. At the oral argument in Kiobel, Justice Ginsburg raised the question of whether the defendants were subject to personal jurisdiction in New York. Plaintiffs’ counsel asserted that the point was waived by defendants’ failure to raise the issue properly in the district court, and defendants’ counsel countered that jurisdiction had not been waived. In any event, no further attention was given to the issue of personal jurisdiction by the Supreme Court in Kiobel. 37 Plaintiffs’ claims under the Alien Tort Statute were subject to dismissal as impermissibly extraterritorial pursuant to Kiobel. Although the claims asserted under Argentine and California law were theoretically still viable, the court may not have had subject matter jurisdiction over those claims. See S. SHERRY, Don’t Answer That! Why (and How) the Supreme Court Should Duck the Question in DaimlerChrysler v. Bauman, 66 Vand. L. Rev. En Banc 111 (2013). 38 Daimler, 134 S. Ct. at 761. 39 Id.

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Daimler AG v. Bauman and of such a nature as to render it essentially “at home” in that state.40 But Daimler’s activities in California did not approach that level.41 As the author of the Daimler decision and the legal comparativist on the Court, Justice Ginsburg pointed to the approach taken to general jurisdiction in other countries, particularly noting that the European Union permits a defendant to be sued on any claim in the member state in which it is domiciled.42 Citing to European Regulation 1215/2012 (the Brussels Recast),43 she emphasized that the E.U Regulation defines “domicile” of a corporation as its “statutory seat”, “central administration”, or “principal place of business”. Although Justice Ginsburg purports to bring U.S. general jurisdiction into conformity with much of the rest of the world, she fails to point out how the interaction of the Daimler ruling and the Supreme Court’s recent decisions on specific jurisdiction create a much more restrictive approach to jurisdiction in transnational cases for the United States. In the European Union and elsewhere, the constrained view of general jurisdiction coexists with broader permissible assertions of specific jurisdiction. For example, under the present European Regulation (the Recast), and the national jurisdiction regimes in many other countries, suit can be brought against non-resident defendants for claims arising out of an injury caused by the defendant in that forum state.44 In the U.S., however, the Due Process Clause requires purposeful availment by the defendant, and has narrowed forum options for plaintiffs in these cases as well.45

40 Id. at 761 n.19. Courts have not found it easy to identify such exceptions. See, e.g., Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 431-32 (5th Cir. 2014) (affirming dismissal of suit against foreign corporation and finding it “incredibly difficult” to establish general jurisdiction outside of a corporation’s principal place of business or place of incorporation). 41 Id. at 761 et seq. (“Here, neither Daimler nor MBUSA is incorporated in California, nor does either entity have its principal place of business there. If Daimler’s California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which MBUSA’s sales are sizable. Such exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.” (internal citations and quotation marks omitted)). 42 Id. at 763. 43 Council Regulation 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Recast), art. 63, 2012 OJ L 351, 1 [hereinafter Recast Brussels I Regulation]. 44 Id. art. 7(2). See also O. CHASE/ H. HERSHKOFF, et al., Civil Litigation in Comparative Context, U.S.A. 2007. 45 For further discussion of this point, see discussion infra notes 60-70 and accompanying text.

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Linda J. Silberman 2.

Comity as a Factor in the Exercise of General Jurisdiction

The Supreme Court majority opinion in Daimler also called attention to the transnational context of the case, suggesting that international comity and the avoidance of international friction is a necessary element of the due process analysis.46 To that end, Justice Ginsburg noted that the expansive view of general jurisdiction in the United States impeded a potential judgment recognition convention,47 and could discourage foreign investment.48 Because the Court’s ruling limits the potential number of fora for general jurisdiction, the majority rejected the overlay of “reasonableness” that courts employ as part of the due process analysis in specific jurisdiction cases.49 Justice Ginsburg explained that when a defendant corporation is “genuinely at home”, a reasonableness inquiry is “superfluous” and only compounds the jurisdictional inquiry.50 In her concurrence, Justice Sotomayor agreed that the action should be dismissed.51 But she criticized the majority for formulating a new rule and altering the “continuous and systematic” contacts inquiry that has been taught to generations of first-year law students,52 particularly focusing her criticism on the majority’s newly added requirement that those contacts are to now be viewed in the context of a defendant’s nationwide and worldwide operations.53 However, even taking the concession that Mercedes was “at home” in California and the majority’s assumption that those contacts are attributable to Daimler, Justice Sotomayor found the exercise of jurisdiction to be unconstitutional as

Daimler, 134 S. Ct. at 762 et seq. Id. at 763 (citing to the Brief of the United States). For a more comprehensive overview of those negotiations and the effect of the U.S. approach to general jurisdiction, see L.J. SILBERMAN, Comparative Jurisdiction in the International Context: Will the Proposed Hague Judgments Convention Be Stalled?, 52 DePaul L. Rev. 319, 338 et seq. (2002). 48 Id. 49 Daimler, 134 S. Ct. at 762 n. 20. 50 Id. Still, Justice Ginsburg’s explicit rejection of “reasonableness” is odd, given that the formal two-step “contacts” and “reasonableness” analysis was developed in a transnational case where the Court stated that one of the important factors to be assessed in the international context was the procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction. Those concerns are precisely the ones Justice Ginsburg points to in her reference to international comity. 51 Id. at 763 et seq. (Sotomayor, J., concurring). 52 Indeed, some thought the principle was too well embedded to be held unconstitutional. S. BURBANK, Jurisdiction to Adjudicate: End of the Century or Beginning of the Millennium?, Tulane J. Int’l & Comp. L. 111, 119 (“It is probably too late in the day for an assertion of jurisdiction […] where the defendant conducts substantial business, systematically and continuously, to be held unconstitutional.”). 53 Id. at 764 et seq. (Sotomayor, J., concurring). 46 47

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Daimler AG v. Bauman unreasonable, given that the case involved foreign plaintiffs, foreign defendants, and foreign conduct.54

III. General Jurisdiction after Daimler: Implications and Future Issues A.

An Assessment of the U.S. Jurisdictional Developments and the Relationship between General and Specific Jurisdiction

Criticism of the “doing business” form of general jurisdiction in the United States prior to Goodyear and Daimler was substantial.55 One difficulty was the indeterminacy of the concept, both as defined by state or federal law and as a function of constitutional due process.56 Another concern was the broad opportunity for forum shopping that general “doing business” jurisdiction presented, particularly in transnational cases.57 Multinational defendants with offices or extensive activities could be sued in the United States on claims that had no relationship to the activities in the United States, and in some circumstances the activities of subsidiaries operating in the United States made the subsidiary the agent for the parent for jurisdictional purposes.58 To some extent, the most egregious excesses of general jurisdiction in the United States – where both parties are foreign and the dispute is centered abroad – are mitigated by the application of

54 Id. at 765 et seq. (Sotomayor, J., concurring). The majority disagreed with Justice Sotomayor. Expressing the view that efficiency should govern any inquiry into general jurisdiction, Justice Ginsburg’s opinion observed that a reasonableness standard would impose a “checklist” on courts and thus hinder the speedy determination of the matter. Id. at 762 n. 20. For a general critique of the “reasonableness” prong of jurisdiction, see L.J. SILBERMAN, “Two Cheers” for International Shoe (and None for Asahi): An Essay on the Fiftieth Anniversary of International Shoe, 28 U.C. Davis L. Rev. 755 (1995). 55 See, e.g., L. SILBERMAN (note 47), Comparative Jurisdiction in the International Context, at 328; S. BURBANK, Jurisdictional Conflict and Jurisdictional Equilibration: Paths to a Via Media?, 26 Hous. J. Int’l L. 385 (2004); L.J. SILBERMAN, The Impact of Jurisdictional Rules and Recognition Practice on International Business Transactions: The U.S. Regime, 26 Hous. J. Int’l L. 327, 333 et seq. (2004); P.J. BORCHERS, The Problem with General Jurisdiction, 2001 U. Chi. Legal. F. 119 (2001); M. TWITCHELL, Why We Keep Doing Business with Doing-Business Jurisdiction, 2001 U. Chi. Legal. F. 171 (2001). 56 See L. SILBERMAN (note 55), The Impact of Jurisdictional Rules; see also M. TWITCHELL (note 55), Doing Business (surveying recent cases on general jurisdiction and recommends limitations when foreign country defendants are involved). 57 In addition to offering U.S. procedural advantages such as juries, discovery, class actions, and contingency fees, courts in the U.S. often provided advantages for plaintiffs with respect to applicable law given the approach to choice of law in particular states. 58 See L. SILBERMAN (note 55), The Impact of Jurisdictional Rules, at 336 n. 25.

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Linda J. Silberman forum non conveniens.59 However, when the defendant was foreign and the claim arose outside the United States but the plaintiff was a U.S. resident, dismissal on forum non conveniens grounds was more problematic. With Goodyear and now Daimler, U.S.-style “doing business” general jurisdiction is basically at an end. Indeed, to the extent this particular issue stymied the attempt at the Hague Conference on Private International Law to negotiate a worldwide jurisdiction and judgments convention, that particular problem is now eliminated.60 However, other aspects of the United States jurisdictional regime continue to present difficulties for a worldwide convention. One remaining problem relates to the constitutional limits for asserting specific jurisdiction in the United States. To the extent that injury in a forum state – generally accepted as a basis for jurisdiction in most countries – does not suffice to establish direct (or even indirect) jurisdiction in many cases, obstacles to agreement remain.61 Interestingly, another attempt – this time for a single (rather than a double or mixed) judgments convention – is proceeding at The Hague.62 The Supreme Court’s narrowing of general jurisdiction is further complicated by the restrictive approach the Court has adopted in cases of specific jurisdiction. Justice Ginsburg, in responding on behalf of the Daimler majority to Justice Sotomayor’s concerns that the narrowing of general jurisdiction would result in injustices, wrote: “Remarkably, Justice Sotomayor treats specific jurisdiction as though it were barely there”.63 In truth, however, Justice Ginsburg overlooks the Court’s recent restrictions on specific jurisdiction in cases like J. McIntyre Machinery, Ltd. v. Nicastro,64 a case in which Justice Ginsburg herself 59 The common law doctrine of forum non conveniens permits a court to decline the exercise of judicial jurisdiction if the court finds that an alternative forum is substantially more appropriate. For the effect of forum non conveniens as a mitigating factor, see L. SILBERMAN (note 47), Comparative Jurisdiction in the International Context, at 344. 60 For a more extensive discussion of this issue, see L. SILBERMAN (note 55), The Impact of Jurisdictional Rules, at 337 et seq. 61 For further explanation of the conflict and the attempts at compromise in the prior Hague negotiations, see L. SILBERMAN (note 47), Comparative Jurisdiction in the International Context, at 330 et seq. 62 HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW, Draft Report of the Fourth Meeting of the Working Group on the Judgments Project (3-6 February 2015). A single Convention sets forth standards for the recognition and enforcement of judgments and a list of acceptable bases of jurisdiction are included only for purposes of recognition and enforcement, that is, for “indirect jurisdiction” purposes. A double or mixed Convention addresses the appropriate bases of judicial jurisdiction for a court to exercise in the first instance (direct jurisdiction) as well as the rules for recognition and enforcement of judgments. For a more detailed explanation of types of Conventions, see Ralf Michaels, Some Fundamental Jurisdictional Conceptions as Applied in Judgment Conventions, in Conflict of Laws in a Globalizing World: A Tribute to Arthur von Mehren, England 2006; A.T. VON MEHREN, Recognition and Enforcement of Foreign Judgments: A New Approach for the Hague Conference?, 57 Law & Contemp. Prob. 271, 282 et seq. (1994). 63 Daimler, 134 S. Ct. at 758 n. 10. 64 131 S. Ct. 2780 (2011).

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Daimler AG v. Bauman was in dissent.65 In McIntyre, the Supreme Court held that the English manufacturer of shearing presses who engaged a U.S. distributor in Ohio to market the presses throughout the United States was not subject to jurisdiction in New Jersey on a product liability claim by a New Jersey plaintiff injured while using the press in New Jersey.66 A majority of the Court concluded that because the manufacturer had not targeted the New Jersey market and only a limited number of machines “ended up” in New Jersey, the defendant did not meet the required “purposeful availment” of the New Jersey market to satisfy due process.67 During the oral argument in McIntyre, Justice Ginsburg asked the defendant’s lawyer whether the plaintiff could sue the foreign manufacturer in Ohio, the state in which the independent distributor was located and the state to which the manufacturer sent its products. Justice Ginsburg never got a direct answer to that question, but the answer is critical in assessing whether and how specific jurisdiction can compensate for the restrictions on general jurisdiction. Critical to the determination of specific jurisdiction is whether the particular claim can be said to “arise from or relate to” the acknowledged lesser contacts of the defendant with the forum. Thus, in McIntyre, jurisdiction over the English manufacturer in Ohio meets constitutional standards only if the claim for the injury in New Jersey can be said to “arise from or relate to” the manufacturer’s sales to the Ohio distributor. The Supreme Court of the United States has not yet interpreted the “arising from/related to” requirement in the context of due process.68 Lower courts that have considered the issue have applied different tests, and they have emphasized the need to preserve the distinction between general and specific jurisdiction.69 After Daimler, only a broad interpretation of “related contacts” in the Id. at 2794 et seq. (Ginsburg, J., dissenting). Id. at 2786. 67 Compare Id. at 2791 (Kennedy, J.) (plurality opinion), with Id. at 2792 (Breyer, J., concurring). In his concurring opinion, Justice Breyer emphasized that he did not share the plurality’s view of sovereignty and consent as the foundations of personal jurisdiction. His disagreement with Justice Ginsburg and the dissenters appeared to turn on the facts of the case and the record. Specifically, Justice Breyer could identify only a single sale to New Jersey and did not believe a single isolated sale causing injury rendered a defendant subject to jurisdiction. For a review of the three separate opinions in McIntyre, see A.N. STEINMAN, The Lay of the Land: Examining the Three Opinions in J. McIntyre Machinery, Ltd. v. Nicastro, 63 S.C. L. Rev. 481 (2012). 68 In Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), the Court had the opportunity to address this issue, but failed to do so. In Shute, the plaintiffs sued Carnival Cruise Lines in federal court in their home state of Washington, and on certification to the state supreme court, that court upheld jurisdiction, interpreting its specific-act statute to permit jurisdiction over Carnival Cruise, because Shute’s personal injury claim suffered off the coast of Mexico “arose from” Carnival’s business advertising in Washington State. Shute v. Carnival Cruise Lines, 113 Wash. 2d 763, 772 (1989). However, the Supreme Court declined to answer whether or not this assertion of “arising from” specific jurisdiction violated due process, and instead reversed the case based on a forum-selection clause that required the case be adjudicated in Florida. 69 For example, in O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312 (3d Cir. 2007), the Court of Appeals for the Third Circuit outlined three predominate approaches taken by 65 66

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Linda J. Silberman context of specific jurisdiction will mitigate the consequences of Daimler’s restrictions on general jurisdiction.70 Otherwise, a foreign manufacturer who avails itself of the U.S. market and causes injury in the United States to a U.S. plaintiff will not be subject to suit anywhere in the United States. Even if such a foreign manufacturer had offices and extensive activities in a state in the United States, under Daimler it will still not be “at home”, and thus not subject to general jurisdiction there. Perhaps the combination of Supreme Court decisions in McIntyre, Goodyear, and Daimler will be the impetus for the U.S. Congress to take legislative action to provide for jurisdiction in cases where a foreign manufacturer selling products in the U.S. market causes injury in the United States, but prior bills have languished in past sessions of Congress.71 state and federal courts: (1) The “proximate cause” test, which requires that the defendant’s contacts be relevant to the merits of the plaintiffs; (2) A more relaxed “but for” test looking to a foreseeable connection with the forum activity and the ultimate claim; and (3) A “substantial connection” test that looks to see whether the connection makes it fair and reasonable to assert jurisdiction. In O’Connor, the court applied the “but for” test, and permitted the plaintiff, who had fallen at the Sandy Lane Hotel in Barbados, to sue the hotel in Pennsylvania on the basis that the plaintiff arranged the massage by telephone while in Pennsylvania after the hotel had mailed a brochure to his home in Pennsylvania. See also Moki Mac River Expeditions v. Drugg, 221 S.W.3d (Tex. 2007) (evaluating these tests and applying a “substantial connection” test, but ultimately finding defendant’s connections with Texas “are simply too attenuated to satisfy specific jurisdiction’s due process concerns”). Related to the proximate cause approach is a test proposed by L. BRILMAYER, How Contacts Count: Due Process Limitations on State Court Jurisdiction, 1980 Sup. Ct. Rev. 77 (1980) (arguing that a claim only “arises from” activities that are substantively an element of plaintiff’s claim). For further elaboration on the “substantive relevance” test, see L. BRILMAYER, Related Contacts and Personal Jurisdiction, 101 Harv. L. Rev. 1444 (1988). For an observation of how Daimler may affect the question of “related contacts”, see L.J. SILBERMAN, The End of Another Era: Reflections on Daimler and its Implications for Judicial Jurisdiction in the United States, Lewis & Clark L. Rev. (forthcoming, 2015) (on file with author). 70 For example, in one recent case in a different context, the district judge, in finding specific jurisdiction in a situation where it appeared that specific jurisdiction was traditionally disfavored, observed: “In a post-Daimler world, it may very well be that specific jurisdiction becomes a more prominent basis for exercising jurisdiction in [such] cases.” Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., No. CV 14-935-LPS, 2015 WL 186833 (D. Del. Jan. 14, 2015). For more on this case, see infra notes 105-07 and accompanying text. 71 For example, a 1987 proposal would have authorized federal court jurisdiction over foreign defendants who injured United States claimants in the United States if the foreign defendants “knew or reasonably should have known that the product would be imported for sale or use in the United States”. See S. 1996 100th Cong. (1987). Rather than the adoption of a foreseeability test which might not satisfy the Court’s present due process test, a more appropriate standard might look to whether the foreign defendant directed its sales to the United States as a whole and derived substantial revenue from the United States. A more recent proposal, the Foreign Manufacturers Legal Accountability Act, would have required a foreign manufacturer that desires to distribute certain products in the United States to establish a registered agent in the United States, specifically in a state with a substantial connection to the importation, distribution, or sale of the covered product.

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Daimler AG v. Bauman B.

Jurisdiction over Foreign Parent Corporations Based on Subsidiary Contacts

The Supreme Court granted certiorari on the agency question in Daimler but gave little guidance for future cases. The Court did reject the Ninth Circuit’s view that Mercedes USA was Daimler’s agent for general jurisdiction purposes because Mercedes’ services were “important” to Daimler, and that if Mercedes were not performing those services, Daimler would have had to undertake those activities itself. However, the Court said little more about when a subsidiary’s activities can be attributed to a foreign parent corporation, particularly in the context of general jurisdiction.72 Traditionally, two theories have accounted for the imputed jurisdiction over a parent on the basis of its subsidiary’s activities: an alter ego theory and an agency theory.73 Cases relying on the doctrinal niceties of either alter ego or agency theories for the assertion of general jurisdiction must first look to state law to do the following: (1) Assess whether the activities of the subsidiary satisfy the required standard of corporate presence or doing business usually defined by a certain level of systematic and continuous activities; and (2) Determine what is required to impute the behavior of the subsidiary to the parent. When courts turn to the due process inquiry, the focus of the case law has been on the issue of whether the level of activity meets the constitutional due process standard for general jurisdiction, rather than on the role of due process with respect to the imputation question. But the latter inquiry is particularly important because any such imputation departs from the deeply ingrained “general principle of corporate law” that a parent corporation (so-called because of control through ownership of another corporation’s stock) is not liable for the acts of its subsidiaries.74 H.R. 3646, S. 1984 112th Cong. (2011); H.R. 1910 113th Cong. (2013). See generally P. HAY, Judicial Jurisdiction Over Foreign-Country Corporate Defendants – Comments on Recent Case Law, 63 Ore. L. Rev. 431, 434 et seq. (1984) (arguing that place of injury should establish personal jurisdiction over foreign corporate defendants when they deal with the United States as a single market). 72 The Court stated that the Ninth Circuit’s view “stacked the deck” and would create an “outcome that would sweep beyond even the sprawling view of general jurisdiction” that it had already rejected in Goodyear. 73 See L.S. HOFFMAN (note 28); L.S. HOFFMAN, Further Thinking About Vicarious Jurisdiction: Reflecting on Goodyear v. Brown and Looking Ahead to Daimler AG v. Bauman, 34 U. Pa. J. Int’l L. 765 (2013); see also L.J. SILBERMAN, Jurisdictional Imputation in DaimlerChrysler AG v. Bauman: A Bridge Too Far, 66 Vand. L. Rev. En Banc 123, 124 et seq. (2013). 74 United States v. Bestfoods, 524 U.S. 51, 61 (1998) (citations and quotation marks omitted). See also L.S. HOFFMAN (note 73), Further Thinking […].

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Linda J. Silberman The existing case law with respect to jurisdiction based on corporate affiliations is mostly muddled. On issues of jurisdiction (as well as for other issues), some courts in the United States have pierced the corporate veil to treat legally distinct entities as a single entity for jurisdictional purposes, attributing a subsidiary’s contacts to its parent.75 Such an alter ego theory is invoked when the parent has complete control over the subsidiary, or where there has been complete integration of the two entities. Other courts have used an agency theory to treat the acts of the subsidiary as those of the parent for particular purposes, including jurisdiction. However, as noted earlier, foreign parents rarely exert the kind of control over U.S. subsidiaries necessary to satisfy classic doctrines of agency. Indeed, the agency theories invoked by various courts in imputing jurisdiction to a parent on the basis of the subsidiary’s activities differ remarkably. The result is that courts in certain states and circuits have presented global forum shopping opportunities for plaintiffs for claims that have little or nothing to do with the United States, as was true of Daimler itself.76 Courts have not always distinguished between general and specific jurisdiction when attributing the acts of a subsidiary to the parent through an “agency theory”. As I have written elsewhere, the attribution via an agency theory is most compelling when there is a connection between the dispute and the foreign defendant.77 In such cases, the defendant’s use of the subsidiary or affiliate has a direct connection with the claim being asserted. Consider, for example, an injury suffered by a U.S. plaintiff in a state in the United States by a defective product manufactured outside the United States by a foreign defendant. The product is distributed in the United States through the foreign defendant’s U.S. subsidiary, and an injury results to a purchaser in the forum state due to an alleged defect in the distributed product. Jurisdiction over the manufacturer in the state where the injury occurred is justified for several reasons: the state has a strong regulatory interest in accidents that occur within its jurisdiction, litigation convenience is best served in an action at the place of injury, and a foreign defendant in these circumstances can expect to defend a suit in a forum where it has been in a chain of activity that causes an injury there.78 In the absence of a formal subsidiary relationship, the plurality in the McIntyre case held that a defendant who uses an independent U.S. distributor to market throughout the country is not subject to suit on the basis of an injury in the forum state.79 As Justice Ginsburg pointed out in her dissent in McIntyre, the United States is an outlier in this regard; injury in the forum state caused by a foreign defendant (regardless of the existence of an agent) is a basis for jurisdiction 75 G.B. BORN/ P.B. RUTLEDGE, International Civil Litigation in the United States, U.S.A. 2011, p. 175 et. seq.; L.J. SILBERMAN (note 73), at 126. 76 Daimler itself involved Argentinian workers and events in Argentina for which Mercedes-Benz Argentina was responsible. Daimler is thus the paradigmatic example of the global forum shopping concern. 77 L.J. SILBERMAN (note 73). 78 Id. at 128. 79 See supra notes 64-67 and accompanying text.

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Daimler AG v. Bauman in most other countries.80 In McIntyre, Justice Ginsburg and the two other dissenters were prepared to find jurisdiction on the basis of the nationwide distribution activity of the foreign defendant’s independent U.S. distributor who sold the machine to a party in the forum state. Indeed, Justice Breyer’s concurrence suggests that he and Justice Alito might have been willing to accept this view if the factual circumstances of the case were different.81 Jurisdiction over a foreign parent on the basis of the marketing activity of its subsidiary in a specific jurisdiction tort case is even more compelling, and perhaps may be persuasive to other justices on the Court. Indeed, Justice Ginsburg makes this precise point when she writes for an almost-unanimous Court in Daimler: “A subsidiary […] for example, might be its parent’s agent for claims arising in the place where the subsidiary operates, yet not its agent regarding claims arising elsewhere”.82 She elaborates further in a footnote, explaining “a corporation can purposefully avail itself of a forum by directing its agents or distributors to take action there”.83 A comparative perspective may be useful in this context. An interesting case from the European Court of Justice, Sar Schotte GmbH v. Parfusm Rothschild Sarl,84 highlights the emphasis on the general/specific jurisdiction distinction. The case involved a contract dispute between a German corporate seller and a French buyer of various perfumery articles. Sar Schotte, a German company, initially sued Rothschild GmbH, the German parent of Parfum Rothschild Sarl (Sarl), and then realized that only the French subsidiary Sarl was liable for payment under the contract. The plaintiff then sued that French subsidiary. The issue thus became whether the French company Sarl could be sued in Germany under the relevant European (Brussels) Regulation Article 5(5) (now Article 7(5) in the Recast),85 which provides for jurisdiction regarding a dispute arising out of the operation of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated. The German court of first instance thought there was no jurisdiction in Germany, since Rothschild GmbH could hardly be regarded as an agency or establishment of

80 J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2803 et seq. (2011) (Ginsburg, J., dissenting). See Council Regulation 44/2001, on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, art. 5 [2001] OJ L 12, 1, 4 [hereinafter Brussels I Regulation]; Recast Brussels I Regulation (note 43), Art. 7(2). 81 In his concurring opinion, Justice Breyer implied that if the record revealed more than a single, isolated sale – or if the manufacturer had targeted the forum through advertising or forum-specific design – the exercise of jurisdiction would have been proper. McIntyre, 131 S. Ct. at 2792, 2799 n. 5 (2011) (Breyer, J. & Alito, J., concurring). 82 Daimler, 134 S. Ct. at 759. 83 Id. at 759 n. 13. 84 Case C-218/86 (1987), ECR 4905. 85 Brussels I Regulation (note 80), Art. 5(5); Recast Brussels I Regulation (note 43), Art. 7(5).

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Linda J. Silberman Sarl in that Sarl was the subsidiary of Rothschild GmbH. The appeals court stayed proceedings to request a ruling from the European Court of Justice on the point. The European Court ruled that even where a legal entity maintained no dependent branch, agency or other establishment, the pursuit of activities through an independent company with the same name and identical management and the use of such entity as an extension of itself would satisfy the jurisdictional requirements of Article 5(5). The Court’s analysis is instructive. It emphasized that when there is a close connection between the dispute and the court, and third parties are doing business with an establishment acting as an extension of another company, those parties must be able to rely on the appearance created. One final comparative example is also instructive. Many countries have a jurisdictional rule, similar to Article 6(1) of the European Regulation (now Article 8(1) of the Recast),86 which permits jurisdiction over all defendants when any one of them is domiciled in the forum state, if the claims are so closely connected that they should be heard together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings. The rule is not specific to parents and subsidiaries, although it might indeed cover such cases. However, even under that provision, there must be a good faith claim asserted against the anchor defendant in order to bring in the other defendants. Thus, in a case like Daimler, where no claim is asserted against the U.S. subsidiary nor could one in good faith be alleged, jurisdiction would fall short even under a provision like Art. 6(1).87 C.

Recognition and Enforcement of Judgments after Daimler

In one potentially unforeseen consequence, the Daimler decision appears to have affected the jurisdictional requirements for recognition and enforcement of foreign judgments and foreign arbitral awards, given the requirement in the United States that jurisdiction over the defendant is necessary in a recognition/enforcement proceeding. In a recent Second Circuit Court of Appeals case, Sonera Holding B.V. v. Çukurova Holdings A.S.,88 a Dutch corporation brought suit in federal court in New York to enforce an arbitral award rendered in Switzerland against a Turkish 86

Brussels I Regulation (note 80), Art. 6(1); Recast Brussels I Regulation (note 43),

Art. 8(1). 87 Although formal corporate separateness is a hallmark of most jurisdictions in the world, many countries authorize the joinder of additional defendants when the forum is the domicile of one of the defendants, the theory being the connectedness of the claims and the desire to avoid irreconcilable judgments. As I have suggested elsewhere, a comparative perspective is useful in assessing the U.S. regime of judicial jurisdiction. See L. SILBERMAN (note 5), Goodyear and Nicastro. For two in-depth and comprehensive studies of comparative jurisdiction pre-Daimler, see A. LOWENFELD, International Litigation and the Question for Reasonableness 81-122, England 1996; A.T. VON MEHREN, Theory and Practice of Adjudicatory Authority in Private International Law: A Comparative Study of the Doctrine, Policies and Practices of Common- and Civil-Law Systems 95-217, USA 2003. 88 750 F.3d 221 (2d Cir. 2014), cert. denied, 134 S. Ct. 2888 (2014).

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Daimler AG v. Bauman company, Çukurova. In a decision rendered prior to Daimler, the district court found that the award debtor had engaged in a continuous course of doing business in New York based on its own contacts with New York, as well as on the activities of its various agents, such that it was therefore subject to general jurisdiction.89 The Second Circuit reversed on appeal.90 Without deciding whether defendant had met New York’s “doing business” test for corporate “presence”, or New York’s agency theory of jurisdiction, the court held “[w]hatever the purported scope of [New York law], Daimler confirmed that subjecting Çukurova to general jurisdiction in New York would be incompatible with due process”.91 The Second Circuit never considered that the plaintiff was seeking “confirmation” of a foreign award, which might alter the jurisdictional requirements. Certainly, the rationale of Shaffer v. Heitner,92 which distinguished, for due process purposes, property as a basis of jurisdiction over a plenary claim from when it was used as a basis for enforcement of a judgment, provides justification for a different standard. Thus, whatever connection the Supreme Court has required for the assertion of general jurisdiction over a plenary claim, something less might suffice in the enforcement context.93 A final conclusion will have to await further word from the Supreme Court. D.

Consent and General Jurisdiction

Heightened restrictions on general jurisdiction have created pressure to find other options for jurisdiction over corporate defendants, including statutes requiring foreign corporations to register to do business and thereby consent to jurisdiction. However, construing such statutes as consent to general jurisdiction raises a number of issues, including due process concerns.94 It is true that consent has been a valid basis for jurisdiction since the years preceding Pennoyer v. Neff, and today every U.S. state has a statute requiring nonresident corporations conducting 89 Sonera Holding B.V. v. Çukurova Holding A.S., 895 F. Supp. 2d 513 (S.D.N.Y. 2012), rev’d, 750 F.3d 221 (2d Cir. 2014), cert. denied, 134 S. Ct. 2888 (2014). 90 750 F.3d 221 (2d Cir. 2014), cert. denied, 134 S. Ct. 2888 (2014). 91 Id. at 224. 92 433 U.S. 186, 210 n.36 (1977) (“Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.”). 93 For further elaboration on this topic, see L.J. SILBERMAN/ A.D. SIMOWITZ Recognition and Enforcement of Foreign Judgments and Awards: What Hath Daimler Wrought? (forthcoming, on file with the author). 94 See K.D. BENISH, Pennoyer’s Ghost: Consent, Registration Statutes, and General Jurisdiction after Daimler AG v. Bauman, 90 New York University L. Rev. (forthcoming Nov. 2015) (on file with author) (arguing registration to do business is an unconstitutional basis for consent to general jurisdiction after Daimler and suggesting alternative solutions).

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Linda J. Silberman business within its borders to register with the state and appoint an agent for service of process.95 However courts and commentators differ on whether such statutes result in consent to service only or to jurisdiction for some or all claims,96 and due process concerns have become even more significant after Daimler.97 Two recent cases in Delaware highlight the problem. In AstraZeneca AB v. Mylan Pharmaceuticals,98 a Swedish company and its Delaware-based U.S. subsidiary (AstraZeneca) filed a patent infringement claim in Delaware federal district court against Mylan, a corporation with its place of incorporation and principal place of business in West Virginia.99 The district court judge easily found that the defendant, Mylan, was not “at home” in Delaware,100 but then considered plaintiff’s argument that the defendant had consented to general jurisdiction when it registered to do business in Delaware.101 95 See id. at Appendix I. For corporations that do not register to do business, but nevertheless conduct activities in a state, a common consequence is losing access to state (and possibly federal) courts in that forum. 96 C. ANDREWS, Another Look at General Personal Jurisdiction, 47 Wake Forest L. Rev. 999, 1070 et seq. (2012) (“[M]ost corporate registration statutes do not state the jurisdictional repercussions of registration. In a tradition dating back to the Pennoyer era, most registration statutes require merely that the corporation name an in-state agent for service of process and do not mention «jurisdiction.» […] Some states, however, interpret registration statutes as conferring general jurisdiction.”). In some instances, courts have found that jurisdiction is conferred only for claims arising from the corporation’s in-state activities. See R.C. CASAD/ W.B. RICHMAN, Jurisdiction in Civil Actions, Charlottesville, Virginia, 1998 (“[C]ourts have reached differing conclusions on the question of whether the consent to jurisdiction exacted under these statutes extends to any cause of action or only to those associated with the corporation’s activity in the state.” See also id. at § 3-2[2][a] nn.430-31 (collecting cases). 97 The relationship between consent and due process was an issue even pre-Daimler. Compare Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196, 1200 (8th Cir. 1990) (holding compliance with Minnesota registration statute is synonymous with consent to general jurisdiction and resort to minimum contacts to justify jurisdiction is unnecessary), Sondergard v. Miles, Inc., 985 F.2d 1389 (8th Cir. 1993), cert. denied 510 U.S. 814 (1993) (holding that appointment of an agent for service of process is sufficient to establish general jurisdiction over defendant and satisfies due process), with Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 183 et seq. (5th Cir. 1992) (holding that general jurisdiction based only on registration is unconstitutional unless minimum contacts are established), and Ratliff v. Cooper Laboratories, 444 F.2d 745, 748 (4th Cir. 1971) (“Principles of due process require a firmer foundation than mere compliance with state domestication statutes.”). 98 No. CV 14-696-GMS, 2014 WL 5778016 (D. Del. Nov. 5, 2014). 99 Id. at *1. 100 Id. at *3 et seq. (“The role of general jurisdiction is a limited one: afford plaintiffs recourse to at least one clear and certain forum in which a corporate defendant may be sued on any and all claims.” (citing Daimler, 134 S. Ct. at 760)). 101 AstraZeneca, 2014 WL 5778016, at *4. Prior to Daimler, Delaware had interpreted its registration statute as consent to general jurisdiction. Sternberg v. O’Neil, 550 A.2d 1105, 1116 (Del. 1988).

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Daimler AG v. Bauman Characterizing the issue as one of “statutory consent”, the judge held that “compliance [with Delaware’s registration statute] does not amount to consent to jurisdiction” in the post-Daimler world.102 The district judge concluded that a contrary decision would be “specifically at odds with Daimler”, given the many states in which the defendant is registered to do business.103 As a result, the court invoked International Shoe, holding that “[j]ust as minimum contacts must be present so as not to offend «traditional notions of fair play and substantial justice», the defendant’s alleged «consent» to jurisdiction must do the same”.104 Less than two months later, in the same district court before a different judge, in a case involving the same defendant and the same claims, the opposite conclusion was reached on the consent issue. In Acorda Therapeutics v. Mylan Pharmaceuticals105 the district judge acknowledged the AstraZeneca case and its “rejection of consent as a basis for general jurisdiction”,106 but nevertheless held “Daimler does not change the fact that [the defendant subsidiary] consented to this Court's exercise of personal jurisdiction when it registered to do business and appointed an agent for service of process in the State of Delaware”.107 The impact of Daimler on registration statutes that purport to create consent-based general jurisdiction continues to generate conflict in the case law.108

Id. at *5. Id. 104 Id. (noting that “mere compliance with such statutes sufficient to satisfy jurisdiction would expose companies with a national presence (such as Mylan) to suit all over the country, a result specifically at odds with Daimler” (citing Daimler, 134 S. Ct. at 761 et seq.)). 105 Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., No. CV 14-935-LPS, 2015 WL 186833 (D. Del. Jan. 14, 2015). 106 Id. at *14. 107 Id. at *1. 108 See, e.g., Novartis Pharm. Corp. v. Mylan Inc., No. CV 14-777-RGA, 2015 WL 1246285, at *5 (D. Del. Mar. 16, 2015) (following Acorda in upholding general jurisdiction and permitting jurisdictional discovery for the purpose of specific jurisdiction); Forest Labs., Inc. v. Amneal Pharm. LLC, No. CV 14-508-LPS, 2015 WL 880599 (D. Del. Feb. 26, 2015; Bailen v. Air & Liquid Sys. Corp., No. 190318/2012, 2014 N.Y. Slip Op. 32079(U), 2014 WL 3885949, at *4-*5 (Sup. Ct. N.Y. Cnty. Aug. 5, 2014) (“Although Daimler clearly narrows the reach of New York courts in terms of its exercise of general jurisdiction over foreign entities, it does not change the law with respect to personal jurisdiction based on consent.”); Beach v. Citigroup Alternative Investments, No. 12 Civ. 7717(PKC), 2014 WL 904650, at *6 (S.D.N.Y. Mar. 7, 2014); Hoffman v. McGraw-Hill Financial, Inc., 2014 WL 7639158 (N.J.Super.Ch.) (upholding general jurisdiction based on consent-by-registration). But see Chatwal Hotels & Resorts LLC v. Dollywood Co., No. 14-cv-8679(CM), 2015 WL 539460, at *6 (S.D.N.Y. Feb. 6, 2015) (holding that compliance with state registration statutes is “insufficient to confer general jurisdiction in a state that is neither its state of incorporation or its principal place of business”) (citing Gucci America, Inc. v. Li, 768 F.3d 122, 135 (2d Cir. 2014)). 102 103

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Linda J. Silberman Until one of these cases make its way to the Supreme Court,109 the unresolved issue creates an unpredictable environment on still another issue of judicial jurisdiction. At least one state legislature has indicated its intent to reassert general jurisdiction over foreign corporations based on a consent theory. Viewing consent as an independent basis for general jurisdiction not constrained by Daimler, the New York State Legislature is considering a bill expressly stating that registration to do business is the equivalent of consent.110

IV. Conclusion Daimler brings U.S. courts more into line with a world-wide view of allpurpose/general jurisdiction and limits forum shopping for actions with only a tenuous connection to the United States. At the same time, the Supreme Court’s earlier decisions on specific jurisdiction constrain assertions of that type of jurisdiction more so than the approach of most other countries. The end result is that courts in the United States have closed their doors to transnational litigation against foreign defendants that courts in the rest of the world would hear in comparable situations. Although the outcome in Daimler is clearly correct, the same result could have been reached on numerous other grounds, without the broad attack on general jurisdiction.111 Indeed, the focus on general jurisdiction will likely have further ramifications. For example, the future of “tag jurisdiction” may be in jeopardy. As one lower court case recently noted, “Burnham’s foundation has been severely

109

The Acorda case is currently on appeal before the Federal Circuit Court of

Appeals. 110 S. DOC. 4846 (N.Y. 2015), available at . The bill was previously introduced in 2014 but did not become law. S. DOC. 7078 (N.Y. 2014), available at . Prior to Daimler, New York courts and the Second Circuit Court of Appeals generally held registration to do business as a valid form of consent. E.g., Le Vine v. Isoserve, Inc., 70 Misc.2d 747, 749 (Sup. Ct. Albany Co. 1972); STX Panocean (U.K) Co., Ltd. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 131 (2d Cir. 2009); China National Chartering Corp. v. Pactrans Air & Sea, Inc., 882 F. Supp. 2d 579, 596 (S.D.N.Y. 2012); Steuben Foods, Inc. v. Oystar Group, 2013 WL 2105894 (W.D.N.Y. 2013); see also The Rockefeller University v. Ligand Pharmaceuticals Inc., 581 F. Supp. 2d 461, 466 et seq. (S.D.N.Y. 2008)). 111 The Court did reject the Ninth Circuit’s view – that because Mercedes’ services were “important” to Daimler and that if Mercedes were not performing those services, Daimler would have had to undertake them itself – Mercedes was Daimler’s agent for general jurisdiction purposes. The Supreme Court could have also reached the same conclusion by relying on forum non conveniens or its interpretation of the extraterritorial reach of the Alien Tort Statute in Kiobel.

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Daimler AG v. Bauman undermined”, especially in cases where foreign individuals in the United States are subjected to suit based on tag jurisdiction.112 Given the new era of jurisdiction for the United States, courts and legislatures may seek alternatives to replace or substitute for the substantial restrictions on general jurisdiction. State registration statutes may be accepted as providing “consent” as a basis for general jurisdiction, but such statutes will have to survive a likely due process challenge.113 Courts may revisit and try to expand the “arising out of” prong of specific jurisdiction in order to compensate for limited general jurisdiction and for the high bar to establish “purposeful availment” in specific jurisdiction cases.114 Efforts to pass federal legislation that would permit jurisdiction over foreign defendants with substantial contacts with the United States rather than with just a particular state are likely to be renewed.115 All of these issues will need to be confronted by courts in the United States in this new post-Daimler era of jurisdiction.

Jaramillo v. Naranjo, No. 10-21951-CIV, 2014 WL 4898210, at *4 (S.D. Fla. Sept. 30, 2014). 113 See K. BENISH (note 94). See also A. FRANKEL, New York’s (Stalled) Grab for Jurisdiction over Foreign Businesses, Reuters U.S., (last visited Feb. 21, 2015) (discussing opposition to the New York Legislature’s jurisdictional consent proposal). 114 See C.W. RHODES/ C.B. ROBERTSON, Toward A New Equilibrium in Personal Jurisdiction, 48 U.C. Davis L. Rev. 207, 229 et seq. (2014) (stating “plaintiffs will work harder to establish another ground for personal jurisdiction” after Daimler, and arguing that future cases will focus on expanding specific jurisdiction). 115 In the 113th Congress, the Foreign Manufacturers Legal Accountability Act received bipartisan support, with 54 members of the House of Representatives acting as cosponsors to the legislation. See Cosponsorship Report: Foreign Manufacturers Legal Accountability Act of 2013, H.R. 1910, 113th Cong. (2013), available at . 112

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THE NEW PORTUGUESE ARBITRATION ACT (LAW NO. 63/2011 OF 14 DECEMBER ON VOLUNTARY ARBITRATION) Rui Manuel MOURA RAMOS*

I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII.

Introduction Arbitration Agreement Arbitrators and the Arbitral Tribunal Jurisdiction of the Arbitral Tribunal Interim Measures and Preliminary Orders Conduct of the Arbitral Proceedings The Arbitral Award and the Closing of the Proceedings Recourse against Award Enforcement of the Arbitral Award International Arbitration Recognition and Enforcement of Foreign Arbitral Awards Final Remarks

I.

Introduction

On 14 March 20121 a new Arbitration Act2 entered into force in Portugal; it was approved by means of Law No. 63/2011 of 14 December,3 and replaced the former * Professor at the Law Faculty of Coimbra University. Member of the International Law Institute and the European Group of Private International Law. 1 Article 6 of the Law 63/2011. 2 According to Article 4, No. 1 of the Law 63/2011, the new Act is binding on arbitral proceedings which, following the letter of Article 33, are initiated before its entry into force (the relevant moment being, unless otherwise agreed by the parties, the one when the demand regarding submission to arbitration is received by the defendant – No. 1). Parties may agree under certain conditions on the application of the new Act to proceedings initiated prior (Article 4, No. 2 of Law 63/2011) and the right to appeal against the arbitral award provided for in the preceding Act is maintained since the arbitration agreement has been entered into prior to the entry in force of the new Act (No. 3 of the same Article 4). 3 See Article 1, No. 1, of the Law 63/2011. On the Arbitration Act, see Lei da Arbitragem Voluntária Anotada, Coimbra 2012; A. RIBEIRO MENDES, A nova lei da arbitragem voluntária: evolução ou continuidade?, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 7-35; G. MALHEIRO, Portugal finally approves its new arbitration law,

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 25-56 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Rui Manuel Moura Ramos legislation approved by Law No. 31/86 of 29 August.4 Arbitration was already considered in Portugal in the codifications of XIXth century,5 and has been dealt with in special laws that implicitly revoked these codifications by the end of the XXth century. A first example of this was Law Decree No. 243/84 of 17 July that intended to modernise and develop the legal regime governing arbitration, but was subsequently considered unconstitutional by the Constitutional Court in Ruling No. 230/1986 of 8 July. The Court considered that the Government had, without authorisation, encroached upon the exclusive legislative power of the Parliament (at Article 165, No. 1, p), of the Constitution).6 Immediately thereafter, the mentioned Law No. 31/1986 pursued the same goal and remained effective until the entry into force of the new Act. The new Act limits itself to voluntary arbitration7 and deals with all kinds of arbitration, whether internal or international.8 It condenses the whole regime into a Revue de droit des affaires internationales 2013, No. 3, p. 327-348; M. PEREIRA BARROCAS, Lei da Arbitragem Comentada, Coimbra 2013; CLÉMENT FOUCHARD/ F. VAZ PINTO, La nouvelle loi portugaise sur l’arbitrage, Revue de l’Arbitrage 2013, No. 2, p. 367-391; Lei da Arbitragem Voluntária Anotada (coordenação de M. ESTEVES DE OLIVEIRA), Coimbra 2014; D. MOURA VICENTE, Portugal, International Handbook on Commercial Arbitration, Suppl. 82, December 2014, p. 1-40. On the “travaux préparatoires”, see Anteprojecto de Lei da Arbitragem Voluntária, 2 Revista Internacional de Arbitragem e Conciliação 2009, p. 205-241; A. SAMPAIO CARAMELO, A reforma da Lei da Arbitragem Voluntária, ibidem, p. 7-56, and Anteprojecto de Lei da Arbitragem Voluntária da Associação Portuguesa de Arbitragem (2010), 3 Revista Internacional de Arbitragem e Conciliação 2010, p. 167-230. 4 This law is abrogated, except (Article 5 of Law 63/2011) its Article 1, No. 1, which remains in force for labour dispute arbitrations until a new law on these matters will come into force (see also Article 2, No. 4). On this subject, see L. de LIMA PINHEIRO, A arbitrabilidade dos conflitos laborais, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (Centro de Arbitragem Comercial), Coimbra 2011, p. 77-88. On the importance of this law in the development of Portuguese arbitration regime, see A. RIBEIRO MENDES, Balanço dos 20 anos de vigência da Lei de Arbitragem Voluntária (Lei n. 31/86, de 29 de Agosto): Sua importância no desenvolvimento da arbitragem e necessidade de reforma, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa, Coimbra 2008, p. 13-80. 5 See Articles 44 to 58 of 1876 Civil Procedure Code, and, in the XXth century codifications, Articles 1561 to 1580 of the 1939 Civil Procedure Code and Articles 1508 to 1528 of the 1961 Civil Procedure Code (the two last ones including provisions on compulsory arbitration (Articles 1577 to 1580 and 1525 to 1528, respectively). On the origins of the institution, see A. SANTOS JUSTO, Arbitragem no direito romano – Breve referência ao direito português, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II, Coimbra 2013, p. 675-701. 6 On arbitration and jurisprudence of the Portuguese Constitutional Court, see A. RIBEIRO MENDES, A arbitragem e a jurisprudência do Tribunal Constitucional, in Estudos em Homenagem ao Conselheiro Artur Maurício, Coimbra 2014, p. 233-268. 7 As it was already the case with Law-Decree 243/84 and Law 31/86. Provisions regarding compulsory arbitration remain in the Civil Procedure Code, now 2013 Civil Procedure Code (Articles 1082 to 1085) and some special laws. See, for instance, Law 62/2011, of 12 December and, in this respect, D. MOURA VICENTE, O regime especial de resolução de conflitos em matéria de patentes (Lei n.º 62/2011), p. 971-990; S. RIBEIRO MENDES, O novo regime de arbitragem necessária dos litígios relativos a medicamentos de

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The New Portuguese Arbitration Act comprehensive legal text,9 and follows the trend of development and modernisation that has also inspired the two preceding legal regimes. The 1985 UNCITRAL Model Law on International Commercial Arbitration,10 as amended in 2006,11 has clearly been the main inspiration for this evolution. The territorial scope of application of the Act is defined at Article 61, and includes all arbitration proceedings on Portuguese territory.12 The creation of institutions to help advance this purpose is subject to the authorisation of the Ministry of Justice (Art. 62, No. 1).13 Besides following the main structure of the Model Law (arbitration agreement; composition of arbitral tribunal; competence of arbitral tribunal; interim measures and preliminary orders; conduct of arbitral proceedings; making of award and termination of proceedings; recourse against award; enforcement), the new Act deals separately with international arbitrations and recognition and enforcement of foreign awards and refers to the State courts who are responsible for certain referência e genéricos, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 1005-1037, and R.M. MOURA RAMOS, Arbitrage nécessaire, “juridiction nationale” au titre de l’art. 267 du TFUE et durée maximale de l’exclusivité accordée dans l’Union Européenne à la suite de l’autorisation de mise sur le marché d’un médicament, 7 Arbitraje. Revista de arbitraje comercial y de inversiones 2014, No. 2, p. 499-508. 8 As it was already the case with Law 31/86 (see its Articles 32 to 35). On the new regulation on this subject, see infra note 10, and R.M. MOURA RAMOS, L’arbitrage international dans le nouveau droit portugais de l’arbitrage, in Entre Bruselas y La Haya. Estudios sobre la unificación internacional y regional del Derecho Internacional Privado. Liber amicorum Alegria Borràs, Madrid 2013, p. 611-624. 9 Until now, the question of recognition and enforcement of foreign arbitration awards was dealt in the Civil Procedure Code, and consisted of the same provisions that applied to foreign judicial decisions. On this issue, see R.M. MOURA RAMOS, L’arbitrage étranger et la reconnaissance des sentences arbitrales étrangères dans le nouveau droit portugais de l’arbitrage, 7 Arbitraje. Revista de arbitraje comercial y de inversiones 2014, No. 1, p. 61-80. The present law expressly states at Article 61 that it is applicable to recognition and enforcement of arbitral awards pronounced in arbitrations conducted abroad. 10 Adopted by UN General Assembly resolution 40/72 (11 December 1985). For a commentary on this text and of the Portuguese arbitration regime in force at that moment, see M.Â. BENTO SOARES/ R.M. MOURA RAMOS, Arbitragem Comercial Internacional. Análise da Lei-Modelo da CNUDCI de 1985, 21 Documentação e Direito Comparado 1985, p. 225-387. 11 The UN General Assembly resolution 61/33 (4 December 2006). The core modifications introduced by this amendment (Chapter IV A on interim measures and preliminary orders) have been incorporated in the new Chapter IV of the Act, bearing the same title. 12 As it was already the case under the preceding Act (see its Article 37) and the UNCITRAL Model Law (Article 1, paragraph 2). On this topic, see E. DOS SANTOS JÚNIOR, Âmbito espacial de regulação e controlo estadual da arbitragem, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 51-71. 13 The solution was identical in the preceding Act (see its Article 38) and the conditions for the creation of those centres have been laid down in Law-Decree No. 425/86, of 27 December that remains in force.

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Rui Manuel Moura Ramos functions of assistance and supervision with respect to arbitration.14 Pursuant to Article 59, when the dispute falls within the jurisdiction of the judicial tribunals, the Court of Appeals (Tribunal da Relação) is competent; if the dispute falls within the jurisdiction of the administrative courts (No. 2), the second instance court (Tribunal Central Administrativo) at the place of the arbitration is competent.15 For all other matters requiring the involvement of State courts, jurisdiction is determined following the same distinction between judicial and administrative first instance courts (No. 4). The law also lists the courts that may (1) assist with the conduct of arbitral proceedings abroad through interim measures or the taking of evidence;16 (2) decide as to recourse against foreign awards (No. 8); (3) decide on jurisdictional matters relating to the enforcement of arbitral awards rendered in Portugal (No. 9);17 (4) provide guidelines regarding arbitrators’ civil liability (No. 10);18 (5) provide rules19 on jurisdictional conflicts between judicial and administrative courts in asserting competence ratione materiae; and, establish the procedure for assistance by the State court in arbitration proceedings (Art. 60).

14 These functions include appointment (in this case the competence always belongs to the president of the court in question), challenge and termination of the mandate of arbitrators, reduction of arbitrators’ fees, recourse against interlocutory decision on the competence of the arbitral court or the final award and recognition of foreign awards. On the role of State courts in arbitration, see J. RAPOSO, A intervenção do tribunal judicial na arbitragem: nomeação de árbitros e produção de prova, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 109-127; M. OLABAZAL DE ALMADA, A assistência (alias colaboração) dos tribunais estaduais em processos arbitrais, in V Congresso do Centro de Arbitragem Comercial, Coimbra 2012, p. 45-77, and P. METELLO DE NÁPOLES/ C. GÓIS COELHO, A arbitragem e os tribunais estaduais – Alguns aspectos práticos, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 195-219. On the situation in the new (and also recent) French law (decree No. 2011-48, of January 13th), see P. CHEVALIER, Le nouveau juge d’appui, in Le nouveau droit français de l’arbitrage (sous la direction de Th. CLAY), Paris 2011, p. 143-161. 15 Except in matters of recognition of foreign arbitral awards, where reference is made to courts exercising jurisdiction at the place of domicile of the person against whom execution of the award is sought. 16 This competence belongs to the first instance courts (of the place, respectively, where the interim measure should be ordered or where evidence must be gathered) of the two jurisdictions considered (judicial and administrative) (Nos 5 and 6). 17 It is the first instance court which, according to applicable procedural law, has jurisdiction. 18 A choice is open to the applicant, to this effect, between the first instance court of the respondent’s domicile or the place of the arbitration. 19 In favour of the court that takes the first decision, establishing that such a decision is, in this respect, definitive (No. 11).

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The New Portuguese Arbitration Act

II.

Arbitration Agreement

According to Article 1 of the Act, disputes involving economic interests20 can be referred to arbitration by the parties. The parties would thereby enter into an arbitration agreement if the dispute is not submitted to national courts or compulsory arbitration is not prescribed by means of a special law (No. 1). Furthermore, an arbitration agreement concerning disputes revolving around non-pecuniary interests is valid only in those cases where the parties have the right to conclude such an agreement and administer the rights and duties at issue (No. 2). In previous laws, the criterion determining whether or not an arbitration agreement was valid was that of “alienability” (direitos não indisponíveis, droits non indisponibles). The new Act refers to the pecuniary character of the rights in question, thereby enlarging the material scope of arbitration procedures to alienable rights of a patrimonial nature (i.e. quantifiable or subject to a pecuniary evaluation) and even to The same criterion was adopted in Swiss law. On this point see A. BUCHER, Le nouvel arbitrage international en Suisse, Bâle 1998, p. 3l-42; L. DE LIMA PINHEIRO, Convenção de Arbitragem (Aspectos internos e internacionais), 64 Revista da Ordem dos Advogados 2004, p. 127-200 (147-163), and A. SAMPAIO CARAMELO, Critérios de arbitrabilidade dos litígios. Revisitando o tema, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 13-44. On the criterion adopted in the previous law, see A. SAMPAIO CARAMELO, A disponibilidade do direito como critério de arbitrabilidade do litígio – Reflexões de iure condendo, in Temas de Direito da Arbitragem, Coimbra 2013, p. 71-104, and J. MORAIS CARVALHO, O critério da disponibilidade na arbitragem, na mediação e noutros negócios jurídicos processuais, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 31-860. On arbitration in different areas, see D. LEITE DE CAMPOS, A Arbitragem voluntária (jurisdição dos cidadãos) nas relações tributárias, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 223-233; S. FERNANDES DE ALMEIDA, Primeiras reflexões sobre a lei de arbitragem em matéria tributária, in Estudos em Memória do Prof. Doutor J. L. Saldanha Santos, v. V, Coimbra 2011, p. 381-416; J.M. JÚDICE/ R.M. FERNANDES FERREIRA, A arbitragem fiscal: defeitos e virtudes, in Liber amicorum Alberto Xavier, v. I, Coimbra 2013, p. 811-841; M. MARQUES MENDES, Arbitrabilidade de litígios em sede de direito da concorrência, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 45-75; A. SAMPAIO CARAMELO, Arbitragem de litígios societários, 4 Revista Internacional de Arbitragem e Conciliação 2011, at 7-64; R. PEREIRA DIAS, Alguns problemas práticos da arbitragem de litígios societários (e uma proposta legislativa), in II Congresso Direito das Sociedades em Revista, Coimbra 2012, p. 291-304; R. BOTICA SANTOS, Arbitragem no direito do desporto, in V Congresso do Centro de Arbitragem Comercial (note 14), at 96-137; M. AROSO DE ALMEIDA, Sobre o âmbito das matérias passíveis de arbitragem no direito administrativo em Portugal, in Estudos em Homenagem a Miguel Galvão Teles, v. II, Coimbra 2012, p. 7-26; P. OTERO, Arbitragem interna de litígios de direito público: apublicização da arbitragem interna de direito privado, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 179-193; R. CHANCERELLE DE MACHETE, O alargamento do âmbito das matérias sujeitas à arbitragem administrativa no direito português, in VI Congresso do Centro de Arbitragem Comercial, Coimbra 2013, p. 169-184, and J.M. SÉRVULO CORREIA, A arbitragem dos litígios entre os particulares e a Administração Pública sobre situações regidas pelo direito administrativo, in Estudos em Homenagem ao Conselheiro Artur Maurício (note 6), at 683-720. 20

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Rui Manuel Moura Ramos non-patrimonial rights, when the parties may reach a settlement. Besides this relevant change, the law is very similar to the previous one, and does not significantly alter the manner in which a dispute is submitted to arbitration. The arbitration agreement may refer to an existing dispute, notwithstanding the fact that it might have been previously brought before a national court (submission agreement) while disputes arising out of a particular legal relationship, whether contractual or not, are also allowed (No. 3).21 Beyond contentious matters, any issue requiring the involvement of an impartial arbitrator may be submitted to arbitration; such cases in which contracts require specification, completion or modification to suit new circumstances may also be submitted (No. 4).22 Both the State and other legal entities observant of public law may enter into arbitration agreements, insofar as the law allows them to do so, or if they are dealing with private law issues (No. 5).23 Article 224 deals with the main requirements that must be met by the arbitration agreement. First, the agreement must be made in writing (No. 1); this entails that the agreement must be included within a written document signed by the parties or in an exchange of letters, telegrams, telefaxes or other means of telecommunication, including electronic means,25 providing for a written record of the agreement (No. 2). The new Act, now departing from the previous one, foresees two more situations. Article 2, No. 4 states that a reference made in a contract to a document that contains an arbitration clause amounts to an arbitration agreement, but only in those cases where the document is in writing and where the reference intends to make the clause part and parcel of the contract. Article 2, No. 5 clarifies the status of an exchange of statements in arbitral proceedings; should such an exchange be made during arbitral proceedings, where one party invokes its existence, then the requirement that the agreement be made in writing is equally met. Finally, Article 2, No. 6 requires that an agreement specifies the subject-matter of the dispute whereby an arbitration clause should refer directly to the legal relationship at issue.

See Article 1, No. 2 of Law 31/86. Also Article 1, No. 3 of Law 31/86. 23 See Article 1, No. 4 of Law 31/86. 24 See, on this topic, D. MOURA VICENTE, A manifestação do consentimento na convenção de arbitragem, 48 Revista da Faculdade de Direito da Universidade de Lisboa 2002, No. 2, p. 987-1004; L. DE LIMA PINHEIRO (note 20), at 127-147; J. CALVÃO DA SILVA, Convenção de arbitragem – Algumas notas, in Homenagem da Faculdade de Direito de Lisboa ao Prof. Doutor Inocêncio Galvão Telles. 90 Anos, Coimbra 2007, p. 533-549; C. FERREIRA DE ALMEIDA, Convenção de Arbitragem: Conteúdo e Efeitos, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 81-95, and, concerning French law, M. DE BOISSÉSON, La nouvelle convention d’arbitrage, in Le nouveau droit français de l’arbitrage (note 14), at 81-89. 25 Reference to electronic means is new, following paragraph 4 of Article 7 (Option 1) of the UNCITRAL Model Law as revised in 2006. Article 2, No. 3 considers that the requirement regarding the written form of the arbitration agreement is satisfied when this agreement is embedded in an electronic, magnetic, optical or similar form, offering the same guarantees of authenticity, intelligibility and conservation. 21 22

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The New Portuguese Arbitration Act The infringement of the above-mentioned conditions is sanctioned with nullity as Article 3 of the Act states,26 while Article 4 deals with the modification, revocation and expiry of the agreement. The paragraph concerning modification, a novel one, enables the parties to modify the arbitration agreement until the acceptance of the first arbitrator or, with the consent of all the arbitrators, until the arbitral award is issued (No. 1), and in matters of revocation, the parties may also modify the arbitration agreement at the last moment (No. 2).27 In both cases the agreement between the parties must be in writing, and this phrasing must be interpreted according to Article 2.28 The law also makes it clear that, unless otherwise agreed by the parties, the arbitration agreement shall not lapse and the action before the arbitral tribunal shall not be terminated by reason of death or extinction of the parties (No. 4).29 Following in the tracks of the Model Law, a new specification (Art. 5) relates to the negative effect of the arbitration agreement, and provides that a court before which an action is brought in a matter which is the object of an arbitration agreement shall, if the respondent so requests, and no later than the submission of its first statement on the substance of the dispute, dismiss the case unless it finds that the agreement is manifestly null and void, is or became inoperative, or is incapable of being performed (No. 1). In such a case, arbitral proceedings may nevertheless be commenced or continued, and an award may be rendered, while the issue is pending before the State court (No. 2).30 Besides, No. 4 of the same article prevents State courts from autonomously discussing issues of invalidity, inoperativeness or unenforceability of an arbitration agreement, either in the context of actions brought before them to that effect, or in that of interim measures proceedings brought before them and aimed at preventing the constitution or the operation of arbitral tribunal.31 Alternatively, No. 3 of the same article states that arbitral proceedings shall cease and the award made therein shall cease to produce effects when a State court considers, by means of a final and definitive decision, that the In the previous law, this sanction was limited to infringement of Article 1, Nos 1 and 4, and Article 2, Nos 1 and 2. 27 The solution was already foreseen in Article 2, No. 2 of the previous law. 28 See supra. 29 See also Article 4, No 2 of Law 31/86. The new law has not retained the three grounds for which the arbitration agreement is deemed to have lapsed (the appointment of an arbitrator ceases to have effect without replacement; a majority of votes is not attained among the arbitral tribunal; an award is not rendered within the time-limit) provided for at Article 4, No. 1 of Law 31/86. 30 See, in this sense Article 8 of the Model Law (also in its 1985 version). 31 One may wonder if this restriction to the right of effective judicial protection is compatible with Article 20 of the Portuguese Constitution. On the constitutional jurisprudence, see Constitutional court rulings No. 230/2013 of 24 April 2013, and 781/2013, and, critically, R. MEDEIROS, Arbitragem necessária e Constituição, in Estudos em Homenagem ao Conselheiro Artur Maurício (note 6), at 1301-1330. See also P. CASTRO RANGEL, Arbitragem e Constituição: um novo lugar e um novo fundamento, in Estudos em Homenagem ao Prof. Doutor José Joaquim Gomes Canotilho, v. I: Constituição e Estado. Entre teoria e dogmática, Coimbra 2012, p. 637-656. 26

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Rui Manuel Moura Ramos arbitral tribunal is incompetent to settle the dispute that was brought before it, irrespective of the action where such a decision is rendered.32 Furthermore, one can notice two new provisions that are novel in comparison with the previous law.33 Assessing the scope of the will of the parties, Article 6 makes it clear that all references in the present law to clauses of the arbitration agreement or to the agreement between the parties include not only what the parties have directly regulated therein, but also the arbitration rules to which the parties have referred. Article 7 further states that it is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, an interim measure from a State court and for the said court to grant such a measure.34

III. Arbitrators and the Arbitral Tribunal Chapter II of the Act,35 on arbitrators and the arbitral tribunal, does not present substantial modifications with respect to the previous law. This applies to the number of arbitrators,36 the freedom to accept and withdraw from the office of arbitrators,37 but also the replacement of arbitrators.38 Some issues have been 32 This might fall in the category of an action foreseen at number 1 of this Article or a recourse to the arbitral tribunal decision on its competence according to Article 18, No. 9, and an action where an application for setting aside is made, referred to Article 46, No. 3, a), i) and iii). 33 By contrast, a provision of the previous law (Article 5) on costs of arbitral proceedings has been eliminated. 34 See Article 9 of the UNCITRAL Model Law (also in its 1985 version). 35 On all the matters included in this chapter, see A. SAMPAIO CARAMELO, O estatuto dos árbitros e a constituição do tribunal na LAV, 6 Revista Internacional de Arbitragem e Conciliação 2013, p. 25-77, and L. DIAMVUTU, A constituição do tribunal arbitral e o papel dos árbitros, ibidem, at 166-190. For a comparison with recent French law, see J.-B. RACINE, Le nouvel arbitre, in Le nouveau droit français de l’arbitrage (note 14), at 117-142. 36 Article 8 states (as it was the case with Article 6 of the previous law, and according to Article 10 of the UNCITRAL Model Law) that the arbitral tribunal may be composed of a sole or of an uneven number of arbitrators (No. 1) and that if the parties have not agreed on the number of arbitrators, the tribunal shall consist of three arbitrators (No. 2). The requirement of an uneven number of arbitrators is not established in the UNCITRAL Model Law. 37 Article 12 states that no one can be compelled to act as an arbitrator, but if the mandate has been accepted, a withdrawal shall only be legitimate if it is based on a superseding impossibility for the appointee to perform is functions (No. 1). It adds that, except where the parties have agreed otherwise, the appointed arbitrator shall, within fifteen days following notice of the appointment, state in a written document his acceptance; whenever he or she neither declares his/her acceptance nor otherwise shows the intent to act as an arbitrator, it shall be deemed that the arbitrator has refused the appointment (No. 2). In addition, the arbitrator who, having accepted the mandate, unjustifiably withdraws from exercising his or her office shall be responsible for the damages he has caused (No. 3). On

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The New Portuguese Arbitration Act addressed for the first time, or have been the subject of important developments. Such is the case for the following items: the qualifications of arbitrators, their appointment (both in general and in particular where multiple claimants and respondents are concerned), challenges to grounds and procedure, the failure or impossibility to act, and the arbitrators’ fees and expenses. The arbitrators’ qualifications are listed in Article 9. Individuals must have full legal capacity and discernment (No. 1).39 No person shall be precluded, on nationality grounds, from being appointed as an arbitrator40 without prejudice to the discretion of the parties (No. 2).41 Arbitrators must be independent and impartial (No. 3), and may not be held liable for damages resulting from their decisions, save for those situations in which judges may be so (No. 4).42 this last question, see M. HENRIQUE MESQUITA, Arbitragem: competência do tribunal arbitral e responsabilidade civil do árbitro, in Ab Uno Ad Omnes. 75 Anos da Coimbra Editora. 1920-1995, Coimbra 1998, p. 1381-1392. See Article 9 of Law 31/86. 38 According to Article 16, in those cases where, for whichever reason, the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed, according to the rules applicable to the appointment of the arbitrator being replaced, without prejudice to the parties that wish to agree on an alternative arrangement or to waive this replacement (No. 1). If this is the case, the arbitral tribunal shall decide, taking into consideration the stage of proceedings, whether any procedural act should be repeated in view of the new composition of the tribunal (No. 2). See Article 13 of Law 31/86 and Article 9 of the UNCITRAL Model Law (also in its 1985 version). 39 It was already the case with Article 8 of Law 31/86. 40 See also Article 11, paragraph 1, of the UNCITRAL Model Law (also in its 1985 version). 41 On this subject, A. PIRES DE LIMA, Independência dos árbitros e ética arbitral, 1 Revista Internacional de Arbitragem e Conciliação 2008, p. 55-60; A. PEREIRA DE MIRANDA, Arbitragem voluntária e deontologia – Considerações preliminares, 2 Revista Internacional de Arbitrageme Conciliação 2009, p. 115-124, and O estatuto deontológico do árbitro – Passado, presente e futuro, in III Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa, Coimbra 2010, p. 59-71; S. FERREIRA LEME, A independência e a imparcialidade do árbitro e o dever de revelação, ibidem, at 41-57; M. GALVÃO TELES, A independência e imparcialidade dos árbitros como imposição constitucional, in Estudos Jurídicos, v. I, Coimbra 2012, p. 605-641; M. PEREIRA BARROCAS, A ética dos árbitros e as suas obrigações legais, 6 Revista Internacional de Arbitragem e Conciliação 2013, p. 191-202; T. TIMBANE, Regras deontológicas aplicáveis aos árbitros, ibidem, at 203-219; N. FERREIRA LOUSA, A escolha de árbitros: a mais importante decisão das partes numa arbitragem?, in V Congresso do Centro de Arbitragem Comercial (note 14), at 15-35; F. GONÇALVES PEREIRA, O estatuto do árbitro: algumas notas, ibidem, at 159-179; L. OLAVO BAPTISTA, Confidencialidade na arbitragem, ibidem, at 197-208; A. WALD, Eficácia, ética e imparcialidade na arbitragem, in Estudos em Homenagem a Miguel Galvão Teles (note 20), at 339-357; M. RAPOSO, Os Árbitros, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 892-918; W.H. REICHBERGER, Independence and impartiality of arbitrators, ibidem, at 1039-1059, and A. PINTO LEITE, Third-party funding as a joint venture and not as a mere finance agreement: The independence and impartiality of the arbitrators, in VII Congresso do Centro de Arbitragem Comercial, Coimbra 2014, p. 105-113. 42 It is also specified that this liability only exists towards the parties (No. 5).

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Rui Manuel Moura Ramos According to Article 10, dealing with the appointment of arbitrators, parties are free to appoint the arbitrators in the arbitration agreement or in a document subsequently signed by the parties, or to agree on a procedure for appointing them, notably by entrusting the appointment of all or some of the arbitrators to a third party (No. 1). Following closely the UNCITRAL Model Law clauses on the subject,43 this provision deals with arbitration involving a sole arbitrator, in which case, and if the parties are unable to agree on the arbitrator’s appointment, such arbitrator shall be appointed, upon request of any party, by the State court (No. 2).44 This Article also deals with arbitration where three or more arbitrators are involved, stating that each party shall appoint an equal number of arbitrators and the arbitrators shall appoint a further arbitrator, who shall act as chairman of the arbitral tribunal (No. 3). If a party is to appoint an arbitrator or arbitrators and fails to do so within thirty days of receipt of the other party’s request to do so, or if the arbitrators appointed by the parties fail to agree on the chairman within thirty days of the appointment of the last arbitrator, the appointment of the remaining arbitrators shall be made, unless otherwise agreed, upon request of any of the parties, by the competent State court45 (No. 4).46 In the case of multiple claimants or respondents, and without prejudice to what may have been stipulated in the arbitration agreement for multi-party arbitrations (No. 4), it is foreseen in Article 11 that if the arbitral tribunal is to consist of three arbitrators, the claimants shall jointly appoint an arbitrator and the respondent shall jointly appoint another one (No. 1).47 Article 11, paras 2 to 5. On appointments by State courts, see J. LEBRE DE FREITAS, O princípio do contraditório na nomeação de árbitro pelo presidente do Tribunal da Relação, 4 Revista Internacional de Arbitragem e Conciliação 2011, p. 163-177, and P. COSTA E SILVA/ N. TRIGO DOS REIS, A natureza do procedimento judicial de nomeação de árbitro, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 951-1004. 45 Such a court shall, in appointing an arbitrator, have due regard to any qualifications required of the arbitrator or the arbitrators by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator; in the case of an international arbitration, while appointing a sole or impartial arbitrator, the court shall furthermore take into account the advisability of appointing an arbitrator of a nationality other than those of the parties (No. 6). It is also established that the decisions made by these courts are not subject to appeal (No. 7). 46 See Article 11, paragraph 3, of the UNCITRAL Model Law (also in its 1985 version). It is provided that, unless otherwise agreed, the last provision shall apply if the parties have entrusted the appointment of all or some of the arbitrators to a third party and the appointment does not occur within thirty days of the request to do so (No. 5). 47 Should the claimants or the respondents fail to reach an agreement on the arbitrators to be appointed by them, the appointment of such arbitrator shall be made, upon request of any party, by the competent State court (No. 2). This court may appoint all the arbitrators and indicate which one of them shall be the chairman if it becomes clear that the parties failed to jointly appoint an arbitrator and have conflicting interests regarding the substance of the dispute, and in such event the appointment of the arbitrator meanwhile made by one of the parties shall become void (No. 3). On this topic, see M. PINTO CARDOSO/ C. GONÇALVES BORGES, Constituição do tribunal arbitral em arbitragens multipartes, in III Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 41), at 139-149. 43 44

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The New Portuguese Arbitration Act After following the UNCITRAL Model Law rules regarding grounds for challenges48 (Art. 13)49 and procedures in this regard (Art. 14),50 the Act deals with the incapability or failure of an arbitrator to act (Art. 15). The main rule (No. 1 – termination of the arbitrator’s mandate if he becomes, de jure or de facto, incapable of performing his or her functions, if he or she withdraws from office or if the parties agree on the termination on such grounds) is the same contained in Article 14, paragraph 1, of UNCITRAL Model Law. In addition to this, No. 2 allows for an arbitrator that fails to perform his or her functions, to terminate his mandate within a reasonable period of time, by mutual agreement and without prejudice to any eventual liability of the person in question. As provided for at Article 14, paragraph 2, second phrase, of the Model Law, Article 15, No. 3 of the Act also states that if the parties cannot agree on the termination in any of the situations listed, any party may request that the competent State court remove such arbitrator from office, on those grounds,51 without the possibility of appeal. Finally, Article 17 deals with the arbitrators’ fees and expenses,52 stating that if the parties have failed to decide on such matters in the arbitration agreement, the arbitrators’ fees, the method of reimbursement of their expenses and the payment by the parties of advances on such fees and expenses shall be agreed upon in writing by the parties and the arbitrators. Such an agreement should be made before the appointment of the last arbitrator (No. 1).53 In the case of a failure to make advance payments for fees and expenses previously agreed on or fixed by the 48 In this respect, see A. PEREIRA DE MIRANDA, Investir em virtude: o dever de revelação do árbitro, 6 Revista Internacional de Arbitragem e Conciliação 2013, p. 9-23, and B. REIS, Reflexões práticas sobre a ética na arbitragem: Perspectiva de árbitro, in VI Congresso do Centro de Arbitragem Comercial (note 20), at 75-97. 49 See Article 12 of the UNCITRAL Model Law. 50 See Article 13 of the same text. 51 Number 4 of the same article states that if an arbitrator withdraws from office or if the parties agree on the termination of the mandate of an arbitrator allegedly found to be in one of the listed circumstances, this does not imply the acceptance of the validity of the grounds for the removal from office mentioned in the provisions quoted. See also Article 14, paragraph 2, of Model Law. 52 On this matter, see J.P. REMÉDIO MARQUES, Algumas notas sobre a determinação e fixação dos custos da arbitragem, incluindo os honorários dos Juízes-Árbitros, 6 Revista Internacional de Arbitragem e Conciliação 2013, p. 97-137, and J.M. JÚDICE, Fixação dos honorários dos árbitros, ibidem, at 139-166. 53 If such matters have not been regulated in the arbitration agreement and an agreement thereon has not been entered into force between the parties and the arbitrators, the arbitrators shall, taking into consideration the complexity of the issues decided, the amount in dispute and the time spent or to be spent with the arbitral proceedings until its conclusion, fix the amount of their fees and expenses, and furthermore determine the payment by the parties of their advance payments, by means of one or several decisions separate from those in which procedural issues or the substance of the dispute are decided (No. 2). In both situations, any of the parties may request the competent State court to reduce the amount of the fees or the expenses and respective advance payments fixed by the arbitrators, whereby that State court may define the amounts it deems adequate, after having heard the members of the arbitral tribunal on the issue (No. 3).

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Rui Manuel Moura Ramos arbitral tribunal or the State court, the arbitrators may suspend or end the arbitral proceedings after a reasonable time limit granted to that effect (No. 4).54

IV. Jurisdiction of the Arbitral Tribunal Following the approach of the UNCITRAL Model Law and unlike the previous Portuguese law, the Act dedicates a chapter to the jurisdiction of the arbitral court, starting with Article 18 on the jurisdiction of the arbitral court to rule on its jurisdiction. The principle of Kompetenz-Kompetenz55 is affirmed in No. 1, that specifies that the jurisdiction of the arbitral tribunal to rule on its own jurisdiction applies even if for that purpose it is necessary to assess the existence, the validity or the effectiveness of the arbitration agreement or of the contract to which it belongs,56 or the application of the said arbitration agreement.57 The best practices identified in the UNCITRAL Model Law are also followed with respect to the temporal sequencing of submissions whereby a plea that the arbitral tribunal does not have jurisdiction to hear the whole or part of the dispute submitted to it58 shall be raised not later than the submission of the statement of defence as to the substance of the dispute or jointly with it (No. 4).59 Moreover, a plea that the arbitral tribunal, in the course of the arbitral proceedings, has exceeded or may exceed its jurisdiction shall be raised as soon as the issue alleged to be beyond the scope of its jurisdiction is raised during the proceedings (No. 6).60 One observes the same trend 54 But, if one of the parties has not made its advance payment within the time limit so determined, the arbitrators, before deciding to suspend or end the arbitral proceedings, shall give notice thereof to the remaining parties so that these may, if they wish, remedy the failure to make such advance payment within the time-limit granted to that effect (No. 5). 55 In its respect, see L. DIAMVUTU, O princípio da competência-competência na arbitragem voluntária, 3 Revista Internacional de Arbitragem e Conciliação 2010, p. 63-103, and Poderes do tribunal arbitral na apreciação da própria competência, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 88-125, and A. SAMPAIO CARAMELO, A “autonomia” da cláusula compromissória e a competência da competência do Tribunal arbitral, in Estudos em Homenagem a Miguel Galvão Teles (note 20), at 105-128. 56 Paragraph 2 adds that for this purpose, an arbitration clause that is part of a contract shall be treated as an agreement that is independent of the other terms of the contract. And, according to paragraph 3, the decision by the tribunal that the contract is null and void shall not automatically entail the invalidity of the arbitration clause. The text follows closely that of Article 16, paragraph 1, of the UNCITRAL Model Law. 57 See also Article 21, No. 1 of Law 31/86. 58 A party is not precluded from raising such a plea by the fact that it has appointed, or participated in the appointment of, an arbitrator (No. 5). 59 See already Article 21, No. 3 of Law 31/86. 60 The arbitral tribunal may, nevertheless, allow that a plea based on these arguments be permitted after the time limits established therein if it considers the delay justified (No. 7). See also Article 16, paragraph 2, of the UNCITRAL Model Law. One may

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The New Portuguese Arbitration Act of closely following UNCITRAL rules, in that the arbitral tribunal may rule on its jurisdiction either in an interim decision61 or in the award on the merits (No. 8). Furthermore, the importance of the arbitral tribunal’s jurisdiction is also stressed in Article 19, according to which, in matters governed by the Act, State courts may only intervene where so provided.62

V.

Interim Measures and Preliminary Orders

With respect to interim measures63 and preliminary orders, the new law equally takes after the Model Law. Following the 2006 legislative overhaul of the substantive clauses on the matter, Article 17 of the old law was replaced with a fullfledged chapter – chapter IV A. Previously, the law stated the following: unless otherwise agreed by the parties, the arbitral tribunal might, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect to the subject matter of the dispute.64 An entire new chapter is now devoted to these matters (Chapter IV A).65 Besides defining

underline that under Law 31/86 (Article 21, No. 4) the award by the arbitral tribunal which declared that it has jurisdiction might only be examined by a court after the award on the merits of the dispute has been rendered and in an application for setting aside or in a request for refusal of enforcement. 61 If it is the case, such a decision may, within thirty days after notification to the parties, be challenged by any of them before the competent court, by an application for setting aside [Articles 46, No. 3, a), i), and ii), and 59, No. 1, f)]. In this case, and under No. 10, while the challenge is pending in the competent State court, the arbitral tribunal may continue the arbitral proceedings and render an award on the merits of the dispute, without prejudice to the provisions of Article 5, No. 3 (supra, No. 2 and note 33). See also paragraph 3 of Article 16 of the UNCIRAL Model Law. 62 In the same sense, see Article 5 of the UNCITRAL Model Law. 63 On this subject, see, J. CALVÃO DA SILVA, Tribunal arbitral e providências cautelares, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 99-107; M. JOÃO MIMOSO, Arbitragem do Comércio Internacional. Medidas Provisórias e Cautelares, Lisboa 2009; A. RIBEIRO MENDES, As medidas cautelares e o processo arbitral (Algumas notas), 2 Revista Internacional de Arbitragem e Conciliação 2009, p. 57-113; M. MENDES COSTA, Os poderes do tribunal arbitral para decretar medidas cautelares, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 127-145; M. FRANÇA GOUVEIA, A competência cautelar do tribunal arbitral, em especial as providências executivas e as antisuit injunctions, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 861-892, and P. CAETANO NUNES, Arbitragem e medidas cautelares: Algumas notas, in VI Congresso do Centro de Arbitragem Comercial (note 20), at 99-118. 64 And that the arbitral tribunal might require of any party to provide appropriate security in connection with such measures (see the same provision). 65 Articles 17 to 17 J of the present version of the UNCITRAL Model Law.

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Rui Manuel Moura Ramos interim measures (Section 1),66 and setting the conditions for granting them67 or for granting preliminary orders (Section 2),68 this chapter details provisions applicable to interim measures and preliminary orders (Section 3),69 and rules on recognition 66 According to the new Article 17, the arbitral tribunal may, unless otherwise agreed by the parties, grant interim measures at the request of a party (paragraph 1). Interim measures are defined as any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to: (a) Maintain or restore the status quo pending determination of the dispute; (b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; (c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or (d) Preserve evidence that may be relevant and material to the resolution of the dispute (No. 2). 67 According to Article 17 A, the party requesting an interim measure shall satisfy to the arbitral tribunal that: (a) harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and (b) there is a reasonable possibility that the requesting party will succeed on the merits of the claim; the determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination (paragraph 1). According to paragraph 2, when such measures are required to take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself, those requirements shall apply only to the extent the arbitral tribunal considers appropriate. 68 The conditions applying to interim measures (preceding note) apply to any preliminary order, provided that the harm to be assessed is the harm likely to result from the order being granted or not (Article 17 B, paragraph 3). According to paragraph 1 of the same article, unless otherwise agreed by the parties, a party may, without notice to any other party, make a request for an interim measure together with an application for a preliminary order directing a party not to frustrate the purpose of the interim measure requested; and the arbitral tribunal may grant a preliminary order provided it considers that prior disclosure of the request for the interim measure to the party against whom it is directed risks frustrating the purpose of the measure (paragraph 2). The specific regime for preliminary orders is contained in Article 17 C. According to paragraph 1, immediately after the arbitral tribunal has made a determination in respect of an application for a preliminary order, the arbitral tribunal shall give notice to all parties of the request for the interim measure, the application for the preliminary order, the preliminary order, if any, and all other communications, including by indicating the content of any oral communication, between any party and the arbitral tribunal in relation thereto. At the same time, the arbitral tribunal shall give an opportunity to any party against whom a preliminary order is directed to present its case at the earliest practicable time (paragraph 2); and shall decide promptly on any objection to the preliminary order (paragraph 3). A preliminary order shall expire after twenty days from the date on which it was issued by the arbitral tribunal; however, the arbitral tribunal may issue an interim measure adopting or modifying the preliminary order, after the party against whom the preliminary order is directed has been given notice and an opportunity to present its case (paragraph 4). Finally, a preliminary order shall be binding on the parties but shall not be subject to enforcement by a court; such a preliminary order does not constitute an award (paragraph 5). 69 On modification, suspension and termination (Article 17 D), provision of security (Article 17 E), disclosure (Article 17 F), and costs and damages (Article 17 G).

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The New Portuguese Arbitration Act and enforcement of interim measures (Section 4)70 and on court-ordered interim measures (Section 5).71 This entire chapter has been incorporated in the Portuguese law72 with only minor changes.73 The only substantial difference relates to the recognition and enforcement of interim measures, where article 27 of the Act contains a new (4) paragraph emphasising that the decision of an arbitral tribunal granting a preliminary order or interim measure and the judgement of a State court deciding on the recognition or enforcement of an interim measure issued by an arbitral court are not subject to appeal.

VI. Conduct of the Arbitral Proceedings The rules governing arbitral proceedings were not so clearly formalised in the previous law, and in this respect, Chapter V of the Act reveals evident progress. First, according to Article 30, the arbitral proceedings must follow a specific set of principles: a) the respondent must be summoned to present its defence; b) the

70 According to Article 17 H, paragraph 1, interim measures issued by an arbitral tribunal shall be recognised as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which they were issued. Grounds for refusing recognition and enforcement are set up in Article 17 I. According to paragraph 1, recognition and enforcement may be refused only at the request of the party against whom it is invoked if the court is satisfied that refusal is warranted on the grounds set forth concerning recognition or enforcement of an arbitral award; the arbitral tribunal’s decision with respect to the provision of security in connection with the interim measure issued by the arbitral tribunal has not been complied with; or the interim measure has been terminated or suspended by the arbitral tribunal or, where so empowered, by the court of the State in which the arbitration takes place or under the law of which that interim measure was granted. And, if the court finds that the interim measure is incompatible with the powers conferred upon the court unless the court decides to reformulate the interim measure to the extent necessary to adapt it to its own powers and procedures for the purposes of enforcing that interim measure and without modifying its substance; the subject-matter of the dispute is not capable of settlement by arbitration under the law of the State; or such a recognition or enforcement would be contrary to the public policy of this State. 71 Article 17 J states that a court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in courts; the court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration. 72 See Chapter IV of the Act, Articles 20-29. 73 Some of them merely relating to form. Article 21 of the Act corresponds to Article 17 A of the Model Law redrafted; Articles 17 D and 17 E have been joined in Article 24 of the Act; and Article 29, paragraphs 1 and 2, corresponds to Article 17 J of the Model Law, redrafted.

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Rui Manuel Moura Ramos parties must be treated equally74 and allowed to present their case in a reasonable manner, whether in writing or orally, before the issuance of the final award; and c) the adversarial principle is to be applied throughout the proceedings (No. 1). In terms of determining the rules of procedure, No. 2 allows the parties to agree75 on the procedure to be followed by the arbitral tribunal in the conduct of the proceedings, prior to the appointment of the first arbitrator, and with respect to the fundamental principles and mandatory provisions of the Act. Furthermore, the arbitrators, the parties and the arbitral institutions, where applicable, are obliged to maintain confidentiality regarding all information obtained and documents brought to their attention in the course of the arbitration proceedings, without prejudice to the right of the parties to make public procedural acts necessary to the defence of their rights and to the duty to communicate or disclose procedural acts to the competent authorities, which may be imposed by law (No. 5).76 The new rules on the place of arbitration (Art. 31),77 the language of the proceedings (Art. 32),78 the commencement of proceedings, the defendant and

See Article 16 of Law 31/86, and, for the principle of equal treatment of parties, Article 18 of the UNCITRAL Model Law, and, with respect to French arbitration, Y. DERAINS, Les nouveaux príncipes de procédure: confidentialité, célérité, loyauté, in Le nouveau droit français de l’arbitrage (note 14), at 91-104. 75 Failing such agreement of the parties and in the absence of applicable provisions in the Act, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, defining the procedural rules it deems adequate and specifying, if it is the case that it considers the provisions of the law that governs the proceedings before the competent State court to be subsidiarily applicable (No. 3). According to No. 4, the powers conferred upon the arbitral tribunal include the determination of the admissibility, relevance and weight of any evidence presented or to be presented. See Article 15 of Law 31/86, and Article 19 of the UNCITRAL Model Law. 76 This does not prevent the publication of awards and other decisions of the arbitral tribunal, with the exclusion of any elements of identification of the parties, unless any of them opposes thereto (No. 6). 77 The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties (No. 1). Nevertheless, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate to hold one or more hearings, to allow the production of any evidence or to deliberate (No. 2). 78 The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings (No. 1). The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal (No. 2). 74

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The New Portuguese Arbitration Act claimant pleadings (Art. 33),79 the hearings and written proceedings (Art. 34),80 the default and absence of a party (Art. 35),81 the appointment of experts (Art. 37),82 and the State court’s assistance in the gathering of evidence (Art. 38),83 follow

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute shall commence on the date on which a request for such dispute be referred to arbitration is received by the respondent (No. 1). Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall submit its statement of claim, in which the remedy sought and the facts supporting the claim shall be stated, and the respondent shall present its statement of defence in which its defence with respect to these particulars shall be outlined, unless the parties have agreed otherwise regarding the required elements of such statements. The parties may submit with their written statements all documents they consider to be relevant and may add a reference to the documents or other means of evidence they will submit (No. 2). Unless otherwise agreed by the parties, either party may, in the course of the arbitral proceedings, amend or supplement its statement of claim or defence, unless the arbitral tribunal considers it inappropriate to allow such a change having regard to the delay in making it and the absence of sufficient justification for this (No. 3). 80 Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence, or whether the proceedings shall be conducted on the basis of documents and other means of proof. The arbitral tribunal shall, however, hold one or more hearings for the presentation of evidence whenever so requested by a party, unless the parties have previously agreed that no hearings shall be held (No. 1). The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of producing evidence (No. 2). All written statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties (No. 3). 81 If the claimant fails to present his statement of claim in accordance with Article 33(1), the arbitral tribunal shall terminate the arbitral proceedings (No. 1). If the respondent fails to present his statement of defence in accordance with Article 33, No. 2, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations (No. 2). If one of the parties fails to appear at a hearing or to produce documentary evidence within the determined period of time, the arbitral tribunal may continue the proceedings and make the award on the evidence before it (No. 3). 82 Unless otherwise agreed by the parties, the arbitral tribunal may, on its own initiative or upon request of the parties, appoint one or more experts to prepare a written or oral report on specific issues to be determined by the arbitral tribunal (No. 1). In such a case, the arbitral tribunal may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, or other goods for the expert’s information (No. 2). Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his or her report, participate in a hearing where the arbitral tribunal and the parties shall have the opportunity to put questions to the expert (No. 3). 83 When the evidence to be gathered depends on the will of one of the parties or of the third parties and the latter refuse to cooperate, a party may, with the approval of the arbitral tribunal, request from the competent State court that the evidence be taken before it, the results being forwarded to the arbitral tribunal (No.1). 79

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Rui Manuel Moura Ramos clearly, with some modifications,84 the corresponding provisions of the UNCITRAL Model Law.85 Finally, the Act contains a new and important clause on third party joinders (Art. 36)86 that indicates the following: only third parties that are bound by the arbitration agreement, whether from the date of such agreement or by having subsequently adhered to it,87 are allowed to join ongoing arbitral proceedings (No. 1).88 Moreover, decisions on joinders must always be made by the arbitral tribunal after allowing the original parties to the arbitration and the third party in question to state their views. The arbitral tribunal shall only allow joinders if this does not unduly disrupt the normal course of the arbitral proceedings and if there are relevant reasons that justify it. Examples include the following, provided that the request is not clearly impracticable: a) the third party has an interest in relation to the subject matter of the dispute that is equal to that of the claimant or the respondent, such that it would have originally permitted voluntary joinder or imposed compulsory joinder between one of the parties to the arbitration and the third party;

84 As the prevision of the possibility of a counterclaim, provided that the subject matter is covered by the arbitration agreement (Article 33, No. 4), the precision that provisions on grounds for challenge (Article 13) and challenge procedure (Article 14, Nos 2 and 3) also apply to experts appointed by the arbitral tribunal (Article 37, No. 4), and determination that Portuguese State court assistance in taking evidence applies also in case of foreign arbitrations (arbitrations seated abroad – Article 61.º and supra, No. 1) (Article 38.º, No. 2). 85 Respectively, Articles 20, 22, 21 and 23, 24, 25, 26, and 27. 86 The regulation provided for in this article is of a non-binding character, since the arbitration agreement may regulate the third party joinder in ongoing arbitrations in a different way, either directly, upholding the principle of equal participation of all parties in the choice of the arbitrators, or by reference to an institutionalised arbitration regulation that allows for such joinder (No. 7). On this problem, see M. GALVÃO TELES, Addition of parties: a vacuum left by the Model Law in need of internationally approved rules, 3 Revista Internacional de Arbitragem e Conciliação 2010, p. 45-62; J. LEBRE DE FREITAS, Intervenção de terceiros em processo arbitral, in III Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 41), at 183-198; J. MORAIS CARVALHO/ M. FRANÇA GOUVEIA, Arbitragens complexas: questões materiais e processuais, 4 Revista Internacional de Arbitragem e Conciliação 2011, p. 111-161; S. MARTINS, Arbitragens complexas: Um comentário ao caso Dallah, in V Congresso do Centro de Arbitragem Comercial (note 14), at 37-54; M. TEIXEIRA DE SOUSA, A intervenção de terceiros no processo arbitral, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 919-949, and C. GONÇALVES BORGES/ R. NETO GALVÃO, A extensão da convenção de arbitragem a não signatários, in VI Congresso do Centro de Arbitragem Comercial (note 20), at 119-135. 87 It is specified that such adhesion requires the consent of all parties to the arbitration agreement and may only take place with respect to the arbitration in question. 88 If the arbitral tribunal has already been constituted, the joinder of a third party can only be allowed or requested if such party declares that it accepts the current composition of the tribunal; when a joinder is requested by the third party such acceptance is presumed (No. 2).

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The New Portuguese Arbitration Act b) the third party wishes to present a claim against the respondent with the same object as that of the claimant, but which is incompatible with the latter’s claim; or c) the respondent against whom a credit is invoked that may, prima facie, be characterised as a joint and several credit, wants the other possible joint and several creditors to be bound by the final award; or d) the respondent wants the third party to be joined, against whom it may have a claim in case the claimant’s request is complete or partially granted (No. 3).89 Once the joinder is allowed, the rules governing the commencement of proceedings and the statements of claim and defence90 shall apply, with necessary adjustments (No. 5), but a joinder before the arbitral tribunal has been constituted can only be allowed in cases of institutionalised arbitration, and provided that the applicable arbitration rules ensure that the principle of equal participation of all parties is upheld, including members of multiple parties, in the choice of the arbitrators (No. 6).

VII. The Arbitral Award and the Closing of the Proceedings The Act closely follows the rules of the UNCITRAL Model Law while adding a clause on the time-limits granted for the issuance of the award. Article 39 deals with the rules applicable to the substance of the dispute, the resort to equity, and the inadmissibility of an appeal of the award. It is provided that the arbitrators shall decide the dispute in accordance with the law unless the parties agree that they shall decide ex aequo et bono91 (No. 1).92 Furthermore, if the parties have entrusted the tribunal with that mission, the tribunal may decide the dispute as amiable compositeur (No. 3).93 In a way that departs from the solution sanctioned in the 89 Provisions referring to claimant and respondent are applicable, with the necessary adjustments, respectively to respondent and claimant, in case of a counterclaim (No. 4). 90 Article 33, and supra, notes 84 and 87. 91 As it was the case regarding Article 22 of Law 31/86, and Article 28 of the UNCITRAL Model Law. The more complex rules embodied in this last text are justified since this instrument deals with international, and not internal, arbitrations. See M.Â. BENTO SOARES/ R.M. MOURA RAMOS (note 10), at 301-304, and infra, No. 10. 92 If the parties’ agreement to decide ex aequo et bono was entered into after the acceptance by the first arbitrator, its effectiveness shall depend on the acceptance by the arbitral tribunal (No. 2). 93 On the relationship between the two notions, see A. SAMPAIO CARAMELO, Arbitration in equity and amiable composition under Portuguese law, 25 Journal of International Arbitration 2008, p. 569-581, and A. RIBEIRO MENDES, Equidade e composição amigável na nova lei da arbitragem voluntária, in Estudos em Homenagem a Miguel Galvão Teles (note 20), at 165-188.

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Rui Manuel Moura Ramos previous law,94 No. 4 provides that the award on the merits of the dispute, or the termination of arbitral proceedings without a decision on the merits, is only subject to appeal to the competent State court if the parties have expressly contemplated such a possibility in the arbitration agreement, and provided that the dispute has not been decided ex aequo et bono or through amiable composition. According to Article 40 dealing with the decision-making processes that must be observed by the panel, any decision of the arbitral tribunal in proceedings with more than one arbitrator shall be made by a majority of its members.95 In case a majority decision cannot be reached, the award shall be made by the chairman of the tribunal (No. 1).96 However, issues relating to procedural ordering, procedural sequencing or procedural initiatives, may be decided by the chairman alone if he is so authorised by the parties or all other members of the arbitral tribunal (No. 3). Rules on settlement (Art. 41),97 the termination of proceedings (Art. 44),98 and the correction and interpretation of the award and additional awards (Art. 45)99 According to Article 29, No. 1 of Law 31/86, unless the parties have waived the right to appeal, the same appeals which were admissible regarding a judgement of a first instance court might be lodged with the Court of Appeal against the arbitral award. 95 If an arbitrator refuses to take part in the vote on the decision, the other arbitrators may make the award without such arbitrator, unless otherwise agreed by the parties. The parties shall be subsequently informed of that arbitrator’s refusal to participate in the vote (No. 2). 96 See Article 20 of Law 31/86. 97 If, during the arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if so requested by the parties, record the settlement in the form of an arbitral award on agreed terms unless the contents of such settlement is in violation of any principle of public policy (No. 1, this last limitation being absent in the UNCITRAL Model Law). An award on agreed terms shall be made in accordance with the provisions of Article 42 and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case (No. 2). 98 The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal (No. 1). The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when: (a) the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute; (b) the parties agree on the termination of the proceedings; (c) the arbitral tribunal finds that the continuation of the proceedings has for any reason become unnecessary or impossible (No. 2). The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of Articles 45 and 46, No. 8 (No. 3). A new provision not contemplated in the Model Law (No. 4) disposes that, unless otherwise agreed by the parties, the chairman of the arbitral tribunal shall keep the original file of the arbitral proceedings for a minimum period of two years and the original arbitral award for a minimum period of five years. One must also underline that the Act does not contain a provision stating that the arbitrators’ jurisdictional power shall terminate upon notification of the deposit of the award that has settled the dispute or, if the tribunal has been relieved of the necessity of such deposit, upon notification of the award to the parties (Article 25 of Law 31/86). 99 Within thirty days of receipt of the notification of the award, unless another period of time has been agreed upon by the parties, any party may, with notice to the other party, request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical error or any error of identical nature (No. 1). In the same period, any party 94

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The New Portuguese Arbitration Act mirror the rules100 of the UNCITRAL Model Law. With respect to form, Article 42 prescribes that the award shall be made in writing and shall be signed by the arbitrator or arbitrators (No. 1),101 and states that, unless otherwise agreed by the parties, the arbitrators may decide on the merits of the dispute in a single award or in as many partial awards as they deem necessary (No. 2). Regarding content, the award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is rendered on the basis of an agreement of the parties under Article 41 (No. 3).102 It shall also state the date of issuance, as well as the place of the arbitration determined in accordance with Article 31 (No. 1).103 Effectively, the award shall be deemed to have been made at that place (No. 4).104 After the award is rendered, the parties shall immediately be notified and are expected to receive a copy that is signed by the arbitrator or arbitrators in accordance with No. 1 of the same article (No. 6).105 Regarding

may, with notice to the other party, request the arbitral tribunal to clarify any obscurity or ambiguity of the award or of the reasons on which it is based (No. 2). If the arbitral tribunal considers the request to be justified, it shall make the correction or give the clarification within thirty days of receipt of the request. The interpretation shall form part of the award (No. 3). The arbitral tribunal may also on its own initiative correct any error of the type referred to in No. 1 of the article within thirty days of the date of notice of the award (No. 4). Unless otherwise agreed by the parties, any party may, with notice to the other party, request the arbitral tribunal, within thirty days of receipt of the notice of the award, to make an additional award as to parts of the claim or claims submitted in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days of the request (No. 5). The arbitral tribunal may extend, if necessary, the period of time within which it may correct, clarify or complete the award under the previous disposition, without prejudice to the compliance with the lime limit set in accordance with 43.º (No. 6). The provisions of Article 42 shall apply to the correction and clarification of the award or to the additional award (No. 7). 100 Articles 30, 32 and 33. 101 In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal or that of the chairman, in case the award is to be made by the latter, shall suffice, provided that the reason for the omission of the remaining signatures is stated in the award. See also Article 31, paragraph 1 of the UNCITRAL Model Law. 102 See Article 31, paragraph 2 of the UNCITRAL Model Law. 103 No. 5 of the same article states that, unless otherwise agreed by the parties, the award shall also determine the proportions in which the parties shall bear the costs directly resulting from the arbitration. The arbitrators may furthermore decide in the award, if they so deem fair and appropriate, that one or some of the parties shall compensate the other party or parties for the whole or part of the reasonable costs and expenses than they can prove to have incurred due to their participation in the arbitration. 104 See Article 31, paragraph 3 of the UNCITRAL Model Law, and, for a comparison, Article 23 of Law 31/86. 105 See Article 31, paragraph 4 of the UNCITRAL Model Law, and Article 24 of Law 31/86. The award shall produce its effects on the date of notification, without prejudice to the possibility of appeal. On effects of the award, see M. ESPERANÇA PINA, A prolação da

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Rui Manuel Moura Ramos effectiveness, No. 7 states that an arbitral award that cannot be appealed and that is no longer subject to amendments under Article 45 has the same binding effect on the parties as the final and binding judgement of a State court, and is enforceable as a State court judgement.106 Finally, following in the footsteps of the previous act, Article 43 contains rules setting a time limit for the issuance of the award.107 On this matter, and unless the parties have agreed, up to the acceptance by the first arbitrator, on a different time limit, the arbitrators shall deliver the final award on the dispute brought before them to the parties within twelve months from the date of acceptance of the last arbitrator (No. 1). This time limit may be freely extended one or more times by an agreement of the parties or, alternatively, by a decision of the arbitral tribunal, for successive periods of twelve months, such extensions having to be duly motivated. The parties may, however, by mutual agreement, oppose the extension (No. 2). Failure to deliver the final award within the maximum time-limit shall automatically terminate the arbitral proceedings and the arbitrators’ jurisdiction to decide on the dispute; the arbitration agreement will, however, remain effective, notably in order for a new arbitral tribunal to be constituted and for a new arbitration to be commenced (No. 3). And the arbitrators that unjustifiably prevent the award from being issued within the time-limit set for that purpose shall be liable for damages (No. 4).

VIII. Recourse against Award Departing from the previous Law,108 the Act adheres to the UNCITRAL Model Law109 system according to which an application to set aside an award is the only recourse against an arbitral award. This is expressly mentioned in Article 46, No. 1, of the Act, which states the following: “unless otherwise agreed by the parties, under Article 39, No. 4,110 recourse to a State court against an arbitral award may be made only by an application for setting aside according with the provisions of this article”.111 The application for setting aside the arbitral award112 decisão: seus efeitos na instância arbitral, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 175-185. 106 See Article 26 of Law 31/86. 107 See Article 19 of Law 31/86. 108 We recall that according to Articles 27 to 29 of Law 31/86, besides the right to apply for setting aside of the arbitral award (that might not be excluded), the same appeals which are admissible regarding a State court judgement might be lodged against the arbitral award, unless the parties have waived the right to appeal. See supra, No. 7, and note 97. 109 See Article 34 of this instrument. 110 See supra, No. 7. 111 On the challenge of the arbitral award, see L. DE LIMA PINHEIRO, Recurso e anulação da decisão arbitral: Admissibilidade, fundamentos e consequências, in I Congresso do Centro de Arbitragem da Câmara de Comércioe Indústria Portuguesa (note 4), at 181195; A. RIBEIRO MENDES, A nova lei de arbitragem voluntária e as formas de impugnação

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The New Portuguese Arbitration Act shall be submitted to the competent State court113 while observing certain rules: evidence shall be presented with the application; the opposing party shall be summoned to present its opposition to the request and to present evidence; the requesting party may present a statement and reply to the possible objections raised by the opposing party; the taking of evidence shall follow; the procedure shall follow, with the necessary adjustments, the rules on appeals (No. 2). The grounds for the application are detailed at No. 3, which closely follows the approach of the UNCITRAL Model Law provisions.114 Moreover, if a party knows of a provision of das decisões arbitrais (Algumas notas), in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 703-757, and, regarding the provisions of recent French law, J. PELLERIN, La nouvelle articulation des recours en arbitrage interne, in Le nouveau droit français de l’arbitrage (note 14), at 175-187. Besides what is mentioned in the text, one must also take into account the possibility of recourse against an arbitral award in Constitutional Court. On this subject, see A.P. PINTO MONTEIRO, Do recurso das decisões arbitrais para o Tribunal Constitucional, 9 Thémis 2009, No. 16, p. 185-223, and M. GALVÃO TELES, Recurso para Tribunal Constitucional das decisões dos tribunais arbitrais, in Estudos Jurídicos (note 41), at 578-603. 112 The application must be accompanied by an authenticated copy thereof, and, if it is drafted in a foreign language, by a translation into Portuguese. 113 See supra, No. 1. 114 According to this provision, it is necessary that the party making the application furnishes the proof that: a) a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under this Act; or b) there has been a violation within the proceedings of some of the fundamental principles referred in Article 30, No. 1, with a decisive influence on the outcome of the dispute; or c) the award dealt with a dispute not contemplated by the arbitration agreement, or contains decisions beyond the scope of the latter; or d) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act, and, in any case, this inconformity had a decisive influence on the decision of the dispute; or e) the arbitral tribunal has condemned in an amount in excess of what was claimed or on a different claim from that that was presented, or has dealt with issues that it should not have dealt with, or has failed to decide issues that it should have decided; or f) the award was made in violation of the requirements set out in Article 42, No. 1, and No. 3; or g) the award was notified to the parties after the maximum timelimit set in accordance with 43 had lapsed. Or that the court finds that a) the subject-matter of the dispute cannot be decided by arbitration under Portuguese law; or b) the award is in conflict with the principles of international public policy of the Portuguese State. One must note that this last ground is formulated differently than its equivalent in the Model Law, which simply refers to “conflict with public policy”, a much broader concept. On the precise meaning of this difference, see A. SAMPAIO CARAMELO, Anulação de sentença arbitral contrária à ordem pública, in Temas de Direito da Arbitragem (note 20), at 290-338, and A sentença arbitral contrária à ordem pública perante a nova LAV, in Estudos em Homenagem a Miguel Galvão Teles (note 20), at 51-72; D. MOURA VICENTE, Impugnação da sentença arbitral e ordem pública, ibidem, at 327-338; A.P. PINTO MONTEIRO, Da ordem pública no processo arbitral, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 589-673 (632-672), and A. MENESES CORDEIRO, A ordem pública nas arbitragens: As últimas tendências, in VII Congresso do Centro de Arbitragem Comercial (note 41), at 73-103.

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Rui Manuel Moura Ramos this Act from which it can derogate or if any condition set out in the arbitration agreement is not respected and the arbitration continues without immediate opposition or, if there is a defined time-limit within which no objection is made, the party waives its right to have the award set aside on such grounds (No. 4). Without prejudice to this rule, the right to apply for the setting aside of an arbitral award cannot be waived (No. 5). With respect to time-limits, the application for setting aside115 may only be made within sixty days from the date on which the party making that application has received the notification of the award or, if a request had been made under Article 45, from the date on which such request had been dealt with by the arbitral tribunal (No. 6).116 When asked to set aside an award, the competent State court may, where appropriate, and if it is so requested by a party, suspend the setting aside proceedings for a period of time, as determined by it, in order to give the arbitral tribunal the opportunity to resume the arbitral proceedings or to take such other action as it deems likely to eliminate the grounds for setting aside (No. 8).117 The State court that sets aside the arbitral award is therefore prevented from dealing with the merits of the issue or issues decided in the award, and such issues are to be submitted, if any party so wishes, to another arbitral tribunal (No. 9). Finally, unless the parties have agreed otherwise, setting aside the award will result in the arbitration agreement becoming operative again in respect of the subject matter of the dispute (No. 10).

IX. Enforcement of the Arbitral Award Regarding the enforcement of an award,118 according to Article 47, the party applying for it must supply the competent court119 with the original award or a certified copy thereof; if the award is not rendered in Portuguese, a certified translation must also be supplied120 (No. 1).121 Moreover, enforcement shall not be 115 If the part of the award in which any of the grounds for setting aside is considered to have occurred and can be separated from the rest of the award, only that part of the award shall be set aside (No. 7). 116 See also paragraph 3 of Article 34 of the UNCITRAL Model Law. On this point, see J.P. PINTO-FERREIRA, A alegação oportuna da incompetência e da irregularidade da constituição do tribunal arbitral, in Estudos em Homenagem ao Prof. Doutor José Lebre de Freitas, v. II (note 5), at 759-809. 117 See also paragraph 4 of Article 34 of the UNCITRAL Model Law. 118 On this subject, P. COSTA E SILVA, A execução em Portugal de decisões arbitrais nacionais e estrangeiras, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), p. 131-180. 119 See supra, No. 1, and note 17. 120 See also Article 35, paragraph 2 of the UNCITRAL Model Law, as it remained after the amendments made in 2006. 121 If the arbitral tribunal has issued an award without liquidating the damages, such liquidation shall be made under Article 805, No. 4, of Civil Procedure Code [now Article

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The New Portuguese Arbitration Act excluded if an application for setting aside has been made in accordance with Article 46; however, the party against whom enforcement is invoked may, upon payment of a security deposit within a time-limit set by the court, request that the application be granted a suspensive effect on the enforcement proceedings (Art. 818, No. 3 of the Civil Procedure Code [now, Article 733]).122 Such enforcement shall be refused if the party against whom enforcement of the arbitral award is invoked should oppose it on any of the grounds which may be used for the setting aside of the award, as stated in Article 46, No. 3,123 but only provided that, on the date on which the opposition is presented, an application for setting aside on the same grounds has not already been rejected by means of a final and binding judgement (Art. 48, No. 1).

X.

International Arbitration

Much like the previous law,124 the Act follows a dualistic approach, separating internal and international arbitration, and dealing with the latter in chapter IX.125 In 716]; however, the arbitral tribunal may be requested to liquidate the damages under Article 45, No. 5, in which case the arbitral tribunal, after giving the other party the opportunity to state its views and after evidence has been taken, shall issue a supplementary decision, judging on equitable terms within the proven limits (No. 2). 122 For this purpose, the provisions of Articles 692-A and 693-B of Civil Procedure Code [now Articles 648 and 651] shall apply, with the necessary adjustments (No. 4). 123 The party against whom enforcement of the arbitral award is requested may not base its opposition on any of the grounds set out at Article 45, No. 3, a) [those which refer to situations that that party must prove – supra, No. 8 and note 117] if the time limit provided for in No. 6 of the same article to apply for the setting aside of the award has expired, without any party having made such application (No. 2); this provision does not affect the possibility of invoking, in the opposition to the enforcement of the arbitral award, any of the other grounds foreseen in the applicable procedural law, under the terms and within the time-limits provided therein (No. 4, – see, in the opposite sense, Article 31 of Law 31/86). According to No. 3 of the same Article 48, notwithstanding the expiry of the time-limit provided for at Article 46, No. 6, the judge may, ex officio, under Article 820 of the Civil Procedure Code [now Article 734], examine the merits of the grounds for setting aside foreseen in Article 46, No. 3, b) of this Law [those which do not require invocation by the parties], whereby it shall, if it considers that the award is invalid for that reason, reject enforcement on such grounds. 124 See chapter 7 (Articles 32 to 35) of Law 31/86. 125 On the matter of this chapter, see R.M. MOURA RAMOS (note 8); M.H. BRITO, As novas regras sobre a arbitragem internacional. Primeiras reflexões, in Estudos em Homenagem a Miguel Galvão Teles (note 20), at 27-49; L. DE LIMA PINHEIRO, Arbitragem Transnacional. A determinação do estatuto da arbitragem, Coimbra 2005; M. PEREIRA BARROCAS, Manual de Arbitragem, Coimbra 2010, p. 545-746. It must be taken into account that, under No. 2 of Article 49, “notwithstanding what is provided in this chapter, the provisions of this law on domestic arbitration shall apply to international arbitration, with the necessary adjustments”.

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Rui Manuel Moura Ramos terms of defining international arbitration, the Portuguese law follows a French approach and considers that arbitration becomes “international” only where international trade interests are at stake (No. 1).126 Article 50 deals with international arbitrations where one of the parties to the arbitration agreement is a State, a State-controlled organisation or a Statecontrolled company. In these cases, the party may not invoke its domestic law to either challenge the arbitrability of the dispute, to deny jurisdiction or to escape from the obligations it had undertaken The rule embodies a general principle of law that may be considered as an expression of transnational public policy, aiming to prevent the abuse that could otherwise occur from the identification between the State as legislator and as party in the arbitration agreement.127 Although the drafters of the UNCITRAL Model Law have not engaged in this reflection, recent lawmaking has taken it into account.128 The rules129 on the substantial validity of the arbitration agreement provide that such an agreement shall be valid as to its substance and the dispute it governs may be submitted to arbitration if the requirements set out by the law chosen by the parties to govern the arbitration agreement, by the law applicable to the subject matter of the dispute, or by the Portuguese law, are met (Article 51, No. 1).130 The question on applicable law is therefore dealt with by an alternative connection that clearly favours either arbitrability of the dispute or substantial validity of the arbitration agreement (conflict of laws rule of a substantive character). And the legislator specifies in a narrative norm,131 at No. 2 of the same article, that the State court to which an application is made to set aside an award in an international

126 See Article 1492 of the Civil Procedure Code [now, after the 2011 revision (see Le nouveau droit français de l’arbitrage (note 14)), Article 1504] and also Article 32 of Law 31/86. As it is well known, the UNCITRAL Model Law presents a different approach, based mainly on the distinct location of the place of business of the parties to the arbitration agreement (Article 1, paragraph 3, and M.Â. BENTO SOARES/ R.M. MOURA RAMOS (note 10), at 244-247; for a similar criterion, see Article 176, para. 1 of the Swiss law (Federal Act on Private International Law), and A. BUCHER (note 20), at 25-27. 127 On the problems raised by these arbitrations, see L. DE LIMA PINHEIRO, A arbitragem CIRDI e o regime dos Contratos de Estado, 1 Revista Internacional de Arbitragem e Conciliação 2008, p. 75-105; B.M. CREMADES, State participation in international arbitration, 4 Revista Internacional de Arbitragem e Conciliação 2011, p. 6584, and, specifically with reference to the provision quoted in the text, S. CORREIA, Arbitragem internacional com Estados na nova lei de arbitragem voluntária, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 99-119. 128 See, for example, Article 177, paragraph 2 of the Swiss Federal Private International Law, and, with an even more limited scope, Article 2, No. 2 of the Spanish law (Law 60/2003 of 23 December). 129 New regarding either the former Portuguese law or the UNCITRAL Model Law. 130 See Article 178, paragraph 2, of the Swiss Federal Private International Law and A. BUCHER (note 20), p. 37-47. 131 The same conclusion would be reached even if the Act were silent on this point.

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The New Portuguese Arbitration Act arbitration seated in Portugal, on the grounds foreseen in Article 46, No. 3, b) of the Act,132 shall take that rule into consideration. In terms of the substance of the dispute, Article 52 departs from the previous Portuguese law133 and remains close to the UNCITRAL Model Law,134 stating that the parties may choose the legal rules that are to be applied by the arbitrators, if they have not authorised them to decide ex aequo et bono,135 and adding that any choice of the law or legal system of a given State shall be construed, unless otherwise expressly agreed, as directly referring to the substantive law of that State and not to its conflict of laws rules (No. 1). In addition to the clear exclusion of renvoi, the main difference is that reference is now made to rules of law and not to a law (legal order),136 thus enabling the parties to choose the lex mercatoria or a combination of rules of different laws (dépeçage). Such a solution corresponds to a greater acknowledgment of party autonomy137 and this is a very modern approach. Should the parties fail to make a choice, the arbitral tribunal shall, according to No. 2 of the same article, apply the law that is most

132

Those where an initiative of one of the parties is needed. See supra, No. 8, and

note 117. 133 In the same sense, Article 187, paragraph 1 of the Swiss Federal Private International Law. The UNCITRAL Model Law also took a conflictual approach, but left the choice of the conflicts rule to the arbitral tribunal (Art. 28, para. 2). Conversely, Article 1496 (now Article 1511) of the French law goes directly to the application of the “most appropriate rules”. 134 See Article 28, paragraph 1 of this instrument, and also Article 187 of the Swiss Federal Private International Law, Article 1496 (now Article 1511) of the French Civil Procedure Code, and Article 34, No. 2 of the Spanish Arbitration Law. On this topic, see also D. MOURA VICENTE, A determinação do direito aplicável ao mérito da causa na arbitragem internacional à luz da nova lei portuguesa da arbitragem voluntária, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 37-50. Underlining that application of foreign law is governed by the same rules that prevail in judicial proceedings, see A. PINTO LEITE, Jura novit curia e a arbitragem internacional, in VI Congresso do Centro de Arbitragem Comercial (note 20), at 151-168. 135 On this topic, see M. GALVÃO TELES, Arbitragem comercial internacional ex aequo et bono e determinação de lei de mérito, in Estudos Jurídicos (note 41), at 531-559. 136 On the theoretical dimensions of this difference, see M. GALVÃO TELES, Beyond the debate between Jan Paulsson and Pierre Mayer on International Arbitral Tribunals and Hierarchy of Norms, in Estudos Jurídicos (note 41), at 643-669. 137 Parties’ autonomy must however respect some mandatory provisions of the law of the State where arbitration takes place, mainly those concerning the binding and final character of the award. On this topic see J. LEBRE DE FEITAS, O caso julgado na arbitragem internacional que tem lugar em território português, in Homenagem da Faculdade de Direito de Lisboa ao Prof. Doutor Inocêncio Galvão Telles. 90 Anos (note 24), at 673-689; J. KLEINHEISTERKAMP, O caso julgado na arbitragem internacional: Entre conceitos transnacionais e contratuais, p. 185-193; F.G. PROL, O caso julgado na arbitragem internacional. Alguns pontos a considerar, ibidem, at 195-206, and J. GALVÃO TELES, Res Judicata in arbitration, in VII Congresso do Centro de Arbitragem Comercial (note 41), at 169-180.

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Rui Manuel Moura Ramos closely connected to the subject matter of the dispute,138 thus following a “conflict”, or classical approach, to applicable law. The influence of the UNCITRAL Model Law is also noticeable in No. 3 of the same article, which states that the arbitral tribunal shall consider the contractual terms agreed upon by the parties and the relevant trade usages.139 Article 53 of the Act deals with recourse against the arbitral award in international arbitrations, stating that such awards are not subject to appeal, unless the parties have expressly agreed on the possibility of an appeal to another arbitral tribunal and have agreed on its terms. Pursuing the path of the previous law140 and of UNCITRAL Model Law,141 this substantive rule of private international law thus excludes the recourse to State courts142 whilst allowing for another tribunal to hear the matter, only if and when the parties have expressly agreed. The authority of awards in international arbitrations is therefore clearly reinforced. Finally, according to Article 54, an award rendered in Portugal, in the context of an international arbitration in which non-Portuguese law has been applied to the merits of the dispute, may be set aside on the grounds provided for at Article 46. Additionally, if such an award is to be enforced or to produce other effects on the national territory, whenever such enforcement leads to a result that is manifestly incompatible with the principles of international public policy, the same conclusion follows. The exact meaning of the last part of this rule is difficult to ascertain since Article 46 also refers to “principles of international public policy of the Portuguese State”,143 but in any case it seems clear that, for these strict purposes, international public policy, and not just internal public policy is at

138 In the same sense, Article 187, paragraph 1 of Swiss Federal Private International Law. The UNCITRAL Model Law also took a conflictual approach, but left the choice of the conflicts rule to the arbitral tribunal (Art. 28, para. 2). Conversely, Article 1496 (now Article 1511) of the French law goes directly to the application of the “most appropriate rules”. 139 See Article 28, paragraph 4 of the UNCITRAL Model Law; Article 34, No. 3 of the Spanish law; and Article 1511 of the French Civil Procedure Code. 140 According to Article 34 of Law 31/86, the award of the arbitral tribunal in an international arbitration may not be appealed unless the parties have agreed on this possibility and the terms of an appeal. 141 See Article 34, paragraph 1 of this text. In general on this topic, see A. MENESES CORDEIRO, Decisões arbitrais internacionais e sua revisão, in IV Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), at 255-277. 142 In the same sense, see Article 1522 of the French Civil Procedure Code, which nowadays even enables the parties to exclude recourse for setting aside the award in international arbitrations. On this topic, see J. ORTSCHEIDT/ Ch. SERAGLINI, La nouvelle articulation des recours en arbitrage international, in Le nouveau droit français de l’arbitrage (note 14), at 189-209. In a more limited solution, Article 192 of the Swiss Federal Private International Law foresees the possibility for certain parties (those that do not have their domicile, their habitual residence or their establishment in Switzerland) to exclude recourse against the award in international arbitration. 143 See supra, No. 8, and note 114.

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The New Portuguese Arbitration Act stake,144 and that an application to set aside an award should be rejected in international arbitrations in which non-Portuguese law has been applied where the award is not to be enforced or to produce other effects in Portugal.

XI. Recognition and Enforcement of Foreign Arbitral Awards Chapter X of the Act deals with foreign awards, mainly with their recognition and enforcement,145 thereby regulating matters that, until now, were codified in the Civil Procedure Code.146 Article 55 stresses the importance of recognition; without prejudice to the mandatory provisions of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards,147 as well as to other treaties or conventions that bind the Portuguese State,148 and regardless of the nationality of the parties, the awards made in arbitral tribunals seated abroad149 shall only be effective in Portugal if they have been recognised by the competent Portuguese State court. The Act, therefore, maintains the traditional rule of

See the references quoted supra, note 114, and L. DE LIMA PINHEIRO, Ordem pública internacional, ordem pública transnacional e normas imperativas que reclamam aplicação ao mérito da causa, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 121-148. 145 On this subject, see R.M. MOURA RAMOS (note 9), and E. DIAS DE OLIVEIRA, Reconhecimento de sentenças arbitrais estrangeiras, 5 Revista Internacional de Arbitragem e Conciliação 2012, p. 73-97. 146 Lastly, see Articles 1094 and 1097. See D. MOURA VICENTE, International arbitration and the recognition of foreign arbitral awards in Portugal, The Arbitration and Dispute Resolution Law Journal 2000, p. 270-277 (274-277). 147 On the application of this instrument in Portuguese law, see L. DE LIMA PINHEIRO, Portugal, in ICC Guide to national procedures for recognition and enforcement of awards under the New York Convention, p. 312-315. And, stressing the need of exequatur also in these cases, J.M. JÚDICE/ A.P. PINTO MONTEIRO, Do reconhecimento e execução de decisões arbitrais estrangeiras ao abrigo da Convenção de Nova Yorque – Anotação ao acórdão do Supremo Tribunal de Justiça de 19/03/2009, 3 Revista Internacional de Arbitragem e Conciliação 2010, p. 145-165. 148 For a reference to these treaties, see M.F. GOUVEIA, O reconhecimento de sentenças arbitrais estrangeiras nos países lusófonos, in III Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 41), at 95-119, and D. MOURA VICENTE, Portugal e as convenções internacionais em matéria de arbitragem, in I Congresso do Centro de Arbitragem da Câmara de Comércio e Indústria Portuguesa (note 4), p. 71-80. And mentioning different conventions that have dealt with this question at the beginning of XX century, see M.Â. BENTO SOARES/ R.M. MOURA RAMOS (note 10), at 238-240. 149 “Arbitrations seated abroad” is the definition of foreign arbitrations for the purpose of the application of the Act. See Article 61 and supra, No. 1, and note 12. 144

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Rui Manuel Moura Ramos Portuguese law that requires a national judicial act (exequatur) before allowing the effects of any foreign (judicial or arbitral) decisions to be fully recognised.150 Such recognition is, however, openly granted, the circumstances that can prevent it being exhaustively enumerated at Article 56151 which corresponds to the relevant provisions of the UNCITRAL Model Law.152 The only difference is that incompatibility with public policy is not sufficient to prevent recognition; lack of compliance with the international public policy of the Portuguese State is also required.153 Recognition procedures154 and the formalities of the application are dealt with at Article 57. If the award or the agreement is not made in Portuguese, the

On the present state of Portuguese law in relation to effects of foreign judicial decisions, see Article 978 of the 2013 Civil Procedure Code, and R.M. MOURA RAMOS, O Direito Processual Civil Internacional no novo Código de Processo Civil, 143 Revista de Legislação e de Jurisprudência 2013, No. 3983, p. 82-106 (97-104). 151 According to this provision, recognition or enforcement may only be refused, a) at the request of the party against whom the award is invoked, if that party furnishes to the competent court to which recognition or enforcement is sought proof that: i) a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or iii) the award deals with a dispute not contemplated by the arbitration agreement or contains decisions on matters beyond the scope of the arbitration agreement; however, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or b) if the court finds that: i) the subject-matter of the dispute is not capable of settlement by arbitration under Portuguese law; or ii) the recognition or enforcement of the award would lead to a result clearly incompatible with the international public policy of the Portuguese State (No. 1). Number 2 of the same article also disposes that if an application for setting aside or suspension of an award has been made to a court referred to in No. 1), a), v) of this article, the court to which recognition or enforcement are requested may, if it considers it proper, stay the proceedings and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security. 152 Article 36 of this instrument. 153 As we mentioned, it was also the case with recourse against the award. See Article 46, No. 3, b), ii), and supra, No. 8, and note 114. 154 The party seeking recognition of a foreign award, particularly if enforcement in Portugal is sought, shall supply the duly authenticated original award or a duly authenticated 150

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The New Portuguese Arbitration Act party that seeks recognition shall supply a duly certified translation (No. 1).155 Furthermore, following the application for recognition that is accompanied by the listed documents, the opposing party shall be summoned to present its opposition, within fifteen days (No. 2). For the purpose of closing arguments (No. 3), access to the file is granted to the party and the Public Prosecutor for fifteen days after the written pleadings and the procedural steps, deemed indispensable by the rapporteur. Finally, Article 58 provides rules on recognition of arbitral awards made in arbitrations abroad and relates to disputes that, according to Portuguese law, should fall under the jurisdiction of the administrative courts. In such cases, it is prescribed that the provisions on grounds for the refusal of recognition and enforcement and on the recognition procedure shall apply with the necessary adjustments to the specific procedural regime of these courts.

XII. Final Remarks The review of the provisions of the Portuguese 2011 Arbitration Act that we have drafted seems to confirm the first indications mentioned156 about this legislative act: it clearly pursues the goal of development and modernisation of the Portuguese arbitration regime, following to a large extent the 1985 UNCITRAL Model Law on International Commercial Arbitration in its 2006 version. In fact, despite being conceived for international arbitrations, the latter instrument is also suitable for internal arbitrations since its aim is mainly the reinforcement of arbitration and of the authority of arbitral decisions. It has therefore been taken into account by several national legislators and constitutes an important factor of harmonisation of national arbitration laws.157 The influence of the Model Law appears very clearly in the Act as a whole, for example in provisions on interim measures and preliminary orders, enacted in the 2006 amendment, which have been almost completely transposed into Portuguese law.158 Besides this influence, the Act follows certain trends of previous Portuguese legislation, having however abandoned this inspiration in an important number of situations where the binding character (force obligatoire) of the award was at stake. This happened in certain matters where recourse against an arbitral award was clearly reduced, either in internal or in copy thereof, as well as the original of the arbitration agreement or a duly authenticated copy thereof. 155 See also para. 2 of Article 35 of the UNCITRAL Model Law. 156 See supra, No. 1. 157 See, in this respect, A. RIBEIRO MENDES, A uniformização do direito da arbitragem através da adopção da Lei-Modelo da CNUDCI sobre a arbitragem comercial internacional, in V Congresso do Centro de Arbitragem Comercial (note 14), at 223-257. Such a result was envisaged when the Model Law was approved; in this sense, see M.Â. BENTO SOARES/ R.M. MOURA RAMOS (note 10), at 242. 158 See supra, No. 5. A different approach has been followed, for example, by French reform (supra note 14).

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Rui Manuel Moura Ramos international arbitrations,159 leading to a great extent to limitations on State courts’ jurisdiction.160 But the Act also presents certain innovative provisions, dealing with matters that have barely been considered in foreign precedents, such as third party joinder.161 And if we would try to discover a common line between these different orientations, it might be perhaps be said that strengthening arbitration, either on at the internal or international level, as an instrument of dispute settlement, has been the major concern of the drafters of the new Act.

159

In these matters, the influence of the French reform (see the preceding note) is

similar. 160 See Article 5, No. 4, and supra, No. 2, and note 33, and, underlining the importance of such a trend, see also P. LALIVE, Absolute finality of arbitral awards?, 1 Revista Internacional de Arbitragem e Conciliação 2008, p. 107-127. 161 See Article 36, and supra, No. 6, in fine.

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PROVISIONAL AND PROTECTIVE MEASURES IN THE BRUSSELS I REGULATION RECAST Francisco GARCIMARTÍN*

I. II.

IV.

Introduction General Rule: The Court Has Jurisdiction as to the Substance A. Introduction B. Rationale C. Types of Measures D. Determination of the Court E. Recognition and Enforcement Abroad 1. General Rule 2. Exception a) Ex parte Measures b) Scope of the Exception under the Recast Regulation Special Rule: Article 35 A. Introduction B. Scope of Application 1. Application ratione materiae 2. Territorial Scope a) The CJEU Case Law under the 2001 Regulation b) The Recast Regulation 3. Relationship to Other Provisions C. Provisional and Protective Measures 1. Autonomous Concept 2. The “Double Condition Test” a) The 2001 Regulation b) The Recast Regulation 3. Types of Measures 4. Measures for Taking of Evidence a) The 2001 Regulation b) The Recast Regulation D. Basis of Jurisdiction Conclusion

I.

Introduction

III.

Court proceedings usually take months, or even years. In principle, since the burden of proving a case rests on the claimant, so do the risks derived from the *

Professor at the University Autónoma of Madrid. Yearbook of Private International Law, Volume 16 (2014/2015), pp. 57-83 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Francisco Garcimartín temporal duration of the proceedings. Most jurisdictions, however, lay down mechanisms of interim relief. If certain conditions are met, such as fumus boni iuris (reasonable evidence of the claimant’s rights) and periculum in mora (urgency), the court may order the defendant to provide provisional satisfaction of the claim, or at least guarantee the effectiveness of a final judgment favourable to the claimant. The content of the order will vary, and may consist of an attachment, a provisional payment or an interim injunction to do or refrain from doing something. In cross-border cases, the need for such interim relief may be greater.1 On the one hand, cross-border proceedings usually take more time than purely internal proceedings:2 they may require procedural acts to be carried out abroad, such as service of process and/or taking of evidence, which could take several months. On the other hand, the diversity of jurisdictions may facilitate strategic movements of assets by opportunistic defendants in order to frustrate the effectiveness of a final judgment. The interest of the claimant in having some kind of protection vis à vis this behaviour must, however, be balanced against the interest of the defendant, who suffers from an interference with respect to his person or assets before the claimant has proved his rights in a final and conclusive manner.3 This paper focuses on the regime of jurisdiction and mutual recognition of interim relief measures laid down by Regulation (EU) No 1215/2012, of 12 December 2012, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Recast Regulation). Following this introduction, Part I provides an analysis of the general rule, i.e. the granting of interim relief measures by the court having jurisdiction on the substance of the merits. Part III looks at the special rule contained in Article 35 of the Recast Regulation, i.e. the granting of the same measures by a different court. Particular attention will be paid to the differences between the Recast Regulation and the former version of this instrument, Regulation 44/2001, of 22 December (the 2001 Regulation). Since the main purpose of this paper is to analyse the amendments introduced by the Recast Regulation, it will neither elaborate on other problems regarding interim relief that have not been dealt with by the new instrument, nor

1 F. GASCÓN, Medidas cautelares del proceso civil extranjero (Comares 1998), p. 185-187; F. GARCIMARTÍN, Las medidas cautelares en el comercio internacional, Mc Graw Hill 1996, p. 1-3; H. KOCH, Grenzüberschreitender einstweiliger Rechtsschutz, in A. HELDRICH / T. KONO (eds), Herausforderungen des Internationalen Zivilverfahrensrecht Mohr 1994, p. 85 et seq.; A. LAYTON/ H. MERCER, European Civil Practice, 2nd edn, Sweet & Maxwell 2004, para. 23-001; S. LEIBLE, in Th. RAUSCHER (ed.), Europäisches Zivilprozess- und Kollisionsrecht EuZPR/EuIPR, Sellier 2010, Art. 31 para. 1. 2 See ECJ, 28 April 2005, C-104/03, St Paul Dairy v Unibel Exser, ECR [2005] I-3497, at para. 12: “[t]he jurisdiction laid down by way of derogation by Article 24 of the Convention is intended to avoid causing loss to the parties as a result of the long delays inherent in any international proceedings”. 3 See, e.g. A. DICKINSON, Provisional Measures in the Brussels I review: Disturbing the status quo?, Journal of Private International Law 2010, p. 519, at 541-542.

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Provisional and Protective Measures under the Brussels I Recast examine the concept of provisional or protective measures in the context of the enforcement proceedings, i.e. Chapter III of this instrument (Arts. 43 and 44).4

II.

General Rule: The Court Has Jurisdiction as to the Substance

A.

Introduction

With respect to jurisdiction, the Recast Regulation retains the approach of the former versions of this instrument, which is built on a “two-track system” of provisional or interim relief (see Recital 33).5 It combines a general rule and a special rule. The general rule is based on the link to the court with jurisdiction over the substance of the merits: this court also has jurisdiction to grant any provisional and protective measures aimed at safeguarding the effectiveness of its final decision on the merits. Article 35 of the Recast Regulation is a special rule which offers an alternative forum for the interested party. According to this provision, “application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter”. This Section analyses the general rule; in particular, its rationale (infra B.), the types of measures that may be granted by the court having jurisdiction on the substance of the merits (infra C.), the determination of this court (infra D.) and the recognition and enforcement of those measures in other Member States (infra E.). B.

Rationale

There is a close functional link between granting interim relief and the substance of the matter. Provisional and protective measures are aimed at guarding the claimant against the risks associated with the temporal duration of the main proceedings, usually by granting a transitory relief or guaranteeing the effectiveness of the final decision. It seems reasonable, therefore, that the jurisdiction to grant a provisional or protective measure lies with the courts of the Member State which also have

See, on the problems raised by the 2001 Regulation regarding these provisions, B. HESS, in B. HESS/ Th. PFEIFFER/ P. SCHLOSSER (eds), The Brussels I Regulation 44/2001. Application and Enforcement in the EU, Beck 2008, p. 518-537. 5 See, i.a. T. DOMEJ, Die Neufassung der EuGVVO, RabelsZ 2014, p. 508, at 543; C. HEINZE, Choice of Court Agreements, Coordination of Proceedings and Provisional Measures in the Reform of the Brussels I Regulation, RabelsZ 2011, p. 581, at 602; also C. HONORATI, Provisional Measures and the recast of Brussels I Regulation: A Missed Opportunity for a Better Ruling, Riv. dir. int. priv. proc. 2012, p. 525, at 526. 4

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Francisco Garcimartín jurisdiction on the substance of the matter.6 This court is particularly well placed to appreciate the conditions typically required to grant those measures, such as the fumus boni iuris (presumption of sufficient legal basis) and the periculum in mora (the risk that the claimant’s right may be impaired by the lapse of time).7 In some cases, non-compliance with the provisional order may result in the defendant being prevented from defending the main claim.8 These types of sanctions are only truly effective if the measures are ordered by the court having jurisdiction on the substance of the matter. C.

Types of Measures

This functional link allows the court with jurisdiction on the substance of the matter to order any provisional and protective measures, irrespective of (i) their nature, be it a freezing order, provisional payment or an interim injunction, or (ii) their scope, which can be territorial or extra-territorial. According to the CJEU: “The first point to be made, as regards the jurisdiction of a court hearing an application for interim relief, is that it is accepted that a court having jurisdiction as to the substance of a case in accordance with Articles 2 and 5 to 18 of the Convention [Articles 4 and 7 to 26 of the Recast Regulation] also have jurisdiction to order any provisional or protective measure which may prove necessary.”9 “Thus, the court having jurisdiction as to the substance of a case under one of the heads of jurisdiction laid down in the Convention [Regulation] also has jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions […].”10

6 See e.g. Recital 13 Regulation 655/2014, of 15 May 2014, establishing a European Account Preservation Order (EAPO) procedure to facilitate cross-border debt recovery in civil and commercial matters (“In order to ensure a close link between the proceedings for the Preservation Order and the proceedings on the substance of the matter, international jurisdiction to issue the Order should lie with the courts of the Member State whose courts have jurisdiction to rule on the substance of the matter.”). 7 For further detail, see F. GARCIMARTÍN (note 1), at 41-44; A. DICKINSON (note 3), at 557-558 (analysing the different types of measures and the courts that are better placed to grant or refuse each measure); see also Recital 14 of the Regulation establishing a EAPO, (note 6). 8 A. DICKINSON (note 3), at 541-542. 9 ECJ, 17 November 1998, C-391/95, Van Uden v Deco-Line, ECR [1995] I-7122, at para. 19. 10 Ibid, at para. 22; see also ECJ, 27 April 1999, C-99/96, Mietz v Intership Yachting, ECR [1999] I-2277, at para. 41.

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Provisional and Protective Measures under the Brussels I Recast D.

Determination of the Court

The determination of the court having jurisdiction as to the substance is not a problem if the dispute is already pending. However, in many jurisdictions the claimant is entitled to obtain provisional and protective measures ex ante, i.e. even if the case is not yet pending, and therefore when the court has not yet made a declaration on its own jurisdiction as to the substance. This possibility is usually accompanied by an obligation to institute proceedings on the merits within a limited period of time (e.g. 20 or 30 days).11 In this case, the interim relief may be granted by any court that may potentially have jurisdiction as to the substance of the merits on the basis of Article 4 or any of the other heads of jurisdiction laid down by the Recast Regulation (e.g. Art. 7 or 8). Therefore, any of the courts which may potentially have jurisdiction on the merits may grant those measures.12 Certainly, the claimant may later opt for instituting the main proceedings before a different court. Thus, for example, the applicant may have obtained ex ante protective measures from the courts of the defendant’s domicile (e.g. Art. 4), but then institute the proceedings leading to a decision on the merits before the court of the place of performance of the obligation in accordance with Article 7(1). In such a case, the former court may keep the measures provided the conditions set out by Article 35 are met.13 The measures will, therefore, not be revoked even if the court holds that it has no jurisdiction as to the substance – because the claimant has opted for a different court to institute the main proceedings – provided that the conditions for the application of Article 35 of the Recast Regulation are satisfied (infra). Otherwise, the measure should be revoked or cease to have effect.14 Likewise, the CJEU has made it clear that if the parties have excluded the jurisdiction of the courts of any Member State by referring the dispute to arbitration, no court has jurisdiction as to the substance and therefore only Article 35 would allow the courts of a Member State to grant provisional or protective measures (see infra § III. B. 2.). According to the court: “Where the parties have validly excluded the jurisdiction of the courts in a dispute arising under a contract and have referred that dispute to arbitration, no provisional or protective measures may be

11 See Article 9 (5) Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004, on the enforcement of intellectual property rights, or Article 10 of the Regulation establishing a EAPO, (note 6). 12 F. GARCIMARTÍN (note 1), at 45-46; S. LEIBLE (note 1), at Art. 31 para. 18, with further references; see, however, A. DICKINSON (note 3), at 546; A. BRIGGS/ P. REES, Civil Jurisdiction and Judgments, 5th edn, Informa 2009, para. 6.13; C. HONORATI (note 5), at 539 (arguing that ante causam measures may only be taken under Article 35 Recast Regulation). 13 A. LAYTON/ H. MERCER (note 1), at para. 23.019; C. HEINZE (note 5), at 608. 14 Note that in the context of the Regulation on the EAPO, the measure should be revoked under Article 33 (1) (a).

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Francisco Garcimartín ordered on the basis of Article 5, point 1, of the Convention [Article 7, point 1, of the Recast Regulation].”15 E.

Recognition and Enforcement Abroad

1.

General Rule

The provisional and protective measures granted by the court having jurisdiction as to the substance may have worldwide effects, as would the final decision on the merits. Therefore, these measures may be recognised and enforced in other Member States in accordance with Chapter III of the Recast Regulation: “As pointed out in the Report to the Brussels Convention (OJ 1979 C 59, p. 71, point 184), Article 25 of that Convention [Article 2 (a) II of the Recast Regulation] is not limited to decisions which terminate a dispute in whole or in part, but also applies to provisional or interlocutory decisions.”16 The Recast Regulation has codified this case law and has included a new sentence to the definition of “judgment” in Article 2 (a) II: “For the purposes of Chapter III, «judgment» includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter.” The mechanism has been further strengthened by Article 42 (2) (b) (i) of the Recast Regulation which requires that the certificate issued by the court of origin include a declaration of its jurisdiction as to the substance of the matter. The control by the Member State addressed is limited to the formal conditions of the certificate. Therefore, if the court of origin has issued the certificate stating that it has jurisdiction as to the substance under Art. 42 (2) (b) (i), the requested court must enforce the measures without further controls, and cannot review the assessment made by the previous court. By the same token, the addressee cannot challenge the enforcement on that ground, i.e. by arguing that the court of origin made a wrong assessment of its own jurisdiction. Note that this circumstance may raise a problem when the court of origin has not yet made a definitive declaration as to its own jurisdiction, for example when the measures are ordered ante causam or at a preliminary stage of the proceedings (supra II. D.). In principle, the court should determine its jurisdiction as to the substance for the purposes of ordering those measures. If however the court’s jurisdiction is later denied, for instance because the claimant institutes the main proceedings in another jurisdiction when the measure was taken ante causam Van Uden (note 9), at para. 48. ECJ, 14 October 2004, C-39/02, Maersk Olie & Bas A/A v Firma M. de Hann en W. Boer, ECR [2004] I-9657, at para. 46; also ECJ, 6 June 2002, C-80/00, Italian Laether v WECO Polstermöbel, ECR [2002] I-4995. 15 16

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Provisional and Protective Measures under the Brussels I Recast or the declaration on its own jurisdiction is appealed by the defendant and denied, the measures – and their enforcement in other Member States – should also be denied. The defendant, on this basis, may challenge the enforcement of the measures before the courts of the enforcing State. Certainly, if the court of origin concludes that it does not have jurisdiction as to the merits, the measure may be maintained but with territorial effects in accordance with Article 35. The court having jurisdiction on the substance may grant measures of a different nature. Thus, for example, an attachment may be ordered by the courts of Member State A (which has jurisdiction on the merits) and enforced in Member State B in accordance with Chapter III of the Recast Regulation. In principle, the enforcement of protective orders in rem – such as an attachment – must be carried out by the authorities of the Member State where the encumbered asset is located and implies the adoption of measures to ensure its “physical” effectiveness (e.g. a deposit or a registration). The enforcement of an attachment of claims implies the notification to the third party – debitor debitoris – and the corresponding order not to pay the original creditor. This will normally correspond to the authorities with jurisdiction over that third party.17 The enforcement of measures in personam, such as an interim injunction to do or refrain from doing a specific act, is usually accompanied by economic penalties (astreints). The court ordering those measures (i.e. the court with jurisdiction as to the substance) may also order these economic penalties. In that case, Article 55 of the Recast Regulation will then apply and those penalties may be enforced in the other Member States in accordance with that provision. Alternatively, if the injunction orders a specific act in another Member State, the applicant may go directly to the courts in that Member State to seek the recognition and the enforcement of the injunction there. That court will then be entitled to order economic penalties.18 Example: Let’s assume that the proceedings on the merits are instituted before a Spanish court on the basis of Article 4 (1) of the Recast Regulation. The dispute is based on a violation by the defendant of his contractual obligation to refrain from competing with the claimant in Germany. In this case, the Spanish court may order an interim injunction against the defendant to refrain from doing certain acts in Germany. The Spanish court may also order economic penalties and they may be enforced in other Member States in accordance with Article 55. But the claimant may also seek the recognition of the injunction in Germany and the German courts may order economic penalties – applying their own procedural law – to enforce that measure.

17 M. VIRGOS/ F. GARCIMARTIN, Derecho procesal civil internacional, 2nd edn, Civitas 2007, p. 699-700. Note that the new Regulation establishing an EAPO, (note 6), offers an alternative to this regime. 18 P. SCHLOSSER (note 4), at 612.

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Francisco Garcimartín 2.

Exception

Ex parte measures did not benefit from the rules on mutual recognition and enforcement under the 2001 Regulation. The Recast Regulation has kept this approach (infra a)), but has departed from it on one important point (infra b)). a)

Ex parte Measures

The CJEU came to the conclusion that ex parte measures were outside the scope of application of Chapter III of the 2001 Regulation and therefore did not benefit from the regime on mutual recognition and enforcement of that instrument. According to its case law, the concept of “judgment” in the Regulation must be interpreted broadly, including provisional and protective measures, but only those granted after hearing the defendant: “[…] Judicial decisions authorizing provisional or protective measures, which are delivered without the party against which they are directed having been summoned to appear and which are intended to be enforced without prior service do not come within the system of recognition and enforcement provided for by Title III of the Convention [the Regulation].”19 The Recast Regulation, departing from the Commission’s Proposal, has confirmed this approach. In its Report, the Commission pointed out four main issues with regard to the regime applicable to provisional and protective measures: one of these was the need to clarify the recognition and enforcement of ex parte measures. In the Green Paper, it suggested that they should be recognised and enforced if the defendant subsequently had the opportunity to challenge the measure.20 Finally, in its proposal, the Commission provided for the recognition and enforcement of ex parte measures also subject to certain conditions (Art. (2) (a) and Recital 25; see also Art. 42 (2) regarding the certificate).21 The final text of the Recast Regulation, however, keeps the approach of the 2001 Regulation and in addition, expressly excludes ex parte measures from the scope of Chapter III of the Recast Regulation:

ECJ, 21 May 1980, C-125/79, Denilauler v Couchet Frères, ECR [1980] I-1553, at para. 18. 20 See Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2009) 175 final, p. 8. 21 Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast), COM (2010) 748 final; see i.a. M. BOGDAN, The Proposed Recast of Rules on Provisional Measures under the Brussels I Regulation, in E. LEIN (ed.), The Brussels I Review Proposal Uncovered, BIICL 2012, p. 125, at 129-133; L. SANDRINI, Coordination of substantive and interim proceedings, in F. POCAR/ I. VIARENGO/ F. VILLATA (eds), Recasting Brussels I, CEDAM 2012, p. 273. 19

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Provisional and Protective Measures under the Brussels I Recast “For the purpose of Chapter III, «judgment» […] does not include a provisional, including protective, measure which is ordered by such a court or tribunal [a court or tribunal which has jurisdiction as to the substance] without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement (Art. 2 (a) II in fine of the Recast Regulation).” To facilitate the verification of this condition, the Regulation requires that where the measure was ordered without the defendant being summoned to appear, the applicant must provide the competent enforcement authority with proof of service of the judgment (Art. 42 (2) (c)). The rationale for this approach could be summarized as follows. It is true that most Member States envisage the issue of ex parte provisional measures in their national law, in particular to strengthen the “surprise effect”. But these measures should not be enforced in other Member States under the Recast Regulation. Even if the enforcement is only provisional, the debtor risks suffering considerable damage, for instance where bank deposits are temporarily blocked and the measure subsequently proves to be unfounded. Such measures can bring businesses to a standstill and force them into insolvency.22 A posterior claim for financial damages does not offset this risk. And, in any event, the special rule laid down by Article 35 of the Recast Regulation offers an adequate alternative to the claimant who may always resort to that provision to obtain an ex parte measure that ensures the “surprise effect” (infra III.).23 Note that the non-recognition of ex parte measures under the Recast Regulation is not because they fall within one of the grounds enumerated in Article 45 of that instrument, but because they are excluded from the scope of Chapter III. This exclusion, however, entails that they are subject to national rules, including bilateral agreements in force between Member States. Recital 33 expressly clarifies that the exclusion from Chapter III “[…] should not preclude the recognition and enforcement of such measures under national law.”24 However, the practical consequences of this exclusion are not very sensible, since they imply that the same provisional measure, when ordered unilaterally, may be enforced in some Member States but not in others. b)

Scope of the Exception under the Recast Regulation

Though the Recast Regulation has expressly excluded ex parte measures from the scope of its Chapter III, it has not confirmed other aspects of the CJEU case law. To understand the issue, it is important to consider the relevant CJEU case law. According to the CJEU, the key element to exclude the application of Chapter 22 See DOC 9474/11 ADD 7, Comments by the German delegation to the Commission’s Proposal, available at . 23 See also Article 11 of the Regulation establishing a EAPO, (note 6), which allows a cross-border effectiveness of an ex parte preservation order under this instrument. 24 The ECJ had stated the same idea in Purrucker v Vallés Perez, 15 July 2010, C-256/09, ECR [2010] I-07353, at para. 92.

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Francisco Garcimartín III of the 2001 Regulation was not only that the “enforcement was intended without prior service”, but also that the measures were “ordered or authorized by a court without the party against whom they were directed having been summoned to appear”.25 It is true that the Denilauler case is somewhat confusing because the Court in its conclusion only refers to the first element. But the reasoning of the judgment is very clear in the sense that the key point is the second, i.e. the fact that the defendant had the opportunity to state his case in the State of origin before the enforcement of the measure was sought in another Member State.26 The principle audi alteram partem must be satisfied before the order benefits from mutual recognition and enforcement under the Regulation. Therefore, the mere notification of the ex parte measure is not sufficient to trigger the application of Chapter III of the 2001 Regulation: if the measure was adopted ex parte on Day 1 and then served on the defendant on Day 2, the claimant could not seek its enforcement under the Regulation on Day 3: “[…] The Convention [the Regulation] is fundamentally concerned with judicial decisions which, before the recognition and enforcement of them is sought in a State other that the State of origin, have been, or have been capable of being, the subject in that State of origin and under various procedures, of an inquiry in adversary proceedings.”27 “[…] the liberal character of the Convention [the Regulation] as regards the procedure for enforcement, which is justified by the guarantee that in the State of origin both parties have either stated their case or had the opportunity to do so.”28 “It should also be noted that the order at issue is undoubtedly a judgment capable of recognition and enforcement under Title III of the Convention [the Regulation] since there could have been an inter partes hearing in the State where it was made before recognition and enforcement were sought in the Netherlands.”29 The CJEU has clarified that even if the measure is adopted ex parte, it may qualify as a judgment for the purpose of the application of the Regulation if the

See Denilauler (note 19), at para. 17. See A. LAYTON/ H. MERCER (note1), at para. 23.022; also P. SCHLOSSER (note 4), at 620 (“As case law of national courts demonstrates, cross-border enforcement of provisional measures becomes possible subsequent to its confirmation after the respondent has submitted his comments”.) 27 Denilauler (note 19), at para. 13; see also ECJ, 2 April 2009, C-394/07, Gambazzi v Daimler Chrysler and CIBC Mellon Trust Company, ECR [2009] I-02563, at para. 23. 28 Denilauler (note 19), at para.14. 29 ECJ, 13 July 1995, C-474/93, Hengs Import v Campese, ECR [1995] I-2122, at para. 14. 25 26

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Provisional and Protective Measures under the Brussels I Recast enforcement is sought after the defendant had an opportunity to be heard in the proceedings in the State of origin.30 “While it is true that, according to settled case-law, the Convention [the Regulation] is concerned essentially with judicial decisions which, before their recognition and enforcement are sought in a State other than the State of origin, have been, or have been capable of being, the subject in that State of origin, and under various procedures, of an inquiry in contested proceedings (Case 125/79 Denilauer [1980] ECR 1553, paragraph 13), it must be stated clearly that, even if it was taken at the conclusion of an initial phase of the proceedings in which both parties were not heard, the order of the Netherlands court could have been the subject of submissions by both parties before the issue of its recognition or its enforcement pursuant to the Convention [the Regulation] came to be addressed (see also, along these lines, Case C-474/93 Hengst Import [1995] ECR I-2113, paragraph 14).”31 The Recast Regulation, however, has not exactly mirrored this case law. The definition contained in Article 2 (a) II of this instrument excludes ex parte measures, i.e. measures ordered without the defendant being summoned to appear, “unless the judgment containing the measure is served on the defendant prior to the enforcement”. Literally, this means that ex parte measures may be enforced in other Member States under the Regulation immediately following service on the defendant. The fact that the measure “[…] has been […] capable of being, the subject in the State of origin and under various procedures, of an inquiry in adversary proceedings” before its recognition and enforcement under the Regulation no longer seems to be a necessary requirement. This would mean that the Recast Regulation has reduced the level of defendant’s protection in relation to the CJEU case law under the 2001 Regulation.32 Article 42 (2) (c), which refers to the service of the document, and recital 33 of the Recast Regulation may be invoked to confirm this interpretation: “However, provisional, including protective, measures which were ordered by such a court without the defendant being summoned to appear should not be recognised and enforced under this Regulation unless the judgment containing the measure is served on the defendant prior to enforcement.” In the example given above, this would mean that the applicant may obtain the enforcement of the ex parte measure on Day 3, i.e. immediately following its service, even though the defendant has not had an opportunity to be heard in the State of origin. ECJ, 14 October 2004, C-39/02, Maersk Olie & Bas A/A v Firma M. de Hann en W. Boer, ECR [2004] I-9657, at paras 50-52. 31 Ibid, at para. 50. 32 See J. VON HEIN, Die Neufassung der EuGVVO, RIW 2013, p. 108; T. DOMEJ (note 5), at 546. 30

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Francisco Garcimartín Personally, I find this policy choice debatable, particularly since Article 45 (1) (b) remains as a ground for non-recognition in the Recast Regulation and this provision was a key element in the reasoning of the CJEU.33 It seems clear that if the measure is enforced immediately following its service, the defendant was not served in sufficient time and in such a way to enable him to arrange for his defence. Furthermore, the middle-ground solution taken by the Recast Regulation does not offer a sufficient protection to the defendant, but it may not be a useful alternative to the claimant either because the key element of ex parte measures, i.e. their “surprise effect”, is anyway lost.

III. Special Rule: Article 35 A.

Introduction

Article 35 of the Recast Regulation lays down a special rule that enables a court to grant provisional or protective measures even if it does not have jurisdiction on the merits: “Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.” This provision has remained practically unchanged from the original text (Article 24 of the 1968 Brussels Convention). This article offers an alternative to the claimant vis à vis the interim protection that may be provided by the court with jurisdiction on the merits. As the CJEU has affirmed, Article 35 of the Recast Regulation allows the claimant to seek interim protection before the courts of one Member State “[…] to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as

See Denilauler (note 19), at paras 7-8: Article 27 of the convention sets out the conditions to be fulfilled for the recognition in a contracting state of judgments given in another contracting state. Under article 27 (2) a judgment shall not be recognized “if the defendant was not duly served with the document which instituted the proceedings in sufficient time to enable him to arrange for his defence”. Article 46 ( 2 ) stipulates that a party seeking recognition or applying for enforcement of a judgment given in default in another contracting state must produce amongst other documents the document which establishes that the party in default was served with the document instituting the proceedings or notice thereof. These provisions were clearly not designed in order to be applied to judgments which, under the national law of a contracting state, are intended to be delivered in the absence of the party against whom they are directed and to be enforced without prior service on him. 33

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Provisional and Protective Measures under the Brussels I Recast to the substance of the matter.”34 It protects the interest of the claimant with regard to the temporal risks associated with court proceedings: “[…] Article 24 of the Convention [Article 35 of the Recast Regulation] is intended to avoid causing loss to the parties as a result of the long delays inherent in any international proceedings.”35 This provision therefore complements the route described above (supra II.): the interested party may request provisional measures before the court with jurisdiction as to the substance and enforcement of such measures in other Member States, or it may seek those measures before the court of another Member State usually where they have to be directly enforced (infra). The second alternative may be quicker and more effective in certain circumstances, in particular where the interested party wants to ensure a “surprise effect”. The CJEU has, however, also clarified that this provision “[…] lays down an exception to the system of jurisdiction set up by the Convention and must therefore be interpreted strictly”.36 This Section analyses Article 35 of the Recast regulation, in particular its scope of application (infra B.), the concept of “provisional and protective measures” (infra C.), and its implicit basis for jurisdiction (infra D.). B.

Scope of Application

The scope of application of Article 35 of the Recast Regulation is determined by the combination of three elements: 1. its application ratione materiae; 2. its territorial scope; and, 3. its relationship with other provisions of the Regulation. 1.

Application ratione materiae

Article 35 states that “[…] under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter”. This sentence is important to understand the scope of application of this provision. The key element to determine the scope of application ratione materiae of Article 35 is the nature of the main action, i.e. the nature of the rights that the provisional or protective measure safeguards. In principle, protective or provisional measures, such as attachments or interim injunctions, are versatile: they may be aimed at protecting various substantive rights. Article 35 only applies to those provisional or protective measures aimed at protecting rights or actions that fall within the material scope of application of the Regulation: “As provisional protective measures relating to property – such as […] the freezing of assets – can serve to safeguard a variety of ECJ, 26 March 1992, C-261/90, Reichert v Dresdner Bank AG, ECR [1992] I-02149, at para. 34; ECJ, 12 July 2012, C-616/10, Solvay v Honeywell, ECLI:EU:C:2012:445, at para. 36. 35 St Paul Dairy (note 2), at para.12. 36 Ibid, at para.11. 34

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Francisco Garcimartín rights, their inclusion in the scope of the Convention [Regulation] is determined not by their own nature but by the nature of the rights which they serve to protect.”37 In this regard, the Court has also added: “In fact that provision [Article 35 of the Recast Regulation] expressly envisages the case of provisional measures in a Contracting State where «under this Convention [Regulation]» the courts of another Contracting State have jurisdiction as to the substance of the matter and it cannot, therefore, be relied on to bring within the scope of the Convention provisional or protective measures relating to matters which are excluded therefrom.”38 Article 35 of the Recast Regulation therefore applies to provisional and protective measures aimed at safeguarding actions which qualify as civil and commercial matters in accordance with Article 1 (1), and are not excluded by Article 1 (2) of the Regulation. It does not apply, for example, to a provisional measure “concerning a husband’s management of his wife’s property”. 39 2.

Territorial Scope

It is debatable whether any territorial element is required for this provision to be applied. I have argued that – in addition to the ratione materiae scope – the relevant element is that there is another Member State that has or may have (territorial) jurisdiction on the substance of the matter.40 The main function of Article 35 is to safeguard the effectiveness of a future judgment on the merits handed down by the court of another Member State. Article 35 is to a certain extent ancillary to the main proceedings. Therefore, it should only apply when the court of another Member State has – or may have – (territorial) jurisdiction on the merits, irrespective of whether this jurisdiction is determined by the uniform rules of the Regulation ex Article 4 and 7 et seq., or by the internal law ex Article 6 (1). Thus, the application of Article 35 does not depend on the defendant being domiciled in a Member State. Rather, the key question is whether the judgment on the merits would benefit from the rules on recognition and enforcement set out by the Regulation. For example, if the main proceedings are instituted before the courts of Member State A on the basis of national law (ex Art. 6 (1)) and the applicant seeks interim relief before the courts of Member State B, the latter would apply Article 35. Conversely, this provision would not apply when the defendant has his domicile in a third country and no other court of a Member State has jurisdiction over that defendant on the basis of its national law. The application of Article 35 37

ECJ, 27 March 1979, C-143/78, De Cavel v De Cavel I, ECR [1979], 1055,

at para. 8. Ibid, at para. 9. ECJ, 31 February 1982, C-25/81, De Cavel II, ECR [1982], 1190, at para. 9. 40 F. GARCIMARTÍN (note 1), at 100-101. 38 39

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Provisional and Protective Measures under the Brussels I Recast would not be justified where the judgment on the merits was – or will be – handed down by the courts of a third country and, therefore, its recognition would not be governed by the Regulation. This nevertheless does not seem to be the approach followed by the CJEU under the 2001 Regulation [infra a)] and this case law seems to be confirmed by the Recast Regulation [infra b)]. a)

The CJEU Case Law under the 2001 Regulation

Under the 2001 Regulation, the Court had clarified that within the scope ratione materiae, the fact that the parties have entered into an arbitration clause does not prevent the application of Article 31 of that instrument (Article 35 of the Recast Regulation): “Where […] the subject-matter of an application for provisional measures relates to a question falling within the scope ratione materiae of the Convention, the Convention is applicable and Article 24 [Article 31 of the 2001 Regulation] thereof may confer jurisdiction on the court hearing that application even where proceedings have already been, or may be, commenced on the substance of the case and even where those proceedings are to be conducted before arbitrators.”41 In this case, the recognition and enforcement of the judgment on the merits would not be governed by the Regulation, though Article 31 of the 2001 Regulation would nevertheless apply. The argument invoked by the CJEU was that the exclusion of Article 1 (2) (4) only relates to orders ancillary to arbitration proceedings, such as the appointment or dismissal of arbitrators, the fixing of the place of arbitration or the extension of the time-limit for making awards. It does not include provisional or protective measures ordered in parallel to such proceedings and aimed at protecting a substantive right falling within the scope ratione materiae of the Regulation.42 The question, then, was whether for Article 31 of the 2001 Regulation to be applied (i) it was sufficient that the rights safeguarded by the provisional measures fell within the scope of application ratione materiae of the Regulation43 or (ii) an additional territorial connection was required, e.g. the fact that the defendant was domiciled in a Member State.44 In principle, it seems that the CJEU argued in favour of the first alternative, in which case Article 31 of the 2001 Regulation applied even if the parties had chosen the courts of a third country or there was no court of another Member State with international jurisdiction on the merits.

Van Uden (note 9), at para. 34. Ibid, at paras 32-33. 43 See A. LAYTON/ H. MERCER (note 1), at para. 23.033. 44 See S. LEIBLE (note 1), at Art. 31 para. 6; see also J. KROPHOLLER/ J. VON HEIN, Europäisches Zivilprozessrecht, 9th edn, Recht und Wirtschaft 2011, Art. 31 para. 2. 41 42

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Francisco Garcimartín b)

The Recast Regulation

The Recast Regulation has not departed from the approach taken in the 2001 Regulation and therefore the CJEU case law remains applicable. Some additional comments may, however, be noted. The Commission’s Proposal codified the Van Uden case law and amended Article 31. According to its proposal (Art. 36), “Application may be made to the courts of a Member State for such provisional, including protective, measures, as may be available under the law of that State, even if the courts of another State or an arbitral tribunal have jurisdiction as to the substance of the matter.”45 The final text maintains the original version of this provision and thus keeps the reference to the courts of “another Member State” but makes no reference to arbitral tribunals. This deletion together with new Recital 12 IV of the Recast Regulation – “This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award” – raises the question of whether the Van Uden case law is still applicable or whether the EU legislator has tried to extend the exclusion on arbitration to provisional and protective measures and, therefore, has departed from that case law. The negotiating documents are not absolutely clear on this issue.46 However, it seems reasonable to conclude that such a departure from the CJEU case law would have required an explicit reference in Recital 12 to provisional and protective measures. The view of the Court in Van Uden was stated in the following terms: “[…] it must be noted in that regard that provisional measures are not in principle ancillary to arbitration proceedings but are ordered in parallel to such proceedings and are intended as measures of support.” Hence, the starting point was that provisional or protective measures – such as those discussed in the Van Uden case, i.e. when they are aimed at the protection of rights falling within the scope ratione materiae of the Regulation – are not “ancillary” to arbitration proceedings. Recital 12, nevertheless, uses this concept

See (note) 21. See, on the one hand, the Document from the Presidency No 9301/12 in which the deletion of the reference to “arbitral tribunal” in Article 35 is linked to the exclusion of arbitration as defined in Recital 12. On the other hand, see the Draft Report prepared by the Committee on Legal Affairs of the European Parliament of 28 June 2011 containing an explicit reference in Recital 11 to the exclusion of provisional and protective measures which was not eventually adopted. 45 46

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Provisional and Protective Measures under the Brussels I Recast and includes a non-exhaustive list largely similar to the one used by the CJEU.47 It therefore seems reasonable to conclude that the Van Uden case law continues to be applicable under the Recast Regulation.48 Note also that the words “under this Regulation” have been deleted from the former version of Article 35. This clarifies that this provision applies even if the jurisdiction on the merits, of the courts of another Member State, is determined by its national law in accordance with Article 6 (1) of the Recast Regulation. 3.

Relationship to Other Provisions

The CJEU has also clarified the relationship between Article 35 and the rules on exclusive jurisdiction laid down by Article 24. According to the Court, Article 35 allows the granting of provisional or protective measures insofar as the provisional decision taken by the court before which the interim proceedings have been brought will not in any way prejudice the decision to be taken on the substance by the court having jurisdiction under Article 24.49 As explained below (infra C. 4.), the general conditions set out by the CJEU regarding the application of Article 35 – i.e. the so-called “double condition test” – will normally guarantee that such requirement is met. The application of Article 35 may be excluded by the agreement of the parties. In principle, since parties typically do not intend to exclude the application of the special provision on provisional measures, i.e. Article 35, the presumption of exclusivity of the jurisdiction clause should not apply with respect to this provision. But if the intention of the parties to exclude its application is clearly demonstrated, only the designated court will have the jurisdiction to grant provisional measures. There are no convincing reasons to deprive the parties of the power to limit that jurisdiction to the chosen court, and there may actually be cases where they have a legitimate interest in doing so.50 It should also be noted that the measures granted under Article 35 are not subject to any kind of review or supervision by the court that has jurisdiction over

47 “Also excluded from the scope of the Convention are proceedings ancillary to arbitration proceedings, such as the appointment or dismissal of arbitrators, the fixing of the place of arbitration or the extension of the time-limit for making awards”, Van Uden (note 9), at para. 32 in fine. 48 See also, A. NUYTS, La refonte du règlement Bruxelles I, Rev. crit. dr. int. pr. 2013, p. 1, 12-13; A. MALATESTA, Il nuovo Regolamento Bruxelles I-bis e l’arbitrato: verso un ampliamento dell’arbitration exclusion, Riv. dir. int. priv. proc. 2014, p. 7. 49 Solvay (note 34), at para. 50. 50 M. VIRGÓS/ F. GARCIMARTÍN (note 17), at 293; see also, obiter dicta, Audiencia Provincial Barcelona, 31.03.2010, unalex ES-459. On this issue, however, the opinions are divided. See, referring the question to the national law, J. KROPHOLLER/ J. VON HEIN (note 44), at Art. 23 para. 103; U. MAGNUS, in U. MAGNUS/ P. MANKOWSKI, Brussels I Regulation, 2nd edn, Sellier 2011, Art. 23 para. 152; P. MANKOWSKI, in Th. RAUSCHER (ed.), Europäisches Zivilprozess-und Kollisionsrecht EuZPR/EuIPR, Sellier 2010, Art. 23 paras 66-67.

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Francisco Garcimartín the merits.51 Naturally, the decisions taken by this court may be taken into account by the court with jurisdiction under Article 35 when applying its own law, for example, to assess the fumus boni iuris or the periculum in mora. C.

Provisional and Protective Measures

1.

Autonomous Concept

The concept of “provisional, including protective, measures” used in Article 35 is an autonomous concept that must be defined, not by reference to national law, but uniformly: “[…] provisional and protective measures within the meaning of Article 24 [Article 35 of the Recast Regulation] is to be understood as referring to measures which, in matters within the scope of the Convention, are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case.”52 It includes those measures aimed at ensuring the enforcement of a final judgment, such as an attachment; provisional interim relief, such as a payment order; or, interim injunctions to do – e.g. continue performance of a contract – or to refrain from doing something. The content of the measures that can be ordered, as well as the circumstances under which they can be ordered, is determined by the lex fori. National law also determines their scope, e.g. in personam or in rem, and their effects against third parties.53 2.

The “Double Condition Test”

Article 35 is not a blank check for Member States, nor should it be taken as leeway to circumvent the uniform rules of jurisdiction laid down by the Regulation, in particular with regard to measures of interim performance that bring forward the possible result of the decision on the merits to a previous stage (mesures d´anticipation in French). Those rules might be undermined if a court without jurisdiction on the merits were to assume jurisdiction under its own rules to grant interim measures without adequately safeguarding the provisional nature of the order: “If, moreover, the plaintiff were entitled to secure interim payment of a contractual consideration before the courts of the place where he is himself domiciled, where those courts have no jurisdiction over J. KROPHOLLER/ J. VON HEIN (note 44), at Art. 31 para. 2; A. DICKINSON (note 3), at 550-551. 52 ECJ, 26 March 1992, Reichert v Dresdner Bank, ECR [1992] I-2175, at para. 34; Van Uden (note 9), at para. 37; St Paul Dairy (note 2), at para. 13. 53 See e.g. A. LAYTON/ H. MERCER (note 1), at para. 23.003. 51

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Provisional and Protective Measures under the Brussels I Recast the substance of the case under Article 2 to 24 [Article 4 to 28 of the Recast Regulation], and thereafter to have the order in question recognised and enforced in the defendant’s State, the rules of jurisdiction laid down by the Convention [the Regulation] could be circumvented.”54 Under the 2001 Regulation, the CJEU prevented this result by limiting the conditions under which “provisional and protective measures” could be granted in accordance with Article 31 of that instrument (infra a). The Recast Regulation follows a slightly different approach: it limits the enforcement of those measures in other Member States (infra b). a)

The 2001 Regulation

Under the 2001 Regulation, the CJEU had set out two main conditions to prevent that result, i.e. the “circumvention” of the uniform rules of jurisdiction set out by the Regulation: one related to the provisional character of the measure, and another, to its territorial scope: “[…] A judgment does not constitute a provisional measure within the meaning of Article 24 [Article 31 of the 2001 Regulation] unless, first, repayment to the defendant of the sum awarded is guaranteed if the plaintiff is unsuccessful as regards the substance of the claim and, second, the measure ordered relates only to specific assets of the defendant located or to be located within the confines of the territorial jurisdiction of the court to which application is made.”55 The application of Article 31 of the 2001 Regulation, therefore, depended on a “double-condition test”. First, the measures had to be for the temporary preservation of a factual or legal situation in order to safeguard rights for which recognition was sought from the court having jurisdiction over the substance of the matter.56 Since their function was merely to safeguard a factual or legal situation in order to protect the main action, their provisional character had to be guaranteed and, therefore, accompanied by a time limitation. Alternatively, their authorisation had to be subject to all conditions guaranteeing their provisional character, in particular a repayment to the defendant in the event of an unsuccessful claim. The CJEU has clarified that this requires a case-by-case analysis: “Depending on each case and commercial practices in particular the court must be able to place a time-limit on its order or, as regards the nature of the assets or goods subject to the measures contemplated, 54 Van Uden (note 9), at para. 46; see also ECJ, 15 May 1990, C-365/88, Kongress Agentur v Zeehaghe, ECR [1990] I-0145, at para. 20. 55 Mietz (note 10), at para. 42; see also, Denilauler (note 19), at para. 15; Van Uden (note 9), at para. 38; St Paul Dairy (note 2), at para. 16. 56 See A. LAYTON/ H. MERCER (note 1), at para. 23.008 fn. 27 (on the meaning of the sentence).

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Francisco Garcimartín require bank guarantees or nominate a sequestrator and generally make its authorization subject to all conditions guaranteeing the provisional or protective character of the measure ordered.”57 Second, the CJEU called for the existence of a genuine link between the subject matter of the measures and the territorial jurisdiction of the court before which those measures were sought: “It follows that the granting of provisional or protective measures on the basis of Article 24 [Article 31 of the 2001 Regulation] is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.”58 As a consequence, measures ordered under Article 31 of the 2001 Regulation were not usually capable of being enforced in other Member States:59 “It follows from the reply to the fourth question that, if the court of origin had expressly indicated in its judgment that it had based its jurisdiction on its national law in conjunction with Article 24 of the Convention [Article 31 of the 2001 Regulation], the court to which application for enforcement was made would have had to conclude that the measure ordered – namely unconditional interim payment – was not a provisional or protective measure within the meaning of that article and was therefore not capable of being the subject of an enforcement order under Title III of the Convention.”60 Furthermore, the CJEU also added a presumption, that if the court of origin was silent as to the basis of its jurisdiction, the court of the other Member States were to assume that it acted under Article 31 of the 2001 Regulation: “So, where the court of origin is silent as to the basis of its jurisdiction, the need to ensure that the Convention rules are not circumvented (…) requires that its judgment be construed as meaning that that court founded its jurisdiction to order provisional measures on its national law governing interim measures and not on any jurisdiction as to substance derived from the Convention.”61

Denilauler (note 19), at para. 15; Van Uden (note 9), at para. 41; S. LEIBLE (note 1), at Art. 31 para. 11, with further references. 58 Van Uden (note 19), at para. 40. 59 See F. POCAR, Explanatory Report to the 2007 Lugano Convention, OJ C 319 of 23.12.2009, p. 1, 127; also M. BOGDAN, in E. LEIN (ed.), The Brussels I Review Proposal Uncovered, BIICL 2012, p. 125, 132; see, however, A. DICKINSON (note 3), at 532-533, 559, with further references to the ECJ’s case law; C. HONORATI (note 5), at 530-531. 60 Mietz (note 10), at para. 54. See Purrucker (note 24), at para. 87 61 Mietz (note 10), at para. 55; see also Purrucker (note 24), at para. 76. 57

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Provisional and Protective Measures under the Brussels I Recast According to some authors, that paragraph meant that the court addressed might review the jurisdiction of the court of origin and deny recognition because the measure was excluded from the scope of Chapter III.62 b)

The Recast Regulation

The Commission’s Proposal did not incorporate that double-condition test into the text. Actually, it would have been technically difficult to specify the “genuine link” requirement in the text of the provision as a basis for jurisdiction in Article 35. Inspired by the Mietz and Purrucker case law (supra a), it opted for a simpler, more elegant approach: to put a territorial limit to the effectiveness of those measures. This approach remains in the final text.63 As explained above, according to Article 2 (a) II of the Recast Regulation, “[f]or the purposes of Chapter III, judgment includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter.” Recital 33 in fine confirms that the measures ordered under Article 35 are excluded from the regime of recognition and enforcement of the Regulation and, therefore only have a territorial reach: “Where provisional, including protective, measures are ordered by a court of a Member State not having jurisdiction as to the substance of the matter, the effect of such measures should be confined, under this Regulation, to the territory of that Member State.” Thus, the new text does not tackle the problem of an abusive use of Article 35 by including a definition of provisional or protective measures, but rather by limiting their territorial scope. The mechanism is strengthened by Article 42 (2) (b) (i) of the Recast Regulation which requires that the certificate issued by the court of origin include a declaration of its jurisdiction as to the substance of the matter (supra II. E.). The approach is to a certain extent similar to the one taken by Article 20 of Regulation 2201/2003 (Brussels II-bis), which limits the jurisdiction under that provision to persons or assets located within the territory of the State ordering the measure. And, though the solution theoretically departs from the regime under the 2001 Regulation, in practice it is not so different. In most cases, the “genuine link requirement” of that instrument results in measures of an effectiveness limited to the territory of the forum State (supra). Two last comments may be made. First, the fact that the Recast Regulation has codified the genuine link test in the form described above does not mean that the other element of the “double-condition test” set out by the CJEU case law no C. HEINZE (note 5), at 614; A. LAYTON/ H. MERCER (note 1), at para. 23.023, fn. 90: (“this is therefore an additional basis on which a court addressed may review the jurisdiction of the court of origin”); also C. HONORATI (note 5), at 541. 63 Conversely, the provision on coordination between the court having jurisdiction over the substance and the court designated under Article 35 has not been kept in the final text (see Art. 31 Commission’s Proposal (note 21)). 62

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Francisco Garcimartín longer applies. The guarantee of the provisional character of the measures ordered under Article 35 must remain in order to avoid a pre-emption of the decision on the merits.64 Second, it is debatable whether (i) the fact that Chapter III does not apply to measures ordered under Article 35 also prevents its recognition under other international instruments or national legislation, or, conversely (ii) that the same rule as in ex parte measures applies, i.e. that they may be enforced under national law (supra II. E. 2.).65 Though Recital 33 may suggest otherwise (since it limits the territoriality of the measures but “under this Regulation”), I understand that in this case Article 35 defines the scope of the jurisdiction and therefore its territorial limits. As explained below, the basis for jurisdiction is determined by national law (infra D.), but Article 35 sets out a limit to its scope: it does not allow for measures capable of being enforced in other Member States to be ordered and, therefore, the solution is different from the one applicable to ex parte measures.66 Furthermore, if measures ordered under Article 35 could be enforced – in accordance with national law – in other Member States, the risk of “circumvention” of the jurisdictional rules, laid down by the Regulation, would remain. 3.

Types of Measures

The application of the new approach – i.e. the territoriality of the jurisdiction under Article 35 – to freezing orders in rem and interim payments does not raise difficulties. These measures can only be ordered and enforced with regard to assets located within the territory of the Member State granting the measures.67 As highlighted above, the result under the Recast Regulation coincides to a large extent with the one that the CJEU had reached under the 2001 Regulation and the “genuine link condition”: “[…] the court of the place where the assets subject to the measures sought are located are those best able to assess the circumstances which may lead to the grant or refusal of the measures sought or to the laying down of procedures and conditions which the plaintiff may observe in order to guarantee the provisional and protective character of the measures authorised.”68 With regard to interim payments, the CJEU had stated that a payment order, even for the full amount of the claim, might be granted under Article 31 of the 2001 Regulation where it was necessary “to ensure the practical effect of the decision on the substance of the case and may, in certain cases, appear justified with regard to

T. DOMEJ (note 5), at 545; C. HEINZE (note 5), at 606. C. HEINZE (note 5), at 615; Purrucker (note 24), at para. 92. 66 T. DOMEJ (note 5), at 545. 67 A. DICKINSON (note 3), at 547; C. HONORATI (note 5), at 535. 68 Denilauer (note 19), at para. 16; Van Uden (note 9), at 39; see also A. LAYTON/ H. MERCER (note 1), at para. 23.015. 64 65

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Provisional and Protective Measures under the Brussels I Recast the interests involved”,69 typically when the claimant was in urgent need of judicial protection. However, the Court had added that the enforcement of such an order should be limited to the specific assets within the court’s territorial jurisdiction: “[…] interim payment of a contractual consideration does not constitute a provisional measure within the meaning of Article 24 [Article 31 of the 2001 Regulation] unless, first, repayment to the defendant of the sum awarded is guaranteed if the plaintiff is unsuccessful as regards the substance of his claim and, second, the measure sought relates only to specific assets of the defendant located or to be located within the confines of the territorial jurisdiction of the courts to which application is made.”70 Its application to interim injunctions to do or refrain from doing something, i.e. mandating or prohibiting specific acts, may give rise to more difficulties. Though these measures are normally in personam, the territoriality principle underpinning Article 35 of the Recast Regulation should lead to a geographical limitation of the order. In principle, these measures only have effects on the territory of the forum. In other words, under Article 35 of the Recast Regulation, the courts of Member State A may grant an injunction to do – e.g. continue the performance of the contract – or refrain from doing something – e.g. do not include certain information in a local newspaper – only within the territory of that Member State. This will usually entail that the applicant would seek to obtain those measures from the courts of the Member State where the specific acts have to be ordered or prohibited. The question then is whether the penalties that usually accompany these types of injunctions may be enforced in other Member States in accordance with Article 55 of the Recast Regulation. Though the issue is highly questionable, I understand that the answer should be yes (as it was under the 2001 Regulation, supra II. E. 1.). Those penalties merely reinforce an injunction, which was territorially limited to the Member State of origin. Or, in other words, the territorial limit called for by Article 35 applies to the scope of the injunction (i.e. under that provision, the courts of Member State A cannot order a party to do or refrain from doing something in Member State B), but not to the pecuniary sanctions that may be ordered to strengthen the effectiveness of such an injunction. The “genuine link” is sufficiently guaranteed by the territorial scope of the order in personam. 4.

Measures for Taking of Evidence

a)

The 2001 Regulation

The application of Article 31 of the 2001 Regulation to orders for obtaining information or taking evidence, such as the appointment of an expert to conduct an investigation or the hearing of a witness, gave rise to some difficulties. The CJEU Van Uden (note 9), at para. 45. Van Uden (note 9), at para. 47; Mietz (note 10), at para. 43; see A. LAYTON/ H. MERCER (note 1), at para. 23.016. 69 70

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Francisco Garcimartín clarified this issue with regard to orders for obtaining evidence to determine whether to bring a case: “Article 24 of the Convention [Article 31 2001 Regulation] must be interpreted as meaning that a measure ordering the hearing of a witness for the purpose of enabling the applicant to decide whether to bring a case, determine whether it would be well founded and assessed the relevance of evidence which might be adduced in that regard is not covered by the notion of provisional, including protective, measures.”71 The Court argued that the mere interest of the applicant in deciding whether to bring proceedings on the substance did not fit within the sense and purpose of Article 31 of the 2001 Regulation, i.e. “[…] to avoid causing loss to the parties as a result of the long delays inherent in any international proceedings”.72 Furthermore, if that type of measure were granted under Article 31, “it could easily be used to circumvent at the stage of preparatory inquiries, the jurisdictional rules set out in Article 2 and 5 to 18 of the Convention”.73 According to this case law, it seemed that measures aimed at searching for potential evidence were excluded from the scope of Article 31 of the 2001 Regulation. Legal scholars, however, were divided as to whether other types of measures aimed at protecting or obtaining information might fall under Article 31 of that instrument.74 Some argued in favour of the application of this provision to any measure aimed at preserving evidence, in particular when there was a risk of loss of the evidence: parties’ direct access to the court where the information was located might be an effective mechanism to reduce the cost of justice.75 Actually, in some circumstances, it might be more efficient than to request the measure from the court having jurisdiction over the substance, and for this court to in turn request its enforcement abroad under The Hague Convention76 or the EU Evidence Regulation.77 Other authors went further and concluded that Article 31 of the 2001 St Paul Dairy (note 2), at para. 25. Ibid, at paras 12, 17. 73 Ibid, at para.18. 74 See J. KROPHOLLER/ J. VON HEIN (note 44), at Art. 31 para. 5; A. NUYTS, Le règlement communautaire sur l’obtention des preuves: un instrument exclusive?, Rev. crit. dr. int. pr. 2007, p. 53, at 60-63, summarising the different views, and with further references; also P. MANKOWSKI, Selbstständige Beweisverfahren und einstweiliger Rechtsschutz in Europa, JuristenZeitung 2005, p. 1144; A. RUSHWORTH, Demarcating the boundary between the Brussels I Regulation and the Evidence Regulation, Lloyd’s Maritime and Commercial Law Quarterly 2009, p. 196. 75 P. SCHLOSSER (note 4), at 610, 637-642, see also Opinion General Advocate D. Ruiz-Jarabo in St Paul Dairy (note 2), at paras 32-34. 76 Convention on the taking of evidence abroad in civil or commercial matters, 18 March 1970, available at . 77 Council Regulation (EC) No 1206/2001, of 28 May 2001, on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, OJ L 174 of 27.06.2001. 71 72

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Provisional and Protective Measures under the Brussels I Recast Regulation might be applied not only in cases of urgency but also in general where there was a need to obtain the information to ensure the effectiveness of the main action and the EU Evidence Regulation or the Hague Convention did not provide an effective option (e.g. where the claimant needed to obtain proof in order to prove his rights).78 Conversely, some authors considered that those types of measures were excluded from the scope of the 2001 Regulation.79 b)

The Recast Regulation

The new text tries to specify the concept of provisional and protective measures, in particular with regard to orders aimed at obtaining information or preserving evidence: “The notion of provisional, including protective, measures should include, for example, protective orders aimed at obtaining information or preserving evidence as referred to in Articles 6 and 7 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights. It should not include measures which are not of a protective nature, such as measures ordering the hearing of a witness. This should be without prejudice to the application of Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters.” Though initially the text of the Recital may seem abstruse, it contains elements that may be useful to interpret Article 35 and facilitate its application with respect to orders for the production or preservation of evidence. First, the Recital confirms the St Paul Dairy case law and, therefore, departs from those opinions that defended a change of approach in favour of a general application of Article 35 to any order for the production of evidence directly before the courts where such evidence is located. It is true that the wording is confusing because it refers, on the one hand, to the purpose of the measure “whether it is of a protective nature” or not, and, on the other, to its content, the “hearing of a witness”. The sentence is not felicitous because the hearing of a witness may be of a protective nature, for example, if the witness is about to die. It therefore has to be interpreted against the background of the St Paul Dairy case law. This implies that Article 35 does not apply to measures for the production of evidence whose only purpose is to enable the applicant to decide whether to bring a case.80 Nevertheless, the Recital also confirms that not all measures for obtaining or protecting evidence are excluded from Article 35. In principle, the relevant criterion to differentiate between those measures that can be ordered under Article 35 and those that cannot is purpose: irrespective of their content (e.g. to hear a See A. NUYTS (note 74), at 63-64; P. MANKOWSKI, (note 74), passim. See the references in S. LEIBLE (note 1), at Art. 31 para. 13b. 80 St Paul Dairy (note 2), at para. 25. 78 79

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Francisco Garcimartín witness or examine a document), the key element is whether the measure is aimed at protecting the evidence or merely at its practice. Certainly, Article 35 will apply when the order to preserve evidence – and the taking of evidence – is needed because any temporal delay may cause irreparable harm to the rights of the applicant, e.g. where there is a risk of destruction of the relevant documents or – as in the previous example – the death of a key witness. This is typically the case of Article 7 of the Directive 2004/48/EC expressly referred to in Recital 25. It is, however, debatable whether Article 35 also applies to measures to present or obtain evidence where there is no risk of destruction of that evidence, but the measures are essential for the applicant to prove his rights. This may be the situation foreseen in Article 6 of the Directive 2004/48/EC, also referred to in that recital. Article 6 envisages a case where the evidence is of paramount importance for establishing the infringement of intellectual property rights, i.e. it is essential for the applicant to prove his rights. The express reference to that provision in the Recital seems to favour a positive answer to the question.81 In these cases, therefore, Article 35 allows the interested party to go directly to the courts where the evidence is located in order to obtain or secure it, thereby avoiding the detour via the court with jurisdiction as to the substance plus the Evidence Regulation. Within this framework, Article 35 can apply to measures for obtaining or protecting evidence ante causam, i.e. before the applicant has instituted the proceedings on the merits, or even once these proceedings are pending.82 Conversely, measures for obtaining evidence for the mere purpose of deciding whether to bring a case are, as explained above, outside the scope of Article 35. The last part of the Recital preserves the application of the EU Regulation on the taking of evidence. Outside the scope of Article 35, the general framework will apply. The measures for the taking of evidence are to be ordered by the court with jurisdiction as to the substance, and this court will in turn seek the cooperation of the foreign court in accordance with the Regulation on the taking of evidence, but also taking into account the options recognised by the CJEU in C-170/11 and C-332/11.83 Chapter III of the Brussels I Regulation does not apply in this scenario. D.

Basis of Jurisdiction

Article 35 does not create a basis for jurisdiction but implicitly refers this point to national law. The internal law of each Member State, therefore, determines the 81 See also C. HEINZE (note 5), at 605; A. NUYTS (note 48), at 46 with further references. 82 Note that the results of the measures taken under Article 35 cannot be the object of a “recognition” in a technical sense, but may only be taken into account by the court with jurisdiction as to the substance when making its decision on the merits. See, on this issue, and with further references, F. NIGGEMANN, Ausländische Beweissicherungsmassnahmen im Rahmen der EuGVVO. Neue Ansätze, aber noch immer keine überzeugende Lösung, IPRax 2015, p. 75. 83 ECJ, 6 September 2012, C-170/11, Ghislain Lippens v. Kortekaas, ECLI:EU:C:2012:540; ECJ, 21 February 2013, C-332/11, ProRail BVB v. Xpedys, C-332/11, ECLI:EU:C:2013:87.

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Provisional and Protective Measures under the Brussels I Recast basis for the jurisdiction for granting provisional measures, including exorbitant jurisdiction rules: “With regard more particularly to the fact that the national court has in this instance based its jurisdiction on one of the national provisions listed in the second paragraph of Article 3 of the Convention, it must be borne in mind that, in accordance with the first paragraph of that article, persons domiciled in a Contracting State may be sued in the courts of another Contracting State only by virtue of the rules set out in Sections 2 to 6 of Title II, that is to say Articles 5 to18, of the Convention. Consequently, the prohibition in Article 3 of reliance on rules of exorbitant jurisdiction does not apply to the special regime provided for by Article 24 [Article 31 of the 2001 Regulation and 35 of the Recast Regulation].” 84 Thus, for example, if according to national law, the jurisdiction to grant provisional measures is linked to the jurisdiction over the substance, this jurisdiction may be determined by national rules, and not by the Regulation (otherwise, Article 35 would have no real impact in practice). Furthermore, where the national law establishes an autonomous basis for the adoption of provisional measures, this basis would apply. Nevertheless, the limitations described above, and, in particular, the territorial scope of the measures, impose serious restrictions on national rules:85 the jurisdiction is determined by national law, but its scope is constrained by the territoriality principle underpinning Article 35 (supra).

IV. Conclusion With regard to provisional and protective measures, the Recast Regulation has not introduced radical amendments to the 2001 Regulation. It has limited itself to codify the CJEU case law on (i) the application of Chapter III of that instrument to the measures ordered by the courts with jurisdiction as to the substance of the merits, (ii) the territorial scope of the measures granted under Article 35 of the Recast Regulation and (iii), the application of this provision to measures for taking of evidence. Only with regard to the cross-border effectiveness of ex parte measures has the Recast Regulation relatively departed from the former regime. This amendment, however, is not entirely convincing.

Van Uden (note 9), at para. 42. A. LAYTON/ H. MERCER (note 1), at para. 23.004; M. VIRGÓS/ F. GARCIMARTÍN (note 17), at 347-348. 84 85

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THE REVISED BRUSSELS I REGULATION AND ARBITRATION – A MISSED OPPORTUNITY? Martin ILLMER*

I. II. III.

IV.

Introduction Legislative History of the Recast Regulation’s Arbitration Exception The New Arbitration Exception A. Clearly Excepted Matters B. Disputed Aspects of the Exception 1. Ancillary Proceedings 2. Provisional Measures 3. Parallel Proceedings a) Counter-Attack and Relief before the Seat Courts i) Anti-Suit Injunction ii) Declaratory Relief iii) Damages for Breach of the Arbitration Agreement b) Counter-Attack and Relief before the Arbitral Tribunal i) Anti-Suit Injunction ii) Commencing the Arbitration iii) Damages for Breach of the Arbitration Agreement Conclusion

I.

Introduction

It was right before the overdue reform of the Brussels I Regulation was kicked off by the Commission Green Paper of 21 April 20091 that a judgment of the Court of Justice of the European Union (CJEU) hit the floor on 10 February 2009: West Tankers,2 a case which has become synonymous with the problematic relationship of the Brussels I Regulation and arbitration and which led to numerous English court decisions constituting the West Tankers saga. Together with the judgment of the English Court of Appeal in the National Navigation case3 in the aftermath of the CJEU’s judgment in West Tankers, these decisions very clearly illustrate the intricate problems and consequences of the arbitration exception under the old * Dr. iur., MJur (Oxford), Senior Research Fellow at the Max Planck Institute for Comparative and International Private Law, Hamburg. 1 COM(2009) 175 final. 2 Case C-185/07, Allianz v West Tankers, [2009] ECR I-663. 3 National Navigation Co v Endesa Generacion SA [2009] EWCA (Civ) 1397 (CA).

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Martin Illmer regime of Regulation 44/2001 in case of parallel proceedings and potentially conflicting decisions by Member State courts and arbitral tribunals. The CJEU’s judgment reminded the legislator in Brussels and Luxembourg that the relationship between the Brussels I Regulation and arbitration, hidden behind a seemingly clear and straightforward exception of “arbitration” from the Regulation’s substantive scope carried over from the Brussels Convention, was all but clear and created severe problems for arbitration within the EU. Hence, it did not come as a surprise that the relationship between the Regulation and arbitration (often referred to as the arbitration interface), in particular the problem of parallel proceedings raising the existence and validity of an arbitration agreement as a principal or preliminary issue, was raised by the 2009 Commission Green Paper as one of eight aspects to be addressed by the forthcoming reform of the Brussels I Regulation.

II.

Legislative History of the Recast Regulation’s Arbitration Exception

The authors of the Heidelberg Report of 20074 had proposed deleting the arbitration exception and inserting a head of exclusive jurisdiction of the courts at the seat of the arbitration with regard to arbitration-related matters including ancillary proceedings.5 By contrast, several arbitration stakeholders were in favour of keeping and possibly even extending the arbitration exception with the intention of entirely separating arbitration and state court litigation for the purposes of the Brussels I Regime.6 Faced with extremely diverse views in the submissions responding to the Green Paper and amidst an ongoing discussion characterised by its ferocity, the European Commission nonetheless sought to move forward in the reform process. Accordingly, in 2010 they set up an Expert Group charged with advising on the 4 B. HESS/ T. PFEIFFER/ P. SCHLOSSER, The Brussels I Regulation (EC) No. 44/2001: The Heidelberg Report on the Application of Regulation Brussels I in 25 Member States (Study JLS/C4/2005/03). 5 See Heidelberg Report, paras 106 et seq. 6 While German arbitration stakeholders were in favour of deleting or at least partially deleting the arbitration exception, English stakeholders were split (with the majority favouring either a reversal of the West Tankers decision, i.e. re-introducing antisuit injunctions, or, alternatively, the elimination of the arbitration exception along the lines of the Heidelberg Report; see e.g. the submission by the Bar Council and the Law Society of England and Wales), and French stakeholders were largely opposed to any changes to the arbitration exception; for the opposing view see, inter alia, the submissions during the public consultation following the Commission’s Green Paper by the IBA Arbitration Committee Working Group (strongly influenced by the French position), the Association of International Arbitration, the Chamber of National and International Arbitration of Milan, the Comité Français de l’Arbitrage, Emmanuel Gaillard (President) (all available at ).

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? future regulation of the arbitration interface and, in particular, formulating a solution for the unresolved parallel proceedings problem that had been exposed in the West Tankers and National Navigation cases. Based on the Expert Group’s recommendations, the Commission’s 2010 proposal for the Recast Regulation7 provided for a minimalist approach. Arbitration was excluded from the Regulation’s substantive scope “save as provided for in Articles 29, paragraph 4 and 33, paragraph 3”. Article 29(4) contained a uniform European lis pendens-mechanism to avoid the problem of parallel proceedings at the outset where a claim is subject to an alleged arbitration agreement, instead of addressing the problem at the stage of recognition and enforcement of potentially conflicting judgments and/or even arbitral awards to be recognised under the New York Convention. In doing so, it took account of the different solutions for the problem in the Member States’ laws and the precedence of the New York Convention. Article 33(3) contained a uniform definition of the term “seizure” in relation to arbitral tribunals. Recitals 11 and 20 provided clarifications and interpretative guidance on the partial deletion of the arbitration exception, especially by affirming the CJEU’s judgment in Marc Rich and by aligning the rule on provisional measures with the van Uden judgment of the CJEU in Article 36.8 The European Parliament took a completely different approach. In its mid2010 resolution on the Brussels I reform, in the wake of the forthcoming Commission proposal, it had already stated unequivocally that “the various national procedural devices developed to protect arbitral jurisdiction (anti-suit injunctions so long as they are in conformity with the free movement of persons and fundamental rights, declaration of validity of an arbitration clause, grant of damages for breach of an arbitration clause, the negative effect of the «Kompetenz-Kompetenz principle», etc.) must continue to be available and the effect of such procedures and the ensuing court decisions in the other Member States must be left to the law of those Member States as was the position prior to the judgment in West Tankers”.9 In its first draft report of mid-2011, the European Parliament (rapporteur ZWIEFKA) referred explicitly to its 2010 resolution and presented its COM(2010) 748 final. For a detailed analysis of the Commission Proposal see M. ILLMER, Brussels I and Arbitration Revisited, RabelsZ 2011, p. 645; L.G. RADICATI DI BROZOLO, Arbitration and the Draft Revised Brussels I Regulation: Seeds of Home Country Control and of Harmonisation?, J. Priv. Int. L. 2011, p. 423, at 435 et seq.; J. VAN HAERSOLTE-VAN HOF, The Commission’s Proposal to Amend the Arbitration Exception Should be Embraced!, Nederlands Internationaal Privatrecht 2011, p. 280; C. CONSOLO/ M. STELLA, Brussels I Regulation Amendment Proposals and Arbitration, in F. POCAR/ I. VIARENGO/ F.C. VILLATA (eds), Recasting Brussels I, CEDAM 2012, p. 37; P. KINDLER, Torpedo Actions and the Interface Between Brussels I and International Commercial Arbitration, in F. POCAR/ I. VIARENGO/ F.C. VILLATA (eds), Recasting Brussels I, CEDAM 2012, p. 57; V. LASIC, The amendment to the arbitration exception suggested in the Commission’s proposal: the reasons as to why it should be rejected, NIPR 2011, p. 289; C. KESSEDJIAN, Commentaire de la refonte du règlement n° 44/2001, 47 RTD eur. 2011, p. 117. 9 See the European Parliament’s Resolution of 6 September 2010 (available at ). 7 8

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Martin Illmer counterposition in an amended recital 11 by extending the exception of arbitration in Article 1(2)(d) to “any dispute, litigation or application which the parties have subjected to an arbitration agreement” including “any dispute or decision concerning the existence or validity of an arbitration agreement or settlement” and “any provisional or preventive measure adopted in the context of a dispute, litigation or application which the parties have subjected to an arbitration agreement or settlement or which relates to arbitration by virtue of an international treaty”.10 According to this proposal, the different national instruments for determining the arbitration agreement’s existence and validity would have remained in force instead of a uniform EU-wide mechanism to avoid parallel proceedings. The positions put forward by scholars and practitioners in the heated debate on the arbitration interface following the Commission proposal covered the entire range between those positions held by the Commission and the European Parliament. Against this background, it is not surprising that in the negotiations between the Member States, commenced in the Working Party on Civil Law Matters of the Council, the solution to the arbitration interface, in particular the parallel proceedings problem, was highly controversial and that despite repeated discussions of the matter, no progress was made towards a common position. In late 2011 the Polish presidency suggested keeping the status quo, potentially with clarifications being made in a recital, and it seems that this was also the majority view amongst the Member States, but the issue was not taken up in the forthcoming meetings of the Working Group. The matter remained controversial amongst Member States and several attempts to reach a compromise beyond the status quo failed, often on the basis of vague and unsubstantiated fears of unintended consequences and interference with Article II(3) and V of the New York Convention. In early April 2012, France and Poland made a new attempt by suggesting to keep the arbitration exception accompanied by a clarifying recital 11, according to which “any judgment given by a court of a Member State which decides, as a main or incidental question, whether the said agreement is valid or whether it is covering the claim under the dispute, should fall outside the scope of this Regulation”.11 Several other Member States, however, rejected this suggestion since it would not have solved the parallel proceedings problem and since it would have led to the application of the autonomous Member States’ regimes for recognition and enforcement of a judgment as soon as an arbitration agreement would have been alleged by one of the parties so that the court had to rule on its validity.12 The arbitration defense would have been an all-too-easy tool to evade the Brussels I Regulation’s recognition and enforcement regime. In late April 2012, the Presidency of the 10 See the European Parliament’s Draft Report of 28 June 2011 (available at ). 11 Council Document 8498/12 of 2 April 2012 (JUSTCIV 138 CODEC 911) containing joint comments issued by the French and Polish delegations. 12 See the German Comments of mid-2012 (Council Document 7839/12 of 19 March 2012 – JUSTCIV 93 CODEC 710).

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? Council suggested a compromise by preserving the status quo with the clarifying recital as suggested by France and Poland, modified, as suggested by Germany, to the extent that judgments on the substance of the matter should be within the scope of the Brussels I Regime so as to take advantage of its recognition and enforcement regime, even though the court had to determine the arbitration agreement’s existence, validity or scope as an incidental matter.13 In early May 2012, the Member States reached an agreement in the Committee of Permanent Representatives (COREPER) to preserve the status quo with said modifications of the clarifying recital.14 This solution was subsequently approved by most Member States15 and formed the basis for recital 12(3) of the reformed Regulation. Once the Member States had agreed on this compromise, the European Parliament gave up its initial position and accepted the compromise. As the major reason for maintaining the status quo it stated: “[A]rbitration is satisfactorily dealt with by the 1958 New York Convention and the 1961 Geneva Convention on International Commercial Arbitration. All Member States are parties to the above mentioned conventions; therefore the exception of arbitration from the scope of the Regulation should be preserved. Recital 11 and following above [sic] clarify this”.16 Both Council and Commission also accepted the compromise without further discussion. An effective, uniform solution to the real problems appeared impossible for lack of consensus; all other battlefields of the reform had been cleared and the reform process could not be prolonged any longer on account of a single aspect which, in the perception of the reform players, was a minor one. Hence, one cannot but regard this compromise as a surrender in light of the irreconcilable positions held until the very end of the legislative process. It leaves the major problem of parallel proceedings unresolved.17

13 Council Document 8855/12 of 17 April 2012 (JUSTCIV 142 CODEC 1011) and the preceding Council Document 9301/12 of 30 April 2012 (JUSTCIV 154 CODEC 1117). 14 Council Document 9301/12 COR 1 of 3 May 2012 (JUSTCIV 154 CODEC 1117). 15 See e.g. Council Document 9547/12 ADD5 of 8 May 2012 (JUSTCIV 164 CODEC 1181) (France); Council Document 9547/12 ADD2 and ADD2 REV1 of 7 and 8 May 2012 (JUSTCIV 164 CODEC 1181) (Germany); Council Document 9547/12 of 4 May 2012 (JUSTCIV 164 CODEC 1181) (United Kingdom). 16 See the Explanatory Statement to the European Parliament’s Draft Legislative Resolution preceding its Position at 1st reading (available at http://www.europarl.europa.eu/ sides/getDoc.do?type=REPORT&reference=A7-2012-0320&language=EN#title2). 17 Equally critical on the preservation of the status quo instead of adopting a solution along the lines of the Commission proposal, G. CARDUCCI, The New EU Regulation 1215/2012 of 12 December 2012 on Jurisdiction and International Arbitration, Arbitration International 2013, p. 467, at 483 et seq.; S.P. CAMILLERI, Recital 12 of the Recast Regulation: A New Hope?, I.C.L.Q. 2013, p. 899, at 915.

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III. The New Arbitration Exception The new arbitration exception consists of three elements: the exception itself in Article 1(2)(d) – which was not amended in the reformed Regulation; a specific provision of the New York Convention’s precedence pursuant to Article 73(2); and, most importantly, a new recital 12 clarifying the exception. A.

Clearly Excepted Matters

Since the Brussels Convention of 1968, the exception of arbitration was motivated by the already existing New York Convention of 195818 and the European Convention on International Commercial Arbitration of 1961,19 neither of which should interfere with the Brussels I Regime in order to keep recognition and enforcement of arbitral awards separate from that of state court judgments.20 In accordance with this rationale, it is clear and was never really disputed that the Brussels Convention and, likewise, the Brussels I Regulation do not apply to jurisdiction in respect of arbitration-related state court proceedings, recognition and enforcement of arbitral awards (which is the primary subject matter of the New York Convention) or judgments rendered in proceedings to set aside arbitral awards. Even more obviously, form, existence, validity and effects of arbitration agreements as well as the procedure before the arbitral tribunal and the powers of the arbitrators are excluded from the Regulation’s substantive scope, which does not contain any provisions on these matters. These clearly excluded aspects are now, for clarifying purposes, even listed (non-exhaustively: “in particular”) in the new recital 12(4) of the reformed Brussels I Regulation. Consequently, they are governed either by international conventions, most prominently the New York Convention, or by national arbitration laws. B.

Disputed Aspects of the Exception

There is some dispute as to whether certain matters, mainly at the interface between state court proceedings and arbitration, are caught by the arbitration exception.21

(New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958, UNTS Vol. 330/3. 19 European Convention on International Commercial Arbitration of 21 April 1961, UNTS Vol. 484/349. 20 See P. JENARD Report [1979] OJ C 59/1, at [13]; D.I. EVRIGENIS/ K.D. KERAMEUS Report [1986] OJ C 298/1, at [35]. 21 Quite rightly, G. CARDUCCI (note 17) has pointed out in that regard that a “onesize-fits-all-regime”, as is pursued by Art. 1(2)(d), may be inappropriate to deal with such a variety of constellations. 18

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? 1.

Ancillary Proceedings

One such matter relates to jurisdiction in state court proceedings ancillary to arbitration proceedings (such as appointment of arbitrators, determination of the seat of the arbitration and extension of time limits), i.e. proceedings by means of which the state courts step in to enable the commencement of arbitral proceedings or to keep the arbitral process going since the arbitral tribunal is not yet constituted or since it lacks the respective coercive powers. All three reports to the Brussels Convention stated explicitly that such ancillary proceedings are caught by the arbitration exception, since they relate directly to arbitration, which constitutes their principal subject matter.22 Still the matter was referred to the CJEU for a preliminary ruling in the Marc Rich case, which dealt with the appointment of an arbitrator. Not surprisingly, the CJEU confirmed the report’s unanimous view, which is now, amongst other aspects, even laid down in recital 12(4). 2.

Provisional Measures

Another problematic matter was jurisdiction for provisional measures ordered by Member State courts under Article 24 of the Brussels Convention (which is now Article 35 of the reformed Regulation) in relation to disputes covered by an arbitration agreement. In the van Uden case, arbitration proceedings regarding a contractual claim for an unpaid debt had been initiated when the claimant applied to the Dutch state courts for an interim injunction securing this debt. Upon a request for a preliminary ruling by the Hoge Raad, the CJEU held that the Regulation’s jurisdiction rules applied to provisional measures concerning the claim on the merits since it regarded such measures as parallel to the arbitration proceedings and thus not covered by the arbitration exception. In contrast, provisional measures concerning the arbitral proceedings were considered as ancillary state court proceedings covered by the arbitration exception (in line with the earlier Marc Rich decision) such that the Regulation’s jurisdictional rules were inapplicable. The distinguishing criterion was said to be the nature of the rights pursued, i.e. rights relating to the arbitration agreement or the arbitral process on the one hand versus rights relating to the substantive claim on the other hand.23 3.

Parallel Proceedings

By far, the most problematic matter is parallel proceedings before two state courts and possibly also an arbitral tribunal resulting from a torpedo action. Since they all raise the arbitration agreement’s existence, validity and scope as preliminary issues P. JENARD Report [1979] OJ C 59/1, at [13] (in light of preparations for a European Convention providing a uniform law on arbitration and a protocol facilitating recognition and enforcement of arbitral awards to an even greater extent than the New York Convention); P. SCHLOSSER Report [1979] OJ C 59/71, at [64]; D.I. EVRIGENIS/ K.D. KERAMEUS Report, [1986] OJ C 298/1, at [35]. 23 Case C-391/95, Van Uden v Deco Line, [1998] ECR I-7091, at [23] et seq. 22

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Martin Illmer or as the principal subject matter, each of the courts and tribunals involved may reach a different decision on the arbitration agreement’s existence, validity and scope24 and potentially also on the substantive subject matter of the claim, which will result in irreconcilable decisions conflicting at the recognition and enforcement stage. The underlying scenario is as follows: the party aiming to avoid arbitration under the alleged arbitration agreement files a claim on the substantive subject matter before a Member State court. These will generally, but not necessarily, be the courts of the country that would be competent under the Brussels I Regulation but for the arbitration agreement (a so-called torpedo action). The claim will sometimes be an action for damages or, more frequently, a claim for negative declaratory relief regarding liability under Article 7 Nos 1 or 2 of the Brussels I Regulation, which raises the existence, validity or scope of the arbitration agreement as preliminary issues for determining the court’s jurisdiction. Of course, the party adhering to the alleged arbitration agreement may challenge the torpedo court’s jurisdiction based on the arbitration agreement under the respective national mechanism incorporating Article II(3) NYC. This right is explicitly mentioned and reserved by the new recital 12(1) of the Brussels I Regulation. In an ideal world, this challenge of the torpedo court’s jurisdiction by invoking the arbitration agreement would be the most effective, time- and cost-saving tool to avoid parallel proceedings right at the point when they are about to begin. In the real world, however, the obstructing party will file the torpedo action with the courts of a state that is known either for its notoriously slow judiciary and/or for its lack of impartial courts so that a challenge of the torpedo court’s jurisdiction based on the arbitration agreement does not prove particularly effective. In light of this reality, the party adhering to the arbitration agreement has to search for alternative reactions to counter the other party’s obstructive behaviour. In doing so, it may opt for relief from the state courts at the seat of the arbitration and/or the arbitral tribunal after commencement of the arbitral proceedings. a)

Counter-Attack and Relief before the Seat Courts

i)

Anti-Suit Injunction

A potentially highly effective counter-attack is an application for an anti-suit injunction from the seat courts (amongst Member States, however, this is a remedy used mostly by the English courts) so as to restrain the other party from commencing or continuing proceedings before a foreign state court.25 Non-compliance with the injunction results in the severe consequences triggered by a contempt of court, which range from fines to the freezing of assets located in England and finally imprisonment. Once the foreign proceedings are restrained, the arbitration can 24 The main reason is the lack of a uniform rule on the law applicable to the arbitration agreement since this issue is excluded from the substantive scope of the Rome I Regulation by virtue of its Art 1(2)(e). 25 See from the English case law A v B [2007] 1 Lloyd’s Rep 237 (Comm) limiting anti suit injunctions to scenarios with an English seat of the arbitration.

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? commence or continue without the risk of irreconcilable decisions emanating from the torpedo court and the arbitral tribunal. Anti-suit injunctions are, due to their origin in the law of equity, a discretionary remedy, but they are regularly granted in the case of arbitration agreements based on a breach of the legal right to not be sued before the state courts.26 Although based on the in personam jurisdiction of the English courts, they are directed at the claimant in the torpedo proceedings instead of the foreign court. Anti-suit injunctions nevertheless interfere with the foreign court’s independent determination of its own jurisdiction. Based on this interference, the CJEU, in its West Tankers decision, has declared anti-suit injunctions, in support of arbitration agreements, incompatible with the old Brussels I Regulation. While the anti-suit proceedings were said to be covered by the arbitration exception, the CJEU regarded it as decisive that the foreign torpedo proceedings were not covered by the arbitration exception based on the rationale of its judgment in the Marc Rich case: since the principal subject matter of these proceedings was a damages claim in tort/delict covered by the Regulation’s substantive scope, the classification of a preliminary issue – in the given case, the existence and validity of an arbitration agreement – was not capable of taking the proceedings outside the Regulation’s scope.27 Because the foreign proceedings are within the Regulation’s substantive scope, it is, according to the CJEU, exclusively for the torpedo court, as the court seized with these proceedings, to determine its jurisdiction, including any preliminary issues such as the existence, validity and scope of an arbitration agreement so that even national procedural devices of the Member States cannot interfere with it and by this interference undermine the effectiveness of the Regulation.28 In the reformed Brussels I Regulation, anti-suit injunctions are not addressed by Article 1(2)(d) or recital 12, thus the CJEU’s West Tankers judgment and its rationale remain unaffected.29 ii)

Declaratory Relief

Another potentially effective counter measure (instead of or in conjunction with an anti-suit injunction) is a quick application to the seat courts for positive declaratory relief regarding the arbitration agreement’s existence and validity in relation to the claims advanced in the torpedo proceedings. The emanating declaratory judgment 26 See The Angelic Grace [1995] 1 Lloyd’s Rep 87 at 96 (CA); Donohue v Armco Inc [2002] 1 All ER 749 at [24], [45] (HL); Turner v Grovit [2002] 1 WLR 107 at [24]f (HL); West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA [2007] UKHL 4 at [8] (HL). 27 Case C-190/89, Marc Rich v Impianti, [1991] ECR I-3894, at [26]. 28 Case C-185/07, Allianz v West Tankers, [2009] ECR I-663, at [28] et seq. 29 Concurring S.P. CAMILLERI (note 17), at 903 et seq.; A.E. IPPOLITO/ M. ADLERNISSEN, West Tankers Revisited: Has the New Brussels I Regulation Brought Anti-suit Injunctions back into the Procedural Armoury?, Arbitration 2013, p. 158, at 168 et seq.; a different view, based on a special, rather unconvincing interpretation of recital 12 of the Recast Regulation, was taken by AG Wathelet in Case C-536/13 Gazprom OAO, at [125]-[137] (the CJEU in its subsequent judgment did not consider the matter since it was not relevant to answering the questions referred to it).

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Martin Illmer could then bind the torpedo court via recognition of the seat court’s decision such that conflicting decisions on the arbitration agreement’s existence, validity and scope are avoided. Since the declaratory judgment is caught by the arbitration exception it falls outside the Regulation’s substantive scope so that it does not benefit from automatic recognition in the torpedo Member State under the Brussels I Regulation. An illustration was provided by the English Court of Appeal under the old Brussels I Regulation in the National Navigation case.30 It applied the rationale of the CJEU’s judgments in Marc Rich and West Tankers to the declaratory relief scenario. Under the reformed Regulation, non-recognition is made explicitly clear by recital 12(2). According to the recital, a ruling by a Member State court as to whether an arbitration agreement is null and void (this encompassing in particular the arbitration agreement’s existence, validity or scope), inoperative or incapable of being performed does not benefit from the Regulation’s rules of recognition and enforcement regardless of whether the ruling constituted the principal subject matter or merely a preliminary issue of the court’s judgment. The reformed regulation has put an end to recognition of the torpedo court’s decision on the arbitration agreement’s existence, validity and scope in the reverse direction. Under the old Brussels I Regulation, the torpedo court’s decision on the preliminary matter, even if constituting a partial judgment, benefitted from the Regulation’s recognition regime as part of the judgment on the substance of the matter (Art. 33), such that the seat court and all other Member State courts were bound by it if the party aiming to sabotage the arbitration managed to obtain a quick decision from the torpedo court. Under the reformed Brussels I Regulation’s recital 12(2), however, the decision by the torpedo court on the arbitration agreement’s existence, validity and scope no longer benefits from the Regulation’s recognition regime, even if it constitutes an incidental aspect of a judgment on the substance of the matter, while, according to recital 12(3), the torpedo court’s decision on the substance of the matter, still does. Hence, the general principle laid down by the CJEU in the Marc Rich judgment, as applied to the parallel proceedings scenario in the West Tankers judgment, no longer applies in relation to a state court’s decision on the arbitration agreement’s existence, validity or scope as a preliminary issue. Rather, for the purposes of recognition and enforcement, recitals 12(2) and (3) split the judgment of the torpedo court into the principal decision on the substance of the matter and the preliminary decision on the arbitration agreement’s existence, validity or scope. Otherwise, an obstructive party could regularly exclude proceedings on the merits from the Regulation’s scope by simply asserting the existence of an arbitration agreement. Overall, the new recitals 12(2) and 12(3) improve the status quo but they do not remedy the fact that declaratory relief is incapable of providing a solution to the parallel proceedings problem.

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National Navigation Co v Endesa Generacion SA [2009] EWCA (Civ) 1397 (CA).

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? iii)

Damages for Breach of the Arbitration Agreement

Providing for compensatory relief rather than operating as a counter measure to avoid parallel proceedings ab initio, the party adhering to the arbitration agreement may claim damages for breach of the arbitration agreement before the seat courts.31 Depending on the status of the torpedo proceedings, this may be an action for a declaration of liability for breach of the arbitration agreement or an action for a specific amount of damages once the torpedo proceedings have come to an end. While the English courts have already awarded damages for breach of jurisdiction clauses and clauses referring the dispute for expert determination,32 applying the CJEU’s rationale in the West Tankers decision, damages for breach of the arbitration agreement, with the torpedo proceedings constituting the damage, appear to be incompatible with the Brussels I Regulation. How can damages for a breach of the arbitration agreement be compatible with the Regulation if specific performance of the arbitration agreement by way of an anti-suit injunction is held to be incompatible with it?33 Besides those doubts on compatibility with the Brussels I Regulation, it should be noted that damages for breach of an arbitration agreement are not available under the national laws of all Member States. Notably, most continental laws do not recognize the breach of an arbitration or jurisdiction agreement as giving rise to a damages claim. In any event, the calculation of the actual damage

31 For a detailed analysis see A. BRIGGS/ P. REES, Civil Jurisdiction and Judgments (5th ed.), London 2009, paras 5.57 et seq.; J. MICHAELSON/ G. BLANKE, Anti-Suit Injunctions and the Recoverability of Legal Costs as Damages for Breach of an Arbitration Agreement, Arbitration 2008, p. 12, at 23 et seq.; P. SANTOMAURO, Sense and Sensibility: Reviewing West Tankers and Dealing with its Implications in the Wake of the Reform of EC Regulation 44/2001, J. Priv. Int. L. 2010, p. 281, at 310 et seq.; for the English practice in that regard see Mantovani v Carapelli [1980] 1 Lloyd’s Rep 375 (CA); Kyrgyz Mobil Tel Ltd v. Fellowes International Holdings Ltd [2005] EWHC 1314 at [42] et seq. (Comm); A v B [2007] EWHC 54 at [9] et seq. (Comm). 32 Discount Co Ltd. v Zoller [2001] EWCA Civ 1755 (CA); Donohue v Armco Inc [2002] 1 All ER 749 at [48] (HL); Sunrock Aircraft Corp. Ltd. v Scandinavian Airlines System [2007] EWCA Civ 882 at [37] (CA); Starlight Shipping v Allianz et al [2014] EWCA Civ 1010 at [15] et seq. (CA) addressing specifically the compatibility of a damages claim with the CJEU’s judgment in Turner v Grovit (Case C-159/02 [2004] ECR I-3565) and EU law in general. 33 Also assuming incompatibility, A. BRIGGS, Agreements on Jurisdiction and Choice of Law, Oxford 2008, para. 8.76; P. MANKOWSKI, Ist eine vertragliche Absicherung von Gerichtsstandsvereinbarungen möglich?, IPRax 2009, p. 23, at 30 et seq. (both with regard to jurisdiction agreements, to which the same reasoning applies though); less sceptical is G. CARDUCCI (note 17), at 489; in an obiter dictum regarded as compatible (without further consideration though) by AG Wathelet (note 29), at fn. 87 (the CJEU in its subsequent judgment did not consider the matter since it was irrelevant for answering the questions referred to it); in its decision on the question whether an arbitral tribunal is prohibited from awarding such damages by virtue of the CJEU’s West Tankers decision (West Tankers Inc v Allianz SpA [2012] EWHC 854 (Comm)), the English High Court seems to doubt the compatibility of a damages award of the seat courts with the CJEU’s ruling in the West Tankers case (see at [53] and [57]).

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Martin Illmer will be very difficult and time consuming, carrying a considerable degree of uncertainty.34 b)

Counter-Attack and Relief before the Arbitral Tribunal

The CJEU’s judgments in Marc Rich and West Tankers have rendered any relief by a Member State seat court incompatible with the old Brussels I Regulation. This has not changed under the reformed Brussels I Regulation. The party adhering to the arbitration agreement is, therefore, dependent on counter-attacks and compensatory relief in the course of arbitral proceedings. i)

Anti-Suit Injunction

As an alternative to anti-suit injunctions by Member State seat courts, which are no longer available, the party adhering to the arbitration agreement has to consider anti-suit injunctions issued by arbitral tribunals.35 The inherent problem of the lack of coercive power in an arbitral tribunal could be remedied by applying for the enforcement of the arbitral award granting the anti-suit injunction under the New York Convention in the Member State where the torpedo proceedings are pending. Recently, the Lithuanian courts had to decide whether to grant leave of enforcement to an arbitral award which contained a decision on the substance of the matter as well as an anti-suit injunction in respect of torpedo proceedings brought before the Lithuanian courts. The Lithuanian Court of Appeal refused recognition and enforcement of the arbitral award on two grounds. The first ground was a violation of Lithuanian public policy (Art. V(2)(b) of the New York Convention) based on the right of each Lithuanian citizen to have his case heard by an objective, impartial and fair court, as it is enshrined in the Lithuanian Code of Civil Procedure and in the Lithuanian Constitution. The second ground was a violation of the sovereignty of the Lithuanian State.36 On appeal, the Lithuanian Supreme Court referred the question to the CJEU – still based on the old Brussels I See for a detailed analysis in relation to jurisdiction agreements K. TAKAHASHI, Damages for Breach of a Choice-of-court Agreement, YPIL 2008, p. 57, at 82 et seq. (comparing the anti-suit injunction with a damages claim); C.J.S. KNIGHT, The Damage of Damages: Agreements on Jurisdiction and Choice of Law, J. Priv. Int. L. 2008, p. 501; R. FENTIMAN, Parallel Proceedings and Jurisdiction Agreements in Europe, in P. DE VAREILLES-SOMMIÈRES (ed.), Forum shopping in the European Judicial Area, Oxford 2007, p. 27, at 43 et seq.; T. RAPHAEL, The Anti-suit injunction, Oxford 2008, ch. 14. 35 A further alternative taking the form of an anti-enforcement injunction (with the effect of stopping the parties from enforcing the torpedo judgment until the position under the arbitration agreement has been determined) is considered by S.P. CAMILLERI (note 17), at 906 et seq., who regards those injunctions as compatible with the CJEU’s West Tankers reasoning but as a “remedy without any teeth”. 36 Lietuvos Apeliacinis Teismas (Lithuanian Court of Appeal) 17 December 2012, published and translated into English in Yb. Com. Arb. 2013, p. 8 et seq. (excerpts), at [28] et seq. 34

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? Regulation since it is applicable to the case – whether the court of a Member State has the right to refuse recognition of an arbitral award containing an anti-suit injunction by which the arbitral tribunal restricts a party from bringing proceedings before the court of a Member State which would have jurisdiction under the Brussels I Regulation but for the arbitration agreement.37 By way of this request for a preliminary ruling, the CJEU has been asked to rule on the relationship between the New York Convention and the Brussels I Regulation against the background that even international conventions generally prevailing over the Brussels I Regulation may not impede its effective operation (effet utile).38 In its detailed reasoning on the request for a preliminary ruling, the Lithuanian Supreme Court indicated, based on the CJEU’s rationale in the West Tankers judgment, that it regarded recognition and enforcement of an anti-suit injunction by way of the New York Convention as incompatible with the Brussels I Regulation: “[I]f arbitration is a mechanism of dispute settlement equivalent to a court, its awards that limit the right of a party to make certain requests before a court of a Member State or restrain a person from bringing a case before a court of a Member State based on the ground that, in the judgment of the arbitral tribunal, the dispute must be settled in arbitration, should also be subject to the same Regulation. A contrary interpretation would mean that dispute settlement in arbitration would gain an advantage over dispute settlement in national courts, because anti suit injunctions issued by courts may not be recognized according to the rules of the Brussels I Regulation, and anti-suit injunctions issued by arbitral tribunals could limit the right of national courts to rule on their own jurisdiction to examine a concrete case”.39 While the “old” Regulation 44/2001 was still applicable to the case, the answer to the question referred to the CJEU does not seem to divert in principle under the “new” reformed Regulation 1215/2012. There appeared to be mainly three lines of argument for the CJEU. First, it could have argued that the New York Convention’s precedence over the Brussels I Regulation (now specifically addressed in recital 12 and Article 73(2) of the reformed regulation) mandates a recognition and enforcement of the anti-suit injunction award as far as the Brussels I Regime is concerned. Second, it might have argued to the contrary that the effect of an anti-suit injunction by an arbitral tribunal is the same as that of an anti-suit injunction by a Member State court and that the application for an anti-suit injunction before the arbitral tribunal instead of the seat courts is only a clever manoeuver to circumvent its West Tankers judgment. Clever is, however, not forbidden by the law. Arbitral tribunals are not bound by the Brussels I 37 Lietuvos Aukščiausiasis Teismas (Lithuanian Supreme Court) 10 October 2013, published and translated into English in Yb. Com. Arb. 2013, p. 17 et seq. (excerpts), at [50] et seq. with a detailed reasoning on the matter; the case is pending before the CJEU (Case C-536/13). 38 Lietuvos Aukščiausiasis Teismas (Lithuanian Supreme Court) 10 October 2013 (note 37), at [66]. 39 Lietuvos Aukščiausiasis Teismas (Lithuanian Supreme Court) 10 October 2013 (note 37), at [80].

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Martin Illmer Regulation’s procedural rules and implications so that an argument based on the Regulation’s effective operation would go too far. As a third possibility, most unsatisfactorily for the curious crowd, the CJEU could have refused to render any judgment on the matter by simply taking the view that it is not primarily a Brussels I but a New York Convention problem, namely its public policy ground for refusing recognition, which the CJEU is not competent to interpret.40 In its opinion of December 2014, after doubting the admissibility of the questions referred to the CJEU for a preliminary ruling,41 Advocate General Wathelet took the view that an arbitral tribunal is not bound by the Brussels I regime’s principles including that of mutual trust such that an anti-suit injunction by a tribunal cannot be regarded as incompatible with the Brussels I Regime, neither the 2001 nor the Recast one.42 Its recognition and enforcement was in his view exclusively subject to the national arbitration laws including the New York Convention (as all EU Member States are parties to it).43 With a view to such recognition and enforcement, he added that the provisions of the Brussels I Regulation, particularly those allocating jurisdiction, do not form part of European public policy in terms of Article V(2)(b) of the New York Convention.44 In its judgment of May 2015, the CJEU, not addressing the admissibility of the questions referred to it, followed the Advocate General’s reasoning with regard to the aspects relevant to answering the questions referred to it. Hence, it held that Regulation 44/2001 – and the same holds true for the reformed Regulation 1215/2012 – does not preclude a Member State court from recognising and enforcing or from refusing to recognise and enforce an arbitral award amounting to an anti-suit injunction.45 It argued, like the Advocate General, that the recognition and enforcement of arbitral awards is governed solely by national laws (in case of domestic awards) or the New York Convention (in case of foreign awards) but not by the Brussels I Regulation.46 The CJEU stressed that the Brussels I Regime is limited to judgments issued by state courts whereas arbitral tribunals are not bound by it, particularly its underlying principle of mutual trust. In that context it referred explicitly to the arbitration exception in Art 1(2)(d) of the Regulation. The CJEU’s judgment including its reasoning are convincing and come as expected since the Regulation’s exception of arbitration does not leave much if any room for another understanding of the Regulation’s substantive scope. It shall, 40 For further potential arguments, see M. MOSES, Arbitration/Litigation Interface: The European Debate, Northwestern Journal of International Law & Business 2014, p. 1. 41 AG Wathelet (note 29), at [58]-[61], [73] and [143]. 42 See AG Wathelet (note 29), at [153]-[155]; far more controversial than this reasoning and the result is the AG’s unconvincing line of argument that recital 12 of the Recast Regulation has removed any incompatibility of anti-suit injunctions even by Member State courts with the Brussels I Regulation so that Recital 12 does in effect reverse the CJEU’s West Tankers judgment. 43 AG Wathelet (note 29), at [157]. 44 AG Wathelet (note 29), at [180]-[188]. 45 Case C-536/13, Gazprom OAO, at [44]. 46 Case C-536/13, Gazprom OAO, at [41] et seq.

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? however, at least be mentioned in passing that the Advocate General’s rather poor (and in relation to the questions referred to it, rather irrelevant) obiter dictum regarding anti-suit injunctions by state courts under the Recast Regulation is not convincing at all. As the main flaw, the Advocate General fails to distinguish between the parallel proceedings scenario in West Tankers and the simple single proceedings scenario in Marc Rich. This failure leads him to incorrect presumptions on the CJEU’s view with regard to anti-suit injunctions under the Recast Regulation and an unconvincing interpretation of recital 12, sub-paragraph 2 in particular, which in his view re-introduces anti-suit injunctions by state courts as being compatible with the Recast Regulation.47 The CJEU did not address this matter at all as it was not relevant to answering the questions referred to it. ii)

Commencing the Arbitration

In any event, the party adhering to the arbitration agreement may commence arbitral proceedings leading to a final arbitral award on the substance of the matter which inherently upholds the arbitration agreement or leading, prior to a final award, to a partial award on the arbitration agreement’s existence, validity and scope. As long as the torpedo court has not yet rendered a decision, the arbitral award may, by way of enforcement under the New York Convention, bind the torpedo court in relation to the arbitration agreement’s existence, validity and scope. Timing is, however, essential because once the torpedo court has rendered a decision on the matter, the Member State where the torpedo court is located will very likely no longer recognise and enforce the arbitral award, even under the New York Convention.48 The award may then, however, still be of use as a protective shield against the torpedo court’s judgment since due to the new recitals 12(2) and (3), a Member State court is no longer bound by the torpedo court’s decision on the arbitration agreement’s existence, validity or scope even if this decision forms an incidental part of a judgment on the substance of the matter which benefits from the Brussels I Regulation’s recognition and enforcement regime. Consequently, the concerned Member State court may, depending on the scenario, uphold the arbitration agreement, refuse to set aside the award or grant leave to enforce the award so as to enable the award to serve as a protective shield even against recognition and enforcement of the torpedo court’s judgment on the substance of the matter under the Brussels I Regulation’s recognition and enforcement scheme. Considering the arbitral award’s operation as a protective shield, three alternative constructions are discussed. First, by way of a direct application of Article 45(1)(c) or (d) and Article 46 of the Recast Regulation, the state court judgment granting leave to enforce the arbitral award may constitute a ground for refusing recognition and enforcement of See AG Wathelet (note 29), at [103]-[141]. The torpedo country’s courts will, when considering the application for leave of enforcement, find a ground for refusal, if only public policy, in order to avoid a contradiction of the torpedo court’s judgment; M. MOSES (note 40), at 40 et seq., therefore rightly stresses that time is of the essence. 47 48

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Martin Illmer the torpedo court’s judgment.49 This construction was chosen by the English courts, which did not consider the first construction when they were asked as the seat courts to grant leave to enforce an arbitral award on the substance of the matter and – according to a peculiarity of English law under s 66(2) Arbitration Act 1996 – to enter judgment in terms of the award50 with the intention to use this judgment as a ground for refusing recognition and enforcement of the awaited Italian torpedo judgment.51 This route via enforcement of the arbitral award has, however, several downsides. First, it requires the party adhering to the arbitration agreement to apply for leave to enforce the arbitral award under the New York Convention or under the national law of the seat of the arbitration in all those Member States where enforcement of the torpedo court’s judgment is expected. Second, to constitute a ground for refusing recognition and enforcement, the decision by a Member State granting leave to enforce the arbitral award would have to qualify as a judgment under Article 2(a) of the Brussels I Regulation, a proposition which is disputed.52 According to the CJEU, in order to qualify as a judgment within the meaning of the Brussels I Regime “the decision must emanate from a judicial body of a Contracting State deciding on its own authority on the issues between the parties.”53 When granting leave to enforce an arbitral award, a national court, however, merely grants the “public” enforcement stamp to a decision on the 49 This is due to the fact that in order to constitute a ground for refusing recognition and enforcement, a prior judgment in the recognising and enforcing Member State need not be a judgment within the Regulation’s substantive scope; see P. SCHLOSSER, Conflits entre jugement judiciaire et arbitrage, Rev. arb. 1981, p. 371, at 382 et seq.; J. HILL/ A. CHONG, International Commercial Disputes (4th ed.), Oxford 2010, para. 13.3.38. 50 West Tankers v Allianz [2011] EWHC 829 (Comm), confirmed [2012] EWCA Civ 27 (CA); African Fertilizers v BD Shipsnavo [2011] EWHC 2452 (Comm). 51 Concurring as a matter of approach, A. MALATESTA, Il nuovo regolamento Bruxelles I-Bis e l’arbitrato: Verso un ampliamento dell’arbitration exclusion, Riv. dir. int. priv. proc. 2014, p. 5, at 21; for a detailed analysis of the English courts’ approach, see M. ILLMER, West Tankers reloaded – Vollstreckung eines feststellenden Schiedsspruchs zur Abwehr der Vollstreckung einer zukünftigen ausländischen Gerichtsentscheidung, IPRax 2012, p. 264; A. MOODY/ C. FORSAITH, Enforcing Declaratory Awards as a Judgment of the English Court: An Effective Weapon if Fighting in Multiple Jurisdictions?, Arbitration International 2012, p. 567. 52 In favour of a judgment within the meaning of the Brussels I regime, H. VAN HOUTTE, May Court Judgments that Disregard Arbitration Clauses and Awards be Enforced under the Brussels and Lugano Conventions?, Arb. Int. 1997, p. 85, at 90; A. BRIGGS/ P. REES (note 31), at para. 7.22 (“This outcome [prevalence of the torpedo judgment] cannot be correct, though.”); merely obiter in that direction National Navigation Co v Endesa Generacion SA [2009] EWCA Civ 1397 at [63] (CA); denying a judgment in the meaning of the Brussels I Regime, B. HESS, Europäisches Zivilprozessrecht, Heidelberg 2010, § 6 para. 211; P. GOTTWALD, in Münchener Kommentar zur ZPO (3rd ed.), vol. 3, München 2008, Art. 34 EuGVO para. 35; S. LEIBLE, in Th. RAUSCHER (ed.), EuZPR/EuIPR (2nd ed.), München 2011, Art. 34 Brüssel I-VO para. 44; French Cour de Cassation, Cass. 1ère Ch. civ., Rev. crit. dr. int. pr. 2007, p. 822. 53 Case C-414/94, Solo Kleinmotoren v Bloch, [1994] ECR I-2237, at [17] where the CJEU held that a court settlement based on the parties’ agreement that they had reached during the proceedings was not a judgment for the purposes of the Brussels I Regime.

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? substance of the matter that has already been made by an arbitral tribunal. From the perspective of the national procedural laws of the Member States, it should further be noted that procedural mechanisms through which leave to enforce arbitral awards is granted differ considerably, such that – despite an autonomous interpretation of the term “judgment” – some may and others may not qualify as judgments for the purposes of the Brussels I Regulation.54 Second, by way of an analogous application of Articles 45(1)(d) and 46 of the Brussels I Regulation (since an arbitral award is not a judgment for the purposes of the Brussels I Regulation according to its Art. 2(a)), the arbitral award itself may, subject to grounds for refusing its recognition and enforcement under the New York Convention, constitute a ground for refusing recognition and enforcement of the torpedo court’s judgment on the substance of the matter. There is no convincing reason why the principle of res iudicata should not apply to an arbitral award capable of being recognised and enforced in the concerned Member State just as it applies to a court judgment.55 The matter has not yet been addressed by the CJEU or a national court, but the New York Convention’s precedence over the Brussels I Regulation (see in particular recital 12(3), second sentence, and Art. 73(2) of the Brussels I Regulation) supports such an analogy. The decision between the two constructions has practical implications: Under the first construction (judgment granting leave to enforce the arbitral award as a shield), there is a race to secure an earlier exequatur of the arbitral award under the New York Convention versus that of the torpedo court’s judgment under the Brussels I Regime. Under the second construction (arbitral award itself as a shield), there is no race to secure exequatur of either the torpedo court’s judgment or the arbitral award but rather a race to obtain the first decision on the arbitration agreement’s existence, validity or scope so as to be able to apply the res iudicata principle to refuse recognition and enforcement of the later decision.56 Third, the second sentence of recital 12(3) of the reformed Brussels I Regulation could afford general precedence to the arbitral award over the torpedo court’s judgment on the substance of the matter irrespective of a time-related priority of the arbitral award or its exequatur judgment (depending on the two 54 See e.g. §§ 1060, 1063(1) (German) Zivilprozessordnung (order of enforceability); Art 1516 (French) Code de procédure civile (ordonnance); section 66(2) (English) Arbitration Act 1996 (judgment in terms of the award); arts 1062(2), 1075(1) (Dutch) Wetboek van Burgerlijke Rechtsvordering (leave for enforcement is primarily merely recorded on the original of the arbitral award or, where no deposit of the award has taken place, laid down in a court decision). 55 See in greater detail M. ILLMER (note 51), at 270 et seq.; P. SCHLOSSER (note 49), at 388 et seq.; U. HAAS, Der Ausschluss der Schiedsgerichtsbarkeit vom Anwendungsbereich des EuGVUÜ, IPRax 1992, p. 292, at 294; J. KROPHOLLER/ J. VON HEIN, Europäisches Zivilprozessrecht (9th ed.), Frankfurt am Main 2011, Art 34 EuGVO para. 60; L.G. RADICATI DI BROZOLO (note 8), at 455; H. VAN HOUTTE (note 52), at 90 et seq.; A. MOURRE/ M. NIOCHE, Le règlement Bruxelles I “refondu“ évite le risque d’une régionalisation de l’arbitrage, Cahiers de l’Arbitrage 2013, p. 567 et seq.; against such an analogy B. HESS (note 52), at § 6 para. 211; S. LEIBLE (note 52), at Art. 34 Brüssel I-VO para. 44. 56 Concurring A. MALATESTA (note 51), at 21.

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Martin Illmer constructions discussed above).57 The second sentence of recital 12(3) provides that the recognition and enforcement of the torpedo court’s judgment on the substance of the matter is without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the New York Convention, which pursuant to Article 73(2) takes precedence over the Brussels I regime. Such a far-reaching rule of general precedence of arbitral awards over judgments by Member States’ courts would amount to no less than the solution of a general problem of recognition and enforcement of arbitral awards under the New York Convention, namely the conflict of awards with state court judgments on the same subject matter.58 The better arguments lie against such a far-reaching interpretation.59 First, recital 12(3)’s second sentence merely preserves the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the New York Convention while it does not order the priority of an award over the torpedo court’s decision on the substance of the matter referred to in recital 12(3)’s first sentence. In other words, it provides for the New York Convention’s precedence, not for the award’s precedence. Hence, a Member State enforcing an arbitral award under the New York Convention, despite a conflicting judgment by another Member State’s court, does not violate its obligations under the Brussels I Regime. In other words, a Member State may afford precedence to the arbitral award over the torpedo court’s judgment, but it must not do so.60 Precedence of the New York Convention is already maintained if the seat court is not bound by the torpedo court’s decision on the arbitration agreement’s existence, validity and scope but is instead free to decide on the matter independently such that it may protect the arbitration proceedings against interference by courts other than the seat court. Second, it 57 Such a general precedence is considered by S.P. CAMILLERI (note 17), at 905 et seq., on the basis of Art. 45(1)(a) or alternatively (d) of the Recast Regulation; it should be noted at the outset that such general precedence could not be based on the New York Convention in relation to the seat of the arbitration. In that regard the New York Convention would not apply for lack of a cross-border element. 58 T. DOMEJ, Alles klar? – Bemerkungen zum Verhältnis zwischen staatlichen Gerichten und Schiedsgerichten unter der neu gefassten EuGVVO, in J. ADOLPHSEN, et al. (ed.), Festschrift für Peter Gottwald, p. 97, at 106, also points out that a conflict between a state court judgment and an arbitral award is by its nature a problem under the New York Convention, which does not contain any specific rule on the matter, with the result that one could solve the conflict between the two decisions merely (and solely for the purpose of denying recognition and enforcement of the arbitral award) via the ordre public (Art V(2)(b) NYC). 59 Against such a far-reaching interpretation (albeit without considering any arguments on the matter) A.E. IPPOLITO/ M. ADLER-NISSEN (note 29), at 168; A. MALATESTA (note 51), at 21; concurring based on a different rationale, namely a violation of the ordre public under Art 45(1)(a) of the Brussels I Regulation by recognising and enforcing the torpedo judgment, T. DOMEJ (note 58), at 107; L. HAUBERG WILHELMSEN, The Recast Brussels I Regulation and Arbitration: Revisited or Revised?, Arbitration International 2014, p. 169, at 183 et seq. 60 P.A. NIELSEN, The New Brussels I Regulation, CMLR 2013, p. 503, at 511; T. DOMEJ (note 58), at 126.

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The Revised Brussels I Regulation and Arbitration – A Missed Opportunity? appears questionable whether the EU has the competence to solve this problem visà-vis the Member States, which are competent to resolve this conflict under their national arbitration laws in light of the New York Convention. iii)

Damages for Breach of the Arbitration Agreement

While a damages award by the seat courts for breach of the arbitration agreement appears to be incompatible with the CJEU’s ban on anti-suit injunctions by state courts, different considerations apply with regard to a damages award by an arbitral tribunal. Although arbitral tribunals are bound by substantive EU law,61 they appear not to be bound by procedural EU law specifically intended and designed to apply only to the Member States’ courts. In particular, the principle of mutual trust underlying the CJEU’s ban on anti-suit injunctions relates specifically to the Member States’ courts while it appears not to bind arbitral tribunals even if the seat of the arbitration is in a Member State. The English courts have therefore quite rightly held that an arbitral tribunal may award damages for breach of an arbitration clause by commencing proceedings before a Member State’s courts.62 Again, one should, however, bear in mind the structural deficiencies of a damages claim as exposed above in relation to damages claims before the seat courts.63

IV. Conclusion The analysis of the CJEU’s case law in light of the reformed Brussels I Regulation has revealed an overall trend that started with the CJEU’s case law under the Brussels Convention and the old Brussels I Regulation, but has become even stronger under the new regulation. Due to the reinforcement of the arbitration exception by virtue of recital 12(2), relief for disregard of an arbitration agreement may successfully be sought before the arbitral tribunal rather than the seat courts whose entire armoury to prevent parallel proceedings, or at least irreconcilable decisions, appears to be incompatible with the Brussels I Regulation. However, any form of relief before an arbitral tribunal – be it an anti-suit injunction or declaratory decision on the arbitration agreement – requires enforcement of the respective awards containing such relief by the state courts. This will generally delay the required relief, often rendering it less effective, if not ineffective in a situation 61

Such as antitrust law; see Case C-126/97, Eco Swiss v Benetton, [1999] ECR

I-3055. 62 See the analysis in West Tankers Inc v Allianz SpA [2012] EWHC 854 (Comm), which dealt with an appeal on points of law under section 69 AA 1996; prior to the CJEU’s judgment in West Tankers see CMA CGM SA v Hyundai Mipo Dockyard Co Ltd [2008] EWHC 2791 (Comm); the Swiss Bundesgericht, 30 September 2013 (case no 4A 232/2013) reached the same conclusion outside the Brussels I Regime when it upheld an arbitral award granting such damages. 63 See at III. B. 3. a) iii).

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Martin Illmer where time is of the essence from a legal and of course economic perspective. Furthermore, the availability of relief will depend on the readiness of an arbitral tribunal to grant it since anti-suit injunctions and damages are not enshrined in any of the respective national arbitration laws or institutional arbitration rules. Hence, the party adhering to the arbitration agreement gets discretionary remedies which still require enforcement by the state courts instead of a uniform EU-wide mandatory mechanism operating as between the state courts to avoid parallel proceedings ab initio. If avoidance ab initio by the arbitral tribunal fails, the problem will inevitably come up again at the stage of recognition and enforcement of the respective state court decisions and the arbitral award, a scenario which a uniform European lis pendens mechanism, as suggested by the European Commission, would have successfully avoided. Against this background, it seems that the European legislator, like the three monkeys at the shrines of Nikko, covered eyes, ears and mouth by simply negating any interface of arbitration and state court litigation under the Brussels I Regulation despite clear evidence to the contrary in the CJEU’s case law, which called for a resolution of the parallel proceedings problem in particular, not only from the point of view of the Brussels I regime but also in order to increase the attractiveness of arbitral seats in EU Member States in the context of global competition for the best place to arbitrate. Overall, one is tempted to believe that the rejection of the Commission proposal by the Parliament and Council was the result of a failure to grasp the real problem coupled with interest-driven lobbying rather than the product of an informed decision-making process. What then is the overall verdict with regard to the reform of the arbitration interface: is it a missed opportunity or a step forward? Clearly a missed opportunity! Given that, a party faced with torpedo proceedings is best advised to commence arbitration proceedings as quickly as possible and to ask the arbitral tribunal to issue an early partial award consisting of (1) a positive declaration on the arbitration agreement’s existence, validity and scope, (2) an anti-suit injunction, and (3) a declaration that the party in breach of the arbitration agreement is liable for damages occurring from that breach. This award may then be enforced under the New York Convention in the state where the torpedo proceedings are pending so as to bind the torpedo court in its assessment of the arbitration agreement’s existence, validity and scope and/or in those additional Member States where the other party may apply for recognition and enforcement of the torpedo judgment.

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PARTY AUTONOMY AND CONFLICT OF JURISDICTIONS IN THE EU PRIVATE INTERNATIONAL LAW ON FAMILY AND SUCCESSION MATTERS Ornella FERACI*

I. II.

V. VI. VII.

Introduction The Functions of Choice-of-Court Agreements in the EU Private International Law Instruments on Family and Succession Matters The Imperfect Parallelism between forum and jus The Lack of Party Autonomy in Matrimonial Matters A. The Restricted Choice-of-Court Agreements under Regulation No 4/2009 (Maintenance Regulation) B. Party Autonomy and the Proposed Regulations on Matrimonial Property Regimes and Property Consequences of Registered Partnerships The Choice-of-Court under Regulation No 650/2012 (Succession Regulation) Concluding Remarks Abstract

I.

Introduction

III. IV.

Party autonomy plays a prominent role in the private international law (PIL) of the European Union (EU). Enhancing emphasis on the concept of private will is one of the most important features of the growing (albeit not yet coherent or complete)1 * Research Fellow of European Union Law at the University of Florence (Università degli Studi di Firenze). 1 See, ex multis: A. BONOMI, Il diritto internazionale privato dell’Unione Europea: considerazioni generali, in A. BONOMI (ed.), Diritto internazionale privato e cooperazione giudiziaria in materia civile, Torino 2009, p. 1-54.; R. LUZZATTO, Riflessioni sulla cd. comunitarizzazione del diritto internazionale privato, in S. BARIATTI/ G. VENTURINI (eds), Nuovi strumenti del diritto internazionale privato. Liber Fausto Pocar, vol. II, Milano 2009, p. 613 et seq., at 625; S. POILLOT PERUZZETTO, Ordre public et lois de police dans les textes de reference, in M. FALLON/ P. LAGARDE/ S. POILLOT PERUZZETTO (eds), La matière civile et commerciale, socle d’un code européen de droit international privé, Paris 2009, p. 93 et seq., at 13. Recently, the sectorial and incomplete development of the EU private international law has raised a doctrinal debate on the need for an eventual “Rome 0 Regulation” providing for uniform EU “general part” rules of private international law. See, in particular, on this issue: S. LEIBLE/ H. UNBERATH (eds), Brauchen wir eine Rom

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Ornella Feraci EU system of PIL and it coincides with a general trend in the current development of PIL at both the national and international level.2 This evolution impacts not only the field of conflict of laws (electio legis),3 where parties traditionally enjoy a certain degree of freedom – especially with respect to contractual obligations4 – but also the field of conflict of jurisdictions (electio fori).5 Within the framework of European civil procedure, EU lawmakers emphasise party autonomy in determining the competent court, by introducing provisions which enable the parties to mutually elect a competent court by agreement (usually expressly, but sometimes implicitly, as considered below).

0-Verordnung?, Munich 2013 and F.M. WILKE, Brauchen wir eine Rom 0-Verordnung?, Zeitschrift für Gemeinschaftsprivatrecht 2012, p. 334 et seq. 2 On the modern evolution of party autonomy in private international law, see: G.R. DELAUME, L’autonomie de la volonté en droit international privé, Rev. crit. dr. int. pr. 1950, p. 321 et seq.; J.Y. CARLIER, Autonomie de la volonté et statut personnel, Bruxelles 1992; P. GANNAGÉ, La pénétration de l’autonomie de la volonté dans le droit international privé de la famille, Rev. crit. dr. int. pr. 1992, p. 425 et seq.; A. VON OVERBECK, L’irrésistible extension de l’autonomie de la volonté en droit international privé, in Nouveaux itinéraires en droit, Hommage à François Rigaux, Bruxelles 1993, p. 619 et seq.; D. BUREAU, L’influence de la volonté individuelle sur les conflits de lois, in L’avenir de droit. Mélanges en hommage à François Terré, Paris 1999, p. 285 et seq.; S. LEIBLE, Parteiautonomie im IPR – Allgemeines Anknüpfungsprinzip oder Verlegenheitslösung?, in H.P. MANSEL/ T. PFEIFFER/ H. KRONKE/ Ch. KOHLER/ R. HAUSMANN (eds), Festschrift für Erik Jayme, vol. I, München 2004, p. 485-503. 3 See, for instance, Article 14 of Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (“Rome II”), OJ L 199 of 31 July 2007, p. 40; Articles 7 and 8 of the Hague Protocol of 23 November 2007 on the law applicable to maintenance obligations as referred by Article 15 of Regulation (EC) No 4/2009; Article 5 of the Council Regulation (EU) No 1259/2010 of 20 December 2010 implementing an enhanced cooperation in the area of the law applicable to divorce and legal separation, OJ L 343 of 29 December 2010, p. 10 (“Rome III”); Article 16 of the Proposal for a Council Regulation on jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes of 16 March 2011, COM(2011) 126 final (hereinafter: “Commission’s Proposal on matrimonial property regimes”); Article 22 of Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession, OJ L 201 of 27 July 2012, p. 107 (hereinafter: “Succession Regulation”). See, on this matter: G. RÜHL, Choice-of-law by the Parties in European Private International Law, in J. BASEDOW/ K. HOPT/ R. ZIMMERMANN (eds), Max Planck Encyclopedia of European Private Law, Oxford 2012, available at ; O. FERACI, L’autonomia della volontà nel diritto internazionale privato dell’Unione europea, Riv. dir. int. 2013, p. 424 et seq. 4 Article 3 of Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (“Rome I”), OJ L 177 of 4 July 2008, p. 6. 5 A. BRIGGS, Agreements on Jurisdiction and Choice-of-law, Oxford 2008.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters It is widely known that prorogation of jurisdiction was allowed by the first European instrument on civil and commercial matters i.e. the Brussels Convention of 27 September 1968 on jurisdiction and recognition and enforcement of judgments.6 This legal device is now governed by Regulation (EU) No. 1215/2012 (Brussels I-bis Recast), which repealed Regulation No 44/2001.7 In recent years, party autonomy has been progressively extended to further areas of the judicial cooperation in civil matters, including matters of international family and succession law, where party autonomy is traditionally excluded or heavily restricted given the sensitive subject matter. In this regard, even at the international level, family law has always been perceived as in need of State protection and strict State regulation, often for the sake of protecting the weaker party of the legal relationship. The resulting public conception of personal relations naturally gives rise to mandatory rules within which there is little scope for party autonomy. This article will scrutinize the provisions on choice-of-court provided by existing and proposed EU instruments in matters related to family relationships, in particular those which address matrimonial issues, maintenance obligations, matrimonial property regimes and property consequences of registered partnership, as well succession matters. From a methodological point of view, this investigation will be undertaken from a teleological, systematic and analytical perspective. First, we will consider the specific policies underlying the choice-of-court provisions in the field of family and succession matters, in order to identify any reasons justifying the introduction of the individual will into the jurisdictional sphere (teleological perspective). Second, we will examine the outcomes of the interplay between the choice-of-law and the choice-of-court as resulting from the application of the relevant uniform provisions (systematic perspective). Third and finally, we will scrutinize the function of the concept of electio fori in the context of the specific instruments concerned, adopted or proposed by the European Institutions in relation to family and succession matters, with particular focus on the scope and modalities of prorogation and the means of assuring the full awareness of the parties in the exercise of their autonomy (analytical perspective).

Articles 17 and 18 of the Brussels Convention. Articles 25 and 26 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351 of 20 December 2012, p. 1. See on this topic: T. RATKOVIĆ and R. D. ZGRABLJIĆ, Choice-of-court agreements under the Brussels I Regulation (recast), Journal of Private International Law 2013, p. 245 et seq.; I. QUEIROLO, Prorogation of Jurisdiction in the proposal for a Recast of the Brussels I Regulation, in F. POCAR/ I. VIARENGO/ F.C. VILLATA (eds), Recasting Brussels I, Padova 2012, p. 183-198; T.C. HARTLEY, Choice-of-Court agreements and the New Brussels I Regulation, Law Quarterly Review 2013, p. 316 et seq. 6 7

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II.

The Functions of Choice-of-Court Agreements in the EU Private International Law Instruments on Family and Succession Matters

Party autonomy in European PIL is a multifaceted phenomenon: the rationale of the parties’ will in conflict of laws diverges from the rationale relevant in the conflict of jurisdictions with regard to the matters harmonized so far. Further differences arise when considering the specific functioning of the legal device in the various EU PIL instruments. In the context of EU law, the functions of prorogation of jurisdiction in family and succession matters deviate from the functions relevant for the prorogation regime in the obligations field, as set out in Regulation No 1215/2012 at Articles 25 and 26. In the framework of civil and commercial matters, the concept of choice-ofcourt has been broadly formulated, allowing parties to confer jurisdiction on the courts of any Member States (but not on the courts of third States or to arbitration), irrespective of the existence of a close link between the State of the forum and the international situation at stake.8 This reflects the general purpose of the uniform rules on contractual and non-contractual obligations, which seek to pursue the material interests of the parties in order to settle the disputes arising between them. However, party autonomy as a jurisdictional ground in family and succession matters shares two general purposes with the prorogation of the Brussels regime.9 On the one hand, choice-of-court agreements foster legal certainty and predictability of solutions, fulfilling the legitimate expectations of the parties. On the other hand, prorogation of jurisdiction improves judicial efficiency: it is a fact that choice-of-court agreements reduce the costs of litigation, avoiding the delays inherent to the determination of the competent court and providing, for some parties, the benefit of a domestic court. The functioning of choice-of-court provisions in family relationship matters also differs from the rationale of choice-of-law provisions in the same matters. The major difference lies in the fact that party autonomy in conflict-of-laws guarantees the settlement of the dispute (since the chosen law is intended to regulate the matter), whereby prorogation merely simplifies the judicial procedures (considering that the court selected by the parties may be better placed to hear the case, being familiar with the situation and the applicable law): even if accepted by 8 See ECJ, 17 January 1980, C-56/79, Zelger, ECR [1980], 97, para. 4; ECJ, 3 July 1997, case C-269/95, Benincasa, ECR [1997] I-3798, para. 28; ECJ, 16 March 1999, case C-159/97, Trasporti Castelletti, ECR [1999] I-1656, para. 49. 9 On choice-of-court agreements under Regulation No 44/2001 see, ex multis: F. SALERNO, Giurisdizione ed efficacia delle decisioni straniere nel Regolamento (CE) n. 44/2001, Padova 2006, 3rd ed., p. 192-210; U. MAGNUS, Art. 23, in U. MAGNUS/ P. MANKOWSKI (eds), Brussels I Regulation, Munich 2007, p. 429 et seq.; L. MERRETT, Article 23 of the Brussels I Regulation: a Comprehensive Code for Jurisdiction Agreements, I.C.L.Q. 2009, p. 545 et seq.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters either the parties, the forum prorogatum cannot assure, instead, that the interests of the parties are fully satisfied, since that outcome will depend only on the law that will be applied. Moreover the increasing role of party autonomy as a jurisdictional ground in EU family and succession matters is attributable to additional reasons. According to a general perspective focused on the functioning of jurisdictional rules in international relationships, the enhancement of prorogation in the private international law area appears as the outcome of a substantial shift in the manner of conceiving the jurisdictional function itself in the modern systems of private international law. In fact, the origin of such a choice derives from a drastic change in the interpretation of the rules concerning the concept of international jurisdiction. Historically, the grounds of jurisdiction laid down by the legislator could not generally be derogated by the will of the parties because they were considered as a direct expression of the State’s sovereignty, i.e. as a public prerogative. Conversely, the current view of the jurisdictional function tends to underline its potential to realize individuals’ rights and interests: according to that interpretation, individuals can exercise freedom, through private agreement, to elect the forum in which to litigate in order to comply with their private interests and assure their self-determination. Furthermore, the EU characterises the process of “individualization” of jurisdiction as being enhanced by the intensification of transnational commercial relationships and, especially, by the growth of the principle of mutual trust between Member States, which currently informs all the uniform jurisdictional rules. This trend is further strengthened in international family and succession law: in fact, in these matters, choice-of-court promotes the self-determination of the individual, which constitutes a corollary of the more general principle of the respect for private and family life as enshrined in Article 8 of the European Convention on Human Rights (ECHR) and in Article 7 of the EU Charter of Fundamental Rights.10 This feature has inspired the idea of an emerging “constitutionalisation” of private autonomy in the context of European private international law on family relations, because, despite other matters, private will, in this case, would be grounded in the ECHR and in the EU primary law. In that sense, the EU private international law presumes the individual’s capacity for selfdetermination. Other legal justifications for party autonomy may arise as a result of matters that fall within the jurisdiction of European private international law and, in particular, in light of the different interests at stake. In this regard, two further functions characterize the choice of forum in family and succession matters,11 some

10 T. MARZAL YETANO, The Constitutionalisation of Party Autonomy in European Family Law, Journal of Private International Law 2010, p. 155 et seq., at 186-192. 11 See E. JAYME, Party Autonomy in International Family and Succession Law, Yearbook of Private International Law 2009, p. 3 et seq.; T. MARZAL YETANO (note 10), p. 155 et seq.

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Ornella Feraci of which coincide with the policies underlying the professio juris in the conflict of laws’ field.12 First of all, choice-of-court agreements ensure the unity of regulation, at a jurisdictional level, of cross-border family relations in the territory of the European Union;13 prorogation, in fact, may lead to a situation where only one Member State’s authority is competent to hear a complex international case, which may raise several family issues grounded on the same personal relationship. In this regard, legal proceedings in connection with matrimonial property regimes often arise from the liquidation of the property when the couple ceases to exist, either as a result of the death of one of them or of their separation. In such a case it is undoubtedly preferable to submit jurisdiction to only one court, irrespective of the nature of the several claims arising from the same family cross-border relation. To this end, the proposed regulations on matrimonial property regimes and property consequences of registered partnerships seek to ensure that the rules for establishing the jurisdiction of the courts called on to handle the property aspects of marriage are in line with the existing rules of other European legislation.14 Secondly, prorogation promotes the proper functioning of the internal market by removing obstacles to the free movement of persons who currently face difficulties in asserting their rights in the context of a family or succession situation having cross-border implications and a dynamic nature.15 In this regard, the choiceof-court agreement provides that, in the European area of justice, the citizens’ right to access to court is effectively guaranteed.

III. The Imperfect Parallelism between forum and jus In EU private international law the power to choose the competent court (optio fori) is usually combined with the correlative power to choose the applicable law (professio juris or optio legis) to the international situation at stake. Generally, in the framework of EU private international law the two classic forms of manifestation of parties’ will tend to be conceived as complementary devices, in the sense that party autonomy should guarantee the coincidence between forum and jus. 12 For a comprehensive overview of the party’ autonomy’s functions in the conflict of laws on family and succession matters, see (also for additional references) see O. FERACI (note 3), p. 432-462. 13 About the coordination among the European uniform regulations in family matters see A. BONOMI, The Interaction among the Future EU Instruments on Matrimonial Property, Registered Partnerships and Successions, Yearbook of Private International Law 2011, p. 217 et seq.; B. CAMPUZANO DÍAZ, The Coordination of the EU Regulation on Divorce and Legal Separation with the Proposal on Matrimonial Property Regimes, in this Yearbook 2011, p. 233 et seq. 14 See Articles 3 and 4 of the Commission’s Proposal on matrimonial property regimes and Articles 3 and 4 of the Commission’s Proposal on property consequences of registered partnerships. 15 Recitals 7 and 80 of Regulation No 650/2012.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters In relation to cross-border situations that have a connection with more than one Member State, the coincidence between forum and jus simplifies the regulatory framework and produces benefits in terms of legal certainty and predictability of solutions. This achieves the general purpose of all the uniform PIL instruments, which, in order to assure the proper functioning of the internal market, require that all the conflict-of-laws rules in force in the Member States designate the same law applicable, irrespective to the State of the forum. Such a parallelism prevents, furthermore, the tension between local and foreign values (that should be therefore neutralized by the public policy exception) as introduced in the forum by the PIL rules’ functioning. However, in family and succession matters, there are areas in which the role of party autonomy is asymmetric, because the latter works only with respect to the determination of the applicable law or of the competent court. Notwithstanding the lack of a jurisdictional criterion grounded on private autonomy, in some cases a certain degree of coordination between jus and forum is indirectly achieved by the functioning of the objective grounds of jurisdiction. This is the case, for example, of matrimonial issues, by virtue of the combined functioning of Article 3 of Regulation No 2201/2003 and Article 5 of Regulation No 1259/2010. Conversely, in other family matters the purpose of the coincidence between electio fori and electio legis is strengthened by the fact that parties may only select the court of the State whose law has been chosen; this is particularly common in the proposed regulations on matrimonial property regimes or property consequences of registered partnerships, on the one hand, and in the Succession Regulation, on the other. In the field of maintenance obligations a perfect symmetry between forum and jus may be not fully achieved by the application of party autonomy provisions, since, according to Article 8 of the Hague Protocol on the law applicable to the maintenance obligations, parties may choose the law of any State of which either party is a national or the law of the State of the habitual residence of both (at the time of designation), on the one hand , and Article 4 of Regulation No 4/2009 confers, instead, jurisdiction to the nationality or habitual residence of one single party, on the other. This may cause, a discrepancy in the overall regulation of the matter.

IV. The Lack of Party Autonomy in Matrimonial Matters An analytical examination of the EU PIL instruments on family relationships shows a variety of approaches to choice-of-court agreements. The first method relates to matrimonial cases, where there is currently no place for party autonomy with regard to jurisdiction. In fact, Regulation No 2201/2003 (Brussels II-bis)16 fails to contemplate any right for the spouses to Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and 16

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Ornella Feraci choose the competent court in legal separation, marriage annulment or divorce cases. As a result, at the European level, divorce and legal separation claims are subject to the jurisdiction rules as set out in the Brussels II-bis Regulation, which allow the spouses to choose between several alternative grounds of jurisdiction listed under Article 3 and based on the connecting factors of habitual residence and/or nationality. Such criteria are: 1) the habitual residence of the spouses;17 2) the last habitual residence of the spouses, insofar as one of them still resides there;18 3) the habitual residence of the respondent;19 4) the habitual residence either of the spouses (in the event of a joint application);20 5) the habitual residence of the applicant (forum actoris) if he or she resided there for at least a year immediately before the application was made;21 6) the habitual residence of the applicant if he or she resided there for at least six months immediately before the application was made and is either a national of the Member State in question or, in the case of the United Kingdom and Ireland, has his or her “domicile” there;22 and, finally 7) the nationality of both spouses or, in the case of the United Kingdom and Ireland, of the “domicile” of both spouses.23 The grounds laid down in Article 3 of the Regulation No 2201/2003 are set out as alternatives and inclusion in section (a) or section (b) does not indicate precedence. This jurisdictional solution seems at odds with the right of the spouses to select the law applicable to divorce or legal separation, as governed by Article 5 of Regulation No 1259/2010 (Rome III),24 whenever the separation or divorce proceeding has been established in a Member State bound by the Rome III Regulation.25

the matters of parental responsibility, repealing Regulation (EC) No 1347/2000 (Brussels IIbis), OJ L 338 of 23 December 2003, p. 1. 17 Article 3(1)(a), first indent. 18 Article 3(1)(a), second indent. 19 Article 3(1)(a), third indent. 20 Article 3(1)(a), fourth indent. 21 Article 3(1)(a), fifth indent. 22 Article 3(1)(a), sixth indent. 23 Article 3(1)(b). 24 Article 5 of the Rome III Regulation gives limited party autonomy to the spouses in legal separation and divorce matters. The parties may agree to designate the law of a country with which they have a special connection (habitual residence or nationality of either spouse) or the law of the forum as the law applicable to divorce and legal separation. 25 The Regulation implements an enhanced cooperation among fifteen Participating Member States (Belgium, Bulgaria, Germany, Spain, France, Italy, Latvia, Luxembourg, Hungary, Malta, Austria, Portugal, Romania, Slovenia and Lithuania) under Articles 328 ff. TFEU. Whenever the forum seized by virtue of the jurisdiction rules set out in the Brussels II-bis Regulation belongs to a non-participating Member State, national conflict rules of the forum will apply. In that case, where the forum’s legal system is inspired by the so called “jurisdictional approach”, the choice-of-court will automatically lead to the application of lex fori.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters The rationale of the lack of party autonomy in matrimonial matters lies essentially in the purposes pursued by Regulation No 2201/2003 at jurisdictional level. The grounds of jurisdiction listed in Article 3 of Brussels II-bis Regulation were originally designed to meet objective requirements: in order to be in line with the interests of the parties, the European legislator established flexible rules, able to accommodate the mobility of citizens within the EU and to meet the needs of individuals without sacrificing legal certainty.26 As a result, the grounds of jurisdiction adopted in Article 3 are based on the principle of a genuine and effective connection between the person and a Member State involved27 and they were not intended to confer on the parties to a matrimonial cause much direct freedom to choose the court in which the proceedings might be raised. 28 However, within the seven grounds of jurisdiction, an indirect scope for party choice is contained in Article 3(a), indent 4, which allows for jurisdiction, in the event of a joint application, in the court of the Member State in whose territory either of the spouses is habitually resident. However, because the parties’ freedom is restricted to the territory of a Member State in which both spouses, presumably at the date of the joint application, are habitually resident, choice can be affected only at the date of the application, and not before, for example, in a prenuptial agreement, which acts as a further restriction on the parties.29 Moreover Brussels II-bis, in its present form, does not allow a defendant to confer jurisdiction upon a Member State’s court merely by entering an appearance before it. This exclusion is coherent, however, with the general purpose of the jurisdictional rules of the Regulation which seek to guarantee, to the extent possible, the abstract foreseeability of jurisdictional outcomes. In fact, in recent years, revisions have been proposed to the grounds of jurisdiction provided by Regulation No 2201/2003. In particular, it has been suggested that spouses are allowed to agree upon the competent court in divorce and legal separation cases (prorogatio fori).30 In this regard, the 2005 Commission’s Green Paper stated that allowing the parties to choose the competent 26 Explanatory Report on the Convention of 28 may 1998 on Jurisdiction and the Recognition and Enforcement of Judgment in Matrimonial Matters (on which the Brussels II-bis Regulation is based), OJ C 221, 16 July 1998, p. 27 (also known as “Borrás Report”), point 27. 27 Recital 12 of Regulation (EC) No 1347/2000 was explicit in referring to that principle. 28 Borrás Report, point 30. 29 Borrás Report, point 31:“… There was also a broad consensus on the ground to apply in the event of a joint application (fourth indent) as the application may be made to the authorities of the place in which either spouse is habitually resident; in that case, it should be noted that, unlike the 1968 Brussels Convention, this Convention allows only a minor role for the spouses’ free choice, which appears only in this limited form: it is logical that it should be so since the issue is matrimonial proceedings”. 30 See Green Paper on Applicable Law and Jurisdiction in Divorce Matters [COM(2005) 82 of 14 March 2005] and the European Commission’s Proposal for a Council Regulation amending Regulation (EC) No 2201/2003 as regards jurisdiction and introducing rules concerning applicable law in matrimonial matters [COM(2006) 399 of 17 July 2006].

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Ornella Feraci court could enhance legal certainty and flexibility in the framework of the Regulation and would be particularly useful in cases of divorce or legal separation by consent.31 A 2006 European Commission Proposal recommended that the jurisdictional rules of the Brussels II-bis Regulation were integrated with a new provision concerning the direct choice-of-court by agreement. Accordingly,32 spouses might have conferred jurisdiction on a court or the courts of a Member State, in a proceeding between them relating to divorce or legal separation, on the basis of certain grounds of jurisdiction, provided that there was a substantial connection with the Member State. The relevant connecting factors were, in particular, the grounds of jurisdiction listed in Article 3: the last common habitual residence of the spouses (for a minimum period of three years) and the nationality of one of them (or “domicile” in the case of the United Kingdom and Ireland). Parties could prorogate in favour of a specific court of a Member State or, in general, in favour of the courts of a certain Member State. In the latter case, the determination of the territorial competence had to be established according to the national procedural rules applicable in that State. Certain formal requirements were also stipulated to ensure that both spouses were aware of the consequences of their choice: in particular, the agreement conferring jurisdiction had to be “expressed in writing and signed by both spouses at the latest at the time the court is seised”.33 The possibility of choosing the competent court did not apply to proceedings relating to marriage annulment where party autonomy was considered inappropriate. The proposed provision clearly sought to improve access to courts for spouses of different nationalities by enabling them to designate by common agreement a court or the courts of a Member State of which one of them is a national. This possibility applied to spouses living in a Member State as well as to spouses living in third States.34 It is clear that this enhanced party autonomy would have improved legal certainty and predictability for the parties. However, such a choice would have been difficult to execute in contentious divorce or separation

COM(2005) 82 of 14 March 2005, para 3.6. Article 3a, COM(2006) 399 of 17 July 2006. See, on the electio fori set out in the Commission’s Proposal: J. CARRASCOSA GONZALEZ/ F. SEATZU, Normas de competencia judicial internacional en la propuesta de Reglamento “Roma III”, Riv. dir. int. priv. proc. 2009, p. 567 et seq., at 476-479; F. SALERNO, I criteri di giurisdizione comunitari in materia matrimoniale, Riv. dir. int. priv. proc. 2007, p. 63 et seq., at 75-77. 33 Article 3a(2), COM(2006) 399 of 17 July 2006. 34 With this regard, the proposal also introduced a uniform and exhaustive rule on “residual jurisdiction” in order to enhance legal certainty and ensure access to court in matrimonial matters for spouses who live in a third country but would like to bring proceedings in a Member State with which they have a close connection. See Article 7 of the Commission’s Proposal which set out grounds of jurisdiction for the cases in which none of the spouses is habitually resident in the territory of a Member State and do not have a common nationality of a Member State. 31 32

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters proceedings, where the litigation rates are high and the parties apply opposing defensive strategies. The prorogation provision set out in Article 3a of the Commission’s Proposal corresponded also to Article 12 of Regulation No 2201/2003, which foresees a limited possibility to choose competent court in matters of parental responsibility.35 It has been argued that the proposal did not allow parties to confer matrimonial jurisdiction on a Member State in which they own heritable property (whether currently or formerly used as a matrimonial home), even though conceivably it may be convenient for the jurisdiction of such a state to be available to parties.36 Moreover the Commission Proposal did not encompass a provision equivalent to Article 24 of the Brussels I Regulation, to provide for jurisdiction based upon submission by the defendant. Notwithstanding the lack of party autonomy in matrimonial matters, the seven alternative grounds of jurisdiction envisaged under Article 3 of Regulation No 2201/2003 allow the spouses (or the plaintiff spouse) to choose the court in whose territory the material interests of the couple are located, or the courts of the places that the choice-of-law of the spouses may address. The combined application of the conflict rules laid down in Rome III Regulation and, in particular, the choice-of-law laid down in Article 5 of the latter can lead to forum shopping, particularly when jurisdiction is grounded on the habitual residence of either or of one of the spouses, due to the vague contents of the criterion.37 The application, under Article 3 of Regulation No 2201/2003 of identical factual circumstances to those laid down in Article 5 of Regulation No 1259/2010 (namely, the habitual

35 Under Article 12(1) of the Brussels II-bis Regulation: “1. The courts of a Member State exercising jurisdiction by virtue of Article 3 on an application for divorce, legal separation or marriage annulment shall have jurisdiction in any matter relating to parental responsibility connected with that application where: (a) at least one of the spouses has parental responsibility in relation to the child; and (b) the jurisdiction of the courts has been accepted expressly or otherwise in an unequivocal manner by the spouses and by the holders of parental responsibility, at the time the court is seised, and is in the superior interests of the child.” 36 J. CARRUTHERS, Party Autonomy in the Legal Regulation of Adult Relationships: What Place for Party Choice in Private International Law, I.C.L.Q. 2012, p. 881-913, at 895. 37 Regulation Brussels II-bis does not provide for a definition of habitual residence. According to the Borrás Report (point 32) the latter coincides with “the place where the person had established, on a fixed basis, his permanent or habitual centre of interests, with all the relevant facts being taken into account for the purpose of determining such residence”. This definition derived from various judgments issued by the European Court of Justice (ECJ, 15 September 1994, case C-452/93, Fernandez, ECR [1994] I-4295; 14 February 1995, case C-279/93, Finanzamt Köln-Altstadt, ECR [1995] I-00225, para. 32; 14 September 1999, case C-391/97, Geschwind, ECR [1999] I-0545, para. 22; 16 May 2000, case C-87/99, Zurtrassen, ECR [2000] I-03337, para. 21].

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The Restricted Choice-of-Court Agreements under Regulation No 4/2009 (Maintenance Regulation)

Notwithstanding the negative approach taken by Brussels II-bis Regulation in relation to choice-of-court agreements, party autonomy has affected, for the first time, the jurisdictional regulation of family relations by the unification of private international rules on maintenance obligations. Following, if only partially, the model prescribed in civil and commercial matters, Regulation No 4/200939 admits two different forms of prorogation (express and tacit), which derogate from the general grounds of jurisdiction laid down in Article 3.40 In order to settle disputes relating to maintenance obligations arising from a family relationship, parentage, marriage or affinity,41 Article 4 of Regulation No 4/2009 enables the maintenance creditor and debtor to prorogate the court by agreement: the actual choice, however, is heavily restricted to the small number of forum that have a close link of the maintenance obligation with a certain Member State. The selected grounds of jurisdiction consist of the place of habitual residence

38 See, on the matter: M. SABIDO RODRÍGUEZ, La nueva regulación del divorcio en la Unión Europea. Su proyección en Derecho internacional privado español, Revista de Derecho Comunitario Europeo 2013, p. 499-534. 39 Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, OJ L 7 of 10 January 2009, p. 1 (hereinafter: “Maintenance Regulation”). For some general comments on the Regulation see (also for additional references): B. ANCEL/ H. MUIR WATT, Le règlement CE n° 4/2009 du 18 décembre 2008 relatif à la competence, la loi applicable, la reconnaissance et l’exécution des decisions et la cooperation en matière d’obligations alimentaires, Rev. crit. dr. int. pr., 2010, p. 464 et seq.; M. CASTELLANETA/ A. LEANDRO, Il regolamento CE n. 4/2009 relativo alle obbligazioni alimentary, Le nuove leggi civili commentate 2009, p. 1051 et seq.; F. VILLATA, Obblighi alimentari e rapporti di famiglia secondo il regolamento n. 4/2009, Riv. dir. int. 2011, p. 731 et seq. 40 According to the general grounds of jurisdiction as set out in Article 3 of the Regulation, in matters relating to maintenance obligations in Member States, jurisdiction shall lie with: “(a) the court for the place where the defendant is habitually resident, or (b) the court for the place where the creditor is habitually resident, o (c) the court which, according to its own law, has jurisdiction to entertain proceedings concerning the status of a person if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties, o (d) the court which, according to its own law, has jurisdiction to entertain proceedings concerning parental responsibility if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties”. 41 Article 1(1) of Regulation No. 4/2009.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters of one of the parties or of nationality of at least one of them.42 Additional connecting factors may be applied where the parties are spouses or former spouses and the maintenance obligation invoked derives from the marriage. In that hypothesis parties may agree that a Member State’s court shall have jurisdiction, if it is competent in adjudicating the matrimonial issues or it is the authority of the spouses’ last common habitual residence for a period of at least one year.43 The above provisions are clearly intended to coordinate with the jurisdictional regulatory framework of marriage-based maintenance obligations in Article 3 of the Brussels II-bis Regulation, particularly in order to concentrate jurisdiction with only one court. Conversely, where the maintenance obligations are between parties that are not spouses, the parties are obliged to opt for a personal “place”, which is presumably strongly connected to the situation at stake, in order to avoid forum shopping. Under article 4(2), the jurisdiction conferred by the choice-of-court agreement shall be exclusive, unless the parties have agreed otherwise; moreover, the provision allows the maintenance creditor and the debtor to also choose “a court or the courts” of the Member States on the basis of the jurisdictional grounds set out in paragraph 1, which directly determines the territorial competence of the forum. In addition, under Article 4(4), if the parties have agreed to confer exclusive jurisdiction on the court or the courts of a State party to the Lugano Convention of 30 October 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, and that State is not a Member State, the said Convention shall nevertheless apply other than in relation to disputes relating to a maintenance obligation towards a child under the age of 18. Article 4 also establishes the relevant time for ascertaining the personal connecting factor made relevant to the purpose of prorogation. It states, in particular, that the grounds of jurisdiction must be met at the time the choice-of-court agreement is concluded or at the time the court is seized (Art. 4(1)). That excludes therefore the possibility of choosing the court during the pending proceeding. Furthermore, article 4(2) of the Regulation sets specific formal requirements, which are clearly designed to safeguard the full awareness of the interested parties: the choice-of-court agreement must be in writing and any communication by electronic means which provides a durable record of the agreement shall be equivalent to “writing”. Contrary to what is usually prescribed in this regard, in family provisions on choice-of-law,44 according to the wording of the provision, 42 Article 4(2)(a) and (b). Where the spouses have a double or multiple nationalities, one of which is not effective, it appears reasonable, in the absence of any indication, to apply, by analogy, the interpretation set by the ECJ in the Hadadi case in relation to Article 3 of the Brussels II-bis Regulation (16 July 2009, case C-168/08, Hadadi, ECR [2009] I-6871). 43 Article 4(2)(c). 44 See Article 8(2) of the Hague Protocol on the law applicable to maintenance obligations (“Such agreement shall be in writing or recorded in any medium, the information contained in which is accessible so as to be usable for subsequent reference, and shall be signed by both parties”); Article 7 of the Regulation (EU) No 1259/2010 which requires that the choice-agreement must be expressed in writing, dated and signed by both spouses (any communication by electronic means which provides a durable record of the agreement shall

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Ornella Feraci dating and signature/s are not expressly required. The sensitive nature of the matters clearly justifies the stricter approach in assessing the formal conditions of the jurisdictional agreements compared with the broader formal requirements setting in Article 23 of the Brussels I Regulation.45 In order to protect the weaker party, such a choice-of-court should not be allowed in the case of maintenance obligations towards a child under the age of 18.46 This strict limitation has been criticized because the choice-of-court could actually favour the interests of the child; in any event, a positive outcome might have been achieved conditioning the prorogation’s functioning to the best interest of the child and to a discretionary assessment of the latter.47 No similar restriction is, however, envisaged with regard to the tacit prorogation as prescribed by Article 5 of the Regulation.48 The latter simply repeats the formulation of Article 24 of Regulation No 44/2001 stating that a court of a Member State before which a defendant enters an appearance shall have jurisdiction, provided that he or she does not contest jurisdiction.

be deemed equivalent to writing) and allows for eventual additional formal requirements; Article 4-bis(1) of the proposed regulation on matrimonial property regimes and Article 4a(1) of the proposed regulation on registered partnership as emended by the EP Reports of 10 September 2013. 45 Under Article 23(1) and (2) of Regulation No 44/2001 the agreement conferring jurisdiction shall be either in writing or evidenced in writing; or in a form which accords with practices which the parties have established between themselves; or 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. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to “writing”. 46 Article 4(3) of the Maintenance Regulation. 47 See F. POCAR/ I. VIARENGO, Il regolamento (CE) N. 4/2009 in materia di obbligazioni alimentary, Riv. dir. int. priv. proc. 2009, p. 805-828, at 814., F. POCAR, La disciplina comunitaria della giurisdizione in tema di alimenti: il regolamento 4/2009/CE, in M.C. BARUFFI/ R. CAFARI PANICO (eds), Le nuove competenze comunitarie. Obbligazioni alimentari, Padova 2009, p. 3 et seq.; M. HELLNER, The Maintenance Regulation: A Critical Assessment of the Commission’s Proposal, in K. BOELE-WOELKI/ T. SVERDRUP (eds), European Challenges in Contemporary Family Law, Antwerp/ Oxford/ Portland 2008, p. 349 et seq. 48 With regard to choice-of-law, the electio juris in the EU private international law instruments on family and succession matters may be performed only expressly, not being allowed in none of the European acts a tacit choice-of-law.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters B.

Party Autonomy and the Proposed Regulations on Matrimonial Property Regimes and Property Consequences of Registered Partnerships

Further examples of prorogation in EU family law have been introduced in the proposed regulations on matrimonial property regimes49 and in relation to the property consequences of registered partnerships.50 The common purpose of the two draft regulations is to establish a clear European legal framework for determining jurisdiction and the law applicable to matrimonial property and registered partnerships regimes in order to facilitate the movement of decisions and instruments among Member States. On 10 September 2013, the European Parliament approved several amendments to the Commission’s above proposals,51 some of which affect party autonomy. Currently, in this field, prorogation of jurisdiction is permitted in three different forms. First, the proposed regulations provide for an “indirect” prorogation. Parties, in fact, may extend the jurisdiction of the courts of a Member State handling an application for divorce, judicial separation or marriage annulment under Regulation No 2201/2003 (or for dissolution or annulment of a registered partnership) to include matters relating to the matrimonial property regimes (or the property consequences of the registered partnership) arising in connection with that application, “if the jurisdiction of the courts concerned has been recognized, expressly or otherwise in an unequivocal manner by the spouses or partners”.52 Such prorogation enables the parties to extend the latter court’s jurisdiction to the liquidation of the matrimonial property (or the property consequences of the registered partnership) following the separation procedure (or the annulment of the registered partnership) and to other matters concerning the property arising from the latter. In the same sense, striving to achieve the principle of unity of jurisdiction, the two proposals establish that the courts of a Member State seized in matters of the succession of a spouse (or of a registered partner) under Regulation 49 Commission’s Proposal on matrimonial property regimes of 16 March 2011, COM(2011) 126. 50 Commission’s Proposal on property consequences of registered partnerships of 16 March 2011, COM(2011) 127. 51 European Parliament legislative resolution of 10 September 2013 on the proposal for a Council regulation on jurisdiction, applicable law and the recognition and enforcement of decisions regarding the property consequences of registered partnerships (P7_TAPROV(2013)0337; hereinafter: “EP Report on registered partnership”) and European Parliament legislative resolution of 10 September 2013 on the proposal for a Council regulation on jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes (P7_TA-PROV(2013)0338; hereinafter: “EP Report on matrimonial property regimes”). 52 See Article 4 of the Commission’s proposal on patrimonial property regimes and Article 4 of the Commission’s Proposal on property consequences on registered partnerships as emended by the EP Reports of 10 September 2013.

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Ornella Feraci No 650/2012 shall have jurisdiction to rule on matters of the matrimonial property regimes (or of the property consequences of the partnership) arising in connection with the succession case.53 Secondly, the two draft instruments envisage an express prorogation, according to which parties may confer exclusive jurisdiction on the courts of the Member State whose law has been chosen as the law applicable to the property regime of their marriage or partnership, according to the relevant provisions on choice-of-law as prescribed in the two proposed regulations.54 This possibility was not originally contained in the Commission’s proposals of 2011 and has been introduced only recently by the European Parliament.55 Such an agreement must comply with certain requirements regarding time and formal validity: in particular, such a choice-of-court agreement may be concluded or amended at any time, but no later than when the case is brought before the court. If the law of the forum so provides, the parties may also choose the court after it has been seized. In that event, the choice shall be recorded in court in accordance with the law of the forum. If the agreement is concluded before the proceedings, it must be drawn up in writing and dated and signed by both parties. In that case any communication by electronic means which provides a durable record of the agreement shall be equivalent to “writing”. Thirdly, the two proposed regulations envisage a further, tacit, prorogation: parties may confer jurisdiction on the court of the Member State whose law has been chosen by virtue of the choice-of-law provisions56 or whose law is applicable pursuant to the conflict of-law-rules applicable in the absence of choice57, if the defendant enters an appearance before it without contesting jurisdiction.58 In this form of party autonomy it is also required to provide support and protection for spouses/partners who may be less well advised and hence susceptible to consent to a jurisdiction substantially unfavourable to them:59 therefore, before assuming jurisdiction, the court shall ensure that the defendant is informed

Article 3 of the Commission’s proposal on patrimonial property regimes and Article 3 of the Commission’s Proposal on property consequences on registered partnerships as emended by the EP Reports of 10 September 2013. 54 The partners or the spouses may choose the applicable law in accordance with Article 15b (registered partnerships) and Article 16 (matrimonial property regimes) of the two proposals as amended by the European Parliament. 55 See the new Article 4a (registered partnership) and Article 4bis (matrimonial property regimes) of the proposals as emended by the European Parliament. 56 Article 16 of the Commission’s Proposal on matrimonial property regimes and Article 15b of the Commission’s Proposal on property consequences of registered partnerships, as emended by the European Parliament. 57 Article 17 of the Proposal on matrimonial property regimes and Article 15 of the Proposal on registered partnerships. 58 See the new Article 4b (registered partnership) and Article 4ter (matrimonial property regimes) of the proposed regulations as emended by the European Parliament. 59 Article 4b(2) (registered partnerships) and Article 4ter(2) (matrimonial property regimes). 53

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V.

The Choice-of-Court under Regulation No 650/2012 (Succession Regulation)

The final step of the expansion of party autonomy in the framework of the international jurisdiction concerns the European regulation of international succession.60 In this regard, Regulation No. 650/201261 places significant emphasis on party autonomy at jurisdictional level. According to Article 5 of the Regulation, where the law chosen by the deceased to govern his succession pursuant to Article 2262 is the law of a Member State, “the parties concerned” may agree to confer exclusive jurisdiction to rule on any succession matter on a court or the courts of that Member State.

For a comprehensive overview on the jurisdictional set of rules provided by Regulation No 650/2012 see: A. LEANDRO, La giurisdizione nel regolamento dell’Unione europea sulle successioni mortis causa, in P. FRANZINA/ A. LEANDRO (eds), Il diritto internazionale privato europeo delle successioni mortis causa, Milano 2013, pp. 59-86; H. GAUDEMET-TALLON, Les règles de compétence judiciarie dans le règlement européen sur les successions, in G. KHAIRALLAH/ M. REVILLARD (eds), Droit européen des successions internationales, Paris 2013, p. 132 et seq.; O. FERACI, La nuova disciplina europea della competenza giurisdizionale in materia di successioni mortis causa, Cuadernos de Derecho Transnacional 2013, p. 291-314. 61 In the near future, the Succession Regulation will unify international succession law in the EU. Containing rules which have a universal nature, starting from 17 August 2015, it will almost entirely replace international succession rules which are currently in force in the Member States. 62 Article 22 of the Succession Regulation allows for a professio iuris in favour of the law of nationality of the deceased as possessed at the time of the choice-of-law or at the time of death; the choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition. On the electio juris in the succession matters see, ex multis: A. DAVÌ, L’autonomie de la volonté en droit international privé des successions dans la perspective d’une future réglementation européenne, Riv. dir. int. priv. proc. 2004, p. 473 et seq.; A. BONOMI, Le choix de la loi applicable à la succession dans la proposition du règlement européen, in A. BONOMI/ C. SCHMID (eds), Successions internationales. Réflexions autour du futur règlement européen et de son impact pour la Suisse. Publications de l'Institut suisse de droit comparé, Zürich 2009, p. 23-55; A. BONOMI, Successions internationales: conflits de lois et des juridictions, Recueil des Cours 2010, p. 71 et seq.; P. KINDLER, La legge regolatrice delle successioni nella proposta di regolamento dell’Unione Europea: qualche riflessione in tema di carattere universale, rinvio e professio iuris, Riv. dir. int. 2011, p. 422 et seq.; A. WYSOCKA, How can a valid professio iuris be made under the EU succession Regulation?, Nederlands Internationaal Privaatrecht 2012, p. 569-575. 60

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Ornella Feraci This option constitutes an exception to the general jurisdictional rule based on the last habitual residence of the deceased as prescribed by Article 4 of the Regulation. As with the provision for transfer of jurisdiction to the better placed court to rule on the succession (as set out in Article 6(a) of the Regulation),63 choice-ofcourt is linked to the exercise of private autonomy in terms of conflict of laws, but that does not affect, directly, the determination of the applicable law. In this hypothesis, in fact, the enhancement of private will entails the possibility of concluding a choice-of-court agreement, through which the “parties concerned” in a succession dispute, both actual and merely potential, may decide to grant exclusive jurisdiction to the court of the State of the deceased’s nationality, when the latter has opted for the law of that State under Article 22 of the Regulation. This option is in line with the general aim of the jurisdictional set of rules of Regulation No 650/2012 according to which jurisdiction should be exercised only if the case has a sufficient connection with the Member State of the seized court.64 Enabling the parties to choose the court proves useful in order to overcome the inconveniences arising out from the application of the criterion of the deceased’s habitual residence.65 In certain cases, determining such a connecting factor may prove complex. An example is where the deceased, for professional or economic reasons, had gone to live abroad to work there, sometimes for a long time, but had maintained a close and stable connection with his State of origin. In such a case, the deceased could, depending on the circumstances of the case, be considered still to have his habitual residence in his State of origin in which the centre of interests of his/her family and his/her social life was located. Other complex cases may arise where the deceased lived in several States alternately or travelled from one State to another without settling permanently in any of them. If the deceased was a national of one of those States or had all his/her main assets in one of those States, his/her nationality or the location of those assets could be a special factor in the overall assessment of all the factual circumstances. 63 Under Article 6(a) of Regulation No 650/2012: “… where the law chosen by the deceased to govern his succession pursuant to Article 22 is the law of a Member State, the court seized pursuant to Article 4 or Article 10: (a) may, at the request of one of the parties to the proceedings, decline jurisdiction if it considers that the courts of the Member State of the chosen law are better placed to rule on the succession, taking into account the practical circumstances of the succession, such as the habitual residence of the parties and the location of the assets …”. 64 This general aim derives from the overall overview on the jurisdictional grounds established in the Regulation. See Recital 23 and Recital 31 of the Regulation. The same rationale inspires the determination of the law applicable to the succession: see recital 37 of the Regulation. 65 See recital 28 of the Regulation. The habitual residence is a purely factual concept. In order to determine it, the authority dealing with the succession should make an overall assessment of the circumstances of the life of the deceased during the years preceding his death and at the time of his death, taking account of all relevant factual elements, in particular the duration and regularity of the deceased’s presence in the State concerned and the conditions and reasons for that stay. In the succession matters the habitual residence usually corresponds to the place where the deceased has all his/her main assets.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters The above-mentioned provision on choice-of-court agreement, which was not originally envisaged in the Commission’s proposal,66 is coherent, moreover, with the general purpose of the uniform rules,67 which are generally devised so as to ensure that the authority dealing with the succession will, in most situations, be applying its own law. Regulation No 650/2012 therefore provides for a series of mechanisms, which would come into play where the deceased had chosen as the law to govern his succession the law of a Member State of which he/she was a national (coincidence between the forum and jus).68 In order to promote the simplification of procedures and the reduction of judicial costs,69 the combination of the two forms of party autonomy in the framework of the Succession Regulation (as choice-of-law and choice-of-court) allows, thus, the effective localization of the factors which connect the individual to the Member State of nationality. Whenever the parties to the succession dispute have prorogated the jurisdiction, according to Article 6(b) of the Regulation, the court seized, pursuant to the general jurisdictional grounds laid down in Article 4 or in Article 10 (subsidiary jurisdiction rule),70 shall immediately decline jurisdiction in favour of the State authorities selected by the parties by virtue to Article 5 of the Regulation.71 In this case, the first seized court shall declare of its own motion that it has no jurisdiction, without considering whether or not the prorogated court is better placed to rule on the succession, in the light, for example, of the practical circumstances of the succession, such as the habitual residence of the parties and the location of the assets. With respect to the formal requirements for the validity of prorogation, Article 5 confirms the strict trend held in relation to all family matters, establishing 66 Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession of 14 October 2010, COM (2009) 15 (hereinafter: “Commission’s Proposal”). 67 The objectives of this Regulation are the free movement of persons, the organisation in advance by citizens of their succession in the European Union context and the protection of the rights of heirs and legatees and of persons close to the deceased, as well as of the creditors of the succession (see Recital 80 of Regulation No 650/2012). 68 Recital 27 of Regulation No 650/2012. 69 For some references on choice-of-law in the Succession Regulation see: O. FERACI (note 3), p. 456 et seq.; E. VASSILAKAKIS, La professio juris dans les successions internationals, in M.N. JOBARD-BACHELLIER/ P. MAYER (eds), Le droit international privé: esprit et méthodes. Mélanges en l'honneur de Paul Lagarde, Paris 2005, p. 805 et seq. 70 Article 10 of Regulation No 650/2012 on “subsidiary jurisdiction” guarantees that the courts of all Member States may, on the same grounds, exercise jurisdiction in relation to the succession of persons not habitually resident in a Member State at the time of death. In particular, it establishes that the courts of a Member State in which assets of the estate are located shall have jurisdiction to rule on the succession as a whole in so far as the deceased had the nationality of that Member State at the time of death; or, failing that, the deceased had his previous habitual residence in that Member State, provided that, at the time the court is seized, a period of not more than five years has elapsed since that habitual residence changed. 71 Article 6(b) of Regulation No 650/2012.

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Ornella Feraci that the choice-of-court agreement must be expressed in writing, dated and signed by the parties concerned. To this purpose, even in this field, it is deemed to be equivalent to writing any communication by an electronic means which provides a durable record of the agreement. However, Article 5 does not indicate the time by which the choice-of-court must be performed. In the absence of any clear indication, it seems reasonable to assume that the agreement can be concluded after the opening of the succession proceeding before the courts determined by the general jurisdictional rules, due to the possibility of transferring jurisdiction under Article 6(b). That option will be bound, in any case, by the requirements set in the national procedural rules applicable to the case and may encounter problems in cases in which the procedural law of the forum does not prescribe anything relevant. The possibility of concluding a jurisdictional agreement before the dispute arises and even before the opening of the succession would be rather more complex and controversial: admitting it, in some States, would, apparently, authorize agreements as to succession, which are (as is commonly known) forbidden in some Member States (or must comply with strict rules on formal validity). As with all the European family instruments that we have examined, the wording of Article 5 of Regulation No 650/2012 refers to “a court or the courts”, meaning that prorogation may even lead to the determination of the territorial competence. As a result, where the parties concerned in a heritage dispute opt, in general, for the courts of a certain Member State, the competence will be determined under the procedural law of the forum. A further issue may arise with respect to the admissibility and the effects of the choice-of-court agreement not concluded by all the parties of the succession dispute. The wording of Article 5 seems to admit, albeit indirectly, such a possibility, since it merely states that the “interested parties” and not all the stakeholders may prorogate the jurisdiction in favour of the courts of the Member State of the chosen law, i.e. of the State of the deceased’s nationality. Similarly, Article 7(b) of Regulation No 650/2012 provides that the courts of the Member State whose law has been chosen by the testator pursuant to Article 22 are competent to rule on the succession if “the parties to the proceedings” have agreed, in accordance with Article 5, to confer jurisdiction on a court or the courts of that Member State. It is clear that a limited choice-of-court among some parties to the dispute is admissible to the extent that such agreement affects exclusively the positions of the parties involved: that might occur in a “partial” choice-of-court, involving only some parties of the dispute but addressing a specific succession’s issue.72 On the other hand, whenever the choice-of-court agreement takes place between only some of the “parties interested in the succession” but involve, on the merits, the succession as a whole, the effects of the agreement might produce, however, in the case of tacit prorogation performed by the parties to the

72

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters proceedings who were not party to the agreement, whereby they enter an appearance without contesting the jurisdiction (tacit prorogation).73 According to Article 9 of the Regulation, where in the course of proceedings before a court of a Member State exercising jurisdiction pursuant to Article 7 - i.e. the court of the Member State whose law has been chosen by the testator by virtue of Article 2274 – it appears that not all the parties to those proceedings were party to the choice-of-court agreement – that court shall continue to exercise jurisdiction if the parties to the proceedings who were not party to the agreement enter an appearance without contesting jurisdiction. In the event that the jurisdiction of the said court is contested by parties to the proceedings but excluded from the agreement, that authority shall decline jurisdiction. In that case, the competence to rule on the succession shall lie with the courts having jurisdiction pursuant to the general jurisdictional rules (Article 4 or Article 10). Conversely, whenever the parties to the agreement do not expressly contest jurisdiction, the court chosen by the other parties shall decline jurisdiction in favour of the court designated by the general ground of jurisdiction (art. 4) or by the subsidiary rule (Article 10).75 In certain situations it may be difficult, if not impossible, to achieve agreement among all the parties concerned, for example where the case is particularly complex, or parties are not known or are not easily identifiable at the start of the proceedings. The above considerations restrict de facto the practical importance of prorogation, as regulated by the uniform rules, and amplifies the asymmetry with the conflict-of-law’s regulation. It is surprising that Regulation No 650/2012 does not permit the person whose succession is concerned to designate the competent courts on the basis of a testamentary disposition, i.e. a unilateral choice-of-court.76 Such a possibility was actually proposed by the Max Planck Institute for Comparative and International Private Law in its comments on the Commission’s proposal;77 the latter, criticizing

See Article 9(1) of Regulation No 650/2012. Under Article 7 of Regulation No 650/2012: “The courts of a Member State whose law had been chosen by the deceased pursuant to Article 22 shall have jurisdiction to rule on the succession if: (a) a court previously seised has declined jurisdiction in the same case pursuant to Article 6; (b) the parties to the proceedings have agreed, in accordance with Article 5, to confer jurisdiction on a court or the courts of that Member State; or (c) the parties to the proceedings have expressly accepted the jurisdiction of the court seised”. 75 Article 9(2) of Regulation No 650/2012. 76 See, for instance, on unilateral choice-of-court Article 87(2) of the Swiss Federal Act on Private International Law of 18 December 1987. Article 50(d) of the Italian private international law No 218/1995 admits a tacit prorogation of jurisdiction, whereby the defendant enters an appearance without contesting jurisdiction, except for claims related to real estates located abroad. The Italian private international law does not provide, instead, for an express prorogation of jurisdiction, only envisaging the professio juris of the testator in Article 46(2). 77 Max Planck Institute for Comparative and International Private Law, “Comments on the European Commission’s Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and 73 74

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Ornella Feraci the lack of party autonomy in the draft regulation, suggested the introduction of two expressed forms of choice of jurisdiction,78 by the testator and by the parties interested in the succession, as well as a form of tacit prorogation,79 linked to the defendant's appearance in court. The proposed modifications seemed reasonable since the unilateral choiceof-court is also provided by Regulation No. 44/2001 with respect to inter vivos trusts: according to Article 23(4) of the latter, in fact, the settlor may designate the forum for trust-related disputes in the trust instrument.80 A similar option is currently allowed by Article 25(3) of Regulation No. 1215/2012 (Brussels I-bis). Generally speaking, the recognition of such a possibility would have reflected the testamentary freedom, at the jurisdictional level, and would have been coherent with the choice-of-law as provided by Article 22. In fact, when the testator chooses the law of a Member State other than that of its habitual residence, he/she may also be interested in the fact that the courts of that State are competent on the merits too: the courts in that State, being familiar with the contents of the applicable law, are usually better placed to hear the case and to deliver a speedy and correct decision. Moreover, the absence of a unilateral choice-of-court cannot be justified by the power of transferring the competence before the courts of the Member State of the chosen law (national) as provided by Article 6(a). Such a possibility does not satisfy, in fact, the interests of the testator for two different reasons: first, the transfer of jurisdiction is subject to the discretion of the court and to the request of one of the parties to the proceedings; secondly, the transfer is restricted to the succession’s issue pending before that court. On the contrary, by introducing a choice-of-court by the testator, though restricted to the Member State of its authentic instruments in matters of succession and the creation of a European Certificate of Succession”, RabelsZ 2010, p. 522-720. 78 Under Article 6a – “Choice-of-court” (Max Planck Institute for Comparative and International Private Law (note 79), p. 585): “1. A person may by way of a testamentary disposition provide that a court or the courts of a Member State whose law they may choose to govern the succession pursuant to Articles 17, 18(3) or 18a(3) shall have jurisdiction to rule on their succession as a whole or in part. The jurisdiction thus conferred shall be exclusive. 2. The parties to a dispute may agree that a court or the courts of a Member State shall have jurisdiction to settle any contentious litigation proceedings which have arisen or which may arise among them in connection with the succession. The jurisdiction conferred by the agreement shall be exclusive unless the parties have agreed otherwise. The agreement shall be in writing or evidenced in writing. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to a «writing»”. 79 Under Article 6b – “Jurisdiction based on the appearance of the defendant” (Max Planck Institute for Comparative and International Private Law (note 79), p. 585): “Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant to contentious litigation proceedings enters an appearance shall have jurisdiction. This rule shall not apply where the appearance was entered to contest jurisdiction”. 80 Under Article 23(4) of Regulation No 44/2001: “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 these persons or their rights or obligations under the trust are involved”.

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Party Autonomy and Conflict of Jurisdictions in Family and Succession Matters nationality, predictability would have been fostered and the international jurisdiction would have been more consistent with the applicable law’s regulatory framework as resulting from the Succession Regulation itself.

VI. Concluding Remarks The issue of party autonomy as a jurisdictional ground is addressed differently in the various EU private international law instruments on family and succession matters. A general feature of prorogation in the above-mentioned field is certainly the restricted nature of the choice. Limitations essentially relate to two different features of the jurisdictional agreement namely, the court that the parties may choose and the formal requirements prescribed for the valid exercise of the private will. Under the first limitation, the choice-of-court requires, in some cases, a close link between the family relation and the State of the forum as resulting from a set of predefined criteria, in order to facilitate the sound administration of justice and ensure legal certainty, avoiding that the defendant is sued in a court of a Member State which he could not reasonably have foreseen (maintenance obligations). In other cases, the forum prorogatum is linked to the electio juris, i.e. it coincides with the court of the Member State whose law has been chosen by the parties in that matter (matrimonial property regimes, property consequences of registered partnerships and succession matters). Finally, prorogation may depend on the achievement of the principle of unity at the jurisdictional level, by applying some legal devices aimed at coordinating jurisdiction among the Member States’ authorities (maintenance obligations, matrimonial property regimes and property consequences of registered partnerships). Under the second limitation, a choice-of-court agreement in these areas of law must comply with strict formal requirements regarding to the ways by which it is possible to express a valid will and preserve the full awareness of the parties, particularly the weaker persons involved. Such a variegated scenario is completed by the lack of party autonomy in matrimonial matters under Regulation No 2201/2003. The above disparity in regulating choice-of-court agreements combines, furthermore, with a second asymmetry in the EU private international law, lying in the imperfect parallelism between jus and forum in certain areas of family law. In conclusion, the asymmetries and deficiencies highlighted in this paper prove the difficulty of balancing, through party autonomy, the public and private interests at stake in family and succession matters, and, particularly, the risks of a fragmented evolution of the EU private international law.

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Ornella Feraci

VII. Abstract The paper provides an overview of party autonomy with regard to jurisdictional rules under the recent EU private international law regulations on family and succession matters, by addressing the issue from a teleological, systematic and analytical point of view. Accordingly, the paper analyses the (specific) legislative policies underlying the prorogation of jurisdiction and the interplay between the choice-of-law and the choice-of-court in these matters. It finally examines the content and modalities of the electio fori in the context of the instruments concerned, adopted or proposed by the European Institutions in relation to family and succession matters. This investigation demonstrates that prorogation has a restricted role in this area, both in the manner of determining the competent court to adjudicate the case and in relation to the formal requirements for validity. Furthermore, the article highlights some asymmetries in the overall regulatory framework of party autonomy as electio fori and electio legis: i.e. the lack of party autonomy in matrimonial matters under Regulation (EC) No 2201/2003 and the imperfect parallelism between jus and forum in certain areas of family and succession law.

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CONFLICTS BETWEEN PARENTS AND BETWEEN LEGAL ORDERS IN RESPECT OF PARENTAL RESPONSIBILITY Gian Paolo ROMANO*

I. II.

IV.

Introduction From Conflict between Parents to Conflict between Legal Orders A. The Origins of Interparental Conflict and Interstate Conflict and the Links between the Two Conflicts B. The Relativity of the Substantive Element and the Universality of the Formal Element of the Child’s (Best) Interests Ways to Prevent and to Resolve Conflicts between Legal Orders A. “Binational” Courts as the Best Guarantors of the Impartiality of Justice? B. The Allocation and Exercise of International Jurisdiction C. Recognition, Refusal of Recognition and Possibilities of Overcoming the Adverse Effects of Such Refusal Conclusion

I.

Introduction

III.

1. First, let me thank professors GUY-ECABERT and VOLCKRICK for inviting me to take part in today’s meeting.1 The few lines through which they sketched the scope and intent of their proposed symposium immediately aroused my interest. The conflict both between “parents” and between “legal orders” was raised, with interna* Full Professor at the University of Geneva. This paper is an almost word-for-word translation of a paper titled Conflits entre parents et entre ordres juridiques en matière de responsabilité parentale which is included in Ch. GUY-ECABERT/ E. VOLCKRICK (eds), Enlèvement parental international d’enfants – Saisir le juge ou s’engager dans la médiation?, Basle (etc.), 2015, p. 85 s. I wish to express my gratitude to Rachel HARRISON for her help in translating the text. 1 I also want to thank Clément BACHMANN, Didier BODEN, Joann CALOZ, Valérie FLUCKIGER, Johannes FOLGER, Virginie JAQUIÉRY, Elena NEIDHART, Valentin RÉTORNAZ, Michel REYMOND for their valuable suggestions and Maître Anne REISER for the inspiring exchanges about two cases on which I had the privilege to work with her. Although the text, which is the outgrowth of a presentation made in Neuchâtel on 31 January 2013, has been considerably modified since, it largely preserves its original, spoken style. The paucity of the cited bibliography is explained, although by no means justified, by both the particular occasion from which the paper stems and the rather unusual standpoint it adopts, offering a chain of ideas that combine current and prospective law in highly perfectible coherence.

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Gian Paolo Romano tional mediation being tentatively proposed as a tool to overcome this two-fold conflict. Now, it seems to me that such a dual perspective is the right way to visualise and isolate the problems triggered by the “cross-border” activity and intercourse of human beings. Here lies all the fascinating ambiguity of private international law; it is private in that the relationships that this area of law essentially targets arise between individuals (this term being here used as covering both physical and legal, or “moral”, persons); it is international in that these relationships, and the individuals involved in them, simultaneously fit within, and are part of, several national communities. State “sovereignty” means that each State is equipped with legislative, judicial and executive branches, and possesses an inherent “aptness” (“vocation” in French) to shape according to its own, independent view the human relationships that affect the society for which it is responsible. However, if each of the national communities that are “co-affected” by a “binational” (“tri-national” or, as the case may be, “tetra-national”, etc.)2 private relationship insists in its own judiciary adjudicating upon it in conformity with its own view of justice, this relationship, and the individuals involved, run the risk of not being ruled by the Law – of not benefiting from the Rule of Law – but of being struck instead by a “legal disorder” that is tantamount to a legal no man’s land. In other words, the two state communities, each being independent of the other when it comes to wholly domestic human relationships, are, in respect of human relationships affecting them both, whether they like it or not, interdependent, i.e. mutually dependent on each other. And so, they are party to an interstate relationship. A “bi-state”,3 or “co-state” as I would like to say, area of sovereignty – an area of joint, “binational” sovereignty – must be pursued by both communities, at least to the extent that both communities are committed to those binational human relationships benefiting from the Rule of Law and, consequently, from a truly legal order. For this reason, it is in the “joint” interests of the two communities to coordinate their efforts in order to bilaterally forge a sort of “bi-state” legal order and make sure the crossborder private relationships at stake take advantage from such a legal order rather than being mired and languishing in a legal mess. 2. Since the key terms that are commonly used in children law and their meaning vary a bit among the different legislations, I will offer definitions that flow in part from a comparative analysis and in part from international instruments, particularly the Hague Convention 1996.4 “Custody” refers to the individual, substantive right, which also often constitutes a legal obligation (Pflichtrecht), to

2 Or “penta-national”, or “hexa-national”, etc., depending on the number of States that the relationship in question presents links with. 3 Or “tri-state”, etc. Such variants will no longer be mentioned in the remainder of the text, but they continue to be implied. 4 Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation in Respect of Parental Responsibility and Measures for the Protection of Children, concluded at The Hague on 19 October 1996 and entered into force in Switzerland on 1 July 2009 (RS 0.211.231.011).

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Conflicts in Respect of Parental Responsibility take daily care of the child and to live with him or her;5 it is an obligation especially towards the child and a right especially towards the “non-custodial” parent but also towards every public authority that should in principle defer to what is sometimes referred to as parental autonomy;6 “parental authority” means the power, which also often constitutes, for similar reasons, both a right and an obligation, to make (if it’s sole) or to contribute to making (if it’s joint) important decisions concerning the child, such as his or her residence,7 education, extracurricular activities, religion and medical treatments; the “right of contact”, including visitation rights, is the right to maintain a personal relationship with the child and to take him or her, while exercising such a right, to a place other than the place of custody; “parental responsibility” means the whole of these prerogatives and any one of them; “state responsibility” designates the duty, and the right that comes with it, of public authorities to take action, mainly on a subsidiary basis, to protect the child when parental authority is exercised by a parent or parents so irresponsibly that the welfare of the child is put at risk.8 First, I suggest we look at the source and the essence of the “conflicts between legal orders”; often used as a synonym, the expression “conflict between legal systems” figures in the preamble to the Hague Convention 1996 which gives itself the aim to “avoid” the conflicts of this sort9 (I). I will then move on to review the legal provisions and mechanisms that are used in current law and those which could be used in future law in order to prevent or resolve such conflicts (II).

5 The expression “physical custody” may suggest that it relates to something other than a substantive right, i.e. a prerogative that is protected by law and may be enforced, if needed, by public authorities: see infra, no 4. 6 Since right and obligation exist here together, the former can be exercised in a way that prevents the fulfilment of the second, in particular when the custody rightholder puts the welfare of the child at risk. This is why parental autonomy vis-à-vis public authorities has limits which, once exceeded, trigger the intervention, which is no longer an undue interference, of state authorities that have a subsidiary responsibility to ensure the welfare of the child. The scope of parental autonomy remains nonetheless considerable and it is due to the large number of alternatives that are all a priori consistent with the welfare of the child that the conflicts discussed in this paper arise. 7 On this point, I am inspired by recent Swiss law under which determining the residence of the child constitutes an ingredient of parental authority (art. 301 a CC), whereas under the Hague Convention 1996 (art. 3 lit. b), this is rather an element of custody. 8 I will use the terms “welfare” and “well-being” as synonyms. As for the relationship between, on the one hand, the welfare or well-being of the child, and the “interests of the child”, on the other, it might be argued that the child’s interests require that the welfare and well-being of the child is satisfied to the fullest extent, the child’s interests constituting, as Thomists would say, an “intermediate end” and the welfare and well-being the “ultimate end”. Since it crops up more often in State legislation, the term “interests of the child” will occur more often in this article. 9 “The States signatory to the present Convention, considering the need to improve the protection of children in international situations, wishing to avoid conflicts between their legal systems […]”.

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II.

From Conflict between Parents to Conflict between Legal Orders

3. The case study I would like to offer as a starting point is inspired by two cases brought before the European Court of Justice.10 The facts are pretty conventional. The protagonists have no bonds with Switzerland. Such a geographical and emotional distance should allow us to observe things from a neutral, “bird’s eye” super partes perspective. A German woman and a Spanish man get married and have a baby daughter who holds dual citizenship, Spanish and German. The family lives for a while in Germany and then moves to Spain. Marital discord arises and deepens and subsequently leads to a breakdown in their relationship. Taking the split as irretrievable, the spouses separate and agree to file for divorce. However, the bitterest disagreement divides them over the custody of their daughter. Both parents are prepared to do anything in their power to secure sole custody. Having little personal contact with Spain, the mother wishes to return to Germany with the girl. The father insists that she grows up with him in Spain. It is first fitting to show how an interparental conflict can trigger an interstate conflict as well as to identify the links between the two types of conflict (A). Since the litigation between the parents is largely the result of their legitimately differing views on what the interests of their common child require, it is also useful to isolate the formal, universal component of the child interests concept (B). A.

The Origins of Interparental Conflict and Interstate Conflict and the Links between the Two Conflicts

4. To put it in simple terms, a “conflict” arises when two individuals11 make and advance two incompatible claims, when they intend to exercise their “power of will” and their control over the same area of freedom. This is ultimately the core of a widespread definition of individual, substantive right (droit subjectif).12 Two claims are incompatible when it is impossible in the real world13 – in the world of Sein, which is the one where the Law develops and the one that Law is intended to 10 On the one hand, the Purrucker v Vallés Perez case, that gave rise to the decisions of 15 July 2010 (C-296/10) and of 9 November 2010 (C-256/09), and, on the other, the Zarraga v Pelz case decided by judgment of 22 December 2010 (C-492/10 PPU). I will take the liberty of making some adjustments for pedagogical reasons so that my case study is not completely identical to either. If I specifically have married parents in mind – J.A. Aguirre Zarraga and S. Pelz were in fact married – most of the developments in this paper should also hold true for non-married parents – as were B. Purrucker and G. Vallés Perez – and also for parents that never lived together as a couple. 11 Or several individuals. 12 For several definitions of “droit subjectif”, see J. DABIN, Le droit subjectif, Paris 1952, p. 55-105. 13 Particularly as opposed to “ideal” or “oneiric” reality, or even “virtual” and “spiritual” realities.

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Conflicts in Respect of Parental Responsibility guide and influence – to satisfy them both and to fulfil the competing human desires and aspirations that they imply. Now, the prerogatives that the parents claim here – each of which exists in the ideal (as opposed to real) unilateral, subjective representation of what ought to be according to each parent (Sollen) – cannot both exist as substantive rights. Because – and here is at least one thing we can be certain of and that would be wrong to neglect because it is the ultimate source of the conflicts that can arise in this domain – the child cannot become ubiquitous and live simultaneously at the domiciles of both the mother and the father. In our case, we are therefore confronted with an interindividual, and specifically interparental, conflict. How can it be resolved? One option is to leave it to what is sometimes called self-justice (Selbstjustiz, justice privée) and allow each individual to do justice him or herself. And consequently, the most robust, cunning, enduring, the swiftest, the one who shouts louder, will prevail. This is the law of the jungle and takes us back to a state of nature. Or, civilised as we are, we may call upon justice, which we might characterise as public and which in fact administers the Law. It is generally recognized that justice requires the intervention of an impartial, super partes, third party authority, an authority which is not involved in a “conflict of interests”14, and whose task is to prevent (if it is “legislative”) or to settle (if it is “judicial”) the clash between inconsistent claims, more precisely the conflicts between the persons who advance those inconsistent claims, and, therefore, the conflicts of private interests that such claims seek to satisfy. Of course, for the Law to be in place, the (judicial or legislative) decision taken by such an authority must be enforceable, if necessary, through coercion:15 that is through the legitimate use of public force as opposed to private force which is the one that individuals exercise against each other. How will such an authority decide? Let’s say that it usually has to lean towards the claim that “holds the most weight”, the overriding private interest. Is Justice not a blindfolded goddess who holds scales in her hands and “weighs up” the opposing claims of those who call upon her to assess where the centre of gravity – the Schwerpunkt – of the balance is located? Added to which, if such an authority is composed of several members and is therefore “collegial”, as is almost always the case if the authority is legislative and often if it is judicial, its decision, whatever it says, as a rule, is made according to the majority principle. It is therefore the “weight” or “force of numbers” that determines where the centre of gravity of the tipping scale will lean. 5. However, in our case, things are more complex because the parental dispute is international, or more precisely binational, in that the protagonists have connections with Spain and Germany, and, therefore, are members of both German and Spanish communities. In this respect, it is possible to talk about “co-interested”

14 Notably between the public interest to prevent or resolve the litigation and a private interest in the dispute being prevented or resolved in a certain way. 15 This is what the European Court of Human Rights never stops reminding: see, among others, in children-related matters, Matrakas and others v Poland and Greece, 7 November 2013, point 144, which I will discuss later (infra, note 106).

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Gian Paolo Romano state communities.16 The least that we can say is that a State is always “interested” to ensure the final, conclusive resolution of an interindividual dispute that affects the society for which it is responsible because it has an obligation to conclusively settle those disputes. And one has obviously always an interest in fulfilling one’s obligations. If the dispute remains legally unresolved, the individuals involved in it might be encouraged to take up their own arms and will therefore be slipping into anarchy. Making sure that disputes between members of the community are prevented, or at least resolved, and that the demands of living side by side such as order, peace and security are satisfied, is one of the least controversial tasks of each independent and sovereign State. In short, it is because they are “jointly affected” by this interindividual, interparental conflict, that Germany and Spain are “jointly interested” in the resolution of such conflict. In this respect, they share a common state interest. In fact, both States are invested with responsibility – which is then a “joint state responsibility” – regarding the fate of a child who has strong connections with Spanish and German societies (and who has in fact both nationalities). The Spanish and German public authorities have the duty to take action when the welfare of such a child is threatened. Since the child needs to live in harmony with his or her environment, the child welfare is undoubtedly at risk when he or she is the subject of a dispute between his or her parents, this parental conflict being the very opposite of the desirable harmony. However, as I said at the beginning,17 the great challenge here is that each of both countries, Spain and Germany, possesses an inherent aptness, and is fully equipped, to prevent parental conflict through its own legal rules and to settle it through its own judges. There lies the twofold problem commonly referred to in private international law parlance as conflict of laws and conflict of jurisdictions. As for the conflict of laws as is traditionally understood, we might think it is of little relevance here because the Spanish Código Civil and the German BGB are almost identical as they agree to rely on the analysis of the interests of the child, sometimes characterized as best or overriding.18 As a matter of fact, both Spanish and German laws leave the matter to the courts by awarding them all the discretion they need to determine which of the parents claiming primary responsibility for the child and which social and cultural context the child has developed the most significant in concreto bonds with, and consequently has the greatest physical, affective and emotional, but also cultural and linguistic, “proximity” to. 6. Let’s pause for a while to reflect on the concept of the “child interests”.19 And recall the unscrupulous words of Carbonnier, who realised some fifty years ago to which extent the child interests had been proclaimed as a “magic notion”: Supra, no 1. Supra, no 1. 18 Particularly since the Convention on the Rights of the Child, adopted in New York on 20 November 1989; article 3, paragraph 1 states that “[i]n all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration”. 19 On the relationship between the interests of the child and the welfare of the child, see supra (note 8). 16 17

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Conflicts in Respect of Parental Responsibility “It might well be in the law; but what isn’t, is today’s abuse of it […]. And yet, there is nothing more evasive, nothing more likely to favour judicial arbitrariness”. As a matter of fact, a parental conflict most of the time reflects a conflict between the subjective, unilateral views maintained by the parents on what best serves the interests of their common child, a conflict between two “parenting plans” about the child’s future and about what would better assist his or her development and self-accomplishment. Thus, in our scenario, the father thinks that the girl’s interests are better satisfied if custody is awarded to him and if the girl continues to live within him in Spain. Whereas the mother considers that the girl’s well-being is more effectively ensured if custody is awarded to her and if the girl is allowed to move to Germany with her. Let’s further clarify that our litigants may be – and I will presume that this is so20 – both of good faith and both reasonably capable of taking day-to-day care of the child and making wise decisions as they are sufficiently “responsible” parents. 7. Let’s imagine – and this is what actually happened in the present case21 – that the Spanish court is seized by the father and the German court is seized by the mother, and that both courts affirm and entertain jurisdiction. Let’s further imagine that the Spanish court awards sole custody to the father while the German court awards sole custody to the mother.22 Here are the reasons offered by the Spanish court (fundamentos de derecho): the young girl’s Spanish roots go deeper than her German roots; she is now attending school in Spain and the “proximity principle” requires that she is not taken away from the environment with which she feels presently integrated. Here are the “counter arguments” (Gründe) articulated by the German court: the ties that the child has developed with the mother are more significant; the child lived in Germany for several years before moving to Spain and all the evidence suggests that she would quickly reintegrate there; the German period was the happiest of her short life; she speaks better German than Spanish. Both of the “co-affected” countries that are “jointly responsible” for the welfare of their common child believe that it is justified for them to decide which parent deserves to be awarded custody rights and decide that, in the present case, the child interests are better satisfied if these rights are conferred to the parent who is their national 20 The summary of facts given in the decisions delivered by the European Court of Justice in the two Hispano-German cases mentioned (supra, note 10) lead us to believe that it was so in those cases. This is also true of a good number of cases brought before the European Court of Justice and the European Court of Human Rights. 21 Infra, no 22. 22 Isn’t customary to say (at least in French): “two lawyers, three opinions” (deux juristes, trois opinions)? And since judges are lawyers, “two judges, two opinions” (two opinions are enough for our purposes). Additionally, and more seriously, whoever talks about the discretion of individuals, here judicial discretion, i.e. discretion of judges, substantively refers to the freedom that those individuals – here the judges – enjoy, although such freedom is confined within specified limits, freedom being here too, as usual, defined by its limits. And freedom entails the power of the individual who enjoys it to exercise it in a different way to another individual who enjoys the same freedom. It is to make sure a disagreement between the members of a judicial body, always possible when it comes to exercising a judicial discretion, that the judicial body is generally made up of an odd number of members (three, five, seven, nine, etc.).

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Gian Paolo Romano and resides or plans to reside on their territory; and this isn’t because of the nationality or the actual or intended residence of that parent, but because of the connection that has arisen between the child and that parent, and more generally, between the child and that national community. Let’s further specify that, although they disagree as to the identity of the parent who should be awarded custody, the Spanish and German judges nevertheless agree that the non-custodial parent should benefit from fairly wide-ranging visitation rights and be able to exercise them in his or her country of residence. That’s at least one important area of common ground: having developed real bonds with both her mother and father, and more generally, with both State communities, the child should be able to maintain regular contact with both parents, to cultivate her dual origin which, beyond being a constant source of enrichment, has shaped so far her identity. We are then confronted with a Spanish-German conflict of decisions reflecting not a potential but an actual, conflict of jurisdictions, a disagreement between judges about the best way to resolve the parental conflict, about what better serves the interests of this Hispano-German child. The national courts are organs of the State community that they derive their power from. The text of the German decision bears the epigraph: im Namen des deutschen Volkes; the Spanish decision proudly indicates that it is pronounced “on behalf of the King of Spain”, who is in turn an organ of the Kingdom of Spain. Let me repeat: a conflict exists when (at least) two persons advance incompatible claims, when they claim control over the same area of freedom. Here it is two States, that are both moral persons and subjects of international law, and whose judiciaries are mobilised by two natural persons, that both claim the right to determine, based on their own views, by which parent and within which national community the child must primarily be raised and which parent will be empowered to make decisions concerning her welfare. The Kingdom of Spain declared through the Spanish court: “the Spanish father shall take primary responsibility for this Hispano-German child and shall be able to decide on the day-to-day planning of her life, and notably, her place of residence”, and therefore, “I hereby direct that the child stays in Spain as the father wishes” and the “German mother shall benefit from contact rights which she can, in principle, exercise in Germany”. The Federal Republic of Germany, through a court that decides on its behalf, in turn stated: “the mother shall take primary responsibility for this Hispano-German child and shall have the right and duty to decide on the day-to-day planning of her life, and notably, her place of residence” and “I hereby direct that the child is brought up and educated in Germany, as the mother wishes, and that she is returned to the mother”, while the “father shall benefit from visitation rights that, in principle, can be exercised in Spain”.23 It seems that there is indeed a conflict of state claims – and therefore, in this sense, an

23 To paraphrase, the Spanish judge declared: “It’s me who allocates the rights and obligations relating to parental responsibility for this Spanish-German child and I award custody to the father”. And the German judge “counter-declared”: “It’s me who allocates the rights and obligations relating to parental responsibility for this Spanish-German child and I award custody to the mother”.

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Conflicts in Respect of Parental Responsibility interstate conflict – on how best to resolve the conflict between individual claims advanced by the parents.24 Let’s note that both types of conflicts have similar roots, which ultimately turn on diverging views of what counts as fair terms of “proximity” or strongest connection. Just as each parent believes that the physical, emotional and affective bond that he or she has forged with the child is deeper than that developed with the other parent, each State community takes the view that the physical, emotional, affective, linguistic, cultural and social bond that “connects” the child to that State community, and to the parent who is part of it, is preponderant compared to the link that connects the child to the other State community, and to the other parent, and that it is within that State community where the Schwerpunkt or centre of gravity of the child’s affective, social and cultural sphere and the “seat” of his or her life and relationships are located. By virtue of this bond, each parent claims authority over the child – parental authority – and, as a consequence, the “competence” to make decisions that he or she believes are required by the child’s wellbeing. Each country also claims, by virtue of this same connection, authority over the same child – state authority – or, in other words, the “competence” to decide which of the two parents should be given the “competence” to determine what best corresponds to the child’s well-being. Each parent develops and advances his or her own “solution” as to the post-marital future of the child, and the solutions the parents come up with are incompatible with one another, there is a “disharmony of parental solutions”, there is a conflict of parental solutions, and this conflict should be resolved. Each country also develops and advances its own solution which is incompatible with the one advanced by the other country and so we are faced with, and the people involved are faced with, a “disharmony of state solutions”, which is the very opposite of the desired “harmony of solutions” but rather constitutes a conflict of state solutions about how to resolve the conflict of parental solutions. 8. This last remark leads me to clarify two points about the relationship that exists between the interparental conflict, on the one hand, and the interstate conflict, on the other.

24 For a case where the interstate dimension of the conflict is at the forefront, see ECtHR, Šneersone and Kampanella v Italy, 12 July 2011 (14737/09). The dispute was between Ms Šneersone, a Latvian national, and Mr Campanella, an Italian national. Marko [K]ampanella was born out of this relationship. Marko initially lived in Italy and, several years after his parents separated, was taken to Latvia by his mother. The father’s application for return of the child to Italy based on The Hague Convention 1980 was refused by the Latvian court, who subsequently confirmed its jurisdiction to decide on parental responsibility and concluded that it was in the best interests of Marko that sole custody be awarded to the mother (point 24 of the judgment) and that he live with her in Latvia. After affirming jurisdiction based on the last lawful habitual residence of the child, the Italian court held that it was in the best interests of Marko to live with his father and it ordered his return to Italy, pursuant to article 11, paragraph 8 of the Brussels II-bis Regulation. To resolve this conflict which had become interstate, the Republic of Latvia started proceeding against the Republic of Italy for breach of article 227 of the Treaty of the European Union (TEU) as well as article 259 of the Treaty on the functioning of the European Union (TFEU) by bringing the matter before the Commission (points 39-45 of the decision): see infra no 21.

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Gian Paolo Romano The first point is that the disagreement between the two countries exists only to the extent that the disagreement between the two parents exists, and only for so long as such a parental disagreement lasts. Logically, and in fact tautologically, there cannot be a conflict between the two countries on how best to resolve a conflict between the two parents if there is no – or no longer – a conflict between the two parents. As soon as the parents agree on a shared view of the child’s best interests, as soon as they agree to establish and abide by a “joint parenting plan” – and, for example, they settle on giving either the mother or the father custody while recognising extensive visitation rights to the non-custodial parent – the two national communities and their authorities are undoubtedly reassured that the breakdown of the marital harmony has not led to a breakdown of the parental harmony and would both in principle be willing to abstain from interfering with, let alone disrupting, this continuing parental harmony. In other words, they would hardly be prepared to develop and impose a judicial regime of custody that contradicts the parental agreement in order to resolve a non-existent parental conflict. One might even claim that the respect for “parental autonomy” as I have defined it generally requires such an abstention, the state responsibility for the child only being triggered subsidiarily.25 In our example, the German authorities, in principle, are no more interested in awarding custody to the mother if she is willing to allow her daughter to live in Spain with her father, than the Spanish authorities have an interest in directing that the child remain in Spain with the father if the father is prepared to allow the girl to move to Germany and live there with her mother. The second point is a ramification of the first. Generally, there would be no interstate conflict if, notwithstanding their dispute, the parents both consented to the authority of one of the “jointly affected” States and accepted to comply with the decision made by the court of this State without disputing it, i.e. if the parent who is unhappy with the outcome arrived at by the court seized is nonetheless willing to abide by it and does not attempt to challenge it before the court in the other State involved. The interstate conflict of the sort discussed in this paper does not arise unless the interindividual conflict leads both parents to effectively mobilise the courts in both state communities, with the mother typically seeking protection from the courts of one of them and the father seeking protection from the courts of the other. A conflict of jurisdictions does not arise when the two judges are not both seised by the individuals who have the power to do so. Just as a judge will not take action to resolve a parental conflict if there is no such parental conflict, a second judge will not take action to resolve a parental conflict if the parental “Parental autonomy” after the separation of the parents – the freedom of the parents to continue to organise the child’s life without interference from public authorities – has more or less the same limits as the “parental autonomy” that parents enjoy before their separation. For example, separated parents cannot any more than parents living together decide not to send the child to school. It is true that legislation in some countries prescribes that the divorce judge must uphold the parenting agreement and may require alterations. But the alterations required by the judge are likely to have little effect for so long as the parents agree to de facto implement the accord that they had reached before the judge modified it. Of course, if this implementation leads to putting the child at risk, child protection authorities will take action but they also have to do it to protect a child whose parents live in harmony with each other. Cf. supra (note 6). 25

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Conflicts in Respect of Parental Responsibility conflict ceases to exist as a result of the decision that was made by the first judge and that was not questioned by any of the parents. 9. One might however be tempted to believe that, since each State only holds the power to enforce its decision within its “sovereign” territory, there is no such thing as an actual interstate conflict, there being a clearly marked dividing line between the Spanish and German boundaries which is undisputed between these two countries? To confine my response to the essential, let me note in the first place that if the two judicial decisions could exist and be enforced independently of each other within the countries that made them, there would be no question of conflict of judicial decisions, but rather of decisional harmony, of harmony of decisions, and of the harmony of the solutions that they embrace. There is good reason to believe that the term “conflict” – which features in the recurring expression “conflict of decisions” – means what it says. The fact is that both State decisions claim the same binational area of control and application. This is hardly surprising if we think that the human relationship that both judicial decisions are directed at and seek to govern is the same one and, spatially, it is Hispano-German. In other words, from a Spanish perspective, the decision transcends the Spanish national community and boundaries to also reach into the German national community, and vice versa. A national court, and the State that such court derives its authority and power from, is bound to claim a domain of jurisdiction which is coextensive with – i.e. which covers the same area as – the particular relationship that it intends to regulate. And so, this area must here also reach beyond Spanish borders, from a Spanish perspective, and beyond German borders, from a German perspective. Isn’t international – or more precisely “binational” – jurisdiction, as opposed to internal jurisdiction, that is at stake here? There has to be a “commensurability”, a “congruence”, a “coextension” between the context in which the private relationship arises and develops, which here is binational, “bi-state” and “bi-societal”, and the context in which the judicial decision that seeks to regulate the relationship spatially operates. If such judicial decision purports to govern a “binational” private relationship, it must follow the relationship into the territory across which the relationship spans, which is here a “binational” territory. Indeed, the nature of the private relationship is not such that Germany can bear the responsibility to govern the German “side” while leaving Spain to take care of the Spanish “side”, because the two sides are inseparable. Germany cannot claim, for example, to shape the rights and obligations of the mother who lives in Germany as it pleases, while leaving Spain and the Spanish decision to take care of shaping the rights and obligations of the father who lives in Spain. If the German decision awards a substantive custody right to the mother, in order for this custody right to exist, it presupposes an obligation of the father notwithstanding the fact that the father lives in Spain, and conversely. A judicial decision, which contains an individual legal norm, comes with a scope of application, just like any abstract and general legal rule, and just like any abstract and general rule, the scope of application of an individual norm can be “extraterritorial” and, more precisely, “territorial” and “extraterritorial” at the same time, or, in this context, “bi-territorial”, binational. The proof is that, in our example, the German court’s decision to award custody to the mother who lives in Germany aims to be binding on both parents, father included, Yearbook of Private International Law, Volume 16 (2014/2015)

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Gian Paolo Romano regardless of the fact that the father lives in Spain. And if the German judge orders the father to hand over the child to the mother, the German judge prescribes a conduct that must also take place in Spain, i.e. outside the German territory. This conduct is therefore, from the German judge’s point of view, “trans-territorial”. If the child is in Germany with the mother and the Spanish judge awards custody to the father, there is also a conduct that must at least partially take place in Germany, that is to say, from a Spanish perspective, “trans-territorially”. All one can say is that there is a discrepancy, a rift, between the areas of juridictio and imperium; the area of juridictio is international, binational and extends beyond the territory of the State that makes the decision because the human relationship that this exercise of jurisdiction seeks to govern is international, binational, “trans-territorial” or “biterritorial”; whereas the area of imperium stops at the national boundaries, does not reach beyond the territory of the State which yields such imperium. However – I hasten to add – indirect means of coercion can be ordered by a State and implemented on its own territory to prompt individual conduct on the territory of another State. Suffice it to think about the imposition of civil penalties which “constrain individuals’ will by hitting their pockets”,26 or criminal sanctions.27 Indirect coercion can be exercised trans-territorially because it is indirect. More precisely, the indirect result – which is the ultimate end – of this type of coercion can occur transterritorially. So, let’s conclude that there truly is a Hispano-German decisional conflict, that is a conflict of individual legal norms which is the consequence of a SpanishGerman conflict between courts and manifests itself as a Spanish-German conflict of jurisdictions. There is little doubt that we are faced with the very “conflict of legal systems” that the Hague Convention 1996 is designed to “avoid”.28 By the way, let’s not forget the aim of the Law is to avert or resolve conflicts between human beings and the associations, organisations or groupings they form, including States. And put in a tautological way, for so long as these conflicts are not settled by Law, the Law is not in place, there is no Rule of Law, and the human beings, and the aggregate persons they give rise to, do benefit from it. B.

The Relativity of the Substantive Element and the Universality of the Formal Element of the Child’s (Best) Interests

10. I suggest returning to the best interests-of-the-child concept. Should we conclude that this concept is not very useful because it calls for a relative and subjective analysis, two persons or instances or bodies being free to interpret and apply it in different ways and reach incompatible outcomes? To do so would, however, mean overlooking the absolute – because “formal” – and objective component of

26

In the words of J. CARBONNIER, “elles frappent le portefeuille pour contraindre la

volonté”. As a result of a contempt of court in common law systems, which flows from failure to comply with a court order. 28 Supra (note 9). 27

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Conflicts in Respect of Parental Responsibility such interests. Admittedly, this constitutes a minimal and self-evident component, but one that we shouldn’t disregard for reasons that will appear later. In order to illustrate this component, I will appeal to your memories of the Bible. King Solomon was called upon to settle a dispute between two women who both claimed to be the mother of the same child. He then famously proposed to sever the child in two, just as is done with a piece of fruit or a slice of cake. Such a solution is obviously contrary to the interests of the child. And not actually what King Solomon intended, as he had devised it as a simple – yet brilliant – trick to find out which of the alleged mothers spoke the truth.29 The interests of the child first of all require that the child can carry on his or her life despite the separation of his or her parents, that, if the parents tear themselves apart, the child is not also torn apart, nor by the parents nor by any authority having the power to resolve the dispute between the parents, nor by any two authorities that both claim to be “legitimate” and who both, mobilised by a parent, would pretend to “pull” the child on the side of a different litigant to get him or her under their control and determine what’s best for him or her, and who, if unable to keep him or her whole, would be content with one half. This leads us to take a further step on the path to understanding the formal and universal dimension of the child’s interests. In order to visualise its purview, let’s take a purely domestic case. The interests of a child who has developed significant bonds with both his or her mother and father and who is, against his or her will, caught up in a parental conflict, undeniably requires that this parental conflict be ended. So, there must be the possibility to settle the conflict between the parents absolutely, no matter how, the decision on “how” being to a measurable extent a matter of discretion. This is the first aim of any legal system in this area. And the decision as to “how”, though depending on discretion, has however – this is a second requirement of any legal system in this area – to emanate from a super partes authority, an authority that is not caught up in conflict of interests, that is able to keep the necessary distance from the case and from the parents involved, in order to be able to weigh up the strengths and weaknesses of each of the claims for custody that they put forward. Through its decision, such authority aims to establish a custody regime which is binding on both parents and capable of resulting in “res judicata”, of being conclusive.30 Unless there is a supervening event – and I suggest ignoring this possibility here – this requires that there must be ways to force both parents to comply with such a custody regime and to preclude continued litigation between them. Strange as it may sound, this also means that it should be possible to enforce the res iudicata decision not only against the parents but also against the courts other than the one that entered the decision, and in fact also against the one who entered it and then is tempted to change its mind, take it back and decide differently.31 So the courts have to recognise and defer to the judicial Only the real mother was concerned with the universal element of the child’s best interest, whereas the fake mother declared: “The child shall be neither mine nor yours. Divide him!”. 30 And, of course, the child. 31 After giving me the details of a particularly mind-boggling case that he had to deal with a while before, a friend, who is a judge, shared with me the following: “I regret the way 29

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Gian Paolo Romano regime that has come into force and become final, they have to abstain from disputing such regime, to abstain from accepting to “re-judge” the case and making a counter-decision that may uphold a custody counter-regime that would neutralise the first. It must further be possible to make law-enforcing bodies materially pay heed to this regime and lend support to its implementation, which requires that those bodies abstain from resisting its enforcement even if they inwardly disagree with the custody regime that has been prescribed by the adjudicating body, even if, had they themselves been vested with the power to decide, they would have done so differently, and also even if they find the decision entered by the competent judge utterly shocking, offending their own most basic perceptions of what justice requires in that particular case. In order for the decision to bind the individuals that it is directed at and resolve the conflict between them, the principle of ne bis in idem which precludes continued litigation must first bind the courts and lawenforcing bodies. Isn’t the fact that the courts and public authorities are subject to the law one of the deepest rooted principles of a constitutional state? This means that the courts and public authorities are also subject to the res judicata that has arisen in conformity with the law. If they weren’t, the matter would never be decided – the res would never be iudicata – and the dispute could continue indefinitely. For there would be no solution to the interindividual conflict if the solution proposed by an authority seized by one of the litigants could be perpetually challenged by the other litigant before other judicial bodies or before the law enforcement bodies. No law, no Rule of Law, would be in place. It follows that the (formal) interests of the child that, as I have already said, require the conflict between the parents to be resolved, also require that domestic conflicts between judges – the disagreement between two or several judicial authorities who get their power from the same state community and who each believes it has jurisdiction to decide on the (substantive) interests of the child – are too prevented or resolved. And the interests of the child further require, for the same reason, that potential disagreements between members of the same competent collegial panel be overcome, which in general is achieved through the majority principle, with the opinion of judges disagreeing with the majority opinion being labelled as “dissenting”. The interests of the child also require that he or she is not left in uncertainty as to the place where he or she is to live or the school he or she is to attend, that he or she is not being torn apart and pulled in different directions by his or her parents, with the public authorities being unable to bring the parents together for they are unable to overcome the disagreement between themselves over the best way to bring the parents together. This would be a “denial of justice” – whose first victim is the child –, which is a “denial of Law” (Rechtsverweigerung), of the Rule of Law, with the child being deprived of the protection of the Law, and prevented from taking advantage of the Law and enjoying harmony and stability in his or her personal relationships.32 The public authorities would together fail to fulfil the duty that they owe to the members of their communities. that I decided this case but now it’s done, it’s res judicata and there’s no more I can do, I am myself bound”. 32 The objective interests of the child require that the school he or she will attend at the start of the term doesn’t remain uncertain, regardless of whether it is the school recommended by the mother or that recommended by the father, because if this uncertainty is not

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Conflicts in Respect of Parental Responsibility In short, the formal, minimum interests of the child require that the conflict between the diverging views about his or her best interests advanced by those who are supposed to ensure his or her welfare is resolved, that this conflict is resolved by a super partes authority which is not in a conflict of interests, and that it is possible to force those that disagree with the way the conflict was definitively resolved (parents, judges and law enforcement bodies) to respect this solution all the same and, in accordance with their roles, lend their support to its enforcement and implementation. 11. Pondering the formal component of the child’s interests is useful because, this component being universal, it must be abided by regardless of the domestic or international nature of the parental dispute. The fact that the controversy between the parents is cross-border does not mean that child interests stop requiring that this controversy is definitively resolved by a super partes authority. However – and here I move from the obvious to the less so –, since the parents’ behaviours must take place in two different countries, in order for the parents to be bound by the decision and the way it allocates custody and parental responsibility, it is first necessary that the judicial and law enforcement bodies of both countries are bound by such decision and such regime. Accordingly, it would appear that the formal element of the interests of a child who lives in a binational context first of all requires that the conflict between the two state communities of which he or she is the child (in the sense that we speak of l’enfant du pays, “child of a country”) on what corresponds to his or her interests and, in particular, on how best to solve the conflict between the mother and father who are the people “primarily” responsible for his or her well-being of the child, is averted or resolved. In other words, as the two state communities are jointly responsible for the welfare of the child – although on a subsdiary basis, i.e. after the parents –, the two state communities must abstain, and if need be, be forced to abstain, from each of them purporting to impose its own views of the substantive interests of the child. Otherwise, the parental conflict will be not be resolved, the minimum formal interests of the child that are pursued by both of the co-affected States would not be satisfied, the subsidiary, joint responsibility they share to care for the child welfare would not be met and their common interest in this respect would be missed.33 Put simply, the child’s interests require that, in the absence of interparental harmony, there should at least be interstate harmony between the “co-affected” States – harmony between the “motherland”, mère patrie in French, and the “fatherland”, Vaterland in German – and their authorities, and in particular, their courts as to how to solve the interparental conflict.34 The resolved, the child risks not to be able to go to school at all. The child’s interest in attending school is more fundamental than the interest the child might have to settle in the school planned for him by his or her mother or father. 33 Supra, no 5. 34 As will be explained in part II, such interstate harmony of solutions may be achieved, in particular, either by preventing the disagreement between the two state communities through rules that distribute jurisdiction between them, coupled with rules that provide that the decision made by the State of competent jurisdiction also binds the authorities (judicial and law enforcement bodies) of the other State, or by using mechanisms that promote the taking of joint, binational decisions. But interstate harmony can also be achieved to the

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Gian Paolo Romano child’s interests also require that the authority responsible for establishing the “binationally” enforceable custody regime has the broadest possible view of the context within which the child’s present and future life should fit.35 Since this context is cross-border and, more specifically, binational, the authority in question should have a binational, binocular vision of things or be able and willing to rise to this binational vision. This leads me to underscore that it is generally necessary that the child can continue to maintain bonds with both communities of which he or she is a member and continue to develop “bi-nationally”, to fuel his or her dual national identity, at least to the extent that both parents are sufficiently responsible within the meaning offered above, which is what I have assumed. 12. Let’s go back to our Hispano-German conflict of judicial decisions and assess its consequences in light of what’s just been said. Not only the dispute between the Spanish father and the German mother is not settled yet, but there is even more reason for such dispute to continue as each of the competing parental claims has been endorsed by a court which has found it legitimate. No wonder, therefore, that both parents are willing to continue to fight over the child – and to force the child to endure such a fight – because the two States involved have failed to agree between themselves on how the parental dispute should be resolved. The two judgments collide and neutralise each other. As a consequence, there is really no judgment at all, the res is not iudicata, there is no res iudicata. So long as Justice does not resolve the conflict between the two inconsistent judicial decisions, so long as she fails to overcome the disagreement between the domestic judges who made them, the goddess who holds the scales in her hands has not pronounced a decision. She remains elusive. She is not only blind, but also deaf and dumb. These States in fact are denying justice to the individuals who are members of their communities. They fail to meet their joint responsibility to ensure peace, security and justice to the human relationships simultaneously affecting them both, to the individuals involved in those relationships. For when they examine their rights and obligations, what do those individuals find? A paternal right of custody awarded by a Spanish court and a maternal right of custody awarded by a German court which are inconsistent with each other, and consequently, a conflict of custody rights. That’s not a legal order. That’s a legal disorder. That’s no private international law and order. For how can a “legal extent that the States, as soon as a disagreement materialises between them, arrange for a mechanism to overcome their disagreement, in particular, by responsibly consenting to submit to a super partes, supranational authority. In other words, if they don’t reach an agreement on how best to discharge their joint responsibility for the welfare of a child that has significant ties with both their communities, the two countries should at least be sufficiently responsible to entrust this responsibility to an authority, and empower such authority to impose its decision on them and accept to be bound by this decision even if it does not uphold their views on how best to settle the parental conflict. 35 Another dimension of the overriding (“supérieurs” in French) interests of the child manifests itself as they “override” not only the interest that each parent in his or her capacity as the (physical) person primarily responsible for the child welfare might have in advancing his or her own vision of his or her child’s interest, but also the interest that each State community in its capacity as the (legal) person subsidiarily responsible for the child welfare might have in advancing its own.

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Conflicts in Respect of Parental Responsibility order” possibly benefit the individuals involved in cross-border relationships which are gripped by an unresolved “conflict of legal orders”? Those human relationships are no longer legal relationships because they are no longer ruled by the Law, no Rule of Law is in place for them. As for the child, in a similar French-Swiss case, one of the lawyers told me: “The child is a great deal of distress. He feels responsible for the conflict between his parents. And now he also feels responsible for the conflict between the States [the State of his father, his fatherland, the State of his mother, his motherland] concerning the best way to resolve the conflict between his parents. All of this is intolerable for him. He felt suicidal”. Everyone is bound to agree, we are faced here with the utmost irresponsibility on the part of both States. They are jointly responsible for the welfare of their common child and yet they together behave in the most irresponsible way, they jointly fail to lit up to their responsibility. It’s a joint, binational failure. A bilateral fiasco. If order is established, and sooner or later it will be – every war is bound to come to an end – this order is not legal, in the sense that it is not the result of the Law. War, when it’s over, also generally brings about an order. The order I am referring to can take place above the conflicting legal orders and may be the product of non-legal factors, of law-of-the-jungle behaviours, of self-justice conducts that the Law precisely tries to degrade, such as muscular strength, cunning, threat and exhaustion. One might however think that the parent who is right according to the country in which the child is found at the time of the first judicial decision prevails, and that it’s just tough luck for the other parent and the other state community. If this country is Spain, it is only the decision given by Germany that is ineffective, and vice versa. But, far from being prompted by the Law, this seeming “nudge in the right direction” might actually be the result of a coup de force. More importantly, each time the child crosses the border to go from Spain to Germany to visit her mother, her status changes and the mother can keep her in Germany. Indeed, from a German perspective, such a conduct by the mother would not be unlawful but rather a way to achieve implementation of the German decision which awarded custody to the mother. To avoid the child becoming a victim of a vicious circle of retention and counter-retention that would result in “tearing her apart”, the Spanish authorities might be tempted to prevent the child from ever travelling to Germany. This would once again be the peak of irresponsibility and injustice! Would the child be forced to keep herself away from a community which is part of her cultural, social and emotional world? Would proximity be the reason for forcing such a distancing? Here the child would be subject to a kind of social, cultural and psychological “disintegration” and would be deprived of an essential component of her identity. Furthermore, this does not conform to the idea that the welfare of the child demands that she can preserve ties with both communities and that visitation rights of the non-custodial parent can also be exercised in the non-custodial parent’s country of residence, as recognized by both decisions in our case study.36 In other words, this common objective inherent in the views of the child’s interests developed by both States is not achieved by either.

36

See supra, no 7.

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III. Ways to Prevent and to Resolve Conflicts between Legal Orders 13. In order for the cross-border dispute between the mother and the father to be resolved, there must be a single “bi-nationally” valid and enforceable decision37 that binds, in the sense described above, the judicial and law enforcement bodies of both state communities, and consequently, both parents.38 As for its scope and content, this decision must pay heed to, and be reflective of, the binational character of the private relationship at stake and, in particular, the dual identity of the child as well as the “bicultural” context in which the child has grown up until the parents’ separation and which would be in his or her general interest to continue to be raised in afterwards. Let’s first ask ourselves whether a national court is structurally up to the challenge of such a task (A). Assuming that it is, I suggest we subsequently move to the international jurisdiction stage and assess where the law stands on this point (B). By finally shifting the perspective to the international recognition, it appears that more work needs to be done, including within the European Union, to prevent or reduce conflicts of legal orders and thereby satisfy the basic component of the best interests of the binational children (C). A.

“Binational” Courts as the Best Guarantors of the Impartiality of Justice?

14. Even though a national court – a “mono-national” court, as I will most of the time refer to it – has jurisdiction based on a binational or supranational jurisdiction-allocating rule, does such a mono-national court possess the required knowledge, evenhandedness, impartiality and vision to resolve a binational child custody dispute? The question is a momentous one. I hasten to add that the doubts one may have in this respect do not necessarily pose a generalised challenge to the traditional posture of private international law that relies on mono-national courts to rule upon multi-national disputes. The fact is that child custody disputes seem to present a certain number of unique features that set them apart from other types of litigation. Let me mention three of them. First, the judicial decision that is sought here is prospective in that it aims to shape the future of the child, which is why the regime of parental responsibility it seek to implement is supposed to last for a certain duration. On the contrary, when the litigation relates to financial issues, and particularly when it is about money, the judicial decision that rules on it is most commonly retrospective in so much that it aims to clarify the consequences of past events,39 and is most often enforced through a single conduct, that of an individual transferring money to another indiAt least for every non-severable aspect of the relationship. As well as the child himself or herself, of course. 39 By deciding on matters such as: Is such a contract valid or not? Does such a fact entail contractual (or non-contractual) liability? Is this person a beneficiary of a will or not? 37 38

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Conflicts in Respect of Parental Responsibility vidual. Second, the general and abstract rule enacted by the legislatures in this area generally abstains from allocating specific rights and obligations to the parties but rather gives the task to determine those rights and obligations to judges, whose discretion is of a magnitude that is unknown to other legal areas, such as contracts, inheritance, matrimonial regime or even maintenance. In other words, predictability of the law and of outcome of litigation counts less than in other domains and, as a rule, gives way to flexibility and individual, case-by-case justice (justice du cas concret, Einzelfallgerechtigkeit). Part of the reason is that a State community may afford the luxury of a litigation for every child that endures the separation of his or her parents but cannot, typically, afford the luxury of a litigation for every single contract that is entered into by members of its community. This also explains why legislations are more concerned about the resolution than the prevention of parental disputes.40 Third, custody law is principally concerned with the factors that the judge may take into account when exercising his discretion in awarding custody. The objective pursued here is the child’s welfare, which requires that the child harmoniously develops and is prepared for adulthood. Now, the child’s harmonious development is not only ensured by his or her family life, but also by his or her extra-family life, including education, recreational activities, sports, religion, in a word, his or her “social” life. So, when adjudicating on custody, a court not only decides and chooses between the competing, potential family environments that the mother and father promise to offer the child, but also between the social environments (in the larger sense that I have just proposed) that the forum state community and the foreign “co-affected” state community are able to ensure. To the extent that protection of children and youth is not only a concern for the parents but also for the society at large, not only a task for the parents but also a task for the State community, and even without insisting on the fact the child generally constitutes a resource for the society in which he or she will principally grow up, it is likely that the intersocietal component of the disputes over children is more significant than the intersocietal component of disputes between contracting parties, spouses or prospective heirs. If some recognition is given to the preceding arguments, it is tempting to indicate two factors that may potentially curtail the mono-national judge’s ability to adequately hear and resolve a binational child custody dispute. On the one hand, while he must have thorough knowledge of the society which has appointed him and in which he operates, including its educational system, the child protection services available and more generally the family support policies, schools, education and recreational facilities that are offered by his community, the mono-national judge might be unaware of or, at any rate, inadequately informed about the corresponding foreign system, structures, facilities and policies. Therefore, he may be lacking the required knowledge of all elements that need to be put on balance and “weighed up” in order for him to make a just, principled and informed decision. While a domestic legislature can order a judge to award custody and parental authority to “the most deserving parent” (without further clarification), it would be inconceivable to direct him to award contractual rights to “the most deserving contracting party” or inheritance rights to “the most deserving next-of-kin” (without further clarification) because this would bring about generalised uncertainty and the courts would be swamped with petitions and living in this society would no longer be viable. 40

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Gian Paolo Romano The second point is yet more fundamental and is about the independence and impartiality of the mono-national court in assessing these elements. Even if we assume he is able to access the required knowledge about the foreign system, structures, facilities and policies,41 we are still left to wonder whether the mono-national judge is systematically able to maintain an appropriate and “fair” distance towards all sides of the litigation, where he is able to rise up to a super partes vision of the conflict, in short, and to put it bluntly, whether he may not be, when appreciating the interests of a binational child, himself involved in a “conflict of interests”. For so long as it’s only the parents who are competing against each other over the custody of their common child, it is easier to be satisfied that independence and impartiality exist in a sufficient measure than if we conclude that, in the child custody area, State communities may also have an interest, and therefore may also found themselves to compete against each other, although subsdiarily and in the background of the parental dispute, to seek control over their common binational child. As a matter of fact, the way in which the conflict between the parents is resolved will determine which culture the child will principally be raised in,42 which country will primarily exercise state responsibility,43 which will probably be where he or she will spend most of his or her adult life and where he or she will mainly serve professionally taking advantage of the skills and capabilities that his or her family and community allowed him or her to acquire while growing up. And, to the extent that a potential contest between two State communities over child control parallels the conflict between the parents, the mono-national court that is dependent on one of those State communities as an “organ” that relies on the organism it’s attached to and is dependent on, may precisely not be “independent” and super partes because, as an organ or body of one of the competing societies, he is part of one of these societies, and therefore “part of one party”. The mono-national court is not super societates, but is actually entrenched within and representative of one of these societies, he is intra societatem. Of course there are large numbers of domestic judges who, confronted with the kind of transdomestic disputes at issue, would be able to put themselves behind a “veil of ignorance”44 and become oblivious to the role they actually play within one of the competing societies without being unduly influenced by that role. Some of them would likely be able to do this even if the child were, if not theirs, that of a close relative, a brother or sister for example. However, for a person to be in a conflict of interests means for that person to be in an objective position that undermines the confidence in the legitimacy of the task – here the judicial task – given to him or her, while proof that he or she has actually been biased in his or her actual determinations is not required. And a conflict of interests is particularly perilous in hard cases because it is less obvious to detect as it may operate in the subconscious of the affected person, without this person being aware of it, particularly in the situations where both parents show an 41 By the cooperation established by chapter V, the Hague Convention 1996 promotes interstate exchange of information not only about “laws” but also about “services available […] relating to the protection of children” (article 30(2)). 42 Sometimes including religious culture. 43 Supra, no 11. 44 According to John RAWLS’s evocative imagery.

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Conflicts in Respect of Parental Responsibility a priori equivalent inclination and aptness to take on primary responsibility for the child so much so that, in order to determine who should have custody, it is necessary to fall back on extra-family factors. These factors of secondary importance may indeed prove tie-breaking when the weighing up of primary factors results in an inconclusive outcome.45 15. If we share these concerns or part of them – which I will not explore here any further – a solution might be to consider having “mixed”, binational46 tribunals to adjudicate upon the merits of those binational child custody cases.47 Within the European Union, we could think of European courts sitting within the Member States’ territories, following the example of the federal courts of the United States, with their composition mirroring the binational nature of the dispute. It might be argued that all this only exists in a utopian reality. Let me recall, however, that “mixed”, international, including binational, courts – based on the origin of their members48, the way they are appointed, the consolidated knowledge of the state communities involved that they possess and the “wide-angle”, crossborder vision they have – settle private international cases every day all over the world: the courts of arbitration. Among the advantages they offer, let me highlight their supranational composition which can truly reflect the different nationalities, domiciles and backgrounds of the parties and ensure clarity of vision and equal distance from the parties and therefore evenhandedness. Admittedly, the area of parental responsibility is, as we speak, impervious to international arbitral justice and arguably represents one of the last fortresses of mono-national state justice.49 But is the current state of affairs really satisfactory? Firstly, it may come as surprise that, in our example, the Spanish father and the German mother are deprived of what we might call the right to the “bi-nationality” of the court that will decide their case, that any interparental agreement expressing a common desire to have their dispute resolved by a Hispano-German court50 is invalid and ineffective, the options available to them being reduced to seizing either an entirely German court or an entirely Spanish court.51 Whereas, if their dispute was, for example, about matrimonial property, they would most often be awarded the right to a binational (arbitration) tribunal, a Hispano-German tribunal that would ensure both an We might wonder whether the mono-national judge is ideally equipped and has the necessary tools to weigh up the alternative options available to the binational child, whether he has a “complete vision”, a “binocular” vision, an “aerial view”, or whether the mono-national vantage point only offers him a “truncated” and therefore “biased” view of the reality that he is supposed to shape and organise. 46 Or tri-national, etc.: see supra (note 3). 47 This clarification is better understood in light of later developments. Infra, no 20. 48 An arbitrator is a judge: E. LOQUIN, Le juge et l’arbitre, in Le juge et l’arbitrage, Paris 2014, p. 19: “l’arbitrage est une justice et […] l’arbitre est un juge”. 49 Cf. the conclusions of K. SCHMACHER, Schiedsgerichtbarkeit und Familienrecht, FamRZ 2004, p. 1667 et seq., esp. p. 1685. For some exceptions in certain federal states of the US, see a summary of the situation offered by M. COURVOISIER, Zur Schiedsfähigkeit familienrechtlicher Angelegenheiten, FamPra.ch 2012, p. 20 et seq., esp. p. 22 et seq. 50 Reference is made to an arbitration tribunal here. 51 Reference is made to a judicial court here. 45

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Gian Paolo Romano equal proximity and an equal distance and, consequently, fairness to the parties.52 Particularly if we look at things from the child’s perspective, it is questionable whether it is really consistent with her interests to systematically deny her the right to have her fate decided by a tribunal that, through the way it’s constituted and the background, culture and training of its members and their “consolidated” first-hand experiences of the family and social environments prevailing in their societies, truly matches and mirrors the Hispano-German context in which she is integrated and should, as a rule, continue to be so. Second, if we look at the reasons which are commonly relied on to explain the exclusion of child custody disputes from arbitration, we cannot help noting that all those reasons militate for preventing conflicts between legal orders of the kind discussed in this paper. The “unalienability” of substantive rights (indisponibilité des droits) and the mandatory character of legal norms in this area are often cited, alongside public policy arguments and state interests that are at stake. First, we must recognize that the parents would by no means “dispose” of, let alone “alienate”, their custody and parental responsibility rights to the extent that, faced with a conflict of custody and parental responsibility rights which is tantamount to having no true custody and parental responsibility rights at all, they seek to overcome this conflict by having the conflict of mono-national decisions and legal orders resolved by a binational tribunal whose determination would award them true, effective binationally protected and enforceable custody and parental responsibility rights.53 This is also true for the mandatory character of the norms in this area. The

Reference is made to an arbitration tribunal here. To be sure, a conflict of legal orders might arise when, for example, the arbitral decision is not recognised in a country other than that of the seat of arbitration or it is quashed in the latter while recognised in the former. However, as is often claimed, an arbitral decision ruling on an international case is likely to circulate more easily and freely than a judicial decision given on the same case. Part of the reason why this is so arguably lies in the binational character of the composition and appointment process of the arbitration tribunal, which directly contrasts with the mono-national composition and appointment process of a wholly domestic court of law. Human beings and the associations they form, including States, tend to more promptly abide by and pay heed to something that they have, even indirectly, contributed to shape than to something they played no role in shaping. The appointment of arbitrator x by litigant a who is connected (by his residence, nationality, etc.) to state community A, notably if arbitral judge x is also connected to state community A, entails that country A is, at least ceteris paribus, in a better disposition towards the arbitral decision emanating from a tribunal composed of x, y and z in which arbitral judge x sits and whose seat of is in country B to which litigant b is connected who has also appointed arbitral judge y who is also connected to state community B. “In a better disposition” over a judicial decision made by a mono-national court of law that sits in state community B and is constituted by judicial judges y, y1 and y2 who are all exclusively appointed by state community B and, just like litigant b, are exclusively attached to state community B, particularly if this court has been unilaterally seized by litigant b. To the extent that international recognition of decisions made by binational tribunals faces less resistance than international recognition of decisions made by mono-national tribunals, conflicts of legal orders in respect of parental responsibility would be less common to the extent that, as long as no binational courts of law are available to the individuals, States allow them recourse to arbitration tribunals which are binational as to their composition and appointment process 52 53

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Conflicts in Respect of Parental Responsibility conflict between two individual norms contained in two judicial decisions that both claim to be imperative result in them both losing their imperativeness, as the parents cannot abide by them both, just like two equally ranked commanders-inchief who pretend to issue contradictory orders to the same troops lose their capacity to require obedience. The fact is that, to be truly imperative, a decision must, in a binational case, be bi-nationally imperative, which is not the case when a binational decisional conflict arises. As for the public policy argument, a decisional conflict is often the product of a conflict of public policies, which is the very opposite of public policy and of public justice, and might even lead to the development of a private non-legal order that is a product of self-justice (Selbstjustiz). Let’s be honest: It’s better to have arbitral justice than self-justice resulting from a conflict of public policies and of public justices, because self-justice is tantamount to the law of the jungle and indeed constitutes a denial of justice. With respect to the state interests that are inherent in this area and allegedly make this area incompatible with arbitration – which is often, far too often, characterized as a “private” means of dispute resolution54 – let’s remind ourselves that arbitration can be interstate, in the sense that the parties to it may well be two States. The first international arbitration of the modern era was indeed an interstate arbitration.55 Let’s also remind ourselves that, if the term “state interest” designates the interest that a State may have in prescribing a particular substantive solution to the parental dispute, such state interest is, as discussed, only subsidiary in the area of parental responsibility. Let’s further not forget that if the parental dispute is cross-border, that’s because there are at least two States affected by that parental dispute. And so, to the extent that a state-related component is inherent in such dispute, and this accounts for the state interest, and the states affected are two, we may be faced with a “conflict of state interests”. Isn’t a conflict of state decisions sufficient evidence of the existence of a “conflict of state interests” of this sort? And finally, let’s not forget that it is in the States’ joint interest to resolve their differences about what their common child’s welfare requires because the resolution of the interparental conflict which threatens the welfare of the child that both countries have a duty to protect is achieved via the resolution of the disagreement between themselves. It follows that all the arguments relied on to support hostility towards arbitration in the area of parental responsibility actually lead to the conclusion that, for and whose decisions are likely therefore to face less resistance internationally, including binationally, than the mono-national decisions. 54 Decisions made by arbitration tribunals, no less than decisions made by judicial tribunals, rely on public authorities for their implementation. As the European Court of Human Rights has often underlined, a vital step of the administration of justice is the enforcement of the decision, which is in fact a decision only to the extent that it can be enforced through public force. And so, the administration of arbitral justice which involves the enforcement of the arbitral decision that takes places under the control and at the hand of public authorities that have the monopoly of public power, involves a public phase which is quintessential to that justice. 55 United States of America v Great Britain (Alabama case), 14 September 1872, A. DE LAPRADELLE/ N. POLITIS, Recueil d’arbitrages internationaux, Vol. 2, Paris 1957, p. 713.

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Gian Paolo Romano so long as they don’t make access to binational or supranational courts of law available to the individuals to resolve conflicts of child custody judicial orders between them, the States should at least be responsible enough as to allow the individuals to have recourse to an international (arbitration) tribunal in order to overcome those interstate conflicts of child custody judicial orders and, therefore, to have the interindividual binational dispute conclusively resolved. In other words, in our example, it is precisely the arguments about inalienability of rights, mandatory nature of the rules in this area, public policy and state interests that should encourage Germany and Spain to allow the German mother and the Spanish father to agree to submit to a Hispano-German court of arbitration in order to overcome the Hispano-German conflict of judicial decisions. This would mean for Germany and Spain to accept to be in principle bound by a supranational arbitral decision that would replace the conflicting mono-national judicial decisions. For let me insist on this point: the choice is here not between arbitration justice and state justice, but rather between arbitration justice and the failure of state justice flowing from the unresolved conflict between two state justices, between two views of state justice, the conflict of legal orders in fact leading to a denial of state justice. However, if we allow recourse to arbitration a posteriori to remedy this denial and this failure, could we not take a further step and allow a priori access to arbitration so as to avert such a denial and such a failure, to prevent a conflict of legal orders?56 Despite their being more onerous and complex to establish, we might think that binational courts of law would be better suited than courts of arbitration to the peculiarities of international child disputes. The European Union and the Hague Conference on Private International Law are surely, in their respective geographical purview, capable to offer an appropriate platform and framework. As I will mention below, the European Union already provides a basic infrastructure which one can build on as well as “co-decisional” mechanisms. As for the Hague Conference, some alterations of and additions to the text of the 1996 Hague Convention – which already includes a substantial section on “co-operation” between the concerned States and authorities – may assist in this respect. The choice to bring the dispute before a binational or European court as an alternative to a mono-national court could be left to one of the parties, including the child, as with the diversity jurisdiction cases in the United States or with the transfer to a better placed jurisdiction that already exists in international and European legislation and which I will discuss later.57 Since the judges would in this scenario be State-appointed, they might be chosen from mutually agreed upon lists, and, for the States bound by the 1996 Hague Convention, those lists might be filed with the Permanent Bureau of the Hague Conference, just as is done for the list of central national authorities. 56 Germany and Spain might submit the Hispano-German conflict of decisions in respect of parental responsibility to a Hispano-German arbitration tribunal where both States would be party to the procedure. It would be a Hispano-German interstate arbitration which is perfectly permissible under (international) law (L. CAFLISCH, L’avenir de l’arbitrage interétatique, Annuaire français de droit international 1979, p. 9 et seq.). One may then wonder whether it does make much sense for those States to deny individuals the right to submit to the decisions of a Hispano-German arbitration tribunal in cases of a HispanoGerman conflict of judicial adjudications. 57 Infra, no 20.

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Conflicts in Respect of Parental Responsibility Appropriate specialisation and training in family law may be required as a precondition to sit in those binational tribunals. Needless to say, a great number of questions would need to be addressed. I will not dwell on them because what I intended to do was simply to outline one possible route that future law could embark on. 16. In connection with what has just been said, let me briefly mention another dispute-settling mechanism, that offered by mediation. It seems that the Law implies the right to a tribunal and that the right to a tribunal entails the right to be in disagreement with one’s counterpart and to not be forced to negotiate an agreed solution with him or her.58 In other words, it is the right to be faithful to oneself, one’s view of things and one’s principles, as subjective and biased as they are. This right to disagreement further entails the right to seek the resolution of such disagreement by a third party authority, a right which is accompanied by an obligation to respect and submit to the decision made by such an authority, regardless of how far it strays from the principles each of the parties has defended and would be willing, if need be, to continue to defend. It is, however, no less trivial to observe that many parental conflicts would be avoided if parents could rely on help from people who are able to favour a harmonious separation, particularly in respect of children, which is fundamentally what mediation aims to do in this area. It is also important to note that this dispute resolution method may be binational as, on the one hand, it is not yet regulated in many countries or geographical regions and, on the other, the national or supranational legislation that exists does not prevent the appointment of two (or more) mediators, typically from the countries that that the parents come from and that the child has significant ties with. Even though the law hasn’t gone so far as to provide for judicial or arbitral binational tribunals, it already allows the setting up and shaping of a mediation process that is binational, “bicultural”, bilingual, “bisexual” (involving a male and a female mediator) and, if need be, “bi-religious”.59 The proposals made by the panel of mediators so appointed are even more legitimate and worthy of confidence since they emanate from a panel who has the required distance and independence and whose members may have had to reconcile their own potentially disparate opinions to reach a joint proposal which is the product of a “mediation among mediators”. And so, to this day, mediation appears to be the only dispute-settling tool which is able to reflect the international dimension of the parental dispute through the composition, legitimacy, expertise and background of those in charge of it. Let me also highlight that mediation could assist here not only to reconcile the diverging views of justice maintained by the two parents, but also those maintained by the two States and their authorities. Here lies the dual dimension of the conflict that I touched upon,60 interparental and interstate. Starting once again with the Hispano-German example, the logical structure of the process would be that, if the parents agree to interparental mediation, and that mediation fails, and the 58 If we could force humans to avoid conflicts or to cope with resolving their conflicts themselves, if necessary with help from their close ones, we wouldn’t need judges. 59 Whatever the “seat” or “forum” of this mediation might be. 60 See, supra, no 1.

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Gian Paolo Romano disagreement between the parents continues, the normal judicial route would then be open to them; if the interparental disagreement leads to a disagreement between national courts, here the German and the Spanish courts (we will see how this can happen later61), the countries of the conflicting courts may have recourse to interstate, including inter-jurisdictional,62 mediation to overcome their disagreement. This would involve the task of encouraging them to negotiate a solution, with the mediator or mediators submitting proposals which help the States find a harmony of solutions in order to supersede the initial disharmony of decisions made by the judicial authorities, all this in the interest of the individuals, and above all in the child’s best interests. It is only where this interstate mediation fails that there would be recourse to a supranational court responsible, not only for proposing, but for imposing a solution to the conflict between the legal orders involved.63 B.

The Allocation and Exercise of International Jurisdiction

17. To return closer to today’s law, a step towards a single, bi-nationally enforceable decision requires that both co-affected countries, through a bilateral or multilateral instrument, forge, and abide by, a rule on jurisdiction which adopts a single connecting factor, that they agree to allocate jurisdiction to the courts of one of them, the one that is designated in each individual case through the operation of this connecting factor. A rule of this sort has then binational (or multinational) origins and legimacy because both (or several) state communities have contributed to its development and enactment, as is true with any “private convention” between two (or several) individuals, in short any contract, which is a bilateral (or multilateral) instrument that is enforceable against those who made it and “takes the place of the law” between them64. Such a rule would distribute jurisdiction among the contracting States and their courts by determining and allocating to each of them what is due to it according to a fair and equitable criterion (suum cuique tribuere). Therefore, assuming that the only bilaterally (or multilaterally) agreed upon jurisdictional connecting factor is, in our case study, the child’s habitual residence and that this residence is in Germany, the German judge has the sole power to adjudicate on this Hispano-German dispute. Such a power is part of a “state subInfra, no 22. This could take place under the aegis of a third party State (as often happens in interstate disputes) and, within the European Union, under the supervision of the European Commission. 63 The increasing recourse to international parental mediation makes one wonder why not allow recourse to international interparental arbitration. Because, if the proposals emanating from a Hispano-German panel of mediators have the power to bind both parents once those proposals have been accepted by the parents, what is the point of not allowing the parents to consent to the decisions of a Hispano-German panel of arbitrators that the parents, fearing the risk of bias and impartiality of a mono-national domestic court, have agreed to empower? 64 “tiennent lieu de loi”, according to language of the Napoleonic Code. 61 62

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Conflicts in Respect of Parental Responsibility stantive right” (droit subjectif étatique), a right of a State – here of Germany – to determine and distribute the substantive rights and obligations among the individuals, here of the Spanish father and the German mother. To be sure, such right of the State is also part of a responsibility and, therefore, an obligation of the State, much like custody, which is, as we have seen, both a right and an obligation (Pflichtrecht): a right against every other State involved, here Spain, and an obligation towards the individuals, here the parents and the child, who are seeking a legal solution to the dispute involving them. Indeed, should the German judge refuse to hear or decide the case, he would be guilty of a denial of justice. As for Spain and its authorities, they will, in principle, be under an obligation to abide by the agreed upon rule and by the German jurisdiction that it confers in this particular case. And so, if one of the parents files an application with the Spanish court, the Spanish court should decline jurisdiction and defer to the German courts, who have the legitimate authority to rule on the German-Spanish dispute, “legitimate” because flowing from a legitimate law, and the law is “legitimate” here because it is a binational law, because both countries involved have participated in developing and enacting it and agreed to be bound by it. This is what the Hague Convention 1996, of which both Spain and Germany, as well as several other countries, are signatory, attempts to do, albeit on a wider, multilateral scale. This treaty establishes a jurisdiction-allocating rule which is not only binational, but also multinational, because of the participation and ratification of Spain, Germany and many other countries. This rule recognizes the central role of the habitual residence of the child.65 The Brussels II-bis Regulation66 is also binding between Germany and Spain and, as a matter of fact, takes precedence over the Hague Convention with respect to relationships that fall within the geographical scope of both. Consequently, it is ultimately Brussels II-bis that governs our case study. The jurisdictional rule adopting the child’s habitual residence67 that is included in the Brussels II-bis Regulation has then been further formally sanctioned by a supranational authority, namely a legislative body or several legislative bodies within the European Union, which is in turn a multi-state and supra-state entity which is composed of all the “Member” States, including Spain and Germany, and enjoys normative, including regulatory, power to distribute international jurisdiction in this area as a result of a transfer of such power from the Member States, including Germany and Spain.68 Let’s note that the national court here formally possesses a binational legitimacy because both countries have agreed, by an international treaty or accepting to be bound by a supranational regulation, to vest the national court with the power to settle this binational dispute. In our example, the Spanish court not only rules “on Article 5. See, e.g. the Explanatory Report drafted by P. LAGARDE, no 6. Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000. 67 Article 8 on the primary of the habitual residence, see B. ANCEL/ H. MUIR WATT, La désunion européenne: le Règlement dit “Bruxelles II”, Rev. crit. dr. int. pr. 2001, p. 403. 68 Particularly through the Treaty of Amsterdam, signed on 2 October 1997 and entered into force on 1st May 1999. 65 66

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Gian Paolo Romano behalf of the King of Spain” as the epigraph to its decision suggests, but also on behalf of the European Union, including on behalf of Germany, because the rule that awards the Spanish court with jurisdiction is not domestic, is not mononational, is not Spanish only, but European, and consequently also HispanoGerman. And for the same reason, the German court not only rules “on behalf of the German people” (im Namen des deutschen Volkes), but also on behalf of the European Union, including Spain. In order to make the mono-national judge aware of the binational role and responsibility he is entrusted with, it might be appropriate to adjust the epigraph of the decision he is called on to render. Regarding a Spanish court’s decision, the Unión europea may for example be mentioned next to the Reino de España, and, regarding a German court’s decision, the Europäische Union may be mentioned next to im Namen des deutschen Volkes.69 18. The place of residence of a child that lives across two state communities can sometimes be controversial, as the courts of these two countries – just as different courts in the same country – may be inclined to “locate” such residence in different places and, particularly, each of them on its own territory. A “conflict of habitual residences” will then arise. In particular, the appropriate time to determine the residence might be debatable – the Hague Convention failing to provide a decisive clarification on this point70 – just as the factors that can effect a change of residence. As is also well-known, the Hague Convention does not ensure a multilateral interpretation – binding on all the contracting States and their courts – of the multilaterally developed and adopted provisions that it contains. We also know that this is different for the Brussels II-bis Regulation. For a supranational, multinational jurisdiction, the European Court of Justice, is responsible for resolving interpretative doubts which are submitted to it by national courts by way of so-called “preliminary” questions. Such questions may typically concern undefined, or insufficiently defined, concepts used by the regulation. The answers are provided through rulings that are supranational, just like the Court from with they emanate and the general rules that they are designed to clarify. These rulings bind not only the “referring” national judge, but also the judge of the Member State that is “co-affected” by the interindividual dispute that led to the reference for a preliminary ruling, as well as every other national court that is faced with the same uncertainty in future cases.71 However, it is true that, when it comes to determining the habitual residence, the factors identified by the Court as playing a role in that analysis are fairly “open”, with the national judge enjoying a measure of appre-

A bit like for passports of Spanish and German citizens and those issued by any other Member State. 70 For example, in respect of the issue of perpetuatio fori, P. LAGARDE’s explanatory Report states two different opinions. 71 The Court resolves issues of interpretation that national courts ask it but in the cases before the Court, all Member States, not only those affected by the interindividual dispute, but also all others, have the “right to be heard”: see, article 40 of Protocol No 3 on the Statute of the Court of Justice of the European Union. In other words, they can submit their observations, so much so that the court’s activity is preceded by “multilateral” effort, just like the one leading to the adoption of the regulation that it interprets. 69

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Conflicts in Respect of Parental Responsibility ciation.72 Even if its work contributes to preventing disagreement between judges of the Member States involved in a binational human relationship, the Court of Justice, when responding to a preliminary question, does not directly settle a conflict between the judges of two Member States. If the courts of both Member States have applied the criteria as determined and spelled out by the Court of Justice and they both take the view that they have jurisdiction based on the Brussels II-bis Regulation due to the child’s habitual residence being located within their territory, a “conflict of jurisdictions” may arise. So having one single connecting factor determining jurisdiction is not sufficient to prevent and resolve the conflict of legal orders of the type under scrutiny here. Other rules are required. 19. These additional rules are all the more needed that the two instruments in question do not completely relinquish the plurality of fora as they provide for others, alongside the habitual residence of the child. To be sure, availability of these additional fora is subject to rigourous conditions, which I will not examine here. Here it is important to note that the variety of jurisdictional bases does not per se stand in the way of ensuring a single bi-nationally enforceable decision – which is, let me repeat, the condicio sine qua non for the dispute being resolved in Law and by the Law – provided that this variety is controlled and accomodated by bilateral (or multilateral) rules, that is by rules developed and adopted by both States involved and designed to guarantee the coordinated exercise of jurisdiction by the courts that do have jurisdiction. This is how the contest of jurisdictions is prevented from developing into a conflict of jurisdictions. The fact is that two or several judges may be vested with competent jurisdiction but only one of them may be allowed to actually exercise it. The factors most commonly relied on to ensure this coordination are the chronological priority, i.e. primacy of the court first seised – which is commonly, although not unambiguously, referred to as lis pendens rule – and the primacy of one jurisdictional factor over the other or others, which last primacy is often justified by the greater ties and connections with the dispute, and especially with the child. It should be clarified that this primacy may be established in abstracto, through a general provision to which both States consent, or may be the result of an in concreto analysis, which is more problematic because it is once again necessary to determine which authority is empowered to make this analysis and to generally bind through its findings the other authorities. Let’s generally say that such analysis may be bilateral, i.e. the result of the joint determination of two courts, or unilateral, the determination of just one of them. The two instruments under scrutiny – the Hague Convention 1996 and the Brussels II-bis Regulation – use both criteria, alternatively or cumulatively. I will not address the technical details of the relevant provisions. I will simply note that the potential conflict between the courts of two Member States which may both claim to be the place of the child’s habitual residence is in principle solved – and, as a matter of fact, most often averted – based on the chronological priority of seisin, which also applies to the infrequent cases of the judge of the habitual 72 ECJ, Mercredi, 22 December 2010, C-497/10 PPU: “It is for the national court to establish the habitual residence of the child, taking account of all the circumstances of fact specific to each individual case”.

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Gian Paolo Romano residence competing against the judge which has jurisdiction for divorce.73 The contest between the forum at the habitual residence and other fora, such as that of the child’s nationality or the habitual residence of one of his or her parents, is accomodated through the primacy of the former; primacy not in the sense that jurisdiction is always exercised by the court of the habitual residence (it would otherwise make little sense to provide for other bases for jurisdiction), but in the sense that the court of the habitual residence has both the power and the responsibility to hear the dispute in situations when the courts having jurisdiction disagree on which among them should go ahead and exercise it. As a matter of fact, the Hague Convention 1996 and the Brussels II-bis Regulation set up a “bilateral”, as opposed to a unilateral, binational, as opposed to mono-national, process in which both “co-affected” contracting or Member States may engage through their courts. Faced with a parental disagreement, with a breakdown in the dialogue between the parents of a child, the courts of the contracting or Member States with which the child has significant connections – typically the “fatherland” and the “motherland” – are permitted and encouraged to reach a joint, binational, “bi-state” agreement on who among them is “better placed to hear [and decide] the case”74. This interstate, and more specifically interjudicial, interjurisdictional agreement may typically be the result of an “exchange of views”,75 of an interjudicial and interjurisdictional dialogue.76 In the event of a persistent disagreement between the courts of the two contracting or Member States as to who should rule on the dispute between the parents – each court typically taking the view that it is better placed to do so than the other77 – the conflict between the courts and the contracting or Member States on behalf of which they are acting is prevented or resolved either through the chronological priority or the primacy of the habitual residence of the child, according to the scheme outlined above. 20. Another possible pathway takes inspiration from some domestic systems of civil procedure. This is to refer the conflict to a higher court, a judge of judges (“juge des juges”), a supra-jurisdictional judge, in other words, a court placed above the jurisdictions that are party to the conflict of jurisdictions. Such a system is in place in France, for example, when it comes to the “conflicts of competences” (conflits de compétences), which term designates the jurisdictional contest between 73 However, it is rare that in such a case, a true jurisdictional conflict arises because the jurisdiction of the divorce judge is subject to acceptance by the parents “as well as by any other person who has parental responsibility in relation to the child”: article 10(1) lit. b) of the Hague Convention 1996 and article 12(1) lit. b) of the Brussels II-bis Regulation. 74 This is the title of article 15 of the revised Brussels II regulation (“Transfer to a court better placed to hear the case”). 75 Article 8 para. 3 of the Hague Convention 1996 states that “[t]he authorities concerned may proceed to an exchange of views”. More stringently, article 1 para. 6 of the revised Brussels II Regulation prescribes that “[t]he courts shall cooperate for the purposes of this Article, either directly or through the central authorities […]”. 76 Cf. H. MUIR WATT, in D. BUREAU/ H. MUIR WATT, Droit international privé, 2nd ed., Paris 2010, vol. I. 77 Or – in rarer cases – each judge believes that the other is better placed to exercise jurisdiction.

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Conflicts in Respect of Parental Responsibility civil and administrative courts. This conflict, once it arises, is settled by a Tribunal des conflits, which is a mixed, bi-jurisdictional court whose members are judges from the Cour de cassation and judges from Conseil d’Etat, in equal number78. We may also cite, under French procedural law, the “conflict of jurisdictions” (conflit de juridictions), this expression meaning the conflicts between judges from the same jurisdictional order that, in civil law, were formerly settled by the French Supreme Court and, in criminal law, still are.79 In Italy, the designation “conflict of jurisdictions” (conflitti di giurisdizioni) refers to conflicts between civil and administrative courts which are too resolved by the Italian Supreme Court (Corte di cassazione) as a result of a procedure that is called regolamento di giurisdizione.80 The Italian Supreme Court also has the responsibility to settle the “conflicts of competences” (conflitti di competenza) which designates the situation when two civil judges think they are both competent or both incompetent to hear a (domestic) case, the procedure being then referred to as regolamento di competenza.81 And so, according to a system of this sort, when a disagreement between the Spanish and German courts arises, with both of them claiming that they have jurisdiction on the grounds that the child’s residence is located within their territory and that they are better placed to exercise it, the solution to the conflict of jurisdictions would not be to require the second court to abide by the unilateral determination of the first court – of the court that was seized by the fastest parent – but to refer the conflict for adjudication to a “court of conflicts” (tribunal des conflits), a “supranational”, higher court whose task would then be to assess the merits of both claims for jurisdiction and the arguments advanced by each of them. This can be the European Court of Justice or the General Court of the European Union82 or an ad hoc, mixed “specialised tribunal” where, in a Hispano-German case, a Spanish judge and a German judge would sit, with a judge from a third Member State typically serving as president.83 21. Let me remind that the European Court of Justice can already be mobilised by a Member State which claims that another Member State is in breach of 78 Created by article 89 of the 1848 Constitution and then abolished under the Second Empire, the Tribunal des conflits has been recreated by the law of 24 May 1872 and its role has been reinforced by the law of 20 April 1932 and the decree of 25 July 1960. 79 Article 659 of the Criminal Procedure Code (Code de procédure pénale). 80 Article 41 of the Civil Procedure Code (Codice di procedura civile), amended by the Act of Parliament (legge) of 18 June 2009 no 69. 81 Articles 42 to 50 of the Codice di procedura civile. 82 In the framework of the Study PE 510.012 financed by the European Parliament and carried out at the Swiss Institute of Comparative Law by L. HECKENDORN URSCHELER/ I. PRETELLI et al., an intervention of the General Court of the European Union is envisaged in order to solve the most acute and intractable cases of intra-European conflict of decisions in child abduction cases. See p. 20 et seq. and 95 et seq. 83 And we might perhaps be in the presence of a tri-national, tri-state Court, in the style of the “Benelux Court of Justice”. See, article 5 of the Benelux Treaty as amended by the protocols of 10 June 1981 and 23 November 1984: “La Cour siège en principe au nombre de neuf juges, trois de chaque pays. Elle peut cependant, dans les cas prévus par son Règlement d’ordre intérieur, siéger au nombre de trois juges, un de chaque pays”.

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Gian Paolo Romano a treaty obligation, including an obligation under a private international law regulation.84 Interestingly, this is what Latvia did against Italy in a recent case involving an Italian father domiciled in Italy and a Latvian mother who, following their separation, relocated to Latvia.85 The Latvian court awarded custody of the ItalianLatvian child to the Latvian mother, while the Italian court awarded custody of that child to the Italian father and ordered the return of the child to Italy. Recognising the standstill that this situation meant for the child and the parents, Latvia attempted to have that conflict settled in favour of the Latvian decision by invoking a failure of Italy to meet its obligations under the Brussels II-bis Regulation. An interstate dispute arose – with both litigants being two States: the Republic of Latvia and the Republic of Italy – concerning the best way to decide an interparental dispute. However, as I will underscore later, the text of Brussels II-bis Regulation makes it possible for conflicts of legal orders to arise without either of the “coaffected” Member States having committed the slightest breach of that European law instrument. It is perhaps within the Hague Convention 1996 that a supranational, permanent or ad hoc tribunal responsible for settling conflicts of legal orders between the contracting States would bear the most interesting fruit. In its chapter on “recognition”, the Hague Convention provides that, when a decision made by a contracting State is presented for recognition in another contracting State, the court of the State addressed may exercise control over the jurisdiction of the court that made the decision in the first place.86 The provision on parallel proceedings does not require the second court to stay proceedings when it believes that the first court has no jurisdiction under the Convention, a “recognition prognosis” being not excluded.87 Since there is no supranational court that can make its interpretation binding on the Contracting States, it is possible that the first court interprets the text in a way that gives it jurisdiction and the second court also interprets the text in a way that gives it jurisdiction and denies the former’s. And so, the second court might refuse to defer to the first court and exercise its own jurisdiction, thus paving the way to a conflict of legal orders.88 But is it true that such a supranational court does not yet exist? It is tempting to wonder whether the International Court of Justice might not already be mobilised in this kind of situation. Let’s think about the recent case Belgium v Switzerland, which involved a dispute between the former Belgian company Sabena and the former Swiss group SwissAir concerning the interpretation of provisions on, among others, lis pendens under the Lugano Convention. Belgium Article 259 TFEU (ex-article 227 TCE). For a summary of the case, see supra, no 12. 86 Article 23 par. 1 lit a) Hague Convention 1996. 87 Article 13 Hague Convention 1996. 88 Thus, in the French-Swiss case that I mentioned (supra, note 12), the French court of the habitual residence of the child at the time when his mother, who was also living in France, filed for a custody order, confirmed its jurisdiction by virtue of the perpetuation fori despite the later transfer of the residence of the child to Switzerland. Seized by the father, the Swiss court of the new habitual residence of the child also upheld its jurisdiction by excluding the perpetuatio fori and refusing to apply lis pendens. 84 85

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Conflicts in Respect of Parental Responsibility argued that the Swiss court should refuse to exercise its jurisdiction since the Belgian court had been seized first and had confirmed its power to settle the dispute. Just like the Italian-Latvian case already discussed, this Swiss-Belgian case is a good example of the dual level and dimension of the conflict at stake. An international, binational, Swiss-Belgian conflict arose in the first place between two private entities, one Belgian and one Swiss. But as both applied to different national courts and both national courts claimed to have jurisdiction to rule on this interindividual conflict, this resulted in an interstate conflict between Belgium and Switzerland and between the claims they made for exercising their jurisdiction and resolving the interindividual dispute. It was precisely in order to resolve such an interstate dispute that Belgium applied to the International Court of Justice, although the application was later withdrawn. This case seems to suggest that there is nothing that stands in the way of the International Court of Justice being called upon, based on the particular ways in which it can be seized, to rule on an interstate disagreement over the interpretation and implementation of an international or binational convention designed to resolve a cross-border private dispute.89 C.

Recognition, Refusal of Recognition and Possibilities for Overcoming the Adverse Effects of Such Refusal

22. We haven’t yet said anything about the possible content of the substantive custody decision. Without prejudice to what I will discuss in a moment in relation to the Brussels II-bis Regulation,90 none of the international or supranational instruments in force in this area compels the States which are bound by them to recognise or enforce, unconditionally and in all circumstances, the decision of another “co-affected” State that is also bound by them. Neither do those instruments force the States that they bind to abstain from making a decision that risks not being recognised in another State with which the individuals involved and typically the child also have significant connections. The list of the reasons which may justify denying recognition is still long: public policy, notably based on the child’s best interests as perceived by the State addressed, the right of the child to be heard as ensured and organised in the State addressed, the right to a fair trial as recognised in the State addressed etc.91 In other words, both “co-affected” Member States are still permitted to be in disagreement over public policy – so as to give rise to a conflict of public policies92 – over procedural demands and requirements, over the need to hear the child, and so on, and there are not yet any means to overcome this disagreement. Put yet another way, it is possible for the States bound by

For a summary of the case, see B. UBERTAZZI, Private international law before the International Court of Justice, Yearbook of Private International Law 2013/2014, p. 57 et seq., esp. p. 66. 90 Infra, no 23. 91 See, article 23 of the Hague Convention 1996 and article 23 of the Brussels II-bis Regulation. 92 I owe the expression conflit d’ordres publics to Ms Anne REISER. 89

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Gian Paolo Romano the Regulation not to be bound by a single judicial decision, with their legal orders being allowed to remain perfectly disconnected and uncoordinated. In one of the cases that has inspired these reflections, the Spanish court, seized first, affirmed its jurisdiction based on the habitual residence of the child. But the child wasn’t heard during the Spanish proceedings. For at the time he should have been heard, he was actually in Germany following a move by his mother which the German court decided did not entail an obligation to return the child to Spain based on the Hague Convention 1980. The child’s right to be heard in the proceedings concerning him is constitutionally guaranteed in Germany and forms part of German public policy. As a result, the Spanish decision was denied recognition by the German court of first instance. And the German court of appeal was also inclined to resist recognition.93 But what would be the effect of such a denial? The German court is likely to have to hear the dispute again – it must in principle do so at the request of any of the individuals involved – and it is obviously free to decide it in a way which conflicts with the way its Spanish counterpart has decided it. If the Spanish public order (ordre public) and the Germany public order clash, there is no public order resulting from this clash, but a HispanoGerman conflict of public orders, that is a legal disorder, which could lead to a private order flowing from self-justice and law-of-the jungle conducts. Let me insist on this point: As long as one of the two States that are affected by a parental dispute is permitted to make a decision on this dispute and, at the same time, the other State that is equally affected by the same dispute is permitted not to recognize this decision – and we leave matters there – the cross-border conflict between the parents threatens not to be solved by Law and the child will not benefit from a legal order but has to endure a legal disorder. And the basic, universal component of his or her interests goes by the window. For – let me repeat – the interests of a binational child require the two States involved to reach an agreement, to achieve harmony between them: either on the substantive solution to the parental conflict that affects them, either on a mechanism allowing to overcome the disagreement between them on what the substantive interests of that particular child require. I will mention two ways to remedy this situation; the first, more radical method, aims to prevent it (1), the second aims to neutralise it after it has arisen (2). 23. (1) The first method is about making mandatory the mutual recognition and enforcement of child custody decisions, about preventing a State to resist recognition and enforcement of a child custody decision made by another State. As 93 Zarraga v Pelz (supra, note 10), point 32: “By judgment of 28 April 2010 the Amtsgericht Celle held that the judgment of the Juzgado de Primera Instancia e Instrucción No 5 de Bilbao was neither to be recognised nor enforced, on the ground that the Spanish court had not heard Andrea before handing down its judgment”. And the Oberlandesgericht Celle believed it had a duty to uphold the first instance decision, observing “that the Juzgado de Primera Instancia e Instrucción No 5 de Bilbao did not obtain Andrea’s current views and was therefore unable to take account of those views in its judgment of 16 December 2009 concerning, inter alia, rights of custody in respect of that child; and that the efforts made by the Spanish court to hear Andrea were inadequate given the importance attached to taking into account the child’s views in Article 24(1) of the Charter of Fundamental Rights”.

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Conflicts in Respect of Parental Responsibility a result, the recognition and exequatur proceedings would be made redundant. For what is the point of checking something that we are obliged to accept anyway?94 A decision made by the Spanish court would then not only bind this court, which is not allowed to change its mind,95 not only all other Spanish courts and the Spanish law-enforcing bodies, but also the German courts, which would be forced to give effect to the decision by abstaining from permitting re-litigation and “re-judging” the case, as well as German law-enforcing bodies which, just as their Spanish counterparts, would be compelled to enforce it even at the price of acting against their own views and even their own principles. Should we fear such an evolution? Let us keep in mind that this is ultimately what happens in most domestic legal orders. Think about an inter-cantonal case involving a father from Zurich who is domiciled in Zurich and a mother from Geneva who is domiciled in Geneva. The court in Zurich affirms jurisdiction by virtue of the habitual residence of the child and awards custody to the father and visitation rights every other weekend to the mother. The child will therefore grow up primarily – and unless a change in circumstances occurs, which I will assume it will not – in Zurich. The Geneva court might inwardly disagree with the decision by the Zurich court and the reasons relied on by the Zurich court, and might even find such decision shocking,96 but it is nonetheless not permitted to resist it and refuse to lend support to its implementation, typically when the mother refuses to return the child to the custodial father after a visitation period spent in Geneva. However, one may think that this analogy is of limited worth because two subdivisions of a sovereign State are more likely to share the same sets of values than two different States, even if they are both “members” of a supranational entity or “union”. This is a complex point and any generalisations would be dangerous. A softened version of the mandatory recognition principle may be envisaged though. It would be to make the obligation to recognise dependent on the State of origin having, at the request of one of the private persons involved, sought the opinion of the “co-affected” State or, at any rate, on the “co-affected” State having being heard, having had the opportunity to share its opinion with the State of origin on the best way to solve the parental dispute. In our example, the German court would be under an obligation to recognise the Spanish decision only to the extent that the German court, typically on application by the German mother, has been involved in an “exchange of views” with the Spanish court, and had the chance to deliver its opinion on the child’s best interest to the Spanish court. The decision would then almost be a Hispano-German decision, a “bi-state”, joint state decision, a binational or “bi-judicial decision”, even if one court, here the Spanish court, has the final word and has the power to cut the knot. Let us remind ourselves that such an exchange of views, such a judicial debate and the effort to reconcile initially diverging opinions that it prompts often occur within judicial bodies that are composed 94 Which, of course, would go further than Regulation (EU) No 1215/2012, called the “recast Brussels I Regulation”, which abolishes the exequatur (see article 39 in particular) without abolishing recognition (articles 45 et seq.). 95 See, supra, no 10. 96 It is not altogether rare for commentators to find the judgments which they report and on which they comment shocking, including those of supreme courts.

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Gian Paolo Romano of several members, the principle of collegiality allowing each of them to form and enrich his reflections through the contact with others while ensuring that the resulting decision is not influenced by bias. And let us keep in mind that the “co-judge” whose opinion is dissenting, whose opinion is not reflected in the final decision, in the operational part of the final decision, has nonetheless served as judge in the case, he has been “co-judge” in the matter, he has jointly been responsible for it alongside the fellow judges whose opinion resulted in the final decision. This suggestion might sound audacious. However, I do not believe it is unrealistic. As a matter of fact, current law provides some examples of joint, binational decisions similar to those envisaged here. I have already recalled the possibility for an interjudicial dialogue offered by the Brussels II-bis Regulation at the stage of determining jurisdiction.97 Let me now specify that this instrument goes further in the event of wrongful removal of a child. The State to which the child has been removed, and which might have refused the child’s return based on the Hague Convention 1980, has nonetheless to recognise and enforce the subsequent child custody decision emanating from the State of habitual residence of the child, including if such decision directs the return of the child to that State. However, before making a child custody decision that direct the child’s return, the court of State of the habitual residence must take into account the reasons that led the State of removal to refuse the child’s return in the first place.98 The recognition is here mandatory, even public policy does not stand in its way. And we might think that the justification for the State of removal being under an obligation to recognise the decision by the State of the habitual residence is that the former has had the right to be heard, to express its opinion to the latter, and that opinion had to be taken into account, just as a co-judge whose opinion remains ultimately dissenting has nonetheless the right (and in fact the duty) to share it with his fellow judges. An example offered by the Hague Convention 1996 concerns access rights. The court of the residence of the parent seeking access rights has the authority to “make a finding on the suitability of that parent to exercise access and on the conditions under which access is to be exercised”. Even though it has the final word, the court of the child’s habitual residence “shall admit and consider such […] finding before reaching its decision”.99 This is also, in a way, a “bi-state” decisional process because the courts of both States are associated with and jointly responsible for it even if they play different roles. 24. (2) The second method is about allowing, on the one hand, the State addressed to object to recognition, as the Brussels II-bis Regulation and the Hague Convention 1996 actually do100, while however, on the other hand, designing and putting in place a system to resolve the international conflict of decisions that such a refusal may trigger, which is what these two instruments fail to do. In particular, a third, higher court should be given the task to settle the conflict between national decisions by replacing them through a supranational decision whose contents may be the same as one of those replaced or different from both of them or even refer Supra, no 19. See, paras 7 and 8 respectively of the Brussels II-bis Regulation. 99 Article 35 para 2 of the Hague Convention 1996. 100 As indicated supra, no 22. 97 98

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Conflicts in Respect of Parental Responsibility the case back to one of the national courts for a fresh adjudication. In the European Union, this might be a European court, including the General Court of the European Union or the European Court of Justice.101 As for the States party to the Hague Convention 1996, this might be a court sitting in The Hague under the auspices of the Hague Conference. Because such a supranational decision would bind both States, it would be capable of bringing harmony between them and their legal orders and consequently, ensure peace, order and Rule of Law for the benefit of the individuals involved, parents and children, whose lives span across both country. A conflict of decisions being likely to arise as a result of the non-recognition in one State of the decision emanating from another State, such non-recognition may already open recourse to a mechanism aimed at resolving the conflict between the “positive” decision of one State and the “negative” decision of the other, negative because it refuses to recognise the first. Going back to our case study, Germany could still refuse to recognise the Spanish decision based on one of the grounds set out in the Brussels II-bis Regulation. But this text would be completed by allowing recourse to a higher, European court,102 perhaps after an interstate mediation procedure, for example, before the Commission, similar to what is provided in the case of an action for breach of European law which is brought by one Member State against another.103 As for its content, the decision by the European court may reproduce the solution embraced by the Spanish judge and so, award custody to the father and visitation rights to the mother, in which case Germany would have to abide by, not the Spanish decision as such, but the European decision that substantially upholds it. Or it might award custody to the mother and visitation rights to the father, in which case the Spanish decision that was not recognised by Germany would also cease being enforceable in Spain. Or it might adopt a third solution awarding custody to the father or the mother while adjusting the visitation rights and other details of the parental responsibility regime in favour of the other parent. Or finally, and particularly when the German court only refuses to recognise the Spanish decision (negative decision) – for example due to the child not being heard – the court might annul the vitiated Spanish decision and refer the case back to the Spanish court so it can adjudicate anew after hearing the child. The difficulties that will have to be overcome to put such a system into place should not be exaggerated. And mechanisms in place within national legal orders to settle domestic conflicts of decisions may be looked upon as a useful source of inspiration.104

Supra (note 84). Supra, no 16. 103 See, supra, no 21. 104 Cf. for example, article 618 of the French Civil Procedure Code: “Lorsque la contrariété des décisions est constatée, la Cour de cassation annule une des décisions ou s’il y a lieu les deux”. 101 102

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IV. Conclusion 25. I must conclude. It is safe to assume that, within the European Union, the developments that have been outlined above are prompted by the task the European Union has been entrusted with to build an “area of freedom, security and justice”.105 As a matter of fact, if the interstate disagreement that underlies a conflict of decisions on how best to solve a conflict between private persons is not prevented or at least resolved, it clearly impairs justice, those individuals being in fact denied justice. This also threatens their freedom because the mere prospect of such an interstate disagreement may ultimately encourage them to “de-internationalise” their lives and activities, to play “domestic”, the cross-border component of their proposed activities and intercourse being ultimately responsible for the legal mess, the legal no man’s land, in which they run the risk of being mired. We might surely think that the European Union already is under an obligation vis-à-vis its citizens and residents to prevent conflicts of legal systems among the Member States and to perfect the work that it has courageously undertaken to avert and settle these conflicts. As for the Member States of the Council of Europe, the European Court of Human Rights has suggested, in relation to child-related disputes, that conflicts of legal orders may be contrary to human rights, and this is so because they defeat the very essence of law and order.106 It is to be anticipated that the judges in Strasbourg will not wait long to confirm this unambiguously and that this will even one day be regarded as a self-evident truth.

Title V of the Treaty on the Functioning of the European Union opens with article 67 whose first subsection goes as follows, “The Union shall constitute an area of freedom, security and justice with respect for fundamental rights and the different legal systems and traditions of the Member States”. 106 In the Greek-Polish case Matrakas and others v Poland and Greece, decided on 7 November 2013, two children of a Polish mother and a Greek father, together with their mother, requested the European Court of Human Rights to uphold complaints against both Poland and Greece on the ground that Poland made a decision that Greece had failed to recognise due to Greek public policy. The Court essentially held that a disagreement of this type between two State communities over the rights and obligations of natural persons whose lives span across them both leads to “situations incompatible with the principle of the rule of law which the Contracting States undertook to respect when they ratified the Convention” (point 144). 105

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SPECIAL JURISDICTION UNDER THE BRUSSELS I-BIS REGULATION ________________

JURISDICTION UNDER ARTICLE 7 NO. 1 OF THE RECAST BRUSSELS I REGULATION: DISCONNECTING THE PROCEDURAL PLACE OF PERFORMANCE FROM ITS COUNTERPART IN SUBSTANTIVE LAW AN ANALYSIS OF THE CASE LAW OF THE ECJ AND PROPOSALS DE LEGE LATA AND DE LEGE FERENDA Thomas KADNER GRAZIANO*

I. II.

III.

Introduction Art. 7 no. 1 lit. a of the Recast Brussels I Regulation: Determining the Place of Performance for Contracts Other than Contracts for the Sale of Goods or the Provision of Services A. Scope of Application of Art. 7 no. 1 lit. a B. A First Brief Critique of the Interpretation lege causae Criticism of Connecting the Procedural Place of Performance to the Place of Performance as Defined by Substantive Law. Reasons for Adopting Art. 7 no. 1 lit. b A. Starting Point: Interpretation lege causae and Criticism of this Method 1. Interpretation lege causae as Illustrated by the Custom Made Case 2. A Critical Evaluation of the Interpretation lege causae a) Complexity of Having Recourse to the Determination of the Law Applicable to the Contract b) Complexity of Determining the Place of Performance under Foreign Substantive Law c) Different Localization of the “Place of Performance” in the EU if this Place Is Not Determined Autonomously

* Professor of Law at the University of Geneva, Faculty of Law (thomas. [email protected]). Dr. iur. (Goethe-Univ. Frankfurt), habil. (Humboldt-Univ. Berlin), LL.M. (Harv.), Director of the Department of Private International Law and of the program on transnational law (available at ). See on this issue by the same author, in German: Der Gerichtsstand des Erfüllungsortes in Art. 7 Nr. 1 der Brüssel I-VO n.F.: Zur Entkoppelung des international-zivilprozessualen vom materiell-rechtlichen Erfüllungsort, RIW 2015 (forthcoming).

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 167-217 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Thomas Kadner Graziano d)

IV.

V.

VI.

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Connecting Substantive and Procedural Law Despite Differences in the Purposes of Both Sets of Rules e) Starting Point: Jurisdiction of the Courts of the Country of the Defendant’s Habitual Residence and Exceptional Character of Special Fora f) Disrespect for the Exceptional Nature of Special Jurisdiction, in Particular When the CISG Applies g) Procedural Non-Sense of Localizing the Place of Performance at the Place Where Goods or Documents Are Handed Over from One Transport Person to the Other h) Different Fora for One Single Contract and No Comprehensive Jurisdiction for Contractual Claims B. Interim Conclusions The 2001 Reform: Disconnecting the Procedural Place of Performance from Substantive Law – One Single Place of Performance and its Autonomous Determination for Sales and Service Contracts in Art. 7 no. 1 lit. b A. One Forum for All Claims Relating to a Contract for the Sale of Goods or for the Provision of Services B. Autonomous Definition of the Place of Performance and Abolishment of the Interpretation lege causae C. Disconnecting the Place of Performance in Procedural Law from Substantive Law D. Interim Conclusions Analysis of the Current Case Law of the ECJ, Part 1: Confirming the Disconnection A. The Case of Car Trim GmbH v KeySaftey Systems Srl: Fundamental Clarifications 1. The Decision of the ECJ a) Qualification of the Contract b) Determination of the Place of Performance 2. Comments a) Qualification of the Contract as a Sales Contract b) Determination of the Place of Performance: Key Points c) Place Where Goods or Documents Are Handed Over from One Transport Person to the Other: an Irrelevant Factor d) Importance of the Final Destination of Goods e) Presence of the Goods at the Place of Destination Required? f) Résumé B. Solution of the Custom Made Case under the New Provision C. The Cases of Color Drack, Rehder, Wood Floor, Krejci, and Corman-Collins Analysis of the Current Case Law of the ECJ, Part 2: Frictions and Aberrations A. The Problematic Case: Electrosteel – Agreements on the Place of Performance B. The Decision of the ECJ C. Critique and a Proposal for Interpretation 1. Confusion between Agreements on the Place of Performance on the One Hand and Court Agreements on the Other 2. Jeopardizing the Purpose of the New Rule in lit. b if Agreements Designating a Place Other than the Destination of the Goods Are Taken into Consideration

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I D.

VII.

Determining the Place of Performance “Under the Contract” – an Analysis of Exemplary Contract Clauses

X.

Open Questions A. Proximity of Proof: Requirement that the Goods Be Present at the Place of Performance When the Action Is Brought? 1. Requirement of Actual Availability of Proof When the Claim Is Brought 2. No Such Requirement Needed 3. Résumé B. Determining the Place of Performance in the Absence of Relevant Contractual Clauses C. “Unless Otherwise Agreed”: delendum est D. Art. 7 no. 1 lit. c: delendum est E. Limiting Jurisdiction at the Place of Performance to Situations Where the Contract Was at Least Partially Performed? F. Jurisdiction at the Procedural Place of Performance: A Forum for the Plaintiff? Conclusions for the Interpretation of Art. 7 no. 1 lit. a: Prospects for an Autonomous Interpretation? Prospects for the Future A. Extension of the List in lit. b B. Alternative: Abolition of lit. a and Creation of a List of Examples for the Autonomous Determination of the Place of Performance C. Proposed Rules de lege ferenda Résumé

I.

Introduction

VIII. IX.

The question of how the jurisdiction at the place of performance shall be determined in transnational contract cases has caused – and it is probably not an exaggeration to say: for decades – considerable difficulties. In legal doctrine this head of jurisdiction has been considered a “mystery” even by specialists in this field.1 The difficulties in determining the place of performance for the purpose of

See S. LEIBLE, Der Erfüllungsort iSv Art. 5 Nr. 1 lit. b Brüssel I-VO – ein Mysterium?, in Festschrift für Ulrich Spellenberg, München 2010, p. 451; P. MANKOWSKI, Der Erfüllungsortsbegriff unter Art. 5 Nr. 1 lit. b EuGGVO – ein immer größer werdendes Rätsel, IHR 2008, 46; see also J. VON HEIN, Der europäische Gerichtsstand des Erfüllungsortes (Art. 5 Nr. 1 EuGGVO) bei einem unentgeltlichen Beratungsvertrag, IPRax 2013, 54; W. HAU, Kaufpreisklage des Verkäufers im reformierten europäischen Vertragsgerichtsstand – ein Heimspiel?, Juristen-Zeitung (JZ) 2008, 974, at 979: “Der Erfüllungsort, Faszinosum der Wissenschaft und Schreckgespenst der Praxis” [The place of performance, fascination with legal science and the bogeyman of legal practice]. 1

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Thomas Kadner Graziano international jurisdiction appear so great that numerous authors have, even recently, proposed to simply abolish this head of jurisdiction.2 Abolishing jurisdiction at the place of performance would however be at odds with the fact that in a number of contractual disputes there is a practical need for a special forum, in addition to the (sometimes distant) forum in the State of the defendant’s domicile. According to some authors, the jurisdiction at the place of performance is “for cross-border economic activities by far the most important of the special jurisdictions”.3 Abolishing this special head of jurisdiction would thus be contrary to the practical need to have a forum which is in proximity to the contractual dispute. The causes of all the difficulties lie in the central connecting factor: the place of performance and its determination. The notion of the “place of performance” is used on the one hand in substantive law, where it responds to the

M. MÜLLER, Objektive Anknüpfungsmomente für Schuldverhältnisse im europäischen IPR/IZVR – Die Behandlung vertraglicher Sachverhalte, in J. VON HEIN/ G. RÜHL (eds), Kohärenz im europäischen Internationalen Privat- und Verfahrensrecht, Tübingen 2015, p. 270, at 289 et seq.; he suggests to remove the curent provision and to entirely redefine the forum for contract claims; H. GAUDEMET-TALLON, La refonte du règlement Bruxelles I, in M. DOUCHY-OUDOT/ E. GUINCHARD (eds), La justice civile européene en marche, Dalloz 2012, p. 21, at 29; idem, Compétence et exécution des jugements en Europe: règlement n° 44/2001 – Conventions de Bruxelles et de Lugano, 4th ed., Paris 2010, p. 209 with further references; R. RODRIGUEZ, Beklagtenwohnsitz und Erfüllungsort im europäischen IZPR, Fribourg 2005, p. 173 et seq., at 240; doubtful also E. LEIN, Modern Art – The ECJ’s Latest Sketches of Art. 5 N° 1 lit. b Brussels I Regulation, YbPIL 2010, 571, at 586; see, from the period before the reform of 2001, J. HILL, Jurisdicion in Matters relating to a Contract under the Brussels Convention, I.C.L.Q. 1995, 591; G. DROZ, Delendum est forum contractus?, Recueil Dalloz (D.) 1997, Chronique, 351 with further references; A. VON OVERBECK, L’interprétation traditionnelle de l’article 5-1 des conventions de Bruxelles et de Lugano: le coup de grâce?, in Liber amicorum G. Droz, La Haye 1996, p. 287 et seq. 3 P. MANKOWSKI, Die Brüssel I-Verordnung vor der Reform, in B. VERSCHRAGEN (ed.), Interdisziplinäre Studien zur Komparatistik und zum Kollisionsrecht (Bd. I), Wien 2012, p. 31, at 72; see also J. KROPHOLLER/ J. VON HEIN, Europäisches Zivilprozessrecht, 9th ed., Frankfurt am Main 2011, Art. 5 EuGGVO, No. 1: “Die praktisch wichtigste besondere Zuständigkeit” (in practice the most important head of jurisdiction); S. LEIBLE (note 1), at 451: “[ihm kommt] in der Praxis […] unter den besonderen Gerichtsständen die größte Bedeutung zu”, “letztlich unverzichtbar” (in practice the most important head of special jurisdiction, ultimately indispensable); H. SCHACK, Entscheidungszuständigkeiten in einem weltweiten Gerichtsstands- und Vollstreckungsübereinkommen, ZEuP 1998, 931, at 932: der Handelsverkehr ist auf ihn “dringend angewiesen” (the trade “strongly depends” on this head of jurisdiction); A. METZGER, Zum Erfüllungsortgerichtsstand bei Kauf- und Dienstleistungsverträgen gemäß der EuGGVO, IPRax 2010, 420; G.P. ROMANO, Le for au lieu de l’exécution dans la jurisprudence récente de la Cour de justice de l’Union européenne, in A. BONOMI/ D. TAPPY/ D. GAULIS/ E. KOHLER (eds), Nouvelle procédure civile et espace judiciaire européen, Genève 2012, p. 63, at 67: the large number of court decisions on jurisdiction at the place of performance also prove its practical significance; R. IGNATOVA, Art. 5 Nr. 1 EuGVO – Chancen und Perspektiven der Reform des Gerichtsstands am Erfüllungsort, Frankfurt am Main 2005, p. 68 et seq. 2

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I specific needs of substantive law.4 On the other hand, the same notion is used in procedural law where it determines a special head of jurisdiction. In the past, the ECJ has not found a way to determine the procedural place of performance autonomously for the purposes of international jurisdiction. Instead, the ECJ determined the place of performance for the purpose of jurisdiction according to the substantive law which is applicable to the contract between the parties (i.e. according to the lex causae).5 However, practical experience has shown that combining the procedural place of performance with the place of performance as defined by substantive law was an aberration.6 When the Brussels I Convention was converted into the Brussels I Regulation in 2001, the European legislator thus disconnected the procedural place of performance from substantive law for the two most important types of contracts: contracts for the sale of goods and contracts for the provision of services. Instead, for these two types of contracts the legislator pragmatically determined the place of performance for the purpose of international jurisdiction autonomously, namely – and in line with some proposals in legal literature7 – at the factual and economic place of performance of the contract.8 Since then, the courts have sought to implement this legislative decision in practice. Most of the ECJ’s decisions on the new Art. 5 (now: Art. 7) no. 1 lit. b implement the disconnection of the procedural place of performance from substantive law consistently and are convincing.9 Other ECJ rulings seem, however, to fall back into old habits and can therefore convince neither in their reasoning nor in the results.10 In legal practice, it is of the utmost importance to have certainty with respect to jurisdiction and available fora. Recital 15 of the Regulation 1215/2012 See below, III. A. 2. d). See below, II. 6 See on behalf of almost all voices in legal literature, T. RAUSCHER, Internationaler Gerichtsstand des Erfüllungsortes – Abschied von Tessili und De Bloos, NJW 2010, 2251, at 2254: “rechtskonstruktiver Irrweg”. For details see below, III. 7 “ein Triumph der Neuerer, der Progressiven” (a triumph of the innovators, the progressive), P. MANKOWSKI, in B. VERSCHRAGEN (note 3), at 73 with references. See in particular G. DROZ (note 2), at 356: “Il faudrait […] poser une règle simple pour les contrats qui forment la majorité du commerce juridique international et dont l’exécution se traduit par des opérations concrètes, ventes, locations, leasing, prestations de services, contrats d’entreprise, etc. Il faudrait donner compétence au tribunal du lieu où s’exécutent ces opérations concrètes, livraisons des marchandises, exécution de la prestation de service, mise à disposition du matériel, etc.” For the (French) source of inspiration of the new provision see J. KROPHOLLER/ J. VON HEIN (note 3), at Art. 5 EuGGVO, No. 27. For a pragmatic, factual localisation of the place of performance at the place where the party to the contract deploys an economic activity (“wirtschaftliche Aktivitäten entfaltet”), see T. PFEIFFER, Internationale Zuständigkeit und prozessuale Gerechtigkeit, Frankfurt am Main 1995, p. 678 et seq.; T. KADNER GRAZIANO, Gerichtsstand des Erfüllungsortes im EuGVÜ, Einheitliches Kaufrecht und international-zivilprozessuale Gerechtigkeit, Jura 1997, 240 et seq., at 247. 8 For details, see below, IV. 9 Below, V. 10 Below, VI. 4 5

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Thomas Kadner Graziano (the recast Brussels I Regulation), thus states that “[t]he rules on jurisdiction should be highly predictable”. According to the rulings of the ECJ, legal certainty requires that the plaintiff can “identify easily the court in which he may sue” and that it is possible for the defendant “reasonably to foresee before which court he may be sued”.11 Regarding jurisdiction of the courts at the place of performance, this objective of the 2001 reform has now partially been achieved. With respect to a certain number of issues, this head of jurisdiction remains however a mystery to many scholars, courts and practitioners. Others have called it the “main construction site in the field of international jurisdiction”.12 This article first sets out how Art. 7 no. 1 lit. a of the recast Brussels I Regulation operates (II.). In lit. a the previous interpretation of the ECJ (i.e. determining the place of performance lege causae) remains in force for contracts other than contracts for the sale of goods or the provision of services.13 The article will then illustrate the weaknesses of this solution and show what the legislator wanted to avoid through adopting the new regulation and the autonomous definition in lit. b for contracts of sale of goods or the provision of services (III.). Looking back at the reasons for the reform paves the way for a consistent historical and teleological interpretation of Art. 7 no. 1 lit. b for sales and service contracts (IV.). It will then be examined how, and to what extent, the recent case law of the ECJ implements the principle of disconnection of the procedural place of performance from its counterpart in substantive law (V. and VI.). On this basis, some open questions regarding lit. b will be analyzed and proposals for solutions will be made (VII.). It will then be considered whether the experiences with lit. b also allow conclusions to be drawn for the interpretation of Art. 7 no. 1 lit. a, i.e. for other types of contracts, and proposals will be made for an autonomous interpretation of lit. a (de lege lata) as well (VIII). Finally, proposals for a cautious reform of Art. 7 no. 1 are made, through which the disconnection could be achieved even more consistently and legal certainty for plaintiffs and defendants in an international context could be further enhanced (IX.).

11 ECJ, 03.05.2007, case C-386/05, Color Drack GmbH v Lexx International Vertriebs GmbH, para. 20; ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung, Thomas Rabitsch v Gisela Weller-Lindhorst, para. 22. 12 P. MANKOWSKI, in B. VERSCHRAGEN (note 3), at 73 et seq.: “Die faktische Bestimmung des Erfüllungsortes ist ein bis heute nicht vollständig durchgerechnetes Prinzip.” Es herrsche “Verunsicherung und Unsicherheit”. [“The factual determination of the place of performance is a principle that is still not completely thought through.” “Insecurity and uncertainty reigns.”], p. 74, es handele sich um die “wichtigste Baustelle im Bereich der Zuständigkeitstatbestände” [the main construction site in the field of international jurisdiction], p. 76. 13 See explicitly ECJ, 23.04.2009, case C-533/07 (Falco Privatstiftung), paras 48-51.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I

II.

Art. 7 no. 1 lit. a of the Recast Brussels I Regulation: Determining the Place of Performance for Contracts Other than Contracts for the Sale of Goods or the Provision of Services

Art. 5 no. 1 1st sent. of the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters14 provided Member States of the European Community for the first time with an internationally uniform head of jurisdiction for contractual claims at the place of performance. The same rule is nowadays to be found in Art. 7 no. 1 lit. a of the recast Brussels I Regulation. It reads: “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; […].” In the following years, the ECJ did not succeed in defining the procedural place of performance autonomously. Instead, starting with the decisions in the Tessili v Dunlop and Shenavai v Kreischer cases, the court determined the place of performance under Art. 5 no. 1 of the Brussels I Convention according to the substantive law which is applicable to the contract between the parties (i.e. according to the lex causae).15 Following the ECJ judgment in the De Bloos v Bouyer case, the place of performance was not determined for the whole contract (for example at the place of performance of the characteristic obligation), but separately for each obligation in question.16 According to the ECJ, this method of interpretation is still to be followed under Art. 7 no. 1 lit. a of the recast Brussels I Regulation.17 Consequently, for contracts falling under Art. 7 no. 1 lit a, when analysing whether they have jurisdiction, the courts have to incidentally determine the law that governs the contract. They then have to determine the place of performance under this law for the obligation that is in dispute. If, under the applicable substantive law, this place is located in the forum State, the court at this place then has international and local jurisdiction.18

OJ L 299, 31.12.1972, p. 32. ECJ, 6.10.1976, case C-12/76, Industrie Tessili v Dunlop AG, in particular paras 13-15; ECJ, 15.01.1987, case 266/83, Shenavai v Kreischer. 16 ECJ, 6.10.1976, case C-14/76, De Bloos v Bouyer. 17 ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst, paras 48-51. 18 For a detailed discussion of the complexity of this examination with a case study, see the author of this article (note 7), at 240 et seq. 14 15

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Scope of Application of Art. 7 no. 1 lit. a

Today, Art. 7 no. 1 lit. a of the recast Brussels I Regulation is applicable to, for example, contractual disputes regarding license agreements and other contractual disputes about intellectual property rights,19 to contracts for the sale of land, to contractual obligations resulting from joint ventures, contractual claims based on letters of exchange,20 contracts for the sale of financial instruments, contracts for the exchange of goods (barter), and possibly also to obligations under certain software contracts (insofar as these are not considered contracts for the sale of goods or for the provision of services),21 etc.22 Once the applicable law has been determined, it is applied in order to find the place of performance of the obligation which is in dispute.23 A recent case decided by the ECJ may serve to illustrate this approach: Case 1: Falco.24 Falco Privatstiftung, a foundation established in Vienna (Austria), licenses Ms Weller-Lindhorst, domiciled in Munich (Germany) to market, against remuneration, in Austria, Germany and Switzerland, video recordings of a music concert of the famous Austrian singer Falco. Falco Privatstiftung requests before the courts of its own domicile in Austria that WellerLindhorst provides an account of all sales of video recordings and pays the resulting royalties. Weller-Lindhorst responds that the Austrian courts lack jurisdiction. Since the defendant is domiciled in Germany, the German courts would have had international jurisdiction under Art. 4 para. 1 of the recast Brussels I Regulation. The courts at the domicile of the plaintiff in Austria would only have jurisdiction if the place of performance of the obligation in question was located in Austria and hence a forum under Art. 7 no. 1 of the recast Brussels I Regulation would be available. In the Falco case, the ECJ argued “that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right for remuneration is not a contract for the provision of services” ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst. See ECJ, 14.03.2013, case C-419/11, Ceska sporitelna, a.s. v Gerald Feichter, paras 41 et seq. 21 For a detailed analysis regarding software contracts, see M. REYMOND, in this Yearbook. 22 For more examples see e.g. P. STONE, EU Private International Law, 3rd ed., Cheltenham 2014, p. 90 et seq. 23 The exact obligation in dispute is to be determined, according to the ECJ, not autonomously but lege causae. For the resulting complications, see E.-M. BAJONS, Der Gerichtsstand des Erfüllungsortes: Rück- und Ausblick auf eine umstrittene Norm, in Festschrift für Reinhold Geimer, München 2002, p. 15, 20 et seq., 43 et seq. 24 ECJ, 23.04.2009, C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst. 19 20

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I and therefore does not fall under lit. b (which governs service contracts) but under the general rule in Art. 7 no. 1 lit. a.25 The ECJ then set out that, since the Brussels I Regulation is largely based on the Brussels I Convention, and in “the absence of any reasons for interpreting” Art. 5 (now: Art. 7) no. 1 lit. a in a different way than its predecessor in the Brussels I Convention, “consistency requires that Article 5(1)(a) of Regulation No 44/2001 be given a scope identical to that of the corresponding provision of the Brussels Convention, so as to ensure a uniform interpretation of the Brussels Convention and Regulation No 44/2001”.26 Consequently, in order to determine jurisdiction, first the law that governs the licensing contract needs to be determined. In the absence of a choice by the parties (Art. 3 of the Rome I Regulation), the law applicable to a license contract is established pursuant to Art. 4 para. 2 of the Rome I Regulation. The contract is thus governed “by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.” In the case of a licensing contract, the party granting the licence effects the characteristic performance.27 Since the licensor in the Falco case was established in Austria, the licensing contract between the parties was governed by Austrian law.28 Once the applicable law is established, the second step is to determine where the obligation in question has to be performed according to this law. In the Falco case, the obligation in question was the licensee’s obligation to pay royalties. § 905 para. 1 of the Austrian Civil Code, the ABGB, provides: “If the place of performance does not follow from the agreement between the parties or from the nature or the purpose of the transaction, the obligation is to be performed at the place where the debtor was domiciled when the contract was formed or, if the obligation was contracted in the course of a business of the debtor, at the place of the relevant branch. […]”29

ECJ, Falco Privatstiftung (note 24), paras 18 et seq., in particular para. 44. ECJ, Falco Privatstiftung (note 24), paras 46 et seq., in particular para. 51. 27 See e.g. P.A. DE MIGUEL ASENSIO, Applicable Law in the Absence of Choice to Contracts Relating to Intellectual or Industrial Property Rights, YbPIL 2008, 199, at 209; D. MARTINY, in Münchener Kommentar BGB, 6th ed. 2015, Art. 4 Rom I-VO, No. 265 with references. 28 Likewise, Art. 122 para. 1 of the Swiss PIL Act expressly states that: “Agreements pertaining to intellectual property are governed by the law of the state in which the transferor or grantor of the intellectual property right has his or her habitual residence”. 29 Translation by the author of this article, emphasis added. In the original version: “Kann der Erfüllungsort weder aus der Verabredung noch aus der Natur oder dem Zwecke des Geschäftes bestimmt werden, so ist an dem Orte zu leisten, wo der Schuldner zur Zeit des Vertragsabschlusses seinen Wohnsitz hatte, oder, wenn die Verbindlichkeit im Betriebe 25 26

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Thomas Kadner Graziano According to § 905 para. 2 of the ABGB, the debtor is in principle responsible, and carries the costs and the risk, for the transfer of money to the creditor’s domicile or place of business; however, under Austrian law, the place of performance of his obligation – i.e. the place where he has to perform the act he is obliged to execute – is still located at his domicile or place of business.30 Consequently, the place of performance for the payment of a royalty under a license contract is, under Austrian law, in principle located at the domicile or place of business of the debtor (in the Falco case: at the defendant debtor’s domicile in Munich, Germany). Thus, according to the ECJ, the Austrian courts at the plaintiff’s domicile did not have jurisdiction under Art. 7 no. 1 lit. a. The same result would be achieved had the parties in the Falco case chosen German law to govern their licensing contract: § 269 para. 1 of the BGB provides that in principle the place of performance is located at the debtor’s habitual residence.31 Just as in Austrian law, the debtor carries the costs and the risk that the money be transferred to the creditor (§ 270 para. 1 of the BGB); however the place for him to perform the acts he is obliged to execute under the contract is still located at his habitual residence (§ 270 para. 4 and § 269 para. 1 of the BGB). The situation would be different had the parties chosen Swiss law to govern their contract. Art. 74 para. 2 no. 1 of the Swiss Code of obligations (OR) provides that “[e]xcept where otherwise stipulated, […] pecuniary debts must be paid at the place where the creditor is resident at the time of performance”.32 In the Falco case, the ECJ thus set out (and insisted) that ‐

the place of performance in the sense of Art. 5 (now Art. 7) no. 1 lit. a is to be determined according to the lex causae, i.e. according to the substantive law that governs the contract (as opposed to being defined autonomously);

‐

for the purpose of jurisdiction, the place of performance of the obligation in dispute is relevant (as opposed to determining a uniform place of performance for all obligations resulting from the contract);

‐

the place of performance under the applicable substantive law continues to determine jurisdiction (as opposed to disconnecting the procedural place of performance from the place of performance as defined by substantive law).

des gewerblichen oder geschäftlichen Unternehmens des Schuldners entstand, am Orte der Niederlassung. […].” 30 Austrian OGH, 08.09.2009, 4 Ob 90/09b, case Falco, para. 3.2. with further references. Under Austrian law, the debt is regarded as a “qualifizierte Schickschuld”. 31 Emphasis added. In the original version: “§ 269 Leistungsort (1) Ist ein Ort für die Leistung weder bestimmt noch aus den Umständen, insbesondere aus der Natur des Schuldverhältnisses, zu entnehmen, so hat die Leistung an dem Ort zu erfolgen, an welchem der Schuldner zur Zeit der Entstehung des Schuldverhältnisses seinen Wohnsitz hatte.” 32 Emphasis added. In the original version: “Art. 74. 1 Der Ort der Erfüllung wird durch den ausdrücklichen oder aus den Umständen zu schliessenden Willen der Parteien bestimmt. 2 Wo nichts anderes bestimmt ist, gelten folgende Grundsätze: 1. Geldschulden sind an dem Orte zu zahlen, wo der Gläubiger zur Zeit der Erfüllung seinen Wohnsitz hat;” A monetary obligation is thus regarded as “Bringschuld”.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I B.

A First Brief Critique of the Interpretation lege causae

In situations such as the one in the Falco case, international jurisdiction thus depends on whether the obligation to pay the licence fee is regarded by the applicable substantive law as a collectable debt, an obligation to be performed at the debtor’s domicile or place of business (such as, in our example, under Austrian and German law), or a portable debt, i.e. a debt to be discharged at the creditor’s domicile (such as, in our example, under Swiss law). These issues of substantive law have nothing to do though with considerations of procedural appropriateness regarding the adequate forum. In situations such as the one in the Falco case, for reasons of proximity of evidence, and thus for procedural reasons, it would indeed often be appropriate to open a forum in the market for which the intellectual property rights were granted. However, the ECJ’s decision to continue determining the place of performance under Art. 7 no. 1 lit. a lege causae shut the door to this solution. As the Falco case as well as the example given in the next chapter will show, determining the place of performance lege causae is complicated, raises numerous criticisms, is for many reasons altogether unfortunate, and may lead to arbitrary results in international civil litigation.

III. Criticism of Connecting the Procedural Place of Performance to the Place of Performance as Defined by Substantive Law. Reasons for Adopting Art. 7 no. 1 lit. b In 1994, the ECJ decided the case of Custom Made Commercial Ltd v. Stawa Metallbau GmbH. This case made the numerous weaknesses of determining the place of performance according to the lex causae (i.e. according to the substantive law that is applicable to the contract) particularly obvious. It thereby contributed considerably to the reform of the jurisdiction at the place of performance under Brussels I. In 2001, the European legislator eventually introduced, in Art. 5 no. 1 lit. b of the new Brussels I Regulation, for contracts for the sale of goods and for contracts for the provision of services, an autonomous definition of the procedural place of performance for the first time.33 Those who nowadays undertake to interpret and apply Art. 7 no. 1 lit. b of the recast Brussels I Regulation need to remember the reasons that led to the reform in 2001. Only when one is aware of the solution that the legislator wanted to abolish is it possible to achieve a coherent application of the new provision that respects the intentions of the European legislator.

33 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L 012, 16/01/2001, p. 1.

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Thomas Kadner Graziano The following chapter therefore briefly recalls the development around the decision in the Custom Made case. It thereby lays the foundations for a subsequent analysis and criticism of the current decisions of the ECJ regarding jurisdiction at the place of performance under what is now Art. 7 no. 1 of the recast Brussels I Regulation. A.

Starting point: Interpretation lege causae and Criticism of this Method

1.

Interpretation lege causae as Illustrated by the Custom Made Case Case 2: Custom Made.34 Custom Made Commercial Ltd., which had its seat in London, ordered windows and doors to be manufactured by Stawa Metallbau GmbH, which had its seat in Bielefeld (Germany), to be used for a building complex in London. The parties agreed that Stawa Metallbau GmbH would supply the goods to Custom Made. When Custom Made paid only part of the stipulated price, Stawa brought proceedings for recovery of the balance before the Landgericht (Regional Court) Bielefeld. Custom Made claimed that the courts in Bielefeld lacked jurisdiction.

Given that the seat of the defendant company was in England it would have been possible for Stawa Metallbau GmbH to sue Custom Made Commercial Ltd for the remaining purchase price before the English courts, pursuant to Art. 2 (now Art. 4) para. 1 of the (now: recast) Brussels I Regulation. However Stawa preferred to bring an action before the German courts at its own seat in Bielefeld. This was only possible if the special jurisdiction for contractual disputes in Art. 5 no. 1 of the Brussels I Convention was open. Art. 5 no. 1 of the Brussels I Convention provided – just as Art. 7 no. 1 lit. a of the recast Brussels I Regulation provides today: “A person domiciled in a Member State may, in another Member State, be sued: 1. in matters relating to a contract, in the courts for the place of performance of the obligation in question; […].” A claim could thus be brought in a State that was not the State of the defendant’s domicile if the disputed obligation was to be performed there. In the Custom Made case the dispute was about the buyer’s obligation to pay the remaining purchase price.35 34 ECJ, 29.06.1994, case C-288/92, Custom Made Commercial Ltd v Stawa Metallbau GmbH. 35 According to the substantive sales laws in a certain number of European jurisdictions, the obligation to pay the purchase price is to be fulfilled at the buyer’s domicile; the obligation is thus a collectable debt, or an obligation to be performed at the debtor’s place of business (this is the case in the laws of France, Belgium, Luxemburg, Austrian and Germany). In other jurisdictions the debt to be discharged, and the place of performance located, at the creditor’s (or seller’s) domicile (this is so in the laws of England, the Netherlands, Denmark, Italy and Switzerland). Given this diversity in the substantive laws the ECJ did not manage to proceed to an autonomous interpretation of the

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I According to the interpretation lege causae – as is still applied today by the ECJ regarding Art. 7 no. 1 lit. a of the recast Brussels I Regulation for contracts other than contracts for the sale of goods or for the provision of services – the court when analysing whether it has jurisdiction, first has to determine incidentally the law that governs the contract. The court then has to establish the place of performance under this law for the obligation that is in dispute. If, under the applicable substantive law, this place is located in the forum State, the court at this place then has international and local jurisdiction. In the Custom Made case the contract between the German seller and the English buyer was governed by the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG).36 Art. 57 para. 1 lit. a of the CISG provides that the buyer has to pay the price “at the seller’s place of business”. Given that the seller’s seat in the Custom Made case was in Bielefeld, Bielefeld was the place of performance for the English buyer’s obligation to pay the balance of the purchase price. In sales scenarios such as the one in the Custom Made case, the interpretation according to the lex causae thus led to the result that the seller could bring a claim against the buyer at his own (the seller’s) seat. 2.

A critical evaluation of the interpretation lege causae

The determination of the place of performance according to the law that is applicable to the contract (i.e. the interpretation lege causae) raises an array of criticisms. Since the European legislator intended to respond to this criticism when enacting Art. 5 (now Art. 7) no. 1 lit. b of the recast Brussels I Regulation, the knowledge of these criticisms provides, as mentioned above, important insights for the interpretation of Art. 7 no. 1 lit. b of the recast Brussels I Regulation. It is therefore advisable to briefly recall the weaknesses of the interpretation lege causae.37 a)

Complexity of Having Recourse to the Determination of the Law Applicable to the Contract

A first point of criticism concerns the considerable complexity of this solution: Determining the place of performance lege causae makes it necessary for the court procedural place of performance for the purpose of international jurisdiction. Instead, the Court determined the place of performance of the obligation in dispute according to the law that governs the contract (interpretation lege causae). This was the method the ECJ had applied in the Tessili and Shenavai cases and this is the method the Court also applied in the Custom Made case. 36 This is the case if the case is brought before German courts, since Germany is a Contracting State to the CISG. It should eventually also be the case before English courts, see the author of this article, The CISG before the Courts of Non-Contracting States? – Take foreign sales law as you find it, YbPIL 2011/2012, 165 et seq. 37 See in detail, with numerous further references, the author of this article (note 7), at 244 et seq.

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Thomas Kadner Graziano to incidentally determine the substantive law that is applicable to the contract when analysing its jurisdiction. This may even be complex if the contract is ultimately governed by uniform sales law, especially when one of the parties is domiciled or established in a country which is not party to the CISG.38 b)

Complexity of Determining the Place of Performance under Foreign Substantive Law

Secondly, the Court, when examining its jurisdiction, must already identify where the place of performance is to be located under the applicable substantive contract law. If the contract, as in the case of Custom Made, is governed by uniform sales law, this can be done quickly. If the parties have however excluded the CISG (which is possible according to Art. 6 of the CISG and is often still done due to widespread ignorance of the substantive law rules of the CISG) and if the contract is then to be assessed by a foreign substantive law, such as Finnish, Polish, Portuguese or Estonian law, it may – according to information provided by practitioners – take more than two years for a court to determine the relevant place of performance under the applicable foreign law. Many lower courts in the EU are overburdened with such a task and have determined the place of performance for the purpose of international jurisdiction simply according to their own law, i.e. lege fori, or purely factually, disregarding the ECJ’s requirement to apply the lex causae.39 c)

Different Localization of the “Place of Performance” in the EU if this Place Is Not Determined Autonomously

The interpretation lege causae makes a uniform understanding of the procedural place of performance for the European judicial area and the recast Brussels I Regulation impossible. Thanks to the Rome I Regulation, the relevant contract law in a specific case is now found by applying the same PIL rules in all EU Member States. The place of performance is thus uniformly determined by application of the same substantive law, regardless of where a precise case is decided. Given that the substantive laws diverge greatly in locating the place of performance for reasons other than procedural considerations,40 this nevertheless leads, in similar situations, to different places of performance depending on the applicable substantive law.

38 This can be particularly complex if the choice of law clauses are to be found in conflicting standard terms; for a detailed analysis, see the author of this article, Solving the Riddle of Conflicting Choice of Law Clauses in Battle of Forms Situations: The Hague Solution, YbPIL 2012/2013, 71 et seq. 39 See H. GAUDEMET-TALLON (note 2), at No. 194, p. 197 with references to French case law. 40 References infra, d).

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I d)

Connecting Substantive and Procedural Law Despite Differences in the Purposes of Both Sets of Rules

If the place of performance is determined lege causae, the procedural place of performance ultimately depends on the place of performance of the contested contractual obligation as defined by substantive law. However, the rules on the place of performance under substantive law have entirely different objectives from those pursued by the rules on jurisdiction. It is crucial for a party to a contractual relationship to know where it has to perform its obligation, for example where goods are to be delivered or where to provide a service and when the party has therefore fulfilled its contractual obligations. If the parties have not determined these issues in their contract, the answers to these questions are to be found in the provisions of substantive law on the place of performance. These provisions determine, for example, whether it is sufficient that the seller makes the sold goods available at its premises for collection by the buyer, or whether he has to send them to the buyer or even bring them to him. The definition of the relevant performance and of the type of debt in turn is crucial for the distribution of the contractual risk (i.e. the question of which party bears the risk of accidental loss of the goods). Once the debtor has done everything he was obliged to do, he has fulfilled his obligations and the risk is transferred to the creditor, who then owes the payment, even if the sold goods are accidentally lost. The debtor’s exact obligations largely depend on how the respective national legislator has delimited the respective duties and obligations of the parties and how he distributed the risk of accidental destruction or loss of the goods. In sale of goods law, many European jurisdictions apply the principle that it is enough for the seller to provide the goods for collection by the buyer.41 This is based on the presumption that the debtor usually wants to take only the least onerous obligation.42 Regarding the place of performance of the obligation to pay the buyer, the solutions in the European jurisdictions differ considerably. In some jurisdictions, the obligation to pay the buyer is to be fulfilled at the place of residence or at the registered office of the creditor (i.e. the seller),43 in others at the residence or domicile of the debtor (i.e. the buyer).44 All these are substantive law considerations. They have nothing at all to do with the question of whether and where it is appropriate to open a special jurisdiction for contract claims alongside the general jurisdiction at the domicile of the defendant. Substantive law and international civil procedure pursue completely

See § 269 para. 1 BGB; Art. 74 para. 2 no. 3 of the Swiss Code of Obligations; no. 2 will also frequently lead to this result; Section 29 (2) of the English Sale of Goods Act; Art. 31 lit. c) CISG; Art. 7:101(1)(b) PECL; Art. 93 no. 1 (b)(ii) CESL. 42 See e.g. O. LANDO/ H. BEALE (eds), Principles of European Contract Law, Parts I and II, The Hague et al. 2000, p. 330, D. 43 For English law: Bank of Scotland v Seitz, 1990 S.L.T. 584; Art. 1182 para. 3 of the Italian Codice civile; Art. 57 CISG; Art. 7:101 (1)(a) PECL; Art. 125 No. 1 CESL. 44 See e.g. § 270 para. 4 and § 269 para. 1 BGB; Art. 1171 para. 3 of the Spanish Código civil; Art. 1247 para. 3 of the Civil codes of France, Belgium, and Luxemburg. 41

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Thomas Kadner Graziano different goals and aims here. Combining two very different regulatory matters causes friction and produces arbitrary results regarding jurisdiction. e)

Starting Point: Jurisdiction of the Courts of the Country of the Defendant’s Habitual Residence and Exceptional Character of Special Fora

The starting point for determining jurisdiction is the almost globally applied principle that the plaintiff has to in principle travel to the defendant (actor sequitur forum rei, codified in Art. 4 para. 1 of the recast Brussels I Regulation). It is then to be decided solely on procedural aspects under what conditions a special jurisdiction at the place of performance, in addition to the general jurisdiction at the defendant’s domicile, is justified. These procedural aspects include a special expertise of the courts, the proximity of evidence (such as the location of a defective item), the possibility of an inspection by the court or by experts, and the availability of witnesses, etc. The ECJ stresses regularly, and rightly so, that the jurisdiction at the place of performance pursues the goal of procedural practicality, which is an issue of procedural law, not of substantive law. In this sense, the ECJ has consistently held (and thus also in the judgment of Custom Made) that the jurisdiction at the place of performance is based on “a particularly close relationship between a dispute and the court which may most conveniently be called upon to take cognizance of the matter”.45 The place of performance “usually constitutes the closest connecting factor between the dispute and the court having jurisdiction over it”. It is this procedural aspect which “explains why that court has jurisdiction in contractual matters”.46 If the procedural place of performance is linked with, and made dependent on, the place of performance as defined by substantive law, it is however a matter of chance whether the result corresponds with these procedural requirements. In the Custom Made case, in which the goods had been delivered to London in accordance with the contract, and in which the German seller claimed payment of the remaining purchase price, there was absolutely no sense from a procedural point of view to open a special forum at the seller’s (and plaintiff’s) domicile in Germany. f)

Disrespect for the Exceptional Nature of Special Jurisdiction, in Particular When the CISG Applies

The situation is particularly precarious in scenarios that fall within the scope of the uniform sales law, such as in the case of Custom Made. According to Art. 57 45 ECJ, 29.06.1994, case C-288/92, Custom Made Commercial Ltd v Stawa Metallbau GmbH, para. 12; see also ECJ, 03.05.2007, case C-386/05, Color Drack GmbH v Lexx International Vertriebs GmbH, para. 24; ECJ, 09.07.2009, case C‑204/08, Peter Rehder v Air Baltic Corporation, para. 33; ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst, para. 24. 46 ECJ, 29.06.1994, case C-288/92, Custom Made Commercial Ltd v Stawa Metallbau GmbH, para. 13.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I para. 1 lit. a of the CISG, “[i]f the buyer is not bound to pay the price at any other particular place, he must pay it to the seller: (a) at the seller’s place of business”. Under the CISG, the money obligation is therefore a portable debt. If the substantive and the procedural place of performance are linked, Art. 57 para. 1 lit. a of the CISG has the effect that the claimant-seller systematically benefits from a forum at his own domicile, without this being justified by any procedural considerations. On the contrary, in order to protect the defendant, the European legislator has enacted the principle that the courts of the country of the defendant’s domicile have general jurisdiction. Special jurisdiction needs a specific procedural justification. If the procedural place of performance is linked with the place of performance as defined by substantive law, this is no longer guaranteed due to the different regulatory objectives of both matters. g)

Procedural Non-Sense of Localizing the Place of Performance at the Place Where Goods or Documents Are Handed Over from One Transport Person to the Other

The non-sense of linking the procedural place of performance with the one as defined by substantive law is particularly obvious in situations in which the sold goods are, according to the contract, handed over midway from seller’s carrier to the buyer’s. According to Art. 57 para. 1 lit. b of the CISG, “[i]f the payment is to be made against the handing over of the goods or of documents,” the place of performance is located “at the place where the handing over takes place”. The seller is then freed from his contractual obligations and the risk of accidental loss of the goods is passed on to the buyer. However, it is in no way justified on procedural aspects to open a special jurisdiction at the place where the goods are handed over from one transporter to the other. On the contrary, the goods are usually only for a very short moment at this location and there is therefore no link that would justify opening a special jurisdiction there. Accordingly, when Art. 57 of the CISG was adopted, the participants in the diplomatic conference did not want to prejudice in any way questions of international jurisdiction by establishing the substantive place of performance under this rule. On the contrary, it was explicitly stated in the Official Records that the rules for place of performance in the CISG are totally distinct and disconnected from issues of international jurisdictional.47 h)

Different Fora for One Single Contract and No Comprehensive Jurisdiction for Contractual Claims

Finally, the solution which provides jurisdiction at the place of performance of the disputed contractual obligation may lead to the unfortunate consequence that, with respect to the same contract, the courts of different States have jurisdiction for 47 United Nations Conference on Contracts for the International Sale of Goods, Official Records (O.R.) 1991, p. 79, Art. 53, no. 2; O.R., p. 122, Art. 53, no. 2, 3, 5; O.R., p. 368 et seq., Art. 53, Nos 27-35.

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Thomas Kadner Graziano different disputed obligations.48 From the point of view of procedural efficiency, this too should absolutely be avoided. B.

Interim Conclusions

At least eight strong reasons thus oppose linking the procedural place of performance with the place of performance as defined by substantive law and making the former dependent on the latter.49 By introducing the new lit. b in Art. 5 (now Art. 7) the European legislator wanted to respond to all of these criticisms and remedy the problems for contracts for the sale of goods and contracts for the provision of services. This intention of the legislator is of the utmost importance for the interpretation of the new Art. 7 no. 1 lit. b, and it must always be taken into account when applying the historical and teleological methods of interpretation to this rule.

IV. The 2001 Reform: Disconnecting the Procedural Place of Performance from Substantive Law – One Single Place of Performance and its Autonomous Determination for Sales and Service Contracts in Art. 7 no. 1 lit. b Just like its predecessor in the Brussels I Convention, Art. 7 no. 1 lit. a in its current version first of all provides that: “A person domiciled in a Member State may, in another Member State, be sued: 1. (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;” Lit. b then defines the place of performance for contracts for the sale of goods and for the provision of services as follows: “(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

For details see E.-M. BAJONS (note 24), at 27-33. On the complexity and the weaknesses of the interpretation lege causae, see E.-M. BAJONS (note 24), at 15 et seq.; G. DROZ (note 2), in particular at 353 et seq.; both authors provide numerous examples taken from domestic case law that illustrate the uncertainties of the former solution; for numerous further references to criticism in legal doctrine, see T. LYNKER, Der besondere Gerichtsstand am Erfüllungsort in der Brüssel I-Verordnung (Art. 5 Nr. 1 EuGGVO), Frankfurt am Main 2006, p. 45 et seq. 48 49

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I - 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; […].” The deficiencies listed above of the old version are thus corrected for these two types of contracts. A.

One Forum for All Claims Relating to a Contract for the Sale of Goods or for the Provision of Services

First, the new rule remedies the problem of opening special jurisdiction in different countries depending on the obligation in dispute (above, III.A.2.h.). For sales contracts the place of performance is located “at the place in a Member State where, under the contract, the goods were delivered or should have been delivered”. For contracts for the provision of services, it is “at the place in a Member State where, under the contract, the services were provided or should have been provided”. Thus, for all obligations resulting from these types of contracts, there is now only one single place of performance,50 namely the place of performance of the obligation that is characteristic of the contract.51 B.

Autonomous Definition of the Place of Performance and Abolishment of the Interpretation lege causae

Secondly, Art. 7 no. 1 lit. b abandons the interpretation lege causae. Instead, the place of performance in lit. b is defined autonomously for two categories of contracts. It is no longer necessary or permitted to have recourse to the law which is applicable to the contract or to the contested contractual obligation. The disadvantages and weaknesses of the former solution mentioned above under (III.A.2.a.c.) are thus also fixed for these two types of contracts. C.

Disconnecting the Place of Performance in Procedural Law from Substantive Law

At the same time, the European legislator has cut the link between the procedural place of performance on the one hand and the substantive place of performance on the other. Instead, the place of performance is defined autonomously in Art. 7 no. 1 50 With the consequence that “Le forum contractus porte enfin bien son nom”, G.P. ROMANO (note 3), at 70. 51 Compare W. HAU (note 1), at 975; F. POCAR, OJ 23.12. 2009, C 319, No. 50: “Sans utiliser le terme, il adopte le principe de l’obligation caractéristique”; G.P. ROMANO (note 3), at 70 et seq.

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Thomas Kadner Graziano lit. b for the purposes of international jurisdiction and completely independently from substantive law. The weaknesses of the former solution set out above under (III.A.2.d.-g.) are thus also fixed. In 2001, the European legislator thus introduced a factual, economic place of performance at the destination of the goods or at the place where the service is provided which allows for an approach based solely on procedural criteria. This disconnection of the procedural place of performance from substantive law allows important consequences to be drawn for numerous categories of cases (see the analysis of the current jurisprudence of the ECJ below, V. and VI., as well as the proposals for solving outstanding issues, VII. and IX.). D.

Interim Conclusions

As an interim conclusion it can thus be stated that the problems of the former solution (a.-h. above), which gave rise to the 2001 reform, are resolved by the present regime for sales contracts and service contracts. It is now important to create clear guidelines for dealing with the new solution. As experiences since 2001 show, the application of the new version raises a whole series of new issues. Given the many serious criticisms of the old solution (above, III.) and given the clear decision by the European legislator to establish an autonomous determination of the procedural place of performance and to disconnect the procedural place of performance from substantive law in lit. b, the current issues of interpretation can by no means be solved by returning to an interpretation of the place of performance lege causae.52

V.

Analysis of the Current Case Law of the ECJ, Part 1: Confirming the Disconnection

In the following chapter the current case law of the ECJ is examined, in particular regarding the extent to which it implements the disconnection of the procedural place of performance from substantive law (1. and 3.). It will also briefly be considered how the case that gave the final push to reform the rules on jurisdiction at the place of performance, the Custom Made case, would be resolved today under the new provision (2.).

52 For authors who are in favour of having recourse to the criteria of substantive law, see e.g. S. LEIBLE, Anmerkung zu EuGH, Urt. v. 25.2.2010 – C-381/08 (Car Trim GmbH/KeySafety Systems Srl), EuZW 2010, 303, at 305; idem (note 1), at 463. He does not, however, recommend returning to an interpretation lege causae; P. MANKOWSKI, IHR 2008, 46, at 50 et seq.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I A.

The Case of Car Trim GmbH v KeySaftey Systems Srl: Fundamental Clarifications

The ruling of the ECJ that is so far the most important for understanding the new provision was issued in February 2010 in the case of Car Trim GmbH v KeySafety Systems Srl. The decision was based on the following facts: Case 3: Car Trim.53 The German company Car Trim GmbH, established in Chemnitz (Germany), produced components for the manufacturing of airbag systems. Car Trim supplied KeySafety Systems Srl., established in Italy, with these components, in accordance with five supply contracts. Under the contracts, Car Trim was obliged to manufacture components for airbags of a certain shape so as to be able to supply them to order, according to the needs of KeySafety’s production process and in conformity with a large number of requirements relating to the organization of the work, quality control, packaging, labelling, delivery orders and invoices. KeySafety in turn used the components for the manufacture of airbags systems and then supplied Italian car manufacturers with these airbag systems. KeySafety declared termination of the contracts with effect from the end of 2003. Based on the view that those contracts should have continued, in part, until 2007, Car Trim claimed that the terminations were in breach of contract and brought an action for damages before the Landgericht Chemnitz (Regional Court, Chemnitz), within whose jurisdiction its own (the claimant’s) registered office was located. The German supplier could have sued their Italian purchaser before the Italian courts on the basis of (the current) Art. 4 para. 1, 63 para. 1 of the recast Brussels I Regulation. It preferred, however, to bring an action before the courts in Chemnitz. Jurisdiction of the German courts could only follow from Art. 5 (now Art. 7) no. 1 lit. b of the (now: recast) Brussels I Regulation. 1.

The Decision of the ECJ

a)

Qualification of the Contract

The ECJ first ruled that the contract at issue must be classified as a contract for sale, relying among others on Art. 1 no. 4 of the Consumer Sales Directive and Art. 3 para. 1 of the CISG.54 According to both sets of rules, contracts for the supply of goods to be manufactured also qualify in principle as sales contracts (as opposed to service or work contracts).

53 54

ECJ, 25.02.2010, case C-381/08, Car Trim GmbH v Key Safety Systems Srl. ECJ, Car Trim (note 53), paras 27-43.

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Determination of the Place of Performance

For the question of how the place of performance is to be determined for the purpose of Article 5 (now Art. 7) no. 1 lit. b, the ECJ first underlined the crucial importance of “the origins, objectives and scheme” of the Brussels I regulation for the interpretation of Article 5 (now: Art. 7) no. 1.55 The Court then set out that the rule on special jurisdiction at the place of performance “complements the rule that jurisdiction is generally based on the domicile of the defendant” (now Art. 4 para. 1 of the recast Brussels I Regulation) and creates a single special forum “to apply to all claims founded on one and the same contract for the sale of goods”.56 This place of performance of the contract is to be determined autonomously.57 The “autonomy of the linking factors provided for in Article 5 [now 7] (1)(b) […] precludes application of the rules of private international law of the Member State with jurisdiction and the substantive law which would be applicable thereunder.”58 The rule of special jurisdiction in matters relating to a contract “reflects an objective of proximity and the reason for that rule is the existence of a close link between the contract and the court called upon to hear and determine the case”.59 Under Article 5 (now Art. 7) no. 1 lit. b the place of performance of the contract for the sale of goods is “the place in a Member State where, under the contract, the goods were delivered or should have been delivered”. The ECJ dedicates the central passages of the judgment to the question of how the terms “delivery” and “place of delivery”, which are not defined in the Regulation, are to be interpreted.60 The Court sets out that “at the time of drafting that provision […] the Commission stated that it was intended «to remedy the shortcomings of applying the rules of private international law of the State whose courts are seized» and that that «pragmatic determination of the place of enforcement» [in the new lit. b] was based on a purely factual criterion.”61 In those circumstances, it is for the referring court “to determine […] whether the place of delivery is apparent from the provisions of the contract.”62 “Where it is possible to identify the place of delivery in that way, without reference to the substantive law applicable to the contract, it is that place which is to be regarded as the place where, under the contract, the goods were delivered or should have been delivered”.63 If “the 55 ECJ, Car Trim (note 53), at para. 47; see the decision in ECJ, Color Drack (note 45), at para. 18. 56 ECJ, Car Trim (note 53), at paras 48, 50; see ECJ, Color Drack (note 45), at paras 26, 39. 57 ECJ, Car Trim (note 53), at paras 49, 52; ECJ, Color Drack (note 45), at paras 24, 39. 58 ECJ, Car Trim (note 53), at para. 53; ECJ, Color Drack (note 45), at paras 30, 39. 59 ECJ, Car Trim (note 53), at para. 48; ECJ, Color Drack (note 45), at para. 40. 60 ECJ, Car Trim (note 53), at paras 51-61. 61 ECJ, Car Trim (note 53), at para. 52; also see the decision ECJ, Color Drack (note 45), at paras 39, 40. 62 ECJ, Car Trim (note 53), at para. 54. 63 ECJ, Car Trim (note 53), at para. 55; see on this issue in detail below, VI.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I contract would not contain any provisions indicating, without reference to the applicable substantive law, the parties’ intentions concerning the place of delivery of the goods” this place is to be determined autonomously in a manner “which is consistent with the origins, objectives and scheme of that regulation.”64 The referring court had suggested “two places which could serve as the place of delivery for the purposes of fixing an autonomous criterion”: “The first is the place of the physical transfer of the goods to the purchaser and the second is the place at which the goods are handed over to the first carrier for transmission to the purchaser.”65 The Court held that of these two places “the place of the physical transfer of the goods to the purchaser” would be preferable and “most consistent with the origins, objectives and scheme” of the Brussels I Regulation.66 This criterion is “highly predictable” and “also meets the objective of proximity, in so far as it ensures the existence of a close link between the contract and the court called upon to hear and determine the case.” Finally the Court stated: “It should be pointed out, in particular, that the goods which are the subject-matter of the contract must, in principle, be in that place after performance of the contract.”67 2.

Comments

a)

Qualification of the Contract as a Sales Contract

With regard to the question of whether the contract should be qualified as a service or sales contract, the reasoning of the Court provides a perfect example of an autonomous, comparative, and international qualification which takes inspiration from EU law and international conventions. A result other than the qualification of the contract between the parties as a contract of sale was hardly defendable.68 b)

Determination of the Place of Performance: Key Points

In the localisation of the place of performance, the ECJ fixes in the Car Trim case, as previously in the case of Color Drack (see below, C.), the key points and vertices for the interpretation of the new lit. b, as they arise in response to the criticisms of the former legal situation (represented above, III.). They comprise: general jurisdiction of the courts of the country where the defendant is domiciled as the basic rule, special jurisdiction at the place of performance as an exception justified by procedural considerations; requirement of proximity and a close link between the specific contract and the court called upon to hear and decide the case; the goal of ensuring uniformity and predictability of jurisdiction; a uniform place ECJ, Car Trim (note 53), at paras 56, 57. ECJ, Car Trim (note 53), at para. 58. 66 Emphasis added. ECJ, Car Trim (note 53), at paras 58-60. 67 ECJ, Car Trim (note 53), at para. 61. 68 See in legal doctrine e.g. G.P. ROMANO (note 3), at 72: “La conclusion s’est – en l’espèce – imposée”. 64 65

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Thomas Kadner Graziano of performance for the entire contract; its autonomous determination without recourse to Private International Law; no more linking the procedural place of performance to the place of performance under substantive law, instead: independence and disconnection of the procedural place of performance from the place of performance as defined by substantive law. All these key points follow either from the wording of Article 5 (now: Art. 7) no. 1 lit. b, or the scheme of jurisdictions in the recast Brussels I Regulation, or they may be deduced in any case from the history of the provision and the purpose of the new regulation in lit. b (as set out above).69 In Car Trim the question was then which consequences were to be drawn from these key points for the determination of the place of performance in the specific case. c)

Place Where Goods or Documents Are Handed Over from One Transport Person to the Other: an Irrelevant Factor

In the Car Trim case, the contract itself contained no express provision regarding the place of performance.70 The place of performance was then to be determined in light of the contract. The referring German Federal Court had suggested two possible options: the place at which the goods were handed over to the first carrier for transfer to the purchaser or, alternatively, the place of the physical transfer of the goods to the purchaser. The ECJ decided that the place at which the goods were handed over to the first carrier was to be excluded,71 and rightly so. In fact, the place where the goods are transferred to an intermediary person such as a carrier is, as a rule, very volatile and there are hardly any procedural arguments for opening a special forum there. At this place, the required proximity and close link between the specific contract and the court called upon to hear and decide the case is usually lacking. d)

Importance of the Final Destination of Goods

The Court decided instead to situate the place of performance for the purposes of Article 5 (now: Art. 7) no. 1 lit. b at the “final destination” of the goods72 (in the Car Trim case this pointed to a place in Italy). This decision is to be most welcomed since it the only one which is appropriate in terms of the ratio of this head of jurisdiction. Proximity and a close link between the specific contract and the court called upon to decide the case is given solely at the final destination of the goods, whether this is the headquarters of the buyer, a construction site, or a production site. Above, III. and IV. See however below, VI. B. For situations in which the parties concluded an agreement on a “place of performance”, see below, VI. 71 ECJ, Car Trim (note 53), at paras 58-60. 72 ECJ, Car Trim (note 53), at para. 60. 69 70

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I e)

Presence of the Goods at the Place of Destination Required?

Towards the end of the central passages of the Car Trim decision the Court states: “It should be pointed out, in particular, that the goods which are the subject-matter of the contract must, in principle, be in that place after performance of the contract.”73 This requirement, not further explained by the ECJ, may seem surprising at first glance. However, with respect to the purpose of this special jurisdiction, it makes sense. We will have to come back to this (below, VII. A.). f)

Résumé

The decision of the ECJ in the Car Trim case has brought most welcome clarity in many ways. The decision confirmed a number of key benchmarks for the interpretation of Article 5 (now: Art. 7) no. 1 lit. b. It also brings important clarifications to the interpretation of the terms “delivery” and “place of delivery”, which are absolutely consistent with the ratio and purpose of the new Art. 5 (now: 7) no. 1 lit. b. Last but not least, the central passages of the judgment of the ECJ show the benefit that can be derived through an autonomous, historical, and teleological (or purposive) interpretation of the new provision. B.

Solution of the Custom Made Case under the New Provision

In the Custom Made74 case, which gave an important push toward reform, the parties had formed a contract for the sale of windows and doors which were intended for a building complex in London. London was the contractually agreed destination of the goods and hence the procedural place of performance of the contract and of all obligations resulting from it. In the case of Custom Made the courts in England already had jurisdiction under Art. 2 (now: Art. 4) para. 1 of the recast Brussels I Regulation. In this situation, there is no room for an application of Art. 7 no. 1, because Art. 7 presupposes that the place of performance is in a Member State other than that of the defendant’s domicile. Art. 7 no. 1 lit. b would however apply if the destination of the goods were in a country other than the one in which the buyer is domiciled or established. One may think for example of building projects in third countries. For example, if an English and a German company are involved in a construction project in Spain, and if the German company supplies goods to Spain because of a purchase contract with the English company, the courts at the place of the destination of the goods in Spain would have jurisdiction pursuant to Art. 7 no. 1 lit. b for a contractual claim of the German or the English company against each other. The reason for the jurisdiction of the Spanish courts is that they are in the best position to take evidence in the case that one party invokes a violation of the contract by the other. It is then for the respective applicants to decide whether they prefer a lawsuit at the domicile of 73 74

ECJ, Car Trim (note 53), at para. 61. Facts and reference above, III. A. 1.).

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Thomas Kadner Graziano the defendant (in the example in Germany or England) or at the Spanish place of performance. C.

The Cases of Color Drack, Rehder, Wood Floor, Krejci, and Corman-Collins

In the cases of Color Drack, Rehder, Wood Floor, Krejci, and Corman-Collins, the Court confirmed the key points for the autonomous determination of the place of performance pursuant to Art. 5 (now: Art. 7) no. 1 lit. b and added further clarifications for a number of specific issues. Case 4: Color Drack.75 Lexx International Vertriebs GmbH (“Lexx”), a company established in Nuremberg (Germany), and Color Drack GmbH (“Color Drack”), a company established in Schwarzach (Austria), formed a contract under which Lexx undertook to deliver goods to various retailers of Color Drack in Austria, inter alia in the area of the registered office of Color Drack, who undertook to pay the price of those goods. The Austrian company argued that the German seller had violated its obligation under the contract to take back unsold goods and to reimburse the price to Color Drack and brought an action for payment before the Austrian court within whose jurisdiction its own (the claimant’s) registered office was located. Color Drack was the ECJ’s first case on the new Art. 7 no.1 lit. b. The ECJ made it clear that Art. 5 (now Art. 7) no. 1 lit. b first indent also applies when several places of delivery are situated in one single Member State. The Court decided that, “where there are several places of delivery within a single Member State” the action can be brought before the court “having jurisdiction […] for the principal place of delivery, which must be determined on the basis of economic criteria. In the absence of determining factors for establishing the principal place of delivery, the plaintiff may sue the defendant in the court for the place of delivery of its choice.” Other judgments concern the application of lit. b second indent to service contracts. Case 5: Rehder.76 Mr Rehder, who resided in Munich, booked a flight from Munich to Vilnius with Air Baltic, the registered office of which was in Riga (Latvia). Shortly before departure, the flight was cancelled. Mr Rehder’s booking was changed by Air Baltic and he arrived in Vilnius after a six hour delay. He brought an action for compensation before the courts in Munich (Germany). 75 ECJ, 03.05.2007, case C‑386/05, Color Drack GmbH v Lexx International Vertriebs GmbH. 76

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I In the Falco case, the ECJ had already made it clear that a service in the sense of Art. 5 (now Art. 7) No.1 lit. b is to be regarded as “a particular activity in return for remuneration.”77 The Rehder case provided the ECJ, for the first time, with the opportunity to clarify “the place in a Member State where, under the contract, the services were provided or should have been provided.” The Court decided that “in the case of air transport of passengers from one Member State to another Member State, carried out on the basis of a contract with only one airline, which is the operating carrier”, the procedural place of performance is both at the place of departure (where the checking-in and boarding of passengers and their luggage, their on-board reception, and the departure of the aircraft at the scheduled time shall take place) and at the place of arrival of the aircraft. The claimant has the choice to bring his claim at either of these places. On the other hand, places where the aircraft may stop over are irrelevant for the purpose of jurisdiction (just as for contracts for the sale of goods, the volatile place where the goods are handed over midway from the seller’s to the buyer’s carrier is irrelevant78). In the case of Wood Floor79 a claim was brought for damages following the termination of a commercial agency contract. The commercial agent had acted in several EU Member States. The ECJ decided that for the purpose of jurisdiction at the place of performance under Art. 5 (now: Art. 7) no. 1 lit. b second indent, when services are provided in several Member States, where the services of the commercial agent were mainly to be provided, as it appears from the provisions of the contract, is relevant. In the absence of such provisions, the actual performance of that contract or, as a last resort, the place where the agent is domiciled are relevant. In the case of Krejci Lager & Umschlagsberiebe GmbH80 the ECJ decided that a contract relating to the storage of goods constitutes a contract for the “provision of services” in the sense of Art. 5 (now Art. 7) para. 1 lit. b second indent. Consequently, special contract jurisdiction is available at the place of storage for claims arising from a storage contract. In the case of Corman-Collins81 the claimant brought a claim following the termination of a distribution agreement. The ECJ decided that an exclusive distribution agreement is to be regarded as a service contract and thus falls within the scope of the current Art. 7 no. 1 lit. b second indent, if it contains specific terms concerning the distribution of goods sold by the grantor to the distributor. In all these cases the ECJ confirmed the key points regarding the procedural place of performance, as set out above, and further specified these principles for a number of typical case scenarios. This case law is coherent, it follows the ratio of 77

ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst,

para. 29. ECJ, 25.02.2010, case C-381/08, Car Trim GmbH v KeySafety Systems Srl, paras 58-60, and above, V. A. 1. b) and 2. c). 79 ECJ, 11.03.2010, case C-19/09, Wood Floor Solutions Andreas Domberger GmbH v Silva Trade SA. 80 ECJ, 14.11.2013, case C-469/12, Krejci Lager & Umschlagbetriebs GmbH v Olbrich Transport und Logistik GmbH. 81 ECJ, 19.12.2013, case C-9/12, Corman-Collins SA v La Maison du Whisky SA. 78

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Thomas Kadner Graziano Art. 5 (now Art. 7) no. 1 lit. b and emphasizes the independence of the procedural place of performance from the place of performance as defined by substantive law. These decisions thus implement the principle of disconnection consistently and they represent an important contribution to legal certainty regarding international jurisdiction in contract cases (for some points that are still in need of clarification, see below VII.).82

VI. Analysis of the Current Case Law of the ECJ, Part 2: Frictions and Aberrations A.

The Problematic Case: Electrosteel – Agreements on the Place of Performance

The assessment is very different when it comes to the ECJ’s rulings on agreements by the parties with respect to the place of performance. For contracts for the sale of goods and for the provision of services, Art. 7 no. 1 lit. b refers in two places, respectively, to agreements between the parties. According to lit. b “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” and “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”. This applies “unless otherwise agreed”. (Emphasis added). The ECJ’s current rulings on agreements on the place of performance in the context of Art. 7 no. 1 lit. b second indent cannot convince yet.83 If not reconsidered, the current position of the ECJ will lead to friction with the rationale of Art. 7 no. 1 lit. b and risks undermining the purpose of the new rule. This becomes clear in the Electrosteel case.

For an overall positive evaluation of the case law of the ECJ, see e.g. T. RAUSCHER (note 6), at 2252 et seq.; R. WAGNER, Die Entscheidungen des ECJ zum Gerichtsstand des Erfüllungsortes nach der EuGGVO – unter besonderer Berücksichtigung der Rechtssache Rehder, IPRax 2010, 143, 148; A. METZGER (note 3), 420; A. STAUDINGER, Streitfragen zum Erfüllungsortgerichtsstand im Luftverkehr, IPRax 2010, 140; U. GRUSIC, Jurisdiction in complex contracts under the Brussels I Regulation, Journal of Private International Law 2011, 321; P. SHINE, The Problem of Place of Performance in Contract under the Brussels I Regulation: Can One Size Fit All?, 1 International Company and Commercial Law Review 2011, 20. – For a critical view, see J. HARRIS, Sale of goods and the relentless march of the Brussels I regulation, Law Quarterly Review 2007, 522 et seq.; B. PILTZ, Anmerkung zu EuGH, Urt. v. 25.2.2010 – C-381/08 (Car Trim GmbH/KeySafety Systems Srl), NJW 2010, 1061, at 1062; S. LEIBLE (note 1), e.g. at 458 et seq.; for a highly critical view of the new lit. b, see P. MANKOWSKI, in B. VERSCHRAGEN (note 3), at 74. 83 See also the critical appreciation by B. GSELL, Erfüllungsort beim Versendungskauf und Abgrenzung von Kauf- und Dienstleistungen nach Art. 5 Nr. 1 lit. b) EuGVVO, ZEuP 2011, 673. 82

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I Case 6: Electrosteel.84 Edil Centro, a seller established in Vicenza, Italy, and the buyer Electrosteel, established in Paris, formed a contract for the sale of goods. The agreement contained, inter alia, the following clause: “Resa: Franco ns. [nostra] sede” (Delivered free ex our business premises). The seller referred to the fact that the contract clause “Resa: Franco nostra sede” corresponds to the Incoterm clause EXW (Ex Works), – drawn up by the International Chamber of Commerce, headquartered in Paris – in relation to which rules A4 and B4 designate the place of delivery of the goods. Rules A4 and B4 for use of the Incoterm “Ex Works” are worded as follows: “A4 Delivery The seller must place the goods at the disposal of the buyer at the named place of delivery, not loaded on any collecting vehicle, […] If no specific point has been agreed within the named place, and if there are several points available, the seller may select the point at the place of delivery which best suits his purpose.” “B4 Taking delivery The buyer must take delivery of the goods when they have been delivered in accordance with A4 […].” The goods were delivered to the purchaser by a carrier which took charge of them in Italy, at the seller’s premises, and delivered them to the buyer’s headquarters in France. The Italian seller Edil Centro applied to the Tribunale ordinario di Vicenza (Vicenza District Court) for an order directing Electrosteel to pay for the goods purchased. The French company Electrosteel pleaded that, under the Regulation, the Italian court lacked jurisdiction. Electrosteel argued that, since it had its seat in France, it should have been sued before the French courts. B.

The Decision of the ECJ

The starting point for the decision in the Electrosteel case was the legal considerations of the ECJ in the Car Trim case:85 Under Article 5 (now Art. 7) no. 1 lit. b the place of performance of the contract for the sale of goods is the place in a Member State where, under the contract, the goods were delivered or should have been delivered. If the contract remains silent regarding the place of delivery, the relevant place is the place where the goods are physically transferred to the purchaser (not to a carrier).86 84

ECJ, 09.06.2011, case C‑87/10, Electrosteel Europe SA v Edil Centro SpA.

85

See above, V. A. ECJ, Car Trim (note 53), paras 58-60, see above, V. A.

86

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Thomas Kadner Graziano In Car Trim, the contract between the parties had, inter alia, contained a clause according to which the supply should be done “as agreed, at call free works Colleferro”. In Car Trim, the ECJ completely disregarded this clause when determining the procedural place of performance – and rightly so, as the following considerations will show. In the Electrosteel case the ECJ explicitly addressed the question of “how the words «under the contract», used in the first indent of Article 5(1)(b) of the Regulation, are to be interpreted and, in particular, to what extent it is possible to take into consideration terms and clauses in the contract which do not identify directly and explicitly the place of delivery”.87 The Court first stated that it should be kept in mind that according to Art. 23 (now Art. 25) of the (now recast) Brussels I Regulation “a jurisdiction clause may be agreed not only in writing – or evidenced in writing – but also in a form which accords with practices which the parties have established between themselves or, 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.”88 The ECJ then held that in this respect, Incoterms, developed by the International Chamber of Commerce, which enjoyed a particularly high level of recognition and were widely used in practice, played an important role. In determining the place of performance, the national court must, according to the ECJ, take into account all clauses of the contract, and should the situation arise, also Incoterms “in so far as they enable that place [i.e. the place of performance] to be clearly identified.”89 The ECJ noticed that with these considerations it came into dangerous proximity to substantive law which – as we have seen – is to be disregarded when the procedural place of performance is determined.90 The Court therefore stressed that for the national court, when analysing its jurisdiction, “it may be necessary to examine” whether the respective contract clauses or Incoterms “merely lay down the conditions relating to the allocation of the risks connected to the carriage of the goods or the division of costs between the contracting parties or whether they also identify the place of delivery of the goods.”91

ECJ, Electrosteel (note 84), at para. 18. ECJ, Electrosteel (note 84), at para. 19. 89 ECJ, Electrosteel (note 84), at para. 22. 90 ECJ, Electrosteel (note 84), at para. 25, and above, IV. and V. 91 ECJ, Electrosteel (note 84), at para. 23. 87 88

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I The Court then recalled that the Advocate General had already pointed out “that that clause [used by the Italian seller] entails not only the application of Rules A5 and B5, entitled «Transfer of risks», and Rules A6 and B6, entitled «Division of costs», but also – and separately – the application of Rules A4 and B4, entitled «Delivery» and «Taking delivery»”.92 Regarding goods in transit, the ECJ held that “[o]n the other hand, where the goods covered by the contract are merely in transit, passing through the territory of a Member State which is a third party, in terms both of the domicile of the parties and of the place of departure or destination of the goods, it must be ascertained, in particular, whether the place mentioned in the contract, situated in such a Member State, is used only to spread the costs and risks relating to the carriage of the goods or whether it is also the place of delivery of the goods.”93 C.

Critique and a Proposal for Interpretation

The reasoning in the Electrosteel case risks violating the spirit, purpose, and rationale of the rule in Art. 5 (now: Art. 7) no. 1 lit. b second indent. It should therefore be reconsidered. 1.

Confusion between Agreements on the Place of Performance on the One Hand and Court Agreements on the Other

The judgment in the Electrosteel case mingles choice of court agreements on one hand and agreements on the place of performance on the other, even though both determine jurisdiction independently and very differently from each other.94 In fact, both have very different aims, requirements and legal consequences: Jurisdiction at the place of performance is based on the idea of a close link between the contract and the court called upon to decide the case. Such considerations do not play any role at all for choice of court agreements which leave it entirely up to the needs and assessment of the parties to determine the court of their choice. Jurisdiction at the place of performance is an alternative jurisdiction available to the claimant in addition to the option of bringing his claim before the courts of the country of the defendant’s domicile. In the case of a choice of court agreement on the other hand, the chosen court has in principle exclusive jurisdiction (Art. 25 para. 1 2nd sent. of the recast Brussels I Regulation). ECJ, Electrosteel (note 84), at para. 23. ECJ, Electrosteel (note 84), at para. 24. 94 G.P. ROMANO (note 3), at 80, called this reference to the rules on choice of court agreements “quelque peu énigmatique” [somewhat puzzling]. 92 93

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Thomas Kadner Graziano It should thus be excluded to draw any conclusions from the rules on choice of court agreements for jurisdiction at the place of performance. If the parties wish to conclude an agreement conferring jurisdiction, they should be referred to the requirements applicable to choice of court agreements. Last but not least, leaving it to the parties to determine jurisdiction through an agreement on the place of performance would ultimately amount to (at least partially) circumventing the requirements for choice of court agreements.95 2.

Jeopardizing the Purpose of the New Rule in lit. b if Agreements Designating a Place Other than the Destination of the Goods Are Taken into Consideration

The reasoning of the ECJ in the Electrosteel case entails a significant risk that, in a variety of cases in which the parties use standard clauses defining a “place of performance”, recourse is ultimately made to criteria of substantive law, such as the character of a debt as a collective or a portable debt, and that, as a result, frequently outcomes are reached that are diametrically opposed to the purpose of the new Art. 7 no. 1 lit. b.96 When parties conclude an agreement on the place of performance, they thereby define their mutual obligations under the contract and make clear when the seller or service provider has fulfilled its contractual obligations, who carries the risk of accidental loss of the goods sold, and, last but not least, who carries the costs for transport of the goods sold from the seller to the buyer.97 All these are aspects of substantive law. However, as we have seen, the 2001 reform intended to entirely disconnect the procedural place of performance in lit. b from substantive law. The ECJ has heard that message and emphasizes the disconnection in all its previous decisions on lit. b. In these other judgments, the Court has recourse to the contract between the parties exclusively in order to determine the destination of the goods sold or the place where the services are to be performed, and rightly so.98 Agreements on the contractual place of performance are thus, first and foremost, to be classified as substantive law agreements. For procedural reasons on See e.g. P. STONE (note 22), at 86. This tendency (and danger) of having recourse to criteria of substantive law again can also be observed in legal doctrine, see (among many) M. GEBAUER, Anmerkung zu EuGH 09.06.2011, C-87/10 (Electrosteel Europe SA/Edil Centro SpA), LMK 2011, 32284 (however hesitant, and rightly so); S. LEIBLE, Anmerkung zu EuGH, Urt. v. 09.06.2011 – C-87/10 (Electrosteel Europe SA/Edil Centro SpA), EuZW 2011, 603; C. ZARTH, Incoterms maßgeblich für Gerichtsstand, GWR 2011, 307; P. STONE (note 22), at 85 et seq. – M. MÜLLER (note 2), at 289: Bei “Koppelung des Erfüllungsorts an eine Erfüllungsortvereinbarung besteht die Gefahr, dass einer Seite faktisch ein Klägergerichtsstand untergeschoben wird” [taking agreements on a “place of performance” into consideration when it comes to determining the procedural place of performance creates, last not least, a considerable danger that one of the parties is confronted with a forum of the claimant without having been aware of it]. 97 See in detail above, III. A. 2. d). 98 Above, V. A. and C. 95 96

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I the other hand, the destination of the goods, or the place where services are provided, is absolutely crucial for determining a forum that is in close proximity to the contract. Both aspects taken together should have the consequence that parties’ agreements on a “place of performance” that designate a place other than the destination of the goods or the place where services are in fact performed should be disregarded when it comes to determining the procedural place of performance.99 The same should apply to contractual clauses that are inspired by Incoterms (as in the Electrosteel case), that refer explicitly to Incoterms, or that incorporate Incoterms into the contract.100 Certain paragraphs of the ECJ’s judgment in the Electrosteel case clearly illustrate that the suggested interpretation is urgently needed: In Car Trim, the ECJ had held that “the place at which the goods are handed over to the first carrier for transmission to the purchaser” is to be disregarded when determining the procedural place of performance.” Instead, the relevant place is, according to the Car Trim judgment, “the place of the physical transfer of the goods to the purchaser”.101 With respect to the purpose of jurisdiction at the place of performance one cannot agree more with this statement of the Court. A forum at the volatile place where the goods are handed over from a transport company designated by the seller to one designated by the buyer is absolutely inappropriate from a procedural point of view. However, in para. 24 of its judgment in the Electrosteel case, the ECJ states that if the parties had designated in their contract as “place of performance” a place “where the goods […] are merely in transit, passing through the territory of a Member State which is a third party, in terms both of the domicile of the parties and of the place of departure or destination of the goods, it must be ascertained, in particular, whether the place mentioned in the contract, situated in such a Member State, is used only to spread the costs and risks relating to the carriage of the goods or whether it is also the place of delivery of the goods.” According to this statement, international jurisdiction on the volatile place of transfer of the goods from one transporting company to the other shall apparently come into consideration if the parties have designated this place in their contractual agreement as the contract’s place of performance. However, such an agreement of the parties does not change the fact that it is devoid of any procedural sense to locate the procedural place of performance for the purpose of international jurisdiction at the volatile place where the goods are 99 For a view that is entirely against the admission of agreements on the procedural place of performance: H. SCHACK, Der Erfüllungsort im deutschen, ausländischen internationalen Privat- und Zivilprozessrecht, Frankfurt 1985, p. 144 et seq.; idem (note 3), at 939 with excellent reasons; W. HAU, Der Vertragsgerichtsstand zwischen judizieller Konsolidierung und legislativer Neukonzeption, IPRax 2000, 354, at 360; D. LEIPOLD, Internationale Zuständigkeit am Erfüllungsort – das Neueste aus Luxemburg und Brüssel, in Gedächtnisschrift für Alexander Lüderitz, München 2000, p. 431, at 449; M. MÜLLER (note 2), at 289; T. LYNKER (note 49), at 158. 100 See in this sense also German Federal Supreme Court, 23.06.2010, VIII ZR 135/08 (OLG München), case note D. LOOSCHELDERS, JA 2011, 63 et seq. 101 ECJ, 25.02.2010, case C-381/08, Car Trim GmbH v KeySafety Systems Srl, paras 50-60.

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Thomas Kadner Graziano handed over from one transport person to the other. Such an agreement on the place of performance (or on the place of delivery) should thus be regarded exclusively as a substantive law agreement. The contract should then be carefully examined in order to determine which destination it provides in fact for the goods. Only the destination under the contract is relevant for determining jurisdiction at the place of performance. The suggested outcome can be reached by way of a narrow and consistently historical and teleological interpretation of Art. 7 no. 1 lit. b. It would be perfectly compatible with the wording “under the contract” in Art. 7 no. 1 lit. b, given that, under the suggested interpretation, the contract between the parties is the essential source for determining the destination of the goods and is therefore decisive for determining the factual, economic and hence the procedural place of performance. The suggested result follows also from a systematic interpretation of the rules on jurisdiction in the (recast) Brussels I Regulation. In this respect the ECJ consistently emphasizes that the “broad logic and scheme of the rules governing jurisdiction laid down by [the Brussels I] Regulation […] require […] a narrow interpretation of the rules on special jurisdiction, including the rule contained, in matters relating to a contract, in Article 5(1) [now: Art. 7] of that Regulation, which derogate from the general principle that jurisdiction is based on the defendant’s domicile.”102 In the Electrosteel case the destination of the goods under the contract was Paris. Paris was the factual, economic and hence the procedural place of performance of the contract, where the goods were physically handed over to the buyer and where he received actual possession of the goods. Insofar as the quality of the goods was contested, the courts in Paris were near the evidence; it was in Paris where the required proximity between the contract and the court was given. Regarding the Italian courts at the seat of the seller, none of these requirements were fulfilled. Consequently, in the Electrosteel case it should have been excluded from the outset to open a forum at the seller’s seat under Art. 7 no. 1 for an action brought by the Italian seller against the French buyer, regardless of what the clause “Resa: Franco ns. [nostra] sede” (Delivered free ex our business premises) provided with respect to a “place of performance”. In the case of Electrosteel, allowing the Italian seller to bring an action at his own seat against the French buyer would, from a procedural point of view, have been just as inappropriate as, in the case of Custom Made, the action brought by the Stawa Metallbau GmbH at its own seat in Bielefeld against the English buyer. In Custom Made, and before the introduction of lit. b, the ECJ had admitted such an action103, and one of the main purposes of the 2001 reform was to avoid allowing such a claimant’s forum, except if justified by procedural reasons. Given that Incoterms enjoy great popularity in practice, it is important to make sure that, in cases where reference to Incoterms is made, a result that would undermine the rationale of the jurisdiction at the place of performance is avoided. The suggested

102

ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst,

para. 37. 103

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I interpretation would achieve this aim and respect the rationale of the new regulation. There is a further, and final, aspect that supports disregarding contractual clauses that locate the place of performance at a place that is different from the destination of the goods (or from the place where services are in fact performed): The contractual forum at the place of performance is based on the idea that contractual disputes often have to do with the (contested) quality of goods sold or services provided. The forum is available in order to guarantee an efficient procedure and to provide easy access to evidence for the court or experts etc. Proximity between the contract and the court is in fact an objective criterion.104 The parties’ contractual agreements should therefore be taken into consideration only insofar as they help locate the factual and economic destination of the goods or the place where a service is in fact provided. The suggested restrictive interpretation would achieve this aim. The ECJ’s reasoning in the Electrosteel case is drafted so carefully that it should be easy for the Court to reconsider it. D.

Determining the Place of Performance “Under the Contract” – an Analysis of Exemplary Contract Clauses

Based on these findings, some contract clauses shall now be examined regarding the question of whether and to what extent they should be taken into consideration when determining the procedural place of performance in Art. 7 no. 1 lit. b. Such clauses may read, for example: 1. Any risk shall pass to the customer upon the handing over of the goods to the carrier entrusted with the transport. 2. The transportation costs shall be borne by the customer. 3. The seller undertakes to transport the goods at his own expense to X where they are to be passed, against remittance of (clearly identified delivery documents), to a transporter nominated by the buyer which performs the further transport (to Y) at the expense and risk of the buyer. Or alternatively: Delivery of the goods is to be effected in accordance with FCA “Free Carrier” (named place) (Incoterms 2000). [Under this term, the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place where the risk then passes to the buyer.] 4. The place of performance for all obligations arising out of the contract is [...] (a precisely designated place, or the seat of one of the parties). 5. The place of performance for delivery and payment is […]. 6. Prices are in Euros and include free delivery to the place of delivery specified by us. 104

See already E. LEIN (note 2), at 574.

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Thomas Kadner Graziano 7. The seller must make the goods available to the purchaser or to any other person designated by the purchaser at (named place of delivery in [...]), without loading. Or alternatively: The goods are to be placed at buyer’s disposal at seller’s premises at (address, city, country). The seller bears the risk that the goods are accidentally damaged or lost until the buyer takes over the goods or breaches the contract by failing to take delivery. 8. The sold goods shall be delivered by (naming a transport company) to Milan. The place of performance of this contract is Munich. 9. The courts in [...] (alternatively: the courts of our place of business in […]) shall have (exclusive) jurisdiction over any dispute arising from this contractual relationship. Or alternatively: Any dispute arising out of or in relation with the present contract shall be submitted to the courts of […]. All of these clauses (except the last ones) define a contractual “place of performance”. As set out above, when the parties have agreed on a “place of performance” it needs to be carefully distinguished whether their agreement relates to the procedural place of performance or rather to the place of performance for the purpose of substantive law.105 The provisions in the above clauses are in fact all related to the place of performance under substantive law. This is obvious for clauses that expressly address the risk of accidental loss or the attribution of the costs of transport (such as the first three of the abovementioned clauses). They address issues of substantive law and should thus, in principle, be disregarded for the determination of the procedural place of performance under Art. 7 no. 1 lit. b. The same applies in principle to clauses that determine a place of performance without explicitly addressing the risk of loss or the distribution of costs (the fourth and fifth of the above clauses). They have the same consequences under substantive law as those clauses which address risk and cost allocation explicitly. As demonstrated above, the destination of the goods and the place where services are actually provided are the key criteria for determining the procedural place of performance of the contract. Contractual agreements on a “place of performance” should therefore only be taken into consideration for the purpose of determining jurisdiction under Art. 7 no. 1 lit. b if, and insofar as, they allow to determine the destination of the goods or the actual place where services are in fact to be provided.106 This is the case of the third of the above clauses (according to which the goods are ultimately to be carried to Y) and of the eighth clause (following which the goods are to be delivered to Milan). The disparity between the place of performance under substantive law on the one hand and the procedural place of performance on the other is particularly evident in the eighth and penultimate of the above clauses: The place of performance for the purpose of substantive law (relevant for the distribution of the risk and of the transport costs) may, according to the wording of that clause, be 105 106

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I Munich,107 whereas the procedural place of performance, relevant for the purpose of Art. 7 no. 1, is to be located at the destination of the goods in Milan.108 The ninth and last of the above clauses is a pure jurisdiction clause within the meaning of Art. 25 para. 1 of the recast Brussels I Regulation. It has nothing to do with the determination of the procedural place of performance under Art. 7 no. 1 lit. b.

VII. Open Questions A.

Proximity of Proof: Requirement that the Goods Be Present at the Place of Performance When the Action Is Brought?

At the end of its reasoning in the Car Trim case, the ECJ stated in para. 61: “It should be pointed out, in particular, that the goods which are the subject-matter of the contract must, in principle, be in that place [i.e. the place of performance at the destination of the goods] after performance of the contract.”109 This raises the question of whether this special jurisdiction is to be opened only when evidence is The example is inspired by the case LG München II, 23.03.2004, IPRax 2005, 143: according to the contract the delivery was to be performed “frei Bau, Bauvorhaben Olginate” [i.e. the goods should be delivered to Olginate in Italy]; at the same time, the contract contained a clause “Erfüllungsort ist Emmering” [i.e. the place of performance is Emmering in Germany]. In such a case, the clause on the place of performance should not even be reinterpreted as containing a hidden choice of court clause under Art. 25 sect. 1 of the recast Brussel I Regulation. See also the references in the following note. 108 In the case of Sigfried Zelger v Sebastiano Salinitri, 17.01.1980, case 56/79, paras 5, 6, the ECJ had held that “if the parties to the contract are permitted by the law applicable to the contract […] to specify the place of performance of an obligation without satisfying any special condition of form, an agreement on the place of performance of the obligation is sufficient to found jurisdiction in that place within the meaning of Article 5 (1) of the Convention.” This applied “irrespective of whether the formal conditions provided for under Article 17 [today: Art. 25] have been observed.” – However, the Court held in Mainschifffahrtsgenossenschaft (MSG) v Les Gravières Rhenans, 20.02.1997, case C-106/95, in particular para. 31-35, “that an oral agreement on the place of performance which is designed not to determine the place where the person liable is actually to perform the obligations incumbent upon him, but solely to establish that the courts for a particular place have jurisdiction, is not governed by Article 5(1) of the Convention, but by Article 17 [today: Art. 25], and is valid only if the requirements set out therein are complied with”. In this decision, the ECJ had, for the first time, recourse to the factual place of performance of a contract and hereby distinguished between agreements on the place of performance on the one hand (where a link to the factual place of performance is required) and choice of court agreements on the other (where no such link is necessary). See also E.-M. BAJONS (note 24), at 40 et seq.; P. HUBER, ZZPInt 1997, 180 et seq.; S. KUBIS, Gerichtspflicht durch Schweigen? – Prorogation, Erfüllungsortvereinbarung und internationale Handelsbräuche, IPRax 1999, 13. 109 ECJ, 25.02.2010, case C-381/08, Car Trim GmbH v KeySafety Systems Srl, para. 61; see above, V. B. 2. e). 107

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Thomas Kadner Graziano actually available at the place of performance when the action is brought, or whether it should be sufficient that the courts at the destination are in principle, i.e. in the abstract, in a better position regarding proof. 1.

Requirement of Actual Availability of Proof When the Claim Is Brought

For contacts for the sale of goods, the considerations of the ECJ in para. 61 of the Car Trim judgment seem to support the first position, i.e. the requirement of actual availability of proof when the claim is brought. According to the ECJ, Art. 7 no. 1 lit. b “reflects an objective of proximity and the reason for that rule is the existence of a close link between the contract and the court called upon to hear and determine the case”. Requiring actual availability of proof would in fact guarantee that this forum is opened only when this is in line with its rationale. The consequences of such a requirement can be illustrated with variants of a practical case study: Case 7: Variation 1 of the Custom Made case. A Polish company sells windows and doors to an English buyer and delivers them, in accordance with the contract, to a construction site in Berlin. The windows and doors are installed in a building in Berlin. The buyer claims that they are not in conformity with the contract. The destination of the goods (and hence the procedural place of performance) under the contract is Berlin (regardless of who carried the risk and costs of transporting them there). In this situation, jurisdiction of the courts in Berlin for actions arising from the contract would be fully in line with the rationale of Art. 7 para. 1 lit. b.110 Variation 2 of the Custom Made case. A Polish company sells windows and doors to an English retailer and delivers them, as per the contract, to London. The English retailer sells and delivers them then to a final customer in Dublin, Ireland. The final destination of the goods was unknown to the Polish seller when the contract was formed. When they are installed on a construction site in Dublin, problems arise. The English retailer claims that the windows and doors are not in conformity with the contract and sues the Polish seller before the courts in London. In variation 2, the windows and doors were sold to a retailer, who resold and delivered them to a party established in a third place (Dublin) where they were used at a construction site. Upon completion of the sales contract between the (Polish) seller and the (English) retailer, the further destination in Ireland was unknown to the (Polish) seller. The destination of the goods under the contract between the parties was therefore London. However, from a procedural point of view, jurisdiction of the courts in London makes sense only if the windows and However, it is noteworthy that, according to an analysis of 100 decisions on the jurisdiction of the place of performance, only one case concerned a situation in which the place of performance was neither at the purchaser’s seat nor that of the seller, see the analysis and findings by G. DROZ (note 2), at 355. 110

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I doors are still there, so that the courts in London are in fact in proximity to potential evidence.111 If the defect is only observable at the construction site in Ireland, there is no procedural reason to open special jurisdiction at the courts in London. If actual availability of evidence was required under Art. 7 no. 1 lit. b when the action is brought, the courts at the initial destination of these goods would have to be denied jurisdiction under Art. 7 no. 1. Had the parties however provided in their sales contract a final destination of the goods in Ireland, where the evidence is present, this could in turn be instrumental for determining the procedural place of performance, regardless of who organises the transport to this place. Last but not least, this would provide an incentive for the parties to create transparency regarding the further use of the goods. If a seller, to whom such a final destination is known, wishes to exclude jurisdiction at the (in this example: Irish) final destination of the goods, the parties could conclude a choice of court agreement under Article 25 of the recast Brussels I Regulation. National codes of civil procedure show that it is quite feasible to make jurisdiction depend on the actual availability of proof: Under the German Code of Civil Procedure, for example, it is possible to bring an independent action at the place where evidence is available in order to safeguard this evidence (selbständiges Beweisverfahren). Under §§ 485 ff. of the German ZPO, a specific procedure may be opened “provided that there is concern that evidence might be lost, or that it risks becoming difficult to access” (§ 485 para. 1 of the ZPO). The petition can be filed by one of the parties with the court that would have jurisdiction for the main action (§ 486 para. 2 of the ZPO). If a main action is not yet pending, “in cases of imminent danger […] the petition may also be filed with the court that has jurisdiction in the judicial district in which the person who is to be questioned or examined is present or in which the object that is to be inspected on site, or regarding which a report is to be prepared, is present (§ 486 para. 3 of the ZPO).” The jurisdiction of this court thus depends on the actual presence of proof.112 Similar rules may exist in other jurisdictions. Actual evidence could systematically be required through a consistently teleological interpretation of Art. 7 no. 1 lit. b, or by a teleological reduction of the scope of application of this head of jurisdiction. The jurisdiction at the place of performance would thereafter only be opened if this actually corresponds to the rationale of this head of jurisdiction, i.e. if evidence is actually available when the action is brought. Such a narrow interpretation could also follow from a systematic interpretation of the heads of jurisdiction in the Brussels I Regulation, given that jurisdiction is in general based on the defendant’s domicile (Art. 4 para. 1 of the recast Brussels I Regulation and rationales 13 and 15 of the recast Brussels I Regulation) whereas special jurisdiction is only open when justified by procedural

111 On the point that, in the case that the goods are resold, the requirement of proximity in fact is no longer fulfilled at the initial destination of the goods, see E.-M. BAJONS (note 24), at 43, fn. 84. 112 See e.g. F. PUKALL, in I. SAENGER, Zivilprozessordnung, 6th ed. 2015, § 486, No. 7; M. HUBER, in H.-J. MUSIELAK/ W. VOIT, ZPO, 12th ed. 2015, § 486, No. 5.

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Thomas Kadner Graziano reasons, i.e. when there is “a close connection between the court and the action or in order to facilitate the sound administration of justice” (rationale 16). 2.

No Such Requirement Needed

According to the opposite view, it is sufficient that the courts at the destination of the goods are in principle, i.e. in the abstract, in a better position regarding proof.113 According to this line of argument, requiring actual availability of proof would in fact create uncertainty and would thus hamper the predictability of the contractual forum. High predictability of the forum is however one of the key requirements of the Brussels I Regulation (rationale 15). Furthermore, the evidence that is actually needed for deciding the case might depend on the development of the facts, case, and procedure. Also, an intermediary who has sold the goods on to a subsequent purchaser may have to take them back from his subsequent customer, so that proximity of proof (e.g. regarding defects) might be re-established at their first destination at any time. According to this view, in variation 2, the courts in London thus have jurisdiction under Art. 7 no. 1 lit. b. 3.

Résumé

Although it may be surprising at first glance that the ECJ, in para. 61 of its judgment in the Car Trim case, arguably seems to require the presence of the goods at the place of performance to open this special jurisdiction, from a procedural point of view, and despite considerable counter-arguments, there are good reasons for such a requirement. Currently, it seems however very hard to find support in legal doctrine for such a requirement. B.

Determining the Place of Performance in the Absence of Relevant Contractual Clauses

In some cases the contract may remain silent with respect to the factual destination of the goods, or with respect to the place where the service shall in fact be provided. The question of how to proceed in these cases was answered by the ECJ in the cases of Rehder and Wood Floor (for service contracts) and in Car Trim (for sales). In Wood Floor the court held that “[f]or a commercial agency contract, that place is the place of the main provision of services by the agent, as it appears from 113 Against any condition of proximity in the actual case in order to open the contract forum, e.g. H. SCHACK (note 3), at 936; S. LEIBLE (note 52), at 305; idem (note 1), p. 451, 463; W. HAU (note 1), at 978; for a particularly strong view A. MARKUS, Tendenzen beim materiellrechtlichen Vertragserfüllungsort im internationalen Zivilverfahrensrecht, Basel 2009, p. 174 et seq., even though this condition would be fully in line with the requirement of proximity between the contract and the court (diese Voraussetzung “dem Kriterium der Sach- und Beweisnähe optimal gerecht [wird]”).

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I the provisions of the contract or, in the absence of such provisions, the actual performance of that contract or, where it cannot be established on that basis, the place where the agent is domiciled.” This should however presuppose that services relevant for the contract were actually provided at the domicile of the travel agent.114 In Rehder, for certain travel contracts, the registered office or the principal place of establishment of the service provider was, on the contrary, held to be irrelevant as a subsidiary connecting factor. The operations and activities undertaken from that place were regarded by the ECJ as mere preparatory acts, irrelevant for the purpose of international jurisdiction.115 For sales contracts, according to the judgment in Car Trim, “the place where the goods were physically transferred […] to the purchaser at their final destination” is the relevant place of performance.116 As exposed above, this solution is fully in line with the rationale of this special head of jurisdiction. However, it may be questioned if this solution also applies in the case that the final destination of the goods is unknown to the seller when the contract is concluded. In this case it may be assumed that the final destination is at the seat of the buyer. But what if this assumption is rebutted? Let us imagine the case that the contract is silent with respect to the destination of the goods, the buyer or his carrier collects them at the seller’s place of business and then carries them to a third place, unknown to the seller. From a procedural point of view, it would not make much sense to locate the place of performance in such a situation at the place where the goods are handed over to the purchaser or his carrier; this would systematically lead to a forum at the seller’s place of business even though the goods are not present there anymore and potential evidence and proximity between the contract and the court are therefore lacking there. Since the factual destination of the goods is unknown to the seller, a forum there would be unforeseeable for the seller and must therefore also be ruled out.117 In cases in which the destination of the goods differs from the buyer’s seat and is unknown and unforeseeable to the seller, a forum at the place of performance should therefore be ruled out altogether. C.

“Unless Otherwise Agreed”: delendum est

All that has been said so far applies only “unless otherwise agreed” by the parties. This passage in the text of Art. 7 no. 1 lit. b is indeed mysterious. The proposal for 114

See already G.P. ROMANO (note 3), at 89.

ECJ, 09.07.2009, case C‑204/08, Peter Rehder v Air Baltic Corporation, para. 39. One reason for this difference in treatment could possibly be that sales representatives often only operate small businesses and are considered in EU law as worthy of protection, while in the case of travel contracts, it is usually the traveller who is considered being worthy of protection, G.P. ROMANO (note 3), at 86. Also, since the place of departure and of arrival are usually fixed in a travel contract, there will hardly ever be a need for a further, subsidiary connecting factor. 116 ECJ, Car Trim (note 53), at para. 60. 117 See for the requirement that special heads of jurisdiction shall be foreseeable, recitals 15 and 16 of the recast Brussels I Regulation. 115

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Thomas Kadner Graziano the recast Brussels I Regulation states in this respect that this wording offers the parties an option to explicitly derogate from the pragmatic, factual and economic place of performance in favour of another place.118 As we have seen, the parties’ contractual arrangements are in the first place relevant for determining the destination of the goods sold or the place where the services are in fact provided, i.e. for localizing the factual, economic and hence procedural place of performance. It is true that the wording “unless otherwise agreed” could be understood as opening an option for a contractual agreement between the parties that defines a place of performance that is different from the contractual destination of the goods. If for example, under the contract the destination of the goods, and therefore the procedural place of performance, is Paris, they could “otherwise agree” that the place of performance shall be Milan.119 – As outlined above,120 in terms of the rationale of the jurisdiction at the place of performance, it would however be very questionable to rely on such agreements for the purpose of determining the procedural place of performance. Rather, contractual agreements of this kind should be regarded as defining the place of performance under substantive law only. As mentioned above, there would otherwise be a considerable risk of undermining the purpose of the 2001 reform and thwarting the merits of lit. b, which consist in opening a forum in proximity to the contract.121 A last attempt to give meaning to the phrase “unless otherwise agreed” could be to perceive it as a reference to the possibility for the parties to conclude a choice of jurisdiction agreement under Art. 25 of the recast Brussels I Regulation. This would, however, be trivial and go without saying.122 The term “mystery” is thus indeed apt when it comes to understanding the terms “unless otherwise agreed” in Art. 7 no. 1 Iit. b. It seems reasonable to suppose that the European legislator simply had the intention to install another safety valve here – given the complexity of this special jurisdiction – without realizing that this runs diametrically against the purpose and the rationale of this head of jurisdiction. De lege ferenda the phrase “unless otherwise agreed” should simply be removed123 (see the proposal below, IX. C.).

118 Proposal for a Council Regulation (EC) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Brussels, 14.07.1999, COM(1999) 348 final, OJ of 28/12/1999 C 376 E , p. 1-17, justification for Art. 5, p. 14. 119 The ECJ considered such clauses, as seen above, in the context of “under the contract”, VI. 2. 120 VI. C. 2. 121 VI. C. 2. 122 P. STONE (note 22), at 85 et seq.; S. LEIBLE (note 52), at 305; idem (note 1), at 455 et seq.; see however T. LYNKER (note 49), at 137, according to him such an interpretation would not be in line with the wording of the provision. 123 See already S. LEIBLE (note 52), at 305, because of the danger of being misleading; idem (note 1), at 456; R. IGNATOVA (note 3), at 307, 318; T. LYNKER (note 49), at 158; firmly and convincingly already D. LEIPOLD (note 99), at 449.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I D.

Art. 7 Nr. 1 lit. c: delendum est

As seen above, Art. 7 no. 1 lit. a contains a rule determining the place of performance for all types of contracts that do not qualify as sales or service contracts, while lit. b defines the place of performance autonomously for sales and for service contracts. Lit. b is thus a specific rule taking precedence over lit. a for these two types of contracts.124 This follows already from the general principles of statutory interpretation. It appears therefore as a legislative oddity that lit. c once again expressly states that when lit. b is not relevant, lit. a shall apply. It was suggested (notably in the Commission’s explanatory memorandum to the Brussels I Regulation) to use lit. c in situations in which the place of performance of a sales or service contract is located in a third country so that lit. b is ultimately inapplicable. Lit. c would then allow recourse to the scheme in lit. a in order to determine a place of performance in an EU Member State.125 Some scholars have however argued, most convincingly, that the purpose of Art. 7 no. 1 is not to create an additional jurisdiction, but to make available a forum that is in close proximity to the contractual dispute.126 This is not achieved if the destination of the goods under the contract is indeed in a third country, but through lit. a, a place of performance for the contested contractual obligation is nevertheless localised in a Member State and a forum is made available there, despite lack of evidence and proximity there (i.e. contrary to idea on which lit. b is based). Since Art. 7 is only applicable if the defendant is domiciled or established in an EU Member State, the courts of that Member State have international jurisdiction according to Art. 4 para. 1. It is difficult to see why, with a destination outside the EU, a second jurisdiction within the EU should be opened through lit. a.127 De lege lata, Art. 7 no. 1 lit. b should therefore be read as applying in all cases where the contract is for the sale of goods or the provision of services even if it does not open a forum because the procedural place of performance is not within a Member State. Recourse to lit. c would then be excluded.128 De lege ferenda lit. c should be removed (see below, IX. C.).129 Much confusion could hereby be avoided and a legislative oddity be eliminated.

124 Compare the ECJ’s judgment of 19.12.2013, case C-9/12, Corman-Collins SA v La Maison du Whisky SA, para. 42. 125 Reasoning in the European Commission’s proposal (note 118), justification for Art. 5, p. 14. 126 T. RAUSCHER (note 6), at 2254, wonach es “nicht darum geht, generell einen zusätzlichen Gerichtsstand zu schaffen, sondern Gewinn an Sachnähe [ist] oberstes Ziel”; P. STONE (note 22), at 86; K. TAKAHASHI, Jurisdiction in matters Relating to contract: Article 5(1) of the Brussels Convention/Regulation, European Law Review (E.L.Rev.) 2002, 530, at 540; J. KROPHOLLER/ J. VON HEIN (note 3), at Art. 5 EuGGVO, No. 53. 127 Or, in the words of P. STONE (note 22), at 86: “it is difficult to see any substantial justification for giving the plaintiff «a second bite at the cherry» in this way.” 128 P. STONE (note 22), at 86. 129 See also e.g. S. LEIBLE (note 1), at 455 et seq. with numerous further references in fn. 39 to authors who also recommend removing lit. c.

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Limiting Jurisdiction at the Place of Performance to Situations Where the Contract Was at Least Partially Performed?

In legal doctrine it has repeatedly been criticized that neither the wording of the former Art. 5 no. 1 nor the present version of Art. 7 no. 1 ultimately ensure that, in a specific case, proof or evidence is available nearby and that proximity between the contract and the court is actually guaranteed. Even under the new Art. 7 no. 1 lit. b, jurisdiction would often be opened despite a lack of nearby proof or evidence and contrary to the rationale of this special head of jurisdiction.130 Some even doubt what the rationale of this head of jurisdiction is at all. Since the contractual forum and the case law of the ECJ implementing Art. 7 no. 1 are largely based on, and derive their rationale from, a close link between the contract and the court which is called upon to decide the case, and in particular from the proximity of evidence, it is unfortunate and it weighs heavily if this proximity is in fact lacking in many cases. This might be a significant cause, if not the main reason, for much of the discomfort with this special head of jurisdiction. It should therefore be considered to open jurisdiction at the place of performance only if the party that has to provide the characteristic performance has started fulfilling its obligations, i.e. if the contract was at least partially executed.131 Only if performance, or its quality, is at issue when a claim is brought can proximity between the contract and the court, and the availability of nearby evidence, be relevant. Following this proposal, the forum at the place of performance would thus not be available if the parties argue about the existence of the contract, its content, or the right of a party to terminate the contract, before they have started executing the contract.132 130 See e.g. J. HARRIS (note 82), at 522: “One of the weaknesses of Art. 5(1)(b) is that it is capable of regularly pointing to a forum of no significant connection to the claim in question”; S. LEIBLE (note 1), at 458 et seq.: the provision in lit. b could ultimately not guarantee proximity of proof either; B. GSELL, IPRax 2002, 484, 488 et seq.; E. LEIN (note 2), at 580 et seq.; M. LEHMANN/ A. DUCZEK, Zuständigkeit nach Art. 5 Nr. 1 lit. b EuGGVO – besondere Herausforderungen bei Dienstleistungsverträgen, IPRax 2011, 41, at 46 et seq.; see already H. SCHACK (note 99), at 335 et seq.; idem (note 3), at 935 et seq.; R. GEIMER, in R. GEIMER/ R. SCHÜTZE, Europäisches Zivilverfahrensrecht, München 2010, Art. 5 A.1., No. 6 et seq.; L.W. VALLONI, Der Gerichtsstand des Erfüllungsortes nach Lugano und Brüsseler Übereinkommen, Zürich 1997, p. 159; R. IGNATOVA (note 3), at 83 et seq., 310; G.P. ROMANO (note 3), at 66; M. MÜLLER (note 2), at 289 et seq.: in practice, proximity of proof cannot, as a rule, be achieved (“Praktisch ist Sach- und Beweisnähe jedoch im Regelfall bei Vertragsstreitigkeiten nicht zu erreichen”). For the opposite view, see e.g. J. KROPHOLLER/J. VON HEIN (note 3), at Art. 5 EuGGVO, Nos 1, 46. 131 T. LYNKER (note 49), at 142 et seq., 154 et seq.; H. SCHACK (note 3), at 940; see also A. BONOMI, in A. BUCHER (ed.), Commentaire Romand: Loi sur le droit international privé – Convention de Lugano, Bâle 2011, Art. 5 CL, No. 12 – Critical of such a restriction A. MARKUS (note 113), at 183. 132 For the view that jurisdiction at the place of performance actually makes no sense in these cases, e.g. G.P. ROMANO (note 3), at 66; M. MÜLLER (note 2), at 290. – In the case of Effer v Kantner, 04.03.1982, case 38/81, para. 7, the ECJ held that jurisdiction at the place of performance is also open “to consider the existence of the constituent parts of the

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I This solution would limit this special head of jurisdiction to cases in which proximity of proof can indeed play a role, and exclude it for situations in which this is typically not the case. It would also avoid difficulties which are associated with determining the place of performance before the parties started to execute the contract, in particular when the contract remains silent with respect to the destination of goods or the place where services shall be provided. In situations in which the parties have started to execute the characteristic performance, on the other hand, and where the performance was accepted at the place where it was executed, the place of performance of the contract is clear and determined, either because the parties have already determined it when concluding the contract, or because this place has been implicitly agreed upon when performance was accepted there.133 If the parties argue for example about the right of one of the parties to terminate the contract, or about the effectiveness of a contract termination, once they have started executing the contract, nearby proof can actually play a role in the proceedings. The rationale for opening this forum would thus not be the actual but the potential availability of evidence at the place of performance. Last but not least, this solution would be in line with Art. 6 of the Preliminary Draft Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters of August 2000.134 Art. 6 (Contracts) of the Hague Draft Convention states: “A plaintiff may bring an action in contract in the courts of a State in which – a) in matters relating to the supply of goods, the goods were supplied in whole or in part; b) in matters relating to the provision of services, the services were provided in whole or in part; […]”.135 The Report of the Special Commission at The Hague accordingly states that “[i]t is therefore necessary, in order for the court seized to have jurisdiction, for a principal obligation to have been performed.”136 To implement this solution, the terms “or should have been delivered” (for contracts of sales) and “or should have been provided” (for contracts for the provision of services) would have to be removed in Art. 7 no. 1 lit. b (see the proposal below, IX. C.). contract itself […] If that were not the case, [this head of jurisdiction] would be in danger of being deprived of its legal effect, since it would be accepted that, in order to defeat the rule contained in that provision it is sufficient for one of the parties to claim that the contract does not exist.” This danger, however, does not exist if this forum is excluded only for cases in which performance has not even started. 133 See e.g. G.P. ROMANO (note 3), at 84. 134 Available at . 135 Emphasis added. 136 Report of the Special Commission, drawn up by P. NYGH and F. POCAR, p. 50: “The plaintiff can bring suit before the courts of the State in which the goods were supplied, in whole or in part. It is therefore necessary, in order for the court seized to have jurisdiction, for a principal obligation to have been performed. If that is the case, any action relating to the contract will be admissible, even if it does not bear upon the supply itself, but instead, for instance, on the validity of the contract. The term «in whole or in part» refers both to cases in which the goods were supplied entirely within one country, and cases in which only part was supplied in one country or in different countries.”

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Thomas Kadner Graziano F.

Jurisdiction at the Procedural Place of Performance: A Forum for the Plaintiff?

If the procedural place of performance for all obligations under the contract is located at the destination of the goods or at the place where services are provided, this may lead to a forum of the plaintiff in a number of cases. Some scholars have criticized this outcome as contrary to the principle according to which the applicant has to in principle travel to the defendant (actor sequitur forum rei, Art. 4 para. 1 of the recast Brussels I Regulation).137 No problem appears in cases where the destination of the goods or the place where services are provided is located in a third country.138 In theory, these are the cases in which jurisdiction at the place of performance may play its most important role. In practice however, the vast majority of published cases relates to situations in which the parties relied on the forum at the place of performance in order to bring an action at their own seat.139 In such cases, the starting point is in fact that the claimant has to travel to the defendant, and that a special jurisdiction represents an exception to this principle in need of a procedural justification.140 This supports, first of all, a consistent historical, teleological, and overall a restrictive, interpretation of Art. 7 no. 1. Secondly, this jurisdiction should only be opened in situations in which the necessity of nearby evidence can, at least potentially, be relevant. For this reason it has been suggested above to limit the jurisdiction to cases where the characteristic obligation has been at least partially fulfilled.141 If the contract has at least partially been executed, there may indeed, at least potentially, be a need for the court for nearby evidence. If the scope of jurisdiction is limited to such situations, and if cases are ruled out where, typically, no need for nearby evidence exists, then the relationship of rule and exception between the general jurisdiction (Art. 4 para. 1) and the special jurisdiction (Art. 5 no. 1) is maintained.

VIII. Conclusions for the Interpretation of Art. 7 no. 1 lit. a: Prospects for an Autonomous Interpretation? It follows from the above analysis that an autonomous determination of the procedural place of performance in Art. 7 no. 1 is proving increasingly feasible and 137 See e.g. E. LEIN (note 2), at 581, 584 et seq. – See, on the contrary, W. HAU (note 1), at 975, who argues that a forum actoris is not to be avoided at any cost and that it is, on the contrary, entirely acceptable insofar as it aims at opening a forum that is in proximity with the dispute between the parties. 138 See the examples above, VII. A. (variations of the Custom Made case). 139 See the results of the analysis by G. DROZ (note 2), at 355. 140 See recital 15 of the recast Brussels I Regulation. 141 Above, E.

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I that the fog around this head of jurisdiction is gradually clearing. Last but not least it shall be asked whether these findings can also bear fruit in the context of Art. 7 no. 1 lit. a. As illustrated above, for the purpose of lit. a, the ECJ still defines the place of performance lege causae. In the past, the ECJ used this interpretation not because it was particularly convincing but, given its complexity and the numerous criticisms of this method,142 purely for lack of a convincing alternative, i.e. because the Court did not see how it could convincingly determine the place of performance autonomously. The interpretation lege causae has however never been mandatory for the ECJ and it is not required under the current version of Art. 7 no. 1 either.143 It is true that, when Art. 7 no. 1 was reformed, the European legislator expected the ECJ to continue applying this method in the context of lit. a, but again only because the courts had so far not succeeded in interpreting this provision autonomously. This does not have to remain so. Should an autonomous interpretation turn out to be practicable for other types of contracts, it may very well be an interesting alternative also in the context of Art. 7 no. 1 lit. a.144 This can be illustrated by the example of contracts on the transfer or the assignment of intellectual property rights: As set out above, in the Falco case, the ECJ used art. 7 no. 1 lit. a for the purpose of determining the place of performance for a licensing contract.145 As we have seen above, the obligation to pay the licence fee is regarded, by the substantive law of many countries, as an obligation to be performed at the debtor’s domicile or place of business.146 However, the courts of the country of the defendant’s domicile already have jurisdiction under the general rule in Art. 4 para. 1 of the recast Brussels I Regulation, and no special jurisdiction under Art. 7 no. 1 lit. a is then opened for a claim regarding a licensing contract. If on the other hand, lit. a was interpreted autonomously (and benefits be drawn from the current level of understanding and knowledge regarding the autonomous determination of the procedural the place of performance), the outcome would certainly be different. The task would then be to determine a factual, economic place of performance of the contract regarding intellectual property rights, which is predictable for the parties and guarantees proximity between the Above, eight reasons for criticism were identified, III. A. 2. a.-h. ECJ, 23.04.2009, case C-533/07, Falco Privatstiftung v Gisela Weller-Lindhorst, para. 51, and above, II. B. 144 Also in favour of drawing conclusions and benefitting from the experiences with lit. b in the context of lit. a, e.g. E.-M. BAJONS (note 24), at 64 et seq.; H.-W. MICKLITZ/ P. ROTT, Vergemeinschaftung des EuGVÜ in der Verordnung (EG) Nr. 44/2001, EuZW 2001, 325, 329; J. KROPHOLLER/ M. VON HINDEN, GS Lüderitz, p. 401, at 409; for an autonomous interpretation of the place of performance well beyond the categories mentioned in lit. b also J. VON HEIN (note 1), at 60; J. KROPHOLLER/ J. VON HEIN (note 3), at Art. 5 EuGGVO, No. 31; T. RAUSCHER (note 6), at 2254; contra e.g. M.-R. MCGUIRE, Jurisdiction in cases related to a licence contract under Art. 5 (1) Brussels regulation, YbPIL 2009, 453, at 459, 465, 467. 145 II. A. 146 References above, II. A. 142 143

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Thomas Kadner Graziano contract and the court which is called upon to decide the case. Regarding intellectual property rights, licensing contracts etc., this should be the place for which the intellectual property rights or the license have been granted, where they may be registered, and where they are used according to the contract (see below, IX. A.). If the user exceeds his contractual rights, does not pay the agreed royalties, does not provide proper accounts, or violates his contractual obligations in any other way, the courts of that State are best positioned to clarify the facts and to give a judgment. Should the ECJ switch from an interpretation lege causae to an autonomous determination of the procedural place of performance also in the context of Art 7 no. 1 lit. a, this could (de lege lata already) thus have a considerable effect of the outcome in a given case.

IX. Prospects for the Future A.

Extension of the List in lit. b

Should this proposal for an autonomous interpretation of lit. a (above, VIII.) be regarded as too daring or far reaching, then it could be considered de lege ferenda to add further categories of contracts to the list in lit. b, such as contracts for the sale of immovable property, franchise contracts, distribution agreements, and licensing contracts or other contracts regarding intellectual property rights.147 For the latter, inspiration could be drawn from a proposal made in 2011 by the European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP). The CLIP Group suggests in Art. 2:201(2) 1st sent. of its “Principles on Conflict of Laws in Intellectual Property (CLIP-Principles)” the following rule:148 “Section 2: Special jurisdiction Article 2:201: Matters relating to a contract […] (2) In disputes concerned with contracts having as their main object the transfer or licence of an intellectual property right, the State where the obligation in question is to be performed shall be […] the State for which the licence is granted or the right is transferred.” This proposal could already be realized under the current text of Art. 7 no. 1 if the ECJ switched from an interpretation lege causae to an autonomous interpretation 147 In favour of adding further categories in lit. b e.g. S. LEIBLE (note 1), at 460; U. GRUSIC (note 82), at 340. 148 European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP), Conflict of Laws in Intellectual Property; the CLIP Principles and Commentary, Oxford University Press, Oxford 2013, C. HEINZE, Section 2: Special jurisdiction, Article 2:201: Matters relating to a contract, No. 2:201.C01 et seq. (p. 61-68). Also available at .

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I of lit. a (see above VIII.). Otherwise, Art. 7 no. 1 lit. b of the Brussels I Regulation could be amended accordingly on the occasion of its next revision. The same could be considered for other types of contracts (see the proposal below, IX.). B.

Alternative: Abolition of lit. a and Creation of a List of Examples for the Autonomous Determination of the Place of Performance

As set out above in detail, the interpretation of the procedural place of performance lege causae raises numerous criticisms and often leads, regarding international jurisdiction, to fortuitous results. The best solution would therefore be to completely abandon the interpretation lex causae, to delete the current version of lit. a),149 to turn the two cases for an autonomous determination of the procedural place of performance in lit. b into examples that are used as guidance for further types of contracts, and to add further types of contracts to Art. 7 no. 1, going well beyond contracts for for the sale of goods and for the provision of services. C.

Proposed Rules de lege ferenda

Art. 7 no. 1 of the recast Brussels I Regulation could, if reformed along the lines set out above, state, for example: Article 7 A person domiciled in a Member State may be sued in another Member State: (1) in matters relating to a contract, in the courts for the place where the party which has to perform the characteristic obligation has performed, under the contract, its contractual obligations fully or in part. The place of performance of the contract is in particular (a) in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered; (b) in the case of the provision of services, the place in a Member State where, under the contract, the services were provided; (c) in the case of a contract of sale having as its subject matter an immovable property, the place in a Member State where the property is situated; (d) for licensing contracts, the transfer of intellectual property rights or other contracts regarding these rights, the places in a Member State for which the licence or other intellectual property rights were granted or transferred;

149 Also in favour of deleting lit. a: T. RAUSCHER (note 6), at 2254; P.A. NIELSEN, European Contract Jurisdiction in Need of Reform?, in Liber Fausto Pocar, 2009, p. 773, at 783 et seq.; T. LYNKER (note 49), at 139 et seq., 140, 154 et seq.; for an entirely autonomous determination of the procedural place of performance de lege ferenda also S. LEIBLE (note 52), at 305; idem (note 1), at 453 et seq., 465.

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Thomas Kadner Graziano (e) for a franchise contract, the place in a Member State where the franchisee has his habitual residence and for which the rights were granted; (f) for distribution agreements, the place in a Member State for which the rights for distribution were granted; (g) [add further categories of contracts].

X.

Résumé

From the above analysis, the following conclusions can be drawn: 1. Special jurisdictions, and in particular the jurisdiction at the place of performance under Art. 7 no. 1 of the recast Brussels I Regulation, are an exception to the general rule according to which the claimant has to bring his action before the courts of the country of the defendant’s domicile (Art. 4 para. 1). They need a procedural justification, such as the proximity between the contract and the court which is called upon to decide the case, in particular with respect to nearby evidence. 2. The procedural place of performance and the place of performance under substantive law have entirely different rationales. This procedural place of performance under Art. 7 no. 1 therefore should be entirely disconnected from the place of performance as defined by substantive law. 3. In the context of Art. 7 no. 1 lit. b, the fog around the jurisdiction at the procedural place of performance is gradually clearing. An autonomous interpretation of the procedural place of performance seems increasingly feasible. 4. For contracts for the sale of goods or the provision of services, the determination of the procedural place of performance under Art. 7 no. 1 lit. b is entirely independent from the place of performance as defined by substantive law. The place of performance is determined autonomously and uniformly for the entire contract and for all obligations resulting from the same contract. The procedural place of performance is located at the final destination of the goods “under the contract” (for sales contracts) or the place where services are provided “under the contract” (for service contracts). Where the ECJ implements the disconnection of the procedural place of performance from substantive law consistently, its decisions are convincing (Car Trim, Color Drack, Rehder, Wood Floor, Krejci, Corman-Collins). 5. In situations where the parties have defined a “place of performance” in their contract, the disconnection has not yet been achieved convincingly by the ECJ (such as in the Electrosteel case). In these situations, in order to not undermine the rationale of lit. b, a significantly more consistent disconnection of the procedural from the substantive place of performance is required. Contractual terms that define a “place of performance” in deviation from the destination of 216

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Jurisdiction at the Place of Performance under Article 7 No. 1 of Brussels I the goods, or from the place where services are in fact provided, shall, in principle, be qualified as relevant only for the purpose of substantive law, and be disregarded for determining the procedural place of performance. Any other solution would seriously impair the rationale of this head of jurisdiction and the purpose of the 2001 reform. 6. In the context of Art. 7 no. 1 lit. a of the recast Brussels Regulation, the ECJ still defines the place of performance lege causae for contracts other than sales and service contracts. The interpretation lege causae however raises numerous criticisms. For the purpose of Art. 7 no. 1 lit. a, the procedural place of performance could also be defined autonomously (even de lege lata). Here inspiration could be drawn from the principles that are applied in the context of lit. b. 7. At least de lege ferenda (if not de lege lata), the procedural place of performance should be localized for all contractual relationships autonomously at the factual and economic place of performance of the contract. For this purpose, a list of examples could be introduced into Art. 7 no. 1 which go far beyond sales and service contracts (following the example set by Art. 4 of the Rome I Regulation; see the proposal above, IX.). 8. In order to ensure that the jurisdiction at the place of performance is in line with the rationale of this head of jurisdiction, and that this jurisdiction in open only where proximity between the case and the court matters at least potentially, this jurisdiction should de lege ferenda be limited to cases in which the characteristic obligation has already, at least partially, been performed. 9. The considerations in the present article are based on the firm conviction that all open questions regarding the interpretation of Art. 7 no. 1 of the recast Brussels I Regulation can adequately (and only) be solved by an autonomous interpretation that consistently takes into consideration the historical development of this head of jurisdiction as well as its purpose and rationale. When Art. 7 no. 1 is interpreted and applied, the history of this head of jurisdiction and the reasons for the 2001 reform should always be kept in mind. 10. In situations in which a place of performance can, after all, not be determined, the forum contractus should remain closed and the claimant be referred to the general jurisdiction under Art. 4 para. 1.

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JURISDICTION UNDER ARTICLE 7 NO. 1 OF THE RECAST BRUSSELS I REGULATION: THE CASE OF CONTRACTS FOR THE SUPPLY OF SOFTWARE Michel REYMOND*

I. II. III.

IV.

Introduction Software Contracts Determining the Place of Performance under Article 7.1 A. Supply of Software as an Ancillary Obligation B. Supply of Standard Software as a Sale of Goods 1. Characterization 2. Supply as a Sale of Goods: Software Transfer Agreements 3. Place of Performance C. Supply of Standard Software as a Service 1. Characterization 2. Supply as Service: “Software as a Service” (SaaS) Contracts 3. Place of Performance D. Supply of Standard Software as a Licence 1. Targeted Scenarios 2. Characterization 3. Place of Performance E. Custom Software Conclusion

I.

Introduction

On 21 May 2015, the ECJ tackled the issue of the form of choice-of-forum clauses when they are inserted in general conditions available on the Internet.1 This development is encouraging, and it seems that the Court is now ready to show how

Dr. Michel REYMOND is currently a post-doc assistant and researcher at the Faculty of Law of the University of Geneva; he can be reached at the address [email protected]. The author would like to thank Prof. Thomas KADNER GRAZIANO and Prof. Gian Paolo ROMANO for the support provided in the writing of this piece. 1 ECJ (Third Chamber), 21.05.15, Jaouad El Majdoub v. CarsOnTheWeb. Deutschland GmbH, Case C-322/14. *

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 219-239 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Michel Reymond exactly the recast Brussels I Regulation2 should apply to B2B contracts made in the context of information technology and electronic commerce. The road ahead is still long, however, and many key issues still remain to be addressed. Chief amongst these is the determination of the place of performance in cases of contracts concerning the supply of software, a question which remains mired in uncertainty due to not only the varied and indeterminate nature of these agreements, but also due to the difficulties inherent to the relevant provision of the Regulation, i.e. article 7.1. The present article aims at resolving these uncertainties by providing clearer guidelines on which place should be relevant for determining jurisdiction at the place of performance for software supply contracts. Trying to tackle all of these complexities in one single article is, admittedly, a daunting prospect. Thankfully, the present volume of the Yearbook already contains an article by Professor KADNER GRAZIANO which covers in detail the issues pertaining to the general application of article 7.1.3 The present author fully supports the arguments advanced in this article and, as such, will focus his contribution on the sole question of the determination of the place of performance in cases of B2B contracts for the supply of software.4 The interaction of article 7.1 and these contracts will thus occupy the main part of the text (III.); before that, it is necessary to present the sorts of agreements that may fall under the term “supply of software” (II.).

II.

Software Contracts

The term “software” refers to the programs which allow a computer to function and to execute dedicated tasks.5 It is opposed to the term “hardware”, which designates all of the physical components of a machine. The tasks which are executed by software are numerous and they operate at different levels of a 2 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351/1. 3 T. KADNER GRAZIANO, Jurisdiction under Article 7 no. 1 of the Recast Brussels I Regulation: Disconnecting the Procedural Place of Performance from its Counterpart in Substantive Law. An Analysis of the Case Law of the ECJ and Proposals de lege lata and de lege ferenda, in this Yearbook, p. 167 et seq. 4 Given its tight focus on the inner workings of article 7.1, this contribution will not cover issues – nonetheless essential in practice – which would prevent a contract from being covered by the provision, such as its characterization as a consumer contract according to articles 17 to 19, or the presence of a choice of forum agreement according to article 25. For more on this, see J. HÖRNLE, The Jurisdictional Challenge of the Internet, in L. EDWARDS/ C. WAELDE, Law and the Internet, 3rd ed., Oxford 2009, p. 121 et seq., at 127-133; R.H. WEBER, E-Commerce und Recht, 2. Aufl., Zürich 2010, p. 92-99. Also excluded from the topics discussed below are contracts of supply of software which rely upon open source licences; for more on this, see W. STRAUB, Softwareschutz, Zürich 2011, p. 237 et seq. 5 For more details, see W. STRAUB (note 4), at 10-13.

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation machine’s infrastructure. When a machine is turned on, it is a specific kind of software, called the Basic Input / Output System (or BIOS for short), which runs first in order to ensure that the hardware functions properly; the BIOS also acts as an intermediary between the hardware and the other software running on the machine. An operating system, such as Microsoft Windows, OS X or Linux, is then loaded by the BIOS; the operating system itself is another type of software, which basically organises and facilitates the interface between the user, the machine, and the rest of the software. Those may include browsers such as Internet Explorer, Firefox and Opera, which enable users to access content on the Internet; and word processors such as Microsoft Word, Apache Writer and Corel WordPerfect, which allow for text processing and editing. In short, the term software designates a wide range of processes, without which hardware would be little more than dead machinery. Software takes the form of a series of machine-readable instructions which are interpreted by the computer. Depending on the software and on its use, it may be contained on a wide range of different media. BIOS software, being the basic controller of a machine’s hardware configuration, is usually embedded into the processing chip which is central to its functioning (“firmware”). As for the other kinds of software, including the operating system, they can be contained in hard drives (whether internal or external), in floppy disks, in CD-ROMS or DVDROMS, in USB sticks, or on even on the memory of mobile phones. Software may also be present on the hard drive of a machine which is then connected to the Internet and made accessible to other machines present on the network. Given the variety of both software and of its containers, operations which involve their transfer or supply can also vary greatly in their operational details.6 This is best illustrated by a practical example. If Firm A wishes to acquire a word processing software and install it on one of the computers located in its offices, it may do so in different ways: (1) It may contact the software supplier directly and acquire a physical medium containing the software, which would then be used to copy and install the software;

6 See the possibilities envisaged by article 21.1 of the General Terms and Conditions for the Procurement and Maintenance of Standard Software used by the Swiss Confederation, available at (for all URLs contained in this article, the date of the last visit is on the 04/06/15). This document was drawn up in 2010, along with the General Terms and Conditions for the Purchase and Maintenance of Hardware, the General Terms and the Conditions for IT Works Contracts and Contracts for the Maintenance of Individual Software, and the General Terms and Conditions for IT Services in order to modernize and standardize software procurement practices for the federal administration. All four also apply to both the Ecole Polytechnique Fédérale de Lausanne and the ETH Zurich , which are leading technical universities and research institutes in Switzerland. Consideration of these models allows for an insight into to the terms actually agreed to in practical situations involving software procurement.

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Michel Reymond (2) It may connect to the software supplier’s website, and acquire the software online. A copy of the software is then transmitted through the network from the vendor’s server to the targeted computer; (3) It may connect to the software supplier’s website, which would then allow access to the software through an online portal. In this situation, the software remains on the vendor’s servers and is not copied on the targeted computer’s hard drive. The transfer method is not the only point of complexity when considering software contracts. The use of the software may also vary depending on the needs of the acquiring party and on the terms put forward by the software supplier. In our example, the following situations may arise: (a) Firm A is a software development company and wishes to integrate the word processing software into its own line of products and technologies; accordingly, the software supplier confers full ownership of the software to Firm A; (b) Firm A is another type of company, and needs to use the word processing software to write documents; accordingly, the software supplier does not transfer ownership of the word processing software to Firm A. Instead it only allows use of a copy of the software, and excludes duplication or resale. However, Firm A is able to install it to all of its computers and to use it indefinitely;7 (c) Same as in (b), except the software supplier allows Firm A to use the software indefinitely but only as long as it is tied to a specific computer or hardware configuration; (d) Same as in (b), except the software supplier allows Firm A to use the software on an on-demand or subscription-based model. It must be noted here that the limitations brought forth by the supplier in situations (c) and (d) can be enforced through the software itself, regardless of the transfer method used. In situation (c), the word processor software could for example be tied to a one-time registration number that Firm A would have to enter before unlocking its features. In situation (d), the word processor might require an Internet connection so that it may “check-in” periodically with its home servers to verify whether or not it should remain active.8 The terms of use present in software supply 7 See for example article 21.1 of the General Terms and Conditions for the Procurement and Maintenance of Standard Software, which states that “The service provider grants the service procurer the right to use the service provider‘s standard software. The manner and scope of the use shall be governed by the individual agreement contained in the contract. Unless the parties agree otherwise in the contractual document, the use shall not be limited in time or space. It is not tied to any particular hardware”. The possibility of an agreement to the contrary expressly allows for situations falling under letters (c) and (d) of the proposed scenario. 8 W. STRAUB (note 4), at 133-153.

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation contracts are thus of a self-executing nature, giving them a stronger grounding in reality than if they remained on purely legal terms. With these two points of complexity – transfer method and terms of use – identified, one can now start to categorize different forms of software contracts. When applying terms of use (b) through (d), situation (1) refers to so-called “shrinkwrap” contracts, in which the software is contained in a physical medium such as a DVD-ROM, and in which the licensing terms are only known by the user once the box containing the disc is opened. Situation (2) refers to the similar concept of “browserwrap” or “clickwrap” contracts, in which the terms of use are displayed on the software vendor's website prior to the transfer of a copy of the software through the Internet. Situation (3), letter (d) accounts for the growing importance of cloud computing in software distribution. Cloud computing, rather than a technology in itself, refers to a series of technological innovations which tend to shift the burden of computing “away from localized systems (i.e., on an end user’s desktop or laptop computer) to shared, remote systems (i.e., on servers located at a data center away from the end user accessible through a network)”.9 In other words, instead of being installed and operated on the user’s hardware, software remains on the vendor’s server, and is being accessed as an on-demand, paid service by that user. When applied to end-user software, this model bears the name “software as a service”, or SaaS; examples include the current version of Microsoft Office, dubbed Office 365,10 the Adobe Creative Cloud Suite,11 Google Apps for Work12 and most subscription-based, online-only services such as the Linkedin social network.13 Two other models exist, the difference lying mainly with the type of service offered: “platform as a service”, or PaaS, allows the user, which will usually be a software development company, to use the vendor’s servers and software environment in order to develop cloud-based applications, which will then be served upon end-users; “infrastructure as a service”, or IaaS, allows the user to tap directly into the hardware capacity of the vendor, i.e. storage space, or U. GASSER, Cloud Innovation and the Law: Issues, Approaches and Interplay, Berkman Center Research Publication No. 2014-7 (2014), available at , p. 3; the definition, however, is extensible and remains “fraught with controversy” (ibid., at note 3). 10 See its official website at . According to the FAQ, Office 365 “refers to subscription plans that include access to Office applications plus other productivity services that are enabled over the Internet (cloud services) […] Internet access is required to install and activate all Office 365 plans and to manage [a] subscription account. Internet connectivity is also required to access Office 365 cloud productivity services, including email, conferencing, IT management, and other services”. Some of the payment plans offered by Microsoft include a version of Office usable offline (see at ). 11 Available at . 12 Available at < https://www.google.com/work/apps/business/>. 13 Available at ; it may nonetheless be argued that only the paid portion of the services provided by the website fall under the SaaS definition. 9

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Michel Reymond processing power. 14 For the present purposes, only SaaS contracts, which are the closest analogue to typical software contracts, will be covered. A third and final point of complexity still needs to be addressed. Until now, the examples have focused on the transfer of a word processing tool, which is a standard, “off the shelf”, type of software. Courts and commentators alike have distinguished these standard software contracts from custom software contracts, in which, as the name implies, the software vendor tailors its product according to the specifications provided by the buyer.15 Without delving too much into the specifics at this point, the basic idea behind the distinction is that custom-made software contracts have a much stronger service element than standard software contracts, much like the difference between the sale of a good and the production of a specific work.16 In summary, the term “supply of software” does not identify a single, easily identified type of transaction; rather, it designates a series of different kinds of dealings which, while they share the common point of addressing the transfer of a software, are distinguished not only by their operational details, but also by the content of the rights and obligations granted to the party to whom the software is transferred.17 These features underlie the main issues which arise when considering these contracts from the point of view of art. 7.1, and to which this article will now turn.

III. Determining the Place of Performance under Article 7.1 Under the system of the recast Brussels I Regulation, contracts which do not fall under its exclusive or protective sections, and which do not contain a valid forum U. GASSER (note 9), at 3-4. This is the case in both PIL and substantive law, see Federal Supreme Court (Germany), 07.03.90, VIII ZR 56/89; Federal Supreme Court (Germany), 04.11.87, VIII ZR 314/86, at paras 14-16; District Court (München), 08.02.95, 8 HKO 24667/93, at para. 1; see also T. COX, Chaos versus Uniformity: the Divergent Views of Software in the International Community, Vindabona Journal of International Commercial Law and Arbitration 2000/4, p. 3 et seq., at 7-8; F. FERRARI, Brief Remarks on Electronic Contracting and the United Nations Convention on Contracts for the International Sale of Goods, Vindabona Journal of International Commercial Law and Arbitration 2002/6, p. 289 et seq., at 295; F.M. HERGET, Die internationale Zuständigkeit im Electronic Commerce in der Europäischen Union, Frankfurt am Main 2006, p. 40; P. MANKOWSKI, Article 5, in U. MAGNUS/ P. MANKOWSKI, Brussels I Regulation, München 2002, p. 105 et seq., at 151. 16 Reliance on the distinction can also be found in the General Terms and Conditions for IT Works Contracts and Contracts for the Maintenance of Individual Software of the Swiss Confederation, which specifically apply to “individual software”, a term defined as “software manufactured for a special intended purpose of the customer on the customer’s request […]” (article 6.3). 17 In this sense, T. COX (note 15), at 3-5. 14 15

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation selection clause are subject to the general rules contained in articles 4 to 9. Following the principle of actor sequitur forum rei, article 4 gives general jurisdiction to the courts of the State of the defendant’s domicile. In addition, art. 7. 1 of the Regulation opens an alternate forum at the location of the performance of the contract.18 The provision is drafted as follows: “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; (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; [...]” In a nutshell, the application of article 7.1 follows a two-step approach. The first step is one of characterization: if the contract is either one of “sale of goods” or of “provision of services”, then it falls under the ambit of letter (b) of the provision, If, instead, it does not fall under either one of these headers, then it falls under its letter (a). The second step is the determination of the relevant place of performance. In letter (b) situations, the Regulation provides an autonomous rule which places the performance of the whole contract either at the place of delivery of the goods or at the place of the provision of services, depending on the contract type. Letter (a) situations, however, are less clear-cut: one needs to identify and isolate the obligation giving rise to the claim in a particular case, and determine its place of performance according to the lex causae.19 Both of these steps raise their own set of issues when considering software contracts. First, the characterization step requires an examination of the different transactions falling under this term in order to label them as either “sales”, “services” or something else; given the various situations outlined above, this step 18 See also, mutatis mutandis, A. BONOMI, Article 5, in A. BUCHER, Commentaire Romand, Loi sur le droit international privé - Convention de Lugano, Bâle 2011, p. 1810 et seq., at 1810-1811, and 1823. 19 ECJ, 06.10.76, A. De Bloos, SPRL v. Société en commandite par actions Bouyer, Case 14-76, ECR [1976], 01497; ECJ, 06.10.76, Industrie Tessili Italiana Como v. Dunlop AG, Case 12-76, ECR [1976], 01473; see also A. BONOMI (note 18), at 1816-1818, 18251826; F. CORNETTE, La nécessaire modification ou suppression de l’article 7-1 du Règlement Bruxelles I bis relatif au for contractuel dans un futur Règlement Bruxelles I ter?, in E. GUINCHARD, Le nouveau règlement Bruxelles I bis, Bruxelles 2014, p. 335 et seq., at 347-350; H. GAUDEMET-TALLON, Compétence et exécution des jugements en Europe, 4th ed., Paris 2010, p. 163 and p. 190-194; T. KADNER GRAZIANO (note 3), at 172-176; P. STONE, EU Private International Law, 3rd ed., Cheltenham 2014, p. 90-95.

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Michel Reymond will already in itself require some degree of care. Second, the determination of the place of performance will need to adhere to the principles underlying article 7.1, namely the need for a forum which is foreseeable, easy to determine and which has a strong procedural link with the dispute.20 In the following paragraphs, the range of situations involving the supply of standard software will be categorized according to each of the heads of article 7.1. For each of these different identified categories, an appropriate place of performance will be proposed. Then, the same exercise will be performed with regard to the supply of custom-made software. A.

Supply of Software as an Ancillary Obligation

According to the ECJ, characterization under article 7.1 is dependent on the obligation “which characterises the contract in question” in a given case.21 It thus follows that situations in which the supply of software is only an ancillary obligation under the contract should be characterized according to the main obligation. This main obligation should also be determinative as regards to the location of the place of performance; in other words, this means that in these situations the software element will have no real role to play. For example, a contract between firm A and firm B regarding the delivery of computer hardware, including its on-board firmware, should be considered as a sale of goods and dealt with accordingly. The sale of a smart phone or of a computer, including its preinstalled operating system and bundled software, should also follow this characterization, regardless of the terms of use granted for the use of that software. Consequently, the place of performance for both of these contracts should be determined according to letter (b), first hypothesis of article 7.1, and located at the place of the actual delivery of the hardware, computer or phone. The solution makes practical sense, as the software here merely follows the hardware upon which it has already been installed prior to delivery.22 B.

Supply of Standard Software as a Sale of Goods

1.

Characterization

In order to be considered as a “sale of goods” under Art. 7.1 letter (b) of the Regulation, a contract must fulfil two cumulative conditions. First, its subject must be a “good”. Second, the contract must contain the features of a “sale”. The definition is autonomous, meaning that its interpretation should be confined to the T. KADNER GRAZIANO (note 3), at 184-186. ECJ (Fourth Chamber), 25.02.10, Car Trim GmbH v. KeySafety Systems Srl, Case C-381/08, ECR [2010] I-01255, at paras 30-31; see also P. MANKOWSKI (note 15), at 145. 22 See art. 9 of the General Terms and Conditions for the Purchase and Maintenance of Hardware of the Swiss Confederation, which provides that “[t]he manner and scope of the use of the operating software inextricably associated with the hardware shall be governed by the intended purpose of the hardware […].” 20 21

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation system of the Regulation and not coloured by considerations made under national or uniform law.23 However, the text of the Regulation does not provide any guidelines for determining the notions of “sale” and “goods”, and the ECJ has yet to tackle the finer points of the definition.24 In practice, thus, scholars and courts, including the ECJ in its Car Trim decision,25 have often turned towards national and uniform substantive law, and in particular the CISG, in order to clarify what exactly falls under the term “sales of goods”. In this context, two questions need to be addressed: first, can standard software be considered as a good? Second, what situations involving the transfer of software fall under the term “sale”? Turning towards the first question, the term “good” as used in article 7.1 is commonly understood as a corporeal, tangible object. While it may seem at first glance that software, consisting of intangible, machine-readable instructions, should be outright excluded from the definition, a look at the discussions around this issue in the context of substantive law – both uniform and national – suggests otherwise. Under the CISG, which, just like the recast Brussels I Regulation, does not give a precise definition of the term “good”, standard software is usually characterized as such. Two arguments underlie this reasoning. First, the CISG does not exclude software from its scope. Second, standard software, even though it is an intangible, is a commercial, tradable commodity; when incorporated into a tangible medium such as a hard disk, it becomes indistinguishable from any other good.26 In German law27 and under the UCC28, similar arguments have been used to characterize software as goods. The subject remains controversial, however, and some have doubted that this construction would apply when software is not A. BONOMI (note 18), at 1820-1821; P. MANKOWSKI (note 15), at 144. F. CORNETTE (note 19), at 350-351. 25 Car Trim (note 21), at paras 35-37. 26 Provincial Court of Appeal (Köln), 26.08.94, 19 U 282/93; District Court (München), 08.02.95, 8 HKO 24667/93; see also F. DIEDRICH, The CISG and Computer Software Revisited, Vindabona Journal of International Commercial Law and Arbitration Supplement 2002/8, p. 55 et seq., at 56-63; J. LOOKOFSKY, In dubio pro conventione? Some thoughts about opt-outs, computer programs and preemption under the 1980 Vienna Sales Convention (CISG), Duke Journal of Comparative & International Law 2003/13, p. 263 et seq., at 273-279. 27 Federal Supreme Court (Germany), 04.11.87, VIII ZR 314/86, at para. (bb); Federal Supreme Court (Germany), 22.12.99, VIII ZR 299/98, at para. 6.1; see also T. COX (note 15), at 12-13. 28 United States Court of Appeals, Ninth Circuit, 06.05.85, RRX Industries Inc. v. Lab-Con Inc., 772 F.2d 543, at 546-547; United States Court of Appeals, Third Circuit, 14.02.91, Advent Systems Ltd. v. Unsisys Corp., 925 F.2d 670, at 673-676; United States District Court, C.D. California, 19.08.01, Softman Products Co. LLC. v. Adobe Systems, 171 F.Supp.2d 1075, at 1084-1087; see also J.R. STEIMAN, Applying UCC Article 2 to Software, UCC Law Journal 2007/40(1), p. 71 et seq., at section II (noting that application of the UCC rests on a test of predominant purpose of the contract, but that in practice courts tend to consider software as goods without much discussion); M.L. RUSTAD/ M.V. ONUFRIO, The Exportability of the Principles of Software: Lost in Translation?, Hastings Law & Technology Law Review 2010/2, p. 25 et seq., at section B. 23 24

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Michel Reymond transferred through a physical medium;29 in English law, supply of software through the Internet tends to be considered as a service.30 Following this view under the CISG, and lacking any clear guidance from the ECJ leading to the opposite conclusion, software could, and should, be considered as a good under the recast Brussels I Regulation.31 If followed, this characterization should be applied regardless of the transfer method used to supply it, in order to prevent legal fragmentation. In the scenarios presented in section II of this article, the word processing software ordered by Firm A would thus be considered as a “good” in all the possible variations, including situations (2) and (3), in which the software is transmitted or accessed through the Internet. In truth, however, the importance of this determination should not be overemphasized. Even if software is considered as a “good”, the second condition, requiring a contract of “sale” – typically defined as the transfer of property of a good made against payment – will prevent most standard software contracts from being characterized as “sales of goods” contracts, due to the software owner retaining its title over it. These cases, which remain highly controversial, will be discussed at some length in section D. of this article. For now, the cases in which the “sales of goods” characterization is appropriate will be examined. 2.

Supply as a Sale of Goods: Software Transfer Agreements

In situations involving the letter (a) of the example scenarios, Firm A acquires full ownership over the software, resulting in a so-called “software transfer agreement” (or “software acquisition agreement”). Under its provisions, Firm A will obtain the software’s source code32 along with all of the intellectual property rights which are tied to it. It will be free to modify, sell, distribute and rebrand the software, or even integrate its functionalities in its own products. In these situations, characterization of the contract as a “sale” is appropriate, because the recipient obtains property over the received software against the payment of a monetary sum. Assuming now that standard software is indeed considered as a good, these contracts should be considered as “sales of goods” falling under article 7.1, letter (b), first indent of the 29 T. COX (note 15), at 6-10; F. FERRARI (note 15), at 294-295; F.M. HERGET (note 15), at 42-44; J. ZIEGEL, The Scope of the Convention: Reaching Out to Article One and Beyond, Journal of Law and Commerce 2005/25, p. 59 et seq., at 61-62. 30 Court of Appeal (Civil Division), 26.07.96, St Albans City and DC v. International Computers Ltd., [1997] F.S.R. 251, per Sir Iain Glidewell; T. COX (note 15), at 11-12. 31 P. MANKOWSKI (note 15), at 151-152; contrast with Federal Supreme Court (Switzerland), 31.07.13, 4A_149/2013, at para. 5.4.1. (software is not a good under art. 5.1 of the Lugano Convention if not incorporated in a tangible medium). 32 The “source code” of software is the human-readable set of instructions written by its developers which allows it to function; in order to be comprehended by a computer, it is then compiled (or “translated”) into “machine code”, which is the machine-readable executable program itself. In order to read, understand and modify the structure of any given software, one either needs a specific machine-oriented skillset, or, more usually, direct access to its source code. For more details on the cycle of software development, see W. STRAUB (note 4), at 5-8.

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation recast Brussels I Regulation. This characterization should remain undisturbed even if the seller obliges itself to provide further services, such as assistance in the maintenance of the software.33 3.

Place of Performance

With the characterization step being taken care of, one can then start to consider the location of the place of performance under these contracts. The Regulation states that, for sale of goods contracts, the place of performance is located at the place “where, under the contract, the goods were delivered or should have been delivered”. Outside of the software context, this formula should be understood as designating the place where the goods are physically delivered. The rationale behind this interpretation rests on the ratio legis of the provision: that is, to provide a forum where the designated court has physical access to the goods as a matter of proof.34 At first glance, software transfer agreements may seem difficult to place under this construction. While there is indeed a delivery of the good (i.e. the software’s source code to the buyer), this delivery may be performed in a variety of ways, including through the Internet. A further complication is that this delivery is not the only obligation undertaken by the seller, as it must also ensure that all possibly applicable IP rights pass on to the buyer. However, in order to make sense of the place of delivery, one has to consider that, if the buyer experiences problems when dealing with the software it received, the only relevant place where the proof will be situated in the case of a dispute will be where it has actually incorporated and used the software. This bears three consequences: first, the method of transfer of the software is not determinative, because it does not influence the final, actual use of the software once received by the buyer; 35 second, whatever remains in the hands of the seller is equally irrelevant; third, because the delivery of the source code of the software is the main obligation of such a contract, any related IP transfer should be considered as an ancillary obligation, devoid of any impact in this determination. The place of delivery in standard software transfer agreements should thus be the place of implementation of the software by the buyer, i.e. where it is installed and operated. If the place of implementation is determined by the contract, or if both parties are aware of its location, then jurisdiction at that place will be readily appropriate. If the seller is not made aware of the location of this place, for example because it delivered the media containing the source code in another location, or because it allowed the buyer to download the software through the P. MANKOWSKI (note 15), at 146-147. A. BONOMI (note 18), at 1830; T. KADNER GRAZIANO (note 3), at 201-203; P. MANKOWSKI (note 15), at 168-172; see also F. POCAR, Explanatory Report on the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007, OJ [2009] C 319, p.1 et seq., at 37, noting the factual character of the place of performance. 35 In this sense, see R.H. WEBER (note 4), at 88-89. 33 34

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Michel Reymond Internet without specifying a place of implementation, then a problem of foreseeability arises. In these cases, then, it seems appropriate to assume that the place of implementation is located at the domicile or the seat of the buyer.36 This assumption should also be considered if the buyer implements the software in multiple locations. In all cases, a balance should be attained between, on one hand, the foreseeability of the forum and its procedural raison d’être regarding proximity of proof, and, on the other hand, the natural volatility of software, which, unlike physical goods, can be copied, transferred, multiplied and modified without prejudice to its original state. Two considerations should be central in this regard: first, the reasonable expectations of the seller should remain protected; if, for example, the buyer moves the machines housing the delivered software to another location, or if it decides to install the software on computers which are located elsewhere, then, in order to protect foreseeability, no jurisdiction should be found at these places. Second, one should however not go as far as to require that the actual proof related to a given dispute (i.e. the specific machine having a problem with the software) be located at the place of implementation in order to justify jurisdiction there. Such a strict requirement would result in uncertainty, as the availability of the forum would hinge on factual variations upon which the parties have no real control.37 With standard software sales contracts now taken care of, the next sections will examine which contracts fall under the definition of “services” under article 7.1, letter (b), second indent. C.

Supply of Standard Software as a Service

1.

Characterization

According to the ECJ in the Falco case, a service is to be understood as the carrying out of a particular activity against remuneration.38 This definition is autonomous and should remain confined to the four corners of the recast Brussels I Regulation: in that decision, the ECJ, arguing that the definition given to the term “service” in the context of the European single market did not fit the interpretation called forward by article 7.1, rejected any analogy with the definitions of “supply of services” as set out in article 57 of the TFEU Treaty as well as the VAT Directive.39 For the present purposes, this may imply that the definition of “information society services” found under Directive 2000/31/EC on electronic See A. BONOMI (note 18), at 1836-1837; T. KADNER GRAZIANO (note 3), at 206-207. 37 See also T. KADNER GRAZIANO (note 3), at 204-206. 38 ECJ (Fourth Chamber), 23.04.09, Falco Privatstiftung & Thomas Rabitsch v. Gisela Weller-Lindhorst, Case C-533/07, ECR [2009] I-03327, at para. 29; F. CORNETTE (note 19), at 350; but see also P. MANKOWSKI (note 15), at 153 (drawing inspiration from the TFEU). 39 Falco (note 38), at paras 33-35; A. BONOMI (note 18), at 1820-1821; H. GAUDEMET-TALLON (note 19), at 188-189. 36

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation commerce should not be relied upon when determining the place of performance of these contracts under the recast Brussels I Regulation. Following this interpretation, only one category, helpfully known as “software as a service” agreements, falls without question under the term “supply of services”. 2.

Supply as Service: “Software as a Service” (SaaS) Contracts

In situation (3), letter (d), the word processor is offered to Firm A under the model known as “software as a service”, or “SaaS”, which has recently emerged alongside the development of cloud technology. While specifics may vary in any given case, SaaS contracts usually share the following three features: -

There is no stated “delivery” or transfer of the software to the user, even in computer form;

-

The software resides on its owners’ servers and is merely accessed and operated remotely by the user through the Internet;

-

The software is offered as an on-demand or as a subscription-based service.

In other words, users contracting under SaaS terms do not enjoy the benefits of a software delivery; they rather gain a right to access the software as it is functioning on the software vendor’s servers; this includes any hardware calculation and computation required in order for the software to function. The access is “metered”, so to speak, by the limits imposed by the so-called end-user licence: primarily through its nature as a subscription-based or on-demand service, but also through other limitations, like storage space caps and premium data plans for specific services.40 SaaS contracts can thus be construed as the mobilization of the resources offered by the software vendor, against the payment of an appropriate sum, which corresponds to the ECJ’s definition of “services” under article 7.1, letter (b), second indent of the recast Brussels I Regulation. It is true however that a contract should not be characterized as a contract of supply of services just because the parties decided to use that term to identify their relationship. Characterization should not turn upon whether or not the term “software as a service” figures on the agreement entered into by the parties, but on a careful examination of the contractual terms themselves when contrasted with the main features of a SaaS contract. For example, if, on one hand, some basic or temporary files are installed on the recipient’s machines, this should not, in itself, be sufficient to outright exclude characterization as a service if the other elements of the definition are present; on the other hand, if these basic files allow for offline use of the software program (i.e. no connection to the vendor’s servers is required), then the opposite conclusion should be reached. Summarized as a rule of thumb, one should basically ask: “is the user, in essence, doing nothing more than query41 See for example the pricing structure of Google Apps For Work, available at . 41 The term “query” should here be understood with reference to its technical definition, i.e. a request for information made by a machine and addressed to a server or database. 40

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Michel Reymond the resources provided by the software vendor?”; in the affirmative, then it is a supply of services.42 3.

Place of Performance

The determination of the place of performance in these cases will be rather clearcut. Cloud-based infrastructures are for the main part based around “large-scale data centers that contain upwards of 100’000 individual servers capable of parallel processing on a massive level […] effectively rented as “services” to a large number of simultaneous, remote end users […]”.43 In other words, a data center is the place where the software, which is then served upon the end-user through the Internet, is operated. It stands to reason that this place is where proof will be present in the case of a dispute.44 Though one may argue that the user’s place of implementation should also be taken into account, for example if misuse of the software causes damage there, regard should be had to the fact that the whole of the hardware and software over which the contract remains in the hands of the software owner. If the place of the data center is not known by the other party, or if it is not contained in one single place, then one should assume that it is located at the place of the vendor’s domicile or seat. This proposition should remain uncontroversial, as it closely mirrors the ECJ’s position regarding the place of performance in the case of service rendered at the place of the service provider’s premises; one will recall that in the Wood Floor case, the Court designated the commercial agent’s main place of activity as the relevant locus, including an assumption in favour of his or her domicile in case of doubt.45

42 Contrast with C. KESSEDJIAN, Electronic Commerce and International Jurisdiction (report), Hague Conference on Private International Law, Enforcement of judgements, Prel. Doc. 12 (2000), which argues at p. 5 that the distinction between “sales of goods” and “supply of services” is irrelevant in the case of contracts of transfer of virtual goods, since the nature of the file delivered through the Internet should not be determinative. It is suggested that SaaS contracts fall outside of this argument, since the contract does not hinge on the delivery or transfer of a virtual good or software, but on the remote, continued use of a computing infrastructure. 43 U. GASSER (note 9), at 9. 44 Contrast with M. REYMOND, La compétence internationale en cas d'atteinte à la personnalité par Internet, Genève 2015, p. 317, in which the present author rejected the place of the location of the servers housing a defamatory website as a connecting factor. It is submitted that SaaS contracts are one of the few cases in which the location of a server will be recognized as relevant, as these agreements rest primarily on the direct mobilization of the resources of a server-based infrastructure in order to provide the service. 45 ECJ (Third Chamber), 11.03.10, Wood Floor Solutions Andreas Domberger GmbH v. Silva Trade SA, Case C-19/09, ECR [2010] I-02121, at paras 39-42; see also A. BONOMI (note 18), at 1830; P. MANKOWSKI (note 15), at 189-191. But see also P. STONE (note 19), at 89, who would also open a forum at the place of reciept of the data if specified in the contract.

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation D.

Supply of Standard Software as a Licence

1.

Targeted Scenarios

Now that the cases which fit without too much trouble under either “sales of goods” or “supply of services” are dealt with, the remaining, and more controversial, situations may be discussed. In the scenarios involving the terms of use (b), Firm A receives a copy of the word processing software and is free to use it in the course of its business. “Use” of the software is the key term here: any other kind of interaction with it will be considered as an infringement upon the exercise of the software vendor’s exclusive rights. Firm A will have no access to its source code; it will also be unable to modify, copy, give away or resell it. These limitations are made more stringent in the scenarios in which the terms of use (c) are employed, as in these cases, even Firm A’s capacity as a user is affected: if it appears that it needs to install the program to more than one machine, then it will have to pay for another copy. Finally, inclusion of the terms of use (d) in the contract – excluding true SaaS situations – will lead Firm A to periodically renew a subscription if it wishes to continue using the word processing software. Temporarily putting aside the further variations made possible by the plurality of transfer methods, it does seem that all of these different situations share a common basic mould. While Firm A is issued a copy of the software and is allowed to use it, its property and all of the intellectual property rights attached to it remain with the software vendor. The difference between each scenario lies with the character of the bargain effectively struck between the parties: depending on the contractual terms, Firm A will have either more or less freedom in the way that it may implement and operate the software for its own purposes. But it is only a difference of degrees; if one considers the common ground between these contracts, then it should be possible – and even desirable, for simplicity’s sake – to regroup them under one single characterization. But then, this just begs the further question – which characterization? 2.

Characterization

Characterization as “sales of goods” is doubtful, because, as opposed to situations in which a software transfer agreement is concluded between the parties, here the ownership of the software does not pass from the software owner to its contractual partner. The latter does not even enjoy a range of rights which could be interpreted in some way as functionally identical to ownership or title: the most it can do is use a copy of it under whatever terms it entered into.46 46 Some doubts may remain concerning situations in which Firm A acquires a copy of the software and is allowed to use it indefinitely without any kind of interference from its owner; in this case, it can be argued that that, in all actuality, Firm A obtains full ownership over that copy; in this sense, see ECJ (Grand Chamber), 03.07.12, UsedSoft GmbH v. Oracle International Corp., Case C-128/11; Softman Products Co. LLC. v. Adobe Systems, at 1084-1087; W. STRAUB (note 4), at 64-68 (calling these situations unechte

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Michel Reymond In response to this argument, one may invoke that, under the CISG, even these situations can be considered as “sales of goods”. In that context, two arguments support the characterization: first, according to its article 4 (b), the CISG does not govern transfer of ownership, leaving an intentional gap which may grant less strength to that requirement. Second, articles 41 and 42 foresee that delivered goods may be subject to intellectual property restrictions as long as the buyer agrees to them. These provisions allow the CISG to adequately deal with cases in which the software owner retains ownership over it and merely confers some limited rights to the recipient. Application of the sales of goods convention as the applicable substantive law to these contracts should therefore not be outright excluded.47 This conclusion is certainly valid when dealing with the sphere of application of the CISG as an instrument of uniform substantive law. However, its specific context means that it cannot be imported mutatis mutandis into the discussion of what is a sale of goods under article 7.1, letter (b) of the recast Brussels I Regulation. Considering also that there is no strong argument which could weaken the requirement of ownership transfer,48 it is submitted that contracts for the supply of software in which this does not occur cannot be characterized as “sales of goods” for the purpose of Art. 7.1, letter (b). Characterization as “supply of services” is also doubtful, though somewhat less so. Going back to the standards set by the ECJ in Falco, a contract is one of supply of services when a particular activity is undertaken against the payment of a sum; this activity must take the form of an act and not of a simple abstention. In that decision, the court decided that a licence contract concluded between a copyright management foundation and a media seller, and authorising the latter to distribute the recording of a concert in a few countries, was not a contract of “supply of services” under the Regulation because the obligation undertaken by the foundation was limited to the tolerance of the sale of these recordings. In summary, without any clear positive act upon which one can identify the service rendered, the characterization must be excluded.49 In pure SaaS contracts, this requirement is fulfilled since the use of the software is entirely carried out by the vendor’s infrastructure at the request of its client. In the other situations, however, the software will be installed and operated Lizenzverträge) and F.M. HERGET (note 15), at 45-47; given the narrow scope of this exception and its lack of impact regarding determination of the place of performance, as opposed to the substantive issue of the right of first sale, it is submitted to not take it into account in the context of article 7.1. 47 F. DIEDRICH (note 26), at 66-70; J. LOOKOFSKY (note 26), at 277-279; but see also F. FERRARI (note 15), at 295-296 and 303 (doubting that the CISG should apply to virtual goods); P. SCHLECHTRIEM, Requirements of Application and Sphere of Applicability of the CISG, Victoria University of Wellington Law Review 2005/36, p. 781 et seq., at 786-787 (only software acquired without restrictions is a sales of goods). 48 P. MANKOWSKI (note 15), at 144-145 (this criterion should be preserved “[...] otherwise it would be impossible to distinguish between the sale of goods and the mere hire of goods”). 49 Falco (note 38), at paras 29-30, see also P. STONE (note 19), at 87.

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation by the recipient on its own machines, meaning that its continued use cannot be considered as a positive act on the part of the owner. Failing that, can the delivery of the software by the owner then be considered as such a positive act? For two reasons, this should not be the case. First, the nature of the obligation of delivery will vary depending on the chosen transfer method: while the handing over of a hard drive or a DVD-ROM containing the software is clearly a positive act, the same conclusion is less easily reached if the vendor does nothing more than allow the recipient to download the software. Such an analysis runs the risk of making characterization of the contract dependent on the practical terms agreed upon by the parties, which in turn would lead to uncertainty and legal fragmentation. Second, and from a more general standpoint, the obligation of delivery is not truthfully the “service” sought by the contractual partner of the owner. It is the use of the software – e.g., Firm A’s use of the word processing software in order to write reports and other documents – which embodies the true purpose of the contract; delivery, by whichever means are the most convenient, is only a first, incidental step giving rise to this use. When adopting this point of view, the obligations undertaken by the owner – that is, allowing its client to enjoy continued use of the software under certain limitations – appear closer to the ones of a licensor such as in the Falco case than the ones traditionally undertaken by service providers.50 In light of this argument, these situations should not be characterized as contracts of “supply of services”, but under their proper designation as contracts of licensing. It is thus proposed that contracts for the supply of standard software which rely on this model should be characterized as licence contracts under the recast Brussels I Regulation, regardless of the limits, or lack thereof, imposed by the terms of use and regardless of the transfer method. This solution is simple, descriptive, and easy to apply. It also has the benefit of upholding the integrity and autonomy of the definitions of “sales of goods” and “supply of services” contained in article 7.1, letter (b) of the recast Brussels I Regulation. Of course, some degree of care is required in order not to apply this definition in every case where parties use the term “licence agreement” in their contract header; recourse to it should be made only if the recipient of the software is allowed to install and use it on its own equipment, with the vendor retaining its ownership and title. 3.

Place of Performance

The characterization proposed above does have a considerable downside. According to the ECJ in Falco, licensing contracts, being neither sales nor services, fall under the scope of the letter (a) of article 7.1 of the recast Brussels I Regulation, which – also according to the ECJ – leads to a determination of the place of performance based on the lex causae and depending on which obligation 50 According to the case law of the ECJ, these “typical” service contracts include commercial agency contracts and transport contracts; in both, the activity performed as a service is easily identified. See ECJ (Fourth Chamber), 09.07.09, Peter Rehder v. Air Baltic Corporation, Case C-204/08, ECR [2009] I-06073; and the case referred to in Wood Floor; see also A. BONOMI (note 18), at 1821-1822.

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Michel Reymond is giving rise to dispute in a particular case.51 Needless to say, this method is overly complicated, unpredictable, and too focused on issues of substantive law in order to be of any help when considering matters of jurisdiction.52 One may indeed rightfully argue that labelling contracts for the use of software as licence contracts would reveal itself as impractical, as it would lead straight into the many difficulties inherent to the lex causae determination. In truth, this objection should be thought of as less of an attack upon the presently proposed characterization than as a criticism of the current role of the letter (a) of article 7.1 as a “catch-all” provision applying to all contracts not falling under its letter (b). If the place of performance of licensing contracts was to be located following an independent, procedural-minded and autonomous definition, as it is currently the case for the sales of goods and the supply of services, then no problem of determination under the lex causae would arise. It is thus submitted that software licensing contracts, which are numerous in practice and yet fit uneasily under the structure of article 7.1 of the Regulation, are in themselves a powerful plaidoyer for, if not an outright reform, then at least a careful adaptation of the current rules. Following Professor KADNER GRAZIANO’s views on the subject, the issue could be resolved in one of two ways. A first, de lege lata, proposal would see the adoption a modern interpretation of the letter (a) of article 7.1 of the recast Brussels I Regulation, which would exclude recourse to the lex causae and instead promote an autonomous, procedurally-minded determination of the place of performance; the second, de lege ferenda, proposal would require either the addition of more named contracts, including licensing contracts, under the situations covered by the letter (b) of article 7.1, or the outright abolition its letter (a).53 Both of these proposals would see the creation of an autonomous place of performance for licence contracts, which would be located at the place where the intellectual property rights are granted or transferred. Regarding software licensing contracts, the place where the rights are granted will usually correspond to the place of implementation of the software, i.e. where the licensee actually uses the software in its premises. Factual determination of this place can then follow the guidelines already set out above concerning software transfer contracts.54 Falco (note 38), at paras 40-44; P. STONE (note 19), at 90-91. F. CORNETTE (note 19), at 354-357; H. GAUDEMET-TALLON (note 19), at 179-182; T. KADNER GRAZIANO (note 3), at 179-183; discontent with this methodology was also reported by F. POCAR (note 34), at 32. 53 T. KADNER GRAZIANO (note 3), at 213-216. 54 See also article 21.1 of General Terms and Conditions for the Procurement and Maintenance of Standard Software of the Swiss Confederation, which provides that “[u]nless otherwise agreed, receipt of the data carrier at the place of installation of the software shall be considered the time and place of performance in the case of delivery of the standard software on a data carrier”. The General Conditions do make a distinction regarding software that is delivered online, stating that in these cases “[t]he availability of the software for download by the service procurer on the server of the service provider shall be considered the time and place of delivery”. However, one must keep in mind that the primary purpose of these provisions is to precisely determine when and where the obligation has been executed as regards to substantive law; even in case of online delivery, the 51 52

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation E.

Custom Software

The solutions proposed in the previous section concerned standard software. Now it is time to address custom software, which is distinguished by the fact that it is specifically developed by its developer in order to satisfy the needs of a particular client. As a preliminary remark, it must be stressed that the definition of “custom” software should be interpreted restrictively. Indeed, many kinds of software available in the market today include some element of adaptability: they are tailored in order to function under a particular operating system; they are offered in different “versions” including different sets of features; and, when being installed on a given computer, many even tailor their performance in order to fit the hardware specifications of that machine. Lest the meaning of “custom made software” lose its distinctiveness, only software which is designed and developed from the ground up to match the features requested by a client should be designated as such.55 It is acknowledged that contracts concerning the supply of custom made software have a much more pronounced service element than standard software contracts. In German law, they are referred to as either manufacturing contracts (Werkverträge) or contracts for the performance of a work (Werklieferungsverträge), rather than contracts for the sales of goods.56 Should this also be the case when considering characterization under article 7.1 of the recast Brussels Regulation? If so, what would be the consequence when envisaging the determination of the place of delivery? Guidance regarding this question can be derived from the Car Trim decision rendered by the ECJ, in which the Court, faced with a contract concerning the delivery of goods which were to be produced according to the buyer’s exact specifications, had to determine both its characterization and the place of its performance. On characterization, and taking inspiration from a variety of sources including the CISG, the court concluded that contracts concerning goods to be manufactured are to be construed as “sales of goods” if the seller is responsible for their quality. It is only in cases where the client supplies the materials necessary for their confection that the characterization should be shifted to a service contract.57 Noting that the place of performance must retain a strong link with the contract in order to justify the opening of a forum there, the ECJ then decided to locate it at the place of the final destination of the delivery of the goods. It notably explained that the “goods which are the subject-matter of the contract must, in principle, be in that place after performance of the contract” and that “the principal aim of a contract for the sale of goods is the transfer of those goods from the seller to the purchaser, an operation which is not fully completed until the arrival of those software is still installed and used by the buyer, which would lead back to the proposed solution for the purposes of article 7.1. 55 F.M. HERGET (note 15), at 40-42. 56 Federal Supreme Court (Germany), 14.07.93, VIII ZR 147/92; Federal Supreme Court (Germany), 09.10.01, X ZR 58/00. 57 Car Trim (note 21), at paras 33-43.

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Michel Reymond goods at their final destination”.58 Taken altogether, the reasoning of the court in Car Trim suggests that, even if a good is specifically tailored according to the wishes of a specific client, its location after delivery should remain the main jurisdictional anchor point under article 7.1. This makes procedural sense: its current location is where it may be examined as proof in case of a dispute. Coming back to custom software and following up on what has been developed above concerning standard software, two main situations may emerge. If the custom software is properly sold to its recipient, meaning that the software developer has passed on its property and title, then, following the rationale found in Car Trim, the contract should be considered as one of “sale of goods” and the place of performance determined according to the place of implementation.59 If the contract does not confer ownership of the software to the recipient, then the analysis should follow the one outlined above regarding standard software, while taking into account the stronger service element. Be that as it may, the main concern should remain focused on the actual location of the software as used by its recipient after delivery. All in all, it appears that the custom-made nature of software will have little impact, if any, upon the determination of the place of performance. This is hardly surprising: while the distinction is certainly decisive in terms of substantive law, it is much less useful when it comes to a procedural, fact-based analysis. And indeed, in practice, contracts of supply of custom-made software routinely foresee that they are to be implemented and installed according to the client’s needs.60

IV. Conclusion Trying to fit supply of software contracts under the structure of article 7.1 of the recast Brussels Regulation is a tricky task. The need for characterization, arising out from the two-tiered structure of the provision, sits at odds with the multifaceted nature of these agreements. By adopting an autonomous interpretation of each of the categories foreseen by the article, this article argues for the following propositions: -

If the contract is properly one of sale of the software, meaning that full transfer of its ownership is included, then it should be considered as a sale of goods. The place of performance is located where the software is implemented by the buyer, assumed to be at its domicile or seat;

Car Trim (note 21), at para. 61. This should be the case even if the seller obliges itself to undertake after-sale services such as support or training of personnel. 60 See article 19.1 of the General Terms and Conditions for IT Works Contracts and Contracts for the Maintenance of Individual Software of the Swiss Confederation: “[t]he customer designates the place of performance. Unless otherwise agreed, the place of installation of the work shall be considered the place of performance”. 58 59

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Jurisdiction under Article 7 No. 1 of the Recast Brussels I Regulation -

If the contract entails a pure “software as a service” type of situation, then meaning that the client does nothing more than use the software vendor’s resources on an on-demand or subscription basis, then it should be considered as a service. The place of performance is located at the vendor’s data centre and assumed to be at its domicile or seat;

-

If the contract is one of use of the software, then it should be considered as a licence contract. Letter (a) of article 7.1 currently applies to these situations. Given the deficiencies of this provision as interpreted by the ECJ it is recommended to create an autonomous determination of the place of performance, which would be located at the place where the licence is conceded and the software is implemented, with an assumption in favour of the licensee’s domicile. De lege lata, one could also consider a new interpretation of letter (a) which would vacate recourse to the lex causae and align itself to the solution proposed above.

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PROTECTING VICTIMS OF CROSS-BORDER TORTS UNDER ARTICLE 7 NO. 2 BRUSSELS IBIS: TOWARDS A MORE DIFFERENTIATED AND BALANCED APPROACH Jan VON HEIN*

I. II.

III.

Introduction The Principle of Ubiquity in European Private International Law (Brussels Ibis and Rome II) A. The Principle of Ubiquity under Article 7 No. 2 Brussels Ibis 1. Procedural Efficiency and the effet utile 2. Restrictions for Systematic and Teleological Reasons B. Remnants of Ubiquity under the Rome II Regulation C. Coherence in European Private International Law The Recent Case-Law of the CJEU A. The Neutrality of the forum delicti commissi: The Negative Declaration Action as a Test Case B. Cross-Border Environmental Damage C. International Product Liability 1. Alternative vs. Subsidiary Connecting Factors 2. Frictions between Brussels Ibis and Rome II a) Place of Damage b) Place of the Causal Event 3. Evaluation D. International Investor Protection 1. Importance of Tort Jurisdiction for Investor Protection 2. Drawing the Line between Contracts and Torts 3. The Place of Damage in Cases Involving Pure Economic Loss 4. The Place of the Causal Event when Harm is Caused by Multiple Tortfeasors

Professor of Civil, Comparative and Private International Law at the University of Freiburg (Germany). Abbreviations of journals and periodicals: BGHZ = Entscheidungen des Bundesgerichtshofs in Zivilsachen; EuZW = Europäische Zeitschrift für Wirtschaftsrecht; J. Priv. Int. L. = Journal of Private International Law; JZ = Juristenzeitung; LMK = Lindenmaier-Möhring, Kommentierte Rechtsprechung; NJW = Neue Juristische Wochenschrift; ZEuP = Zeitschrift für Europäisches Privatrecht; ZIP = Zeitschrift für Wirtschaftsrecht. *

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 241-274 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Jan von Hein

IV.

5. Conclusion International Violations of Rights Relating to Personality 1. From Shevill to eDate 2. Distinguishing between Cyberspace and Conventional Media 3. Favouring the Weaker Party in Cyberspace Cases F. International Infringements of Intellectual Property Rights 1. Introduction 2. Principle of Ubiquity 3. Place of Damage 4. Place of the Causal Event 5. Conclusion Conclusion

I.

Introduction

E.

In a globalized society where people, money, goods and news cross national borders with few, if any, restrictions, acts committed in one state – for example the pollution of a river, the manufacturing of a defective product or the publication of a defamatory article on the Internet – frequently cause damage in another state, for example where the polluted water poisons plants, a consumer is hurt by a product or where a victim suffers damage to his or her reputation. Thus, the perennial question as to where a tort has been committed in cross-border cases has gained increasing practical significance in recent years, both for establishing jurisdiction and for determining the applicable law. In the European Union, these questions are, in principle, governed by EU Regulations, i.e., with regard to jurisdiction, Article 7 No. 2 of the recast Brussels I Regulation (Brussels Ibis)1 and, as regards the applicable law, the Rome II Regulation.2 Article 7 No. 2 Brussels Ibis, which is substantially identical with Article 5 No. 3 of the former Brussels I Regulation,3 establishes jurisdiction at the place where a harmful event occurred. Ever since the leading Rhine salination case, the ECJ (now the CJEU) has interpreted the “harmful event” as covering both the place where the event giving rise to the damage occurred (the place of the causal event) and the place where damage was Regulation (EU) No 1215/2012 of the European Parliament and the Council of 12 December 2010 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351 of 20 December 2012, p. 1. The recast Regulation has become applicable on 10 January 2015. 2 Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), OJ L 1999 of 31 July 2007, p. 40. It should be noted, however, that – unlike Brussels Ibis –, Rome II is neither applicable to nuclear damage nor to violations of rights relating to personality (Article 1(2)(f) and (g) Rome II). 3 Regulation (EC) No 44/2001 of the Council of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I), OJ L 12 of 16 January 2001, p. 1. 1

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Protecting Victims of Cross-Border Torts suffered (the place of damage).4 The choice between these two fora is left to the plaintiff.5 On the one hand, this so-called principle of ubiquity is interpreted widely by the CJEU with regard to the scope of its application. According to the Court’s settled case-law, this principle is not limited to specific kinds of torts for which an enhanced degree of protection is considered justified, such as cases of environmental damage;6 rather, this principle has been applied to various types of torts such as international product liability, international investor protection and cross-border violations of rights relating to personality or intellectual property as well.7 On the other hand, the normative perspective of the CJEU is focused on purely procedural aspects, such as facilitating the taking of evidence and enhancing the efficiency of proceedings, and not on a need for protecting the victim as the weaker party.8 These normative underpinnings of the principle of ubiquity may, however, lead to frictions in its practical application. First of all, applying this principle to all kinds of torts without any restriction or modification may encourage forum shopping to an extent that is hardly compatible with one of the basic goals underlying Article 7 No. 2 Brussels Ibis, which seeks to make it foreseeable for a defendant where he or she might be sued.9 In this regard, the principle of ubiquity may be framed too broadly and a more differentiated approach may be appropriate, e.g., taking into account characteristic features of specific types of torts in order to determine the most convenient forum, reducing the number of available fora and/or limiting the jurisdiction of Member States’ courts to rule on the damage caused in their respective country.10 Secondly, it is questionable whether jurisdiction in tort cases should be without any exception considered as neutral, even in the case of manifest structural imbalances between the tortfeasor and victim in specific types of cases. A consumer, for example, who is hurt by a defective product manufactured and distributed by a multinational company, or a person whose reputation is damaged by rumours spread online all over the globe may arguably be classified as a weaker party in need of specific protection in international cases. Focusing exclusively on the efficacious conduct of proceedings in these types of cases may, from a policyoriented perspective, be too restrictive an approach in certain circumstances.11 The aforementioned doubts regarding the legitimacy and the boundaries of the principle of ubiquity in European civil procedure are exacerbated when the Rome II Regulation on the law applicable to non-contractual obligations is factored into the equation because, according to Recital 7 Rome II, the “substantive scope ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735. 5 See infra II.A.1. 6 See infra II.A.1. and III.B. 7 For a more detailed account, see infra III.C.–F. 8 See infra II.A.1, III.A., III.C.2.b. 9 See infra II.A.2. 10 See infra III. 11 See infra III.C.3. and III.E.3. 4

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Jan von Hein and the provisions” of the Rome II Regulation should be “consistent with” the Brussels Ibis Regulation.12 Rome II, however, does not accept the principle of ubiquity as a general rule for choice-of-law purposes (see infra II.B.). Thus, it is open to discussion what degree of mutual interdependence between the Regulations the goal of a “consistent” interpretation actually entails (see infra II.C.). In its recent case-law on Article 7 No 2 Brussels Ibis, the CJEU had to grapple with these issues repeatedly.13 In the present article, I will look at this jurisprudence and analyze, firstly, whether the Court differentiates between various kinds of torts and, secondly, the extent to which it takes social, informational or technological asymmetries between tortfeasor and victim into account. In the remaining parts of this paper, I will start with briefly revisiting the normative foundations of the principle of ubiquity in European private international law (infra II.). Then, I will survey and analyze the recent case-law of the CJEU on various types of torts (infra III.). Finally, I will attempt to develop a synthesis that, while maintaining the autonomy of Brussels Ibis vis-à-vis choice of law, aims at a more differentiated and balanced approach towards determining jurisdiction in crossborder tort cases (infra IV.).

II.

The Principle of Ubiquity in European Private International Law (Brussels Ibis and Rome II)

A.

The Principle of Ubiquity under Article 7 No. 2 Brussels Ibis

1.

Procedural Efficiency and the effet utile

In order to understand the normative foundations of the principle of ubiquity under Article 7 No. 2 Brussels Ibis, it is helpful to look back at the genesis of this principle in the leading Reinwater case.14 In this case, the French defendant, Mines de Potasse d’Alsace, had allegedly discharged tonnes of chloride into the Rhine, which subsequently caused damage downstream to the Dutch plaintiff, who was engaged in the business of nursery gardening and had used water from the Rhine for irrigation purposes. In its judgment, the ECJ pointed out “that the place of the event giving rise to the damage no less than the place where the damage occurred can, depending on the case, constitute a significant connecting factor from the 12 The reference to the former Brussels I Regulation in Recital 7 Rome II must be read as a reference to Brussels Ibis, see Article 80 2nd sentence Brussels Ibis. 13 As the substantive content of the rule remained unchanged, I will, for the sake of readability, usually refer to the renumbered version in the recast Regulation even with regard to cases decided under the former Brussels I Regulation (or the Brussels Convention), except where otherwise indicated. 14 ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735.

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Protecting Victims of Cross-Border Torts point of view of jurisdiction”.15 The Court went on to take “into account the close connexion between the component parts of every sort of liability” and concluded that “it does not appear appropriate to opt for one of the two connecting factors mentioned to the exclusion of the other, since each of them can, depending on the circumstances, be particularly helpful from the point of view of the evidence and of the conduct of the proceedings”.16 In order to justify this result, the Court invoked the principle of effet utile: concentrating jurisdiction at “the place of the event giving rise to the damage would, in an appreciable number of cases, cause confusion between the heads of jurisdiction laid down by Articles 2 and 5(3) of the [Brussels] Convention [today: Articles 4 and 7 No. 2 Brussels Ibis], so that the latter provision would, to that extent, lose its effectiveness”.17 Focusing exclusively on the place where the damage was suffered would, on the other hand, “in cases where the place of the event giving rise to the damage does not coincide with the domicile of the person liable, have the effect of excluding a helpful connecting factor with the jurisdiction of a court particularly near to the cause of the damage”.18 Two key features of the Court’s reasoning deserve to be emphasized: firstly, the Court stressed that its analysis of the forum delicti commissi was neither influenced by considerations concerning the substantive law applicable to the case nor limited to cases involving cross-border environmental pollution; rather, the Court explicitly stated that “to exclude one option appears all the more undesirable in that, by its comprehensive form of words, Article 5(3) of the [Brussels] Convention covers a wide diversity of kinds of liability”.19 Secondly, whereas Recital 25 of today’s Rome II Regulation justifies “the use of the principle of discriminating in favour of the person sustaining the damage” by a recourse to the goal of a high level of environmental protection enshrined in Article 191 TFEU and the “polluter pays” principle, the Court abstained from such policy-oriented arguments. This is all the more remarkable as the idea of favouring the victim as the weaker party, at least in cases concerning environmental damage, had been articulated by the Advocate General and observers to the proceedings. In particular, Advocate General Capotorti had argued that the “injured party, who must establish the unlawful act, is automatically deemed the weaker party and as such worthy of protection in the choice of the court having jurisdiction”, invoking the Brussels Convention’s rules on jurisdiction for maintenance obligations, insurance and installment loan contracts as examples ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, para. 15. 16 ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, para. 17 17 ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, para. 20; confirmed by ECJ, 16 July 2009, C-189/08, Zuid-Chemie, ECR [2009] I-6917, para. 31. 18 ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, para. 21. 19 ECJ, 30 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, para. 18. 15

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Jan von Hein for such an approach.20 In the case-law following Reinwater, however, the Court has made very explicit that the forum delicti commissi – unlike the heads of jurisdiction for maintenance claims (Article 5 No. 2 of the former Brussels I Regulation, now superseded by Article 3(b) of the EU Maintenance Regulation21) or for contractual consumer claims (Articles 17 et seq. Brussels Ibis) – does not seek to favour the plaintiff as the weaker party per se,22 but is rooted exclusively in concerns for a fair and efficient administration of justice, in particular by granting jurisdiction in a place where relevant evidence may be located.23 2.

Restrictions for Systematic and Teleological Reasons

Although the principle of ubiquity is thus based on neutral, procedural foundations, its practical application will, in most cases, ultimately benefit the victim in their role as plaintiff.24 In order to avoid a descent into unlimited forum shopping, however, the Court has, in its settled case-law, developed three methodological axioms that restrain the principle of ubiquity’s reach: first, the Court has consistently maintained that the special jurisdictions found in Article 7 Brussels Ibis, in particular No. 2, must be given a restrictive interpretation because they deviate from the general principle of actor sequitur forum rei laid down in Article 4(1) Brussels Ibis.25 Second, the notion of tort (as opposed to contract), the place of the causal event and the place of damage must be interpreted autonomously, i.e. independently of domestic legal concepts found in the laws of the Member States.26 Finally, Article 7 No. 2 Brussels Ibis shall provide for a jurisdiction that is foreseeable for the defendant.27 The principle of foreseeability had already been AG CAPOTORTI, Conclusions of 10 November 1976, C-21/76, Bier v. Mines de Potasse d´Alsace SA, ECR [1976] 1749, 1758. 21 Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, OJ L 7 of 10 January 2009, p. 1. 22 CJEU, 25 October 2012, C-133/11, Folien Fischer, ECLI:EU:C:2012:664, para. 46; CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 31. 23 ECJ, 1 October 2002, C-167/00, Henkel, ECR [2002] I-8111, para. 46; ECJ, 16 July 2009, C-189/08, Zuid-Chemie, ECR [2009] I-6917, para. 24; CJEU, 25 October 2012, C-133/11, Folien Fischer, ECLI:EU:C:2012:664, para. 38; CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, paras 26 et seq. 24 On negative declaratory actions, see infra III.A. 25 ECJ, 16 July 2009, C-189/08, Zuid-Chemie, ECR [2009] I-6917, paras 20-22; CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, paras 23 et seq.; CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, paras 21 et seq. 26 Cf., on the tort/contract divide, ECJ 17 June 1992, C-26/91, Handte, ECR [1992] I-3967, para. 10; CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 44; on the place of the harmful event, cf. CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, para. 22; CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, para. 43. 27 ECJ, 10 June 2004, C-168/02, Kronhofer, ECR [2004] I-6009, para. 20; CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, para. 23; CJEU, 25 October 20

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Protecting Victims of Cross-Border Torts laid down with regard to jurisdiction in general in Recital 11 Brussels I and is now mentioned more specifically with regard to Article 7 No. 2 Brussels Ibis in Recital 16 of the latter Regulation.28 In view of those potentially conflicting normative directives – effet utile vs. strict interpretation, conferring jurisdiction on multiple courts while at the same time allowing the defendant to reasonably anticipate where he might be sued – defining the precise content of Article 7 No. 2 Brussels Ibis can, at times, become a rather difficult balancing exercise. The fact that in several recent cases on Article 7 No. 2 Brussels Ibis the Court declined to subscribe to the conclusions offered by the Advocates General shows that sensible lawyers may disagree on where the lines should be drawn in a given case.29 B.

Remnants of Ubiquity under the Rome II Regulation

Contrary to Brussels Ibis – and also deviating from the approaches found in some Member States’ PIL codes, such as Italy30 and Germany31 – the Rome II Regulation does not, as a general principle, embrace the plaintiff-friendly principle of ubiquity; rather, the basic conflicts rule for torts in general (Article 4(1) Rome II) exclusively refers to the place of damage. This preference is justified because, generally speaking, it strikes “a fair balance” between the interest of the person alleged to be liable to foresee the applicable law and the interests of the person sustaining the damage.32 In most cases, the person alleged to be liable should be able to anticipate that his or her acts may cause harm in another country, whereas the victim should be able to rely on the legal standard of the environment to which he or she exposed his or her body or property.33 On the whole, the Rome II Regulation offers a much more nuanced system of connections than the Brussels Ibis Regulation.34 As Recital 19 Rome II explains, “[s]pecific rules should be laid down for special torts/delicts where the general rule does not allow a reasonable balance to be struck between the interests at stake”. Whereas some specific rules 2012, C-133/11, Folien Fischer, ECLI:EU:C:2012:664, para. 45; CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 31; CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 56. 28 See infra III.E.3. 29 See infra III.A on Folien Fischer; III.F.2 on Hejduk. 30 Art. 62(1) of the Italian Code on Private International Law of 1995, RabelsZ 1997, p. 344. 31 Art. 40(1) of the German Introductory Law to the Civil Code, Gesetz zum Internationalen Privatrecht für außervertragliche Schuldverhältnisse und für Sachen, 21 May 1999, Bundesgesetzblatt (BGBl.) 1999, part I, p. 1026. 32 Recital 16 Rome II. 33 Cf. J. VON HEIN, Das Günstigkeitsprinzip im Internationalen Deliktsrecht, Tübingen 1999, p. 217-220. 34 For closer analysis, see J. VON HEIN, Of Older Siblings and Distant Cousins – The Contribution of the Rome II Regulation to the Communitarisation of Private International Law, RabelsZ 2009, p. 461.

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Jan von Hein favour an impact-oriented perspective, but also try to give a more precise definition of where the protected interest is located, other rules deliberately deviate from the place of damage and restore the place of the causal event as the decisive or at least as a supplemental connecting factor.35 In particular, the law applicable to product liability depends on a marketing of the product that must have been foreseeable from the point of view of the producer (Article 5(1), 2nd sentence Rome II). Moreover, the place of the causal event completely displaces the generally impactoriented approach of the Rome II Regulation with regard to some types of tort, particularly violations of European intellectual property rights (see infra III.F.). Even in the Rome II Regulation, there are two important remnants of the principle of ubiquity. First of all, the rule on environmental damage (Article 7 Rome II) allows the victim to opt for the law of the country in which the event giving rise to the damage occurred in order to contribute to a high level of environmental protection (see supra II.A.1.). Secondly, the rule on cartel damages in Article 6(3)(b) Rome II allows the victim to choose the applicable law not for reasons of substantive justice, but for the sake of procedural economy and ease of litigation: when a market is affected by a restriction of competition in more than one country, the victim who sues the defendant company at its domicile – which is typically the centre of corporate activity – may choose to base the claim on the law of the court seised instead of the laws of the places of damage (the several affected markets), provided that the market in that Member State is amongst those directly and substantially affected by the anti-competitive act in question.36 In sum, the Rome II Regulation provides a significantly more refined model compared to the Brussels Ibis Regulation. Firstly, it does not grant the victim an option to choose between the place of the causal event and the place of damage regardless of the type of liability in question, but only in two specific scenarios where doing so is justified for either substantive or procedural reasons. Secondly, in search of the most significant connection, the Rome II Regulation rejects a “onesize-fits-all” approach in favour of the place of damage; rather, it differentiates between various types of torts in this regard as well. C.

Coherence in European Private International Law

In the Reinwater decision, the Court did not engage in an analysis of the question whether allocating the jurisdiction of Member States’ courts should be aligned with approaches to determining the applicable law. This issue had already been discussed in 1976, however, by the Advocate General and the Commission, albeit with a negative conclusion. Advocate General Capotorti explicitly emphasized that “it was certainly not intended [by the Brussels Convention] to render determination of jurisdiction dependent on determination of the substantive law”.37 The See J. VON HEIN (note 34), at 492-496. For closer analysis, see, e.g., J. FITCHEN, Choice of law in international claims based on restrictions of competition, Article 6(3) of the Rome II Regulation, J. Priv. Int. L. 2009, p. 337. 37 AG CAPOTORTI, Conclusions of 10 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1749, 1755. 35 36

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Protecting Victims of Cross-Border Torts Commission had considered transferring the principle of the “most significant relationship” from choice of law to jurisdiction, but in the end rejected this idea, too, because it saw no basis for such a method in the Brussels Convention.38 Although consistency with choice of law rules thus hardly constitutes a part of the principle of ubiquity’s normative DNA, one must not overlook the fact that back in 1976, advocating a close alignment between choice of law and jurisdiction would have threatened the basic principle of interpreting the Brussels regime autonomously, i.e. independently of the Member States’ domestic legal systems. Since a common European private international law did not yet exist at that time, striving for a parallel between choice of law and jurisdiction would have opened the floodgates for a re-nationalisation of the Brussels Convention. Today, however, the legal landscape in the EU has changed considerably. The law applicable to non-contractual obligations must, in principle, be determined in all Member States participating in Brussels Ibis by the conflicts rules of the Rome II Regulation.39 Therefore, insisting on a coherent application of choice-oflaw rules and rules on jurisdiction would not create the danger of a renationalisation of the Brussels Ibis Regulation. On the contrary, it has already been pointed out (supra I.) that according to Recital 7 Rome II, the “substantive scope and the provisions” of this Regulation should be “consistent with” the Brussels Ibis Regulation.40 Should the principle of ubiquity, therefore, be limited to specific types of torts for which an enhanced degree of protection seems justified, following the model of Rome II? Interpreting “consistency” with the Brussels Ibis Regulation in such a narrow and literal sense would, however, lead to problematic results. As the Commission pointed out in its statement in the Reinwater case, “unlike the problem of establishing connecting factors for the purposes of the application of the substantive law, where in the end only the substantive law of one country can be applied to a given legal situation, it is not necessary, for the purposes of establishing connecting factors in order to find the court with jurisdiction, to refer in this respect to a single court with jurisdiction”.41 There are inherent limitations on a full parallelism of the connecting factors used by rules on jurisdiction, on the one hand, and conflicts rules, on the other, because the Rome II Regulation is committed to the goal of international decisional harmony

Commission statement in C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, 1742. 39 For exceptions concerning product liability, see infra III.C.2. 38

40 On the concept of a consistent interpretation of Brussels Ibis and Rome II, see in more detail J. LÜTTRINGHAUS, Übergreifende Begrifflichkeiten im europäischen Zivilverfahrens- und Kollisionsrecht – Grund und Grenzen der rechtsaktsübergreifenden Auslegung, dargestellt am Beispiel vertraglicher und außervertraglicher Schuldverhältnisse, RabelsZ 2013, p. 31; M. WÜRDINGER, Das Prinzip der Einheit der Schuldrechtsverordnungen im Europäischen Internationalen Privat- und Verfahrensrecht: eine methodologische Untersuchung über die praktische Konkordanz zwischen Brüssel I-VO, Rom I-VO und Rom II-VO, RabelsZ 2011, p. 102. 41 Commission statement in C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1735, 1742.

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Jan von Hein “irrespective of the country of the court in which an action is brought”.42 Whereas Article 7 No. 2 Brussels Ibis gives the plaintiff an option to sue either at the place of the causal event or at the place of damage, Article 4(1) Rome II opts for the place of damage alone precisely because the choice of forum should not, generally speaking, predetermine the applicable law.43 Thus, the goal of a “consistent” application of Brussels Ibis and Rome II must not be misunderstood as demanding a strictly uniform interpretation of both legal instruments; rather, the different purposes of rules concerning jurisdiction, on the one hand, and choice-of-law rules, on the other, may well justify a diverging interpretation.44 In particular, although the Rome II Regulation does not accept the principle of ubiquity as a general rule for determining the law applicable to torts, this cannot justify abolishing this principle under Article 7 No. 2 Brussels Ibis. The idea that both the place of the causal event and the place of damage can be helpful with regard to the location of evidence and an efficacious conduct of the proceedings (see supra II.A.1.) rests on procedural considerations that are, in principle, independent of the substantive law applicable to the dispute. One may even invoke Rome II’s stance against a general principle of ubiquity in choice of law as an additional argument for upholding this principle in the procedural context because Rome II reduces the previously existing danger of forum shopping. In view of Rome II’s unified choice of law rules, the plaintiff’s power to indirectly opt for the applicable law by choosing one of the courts having jurisdiction pursuant to Article 7 No. 2 Brussels Ibis is, generally speaking, no longer a decisive factor because each Member State must in any event apply the substantive law that is determined by the Rome II Regulation. In addition, not even the substantive scope of Brussels Ibis and Rome II are identical: whereas Article 7 No. 2 of the Brussels Ibis Regulation applies to infringements of personality rights,45 for example, this group of cases is excluded from Rome II’s scope (Article 1(2)(g) Rome II).46 Nevertheless, simply ignoring the functional interdependence of Brussels Ibis and Rome II does not qualify as a viable option, either. Since the Court’s interpretation of Article 7 No. 2 Brussels Ibis is committed to the idea of guaranteeing to a potential defendant the foreseeability of the forum delicti commissi,47 it would hardly be conducive to legal certainty if key concepts of both regulations, e.g. the place of damage, were treated as completely unrelated to each other. Moreover, in so far as the protection of the weaker party in a contractual dispute is concerned, Article 17 Brussels Ibis and Article 6 Rome I are closely aligned.48 This Recital 6 Rome II. Cf. M. WÜRDINGER (note 40), at 108 et seq. 44 M. WÜRDINGER (note 40), at 112-123. 45 See infra III.E. 46 See, however, European Parliament, Report with recommendations to the Commission on the amendment of Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II), May 10th, 2012, OJ CE 261 of 10 September 2013, p. 17. 47 See supra II.A.2. 48 See in more detail G. RÜHL, Die rechtsaktübergreifende Auslegung im europäischen Internationalen Privatrecht, Zeitschrift für Gemeinschaftsprivatrecht (GPR) 42 43

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Protecting Victims of Cross-Border Torts has advantages for both consumers who may sue in their home state and for judges who may apply their own law; in this way, the need to ascertain and apply foreign law is reduced and disputes may be settled more efficiently and quickly. Thus, the question seems legitimate whether in the area of cross-border torts, Article 7 No. 2 Brussels Ibis should mirror solutions found in Rome II at least with regard to those specific types of torts that are characterized by a structural imbalance between the tortfeasor and the victim, i.e. whether Rome II should, for example, be used as a blueprint for extending Article 7 No. 2 Brussels Ibis to places that serve as connecting factors for conflicts purposes, but which so far have not been classified as places where the harmful event occurred in the procedural context, e.g. the place where a defective product was marketed. In the following parts of this article, I will look at the recent case-law of the CJEU in this regard (infra III.).

III. The Recent Case-Law of the CJEU A.

The Neutrality of the forum delicti commissi: The Negative Declaratory Action as a Test Case

In spite of the fact that the ECJ had decided the Reinwater case without any reference to a need for protecting the victim as the structurally weaker party (see supra II.A.1), it remained controversial until recently whether the interpretation of Article 5 No. 3 Brussels I could really be conceived of as a strictly neutral head of jurisdiction.49 The litmus test for the diverging views was found in negative declaratory actions raised by the alleged tortfeasor. Several courts and academic writers had argued that Article 5 No. 3 Brussels I could not be invoked for bringing such a claim because the plaintiff did not charge anyone with actually having committed a tort.50 This restrictive approach to the forum delicti commissi was largely inspired by the desire to fight abusive tactics commonly known as the so-called “Italian torpedo”.51 By lodging a negative declaratory action in a jurisdiction enjoying a reputation as being comparatively slow in handling proceedings, the alleged tortfeasor could then rely on the principle of lis alibi pendens under Article 27 2013, p. 122; but cf. the very narrowly focused ruling by the CJEU, 17 October 2013, C-218/12, Emrek, ECLI:EU:C:2013:666. 49 Cf. J. KROPHOLLER/ J. VON HEIN, Europäisches Zivilprozessrecht, 9th ed., Frankfurt am Main 2011, Art. 5 Brussels I para. 78 with further references. 50 See, e.g., Cass. (Italy) 6 November 2003, I. L. Pr. 2004, p. 350; 19 December 2003, Riv. dir. int. priv. proc. 2004, p. 1372 = GRUR Int. 2005, p. 264 with a critical case note by W. WURMNEST; LG Leipzig 27 May 2008, Die deutsche Rechtsprechung auf dem Gebiete des Internationalen Privatrechts (IPRspr.) 2008 No. 96; Hof’s-Gravenhage 22 January 1998, N. J. 1999 No. 163; likewise P. SCHLOSSER, EU-Zivilprozessrecht, 3rd ed., Munich 2009, Art. 5 Brussels I para. 15. 51 On so-called “torpedo” actions under Brussels I, see in detail I. CARL, Einstweiliger Rechtsschutz bei Torpedoklagen, Frankfurt am Main 2007, with further references.

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Jan von Hein Brussels I in order to bar any positive action brought by the natural plaintiff in another Member State.52 Most authors, however, rejected excluding negative declaratory actions from the forum delicti commissi, arguing that this jurisdiction does not only encompass actual damages, but also damages that are likely to occur and that the related jurisdiction for contractual claims (Article 5 No. 1 Brussels I) could also serve as a basis for negative declaratory actions.53 In its judgment in the Folien Fischer case, the Court – deviating from the conclusions of the Advocate General54 – allowed the alleged tortfeasor to bring a negative declaratory action, arguing explicitly that the forum delicti commissi “does not pursue the same objective as the rules on jurisdiction laid down in Sections 3 to 5 of Chapter II of that regulation, which are designed to offer the weaker party stronger protection”.55 It is submitted that the CJEU is correct in this regard: the Court’s reasoning is not only in line with the foundations of the Reinwater judgment (see supra II.A.1.); it must also be kept in mind that the root cause of the “Italian torpedo” is not the availability of negative declaratory actions per se, but the Court’s highly controversial case-law on Article 27 Brussels I, particularly concerning exclusive choice-of-court agreements.56 To date, the recast of the Brussels I Regulation has further supported the case for tolerating negative declaratory actions under Article 7 No. 2 Brussels Ibis: since exclusive agreements on jurisdiction now enjoy an enhanced degree of protection pursuant to Article 31(2) Brussels Ibis, the danger of their circumvention by a “torpedo” action has been limited considerably.57 B.

Cross-Border Environmental Damage

Whereas the Rome II Regulation opts for an openly substantivist approach aimed at a high level of environmental protection, a similar bias in favour of the outcome of a case is lacking in the Court’s reasoning in the Reinwater case (see supra II.A.1). In spite of these normative divergences, the practical result will, in most cases, be the application of lex fori in foro proprio. Such a parallelism between jurisdiction and the applicable law is, however, not mandatory: the plaintiff may decide to sue at the place where he suffered the damage, but nevertheless opt for

See, e.g., I. CARL (note 51), at 49-81. Cf. T. DOMEJ, Negative Feststellungsklagen im Deliktsgerichtsstand, IPRax 2008, p. 550; J. KROPHOLLER/ J. VON HEIN (note 49), Art. 5 Brussels I para. 78; P. MANKOWSKI, in U. MAGNUS/ P. MANKOWSKI (eds), Brussels I Regulation, 2nd ed., Munich 2012, Art. 5 Brussels I para. 191; all with further references. 54 AG JÄÄSKINEN, Conclusions of 19 April 2012, C-133/11, Folien Fischer, ECLI:EU:C:2012:226. 55 CJEU, 25 October 2012, C-133/11, Folien Fischer, ECLI:EU:C:2012:664, para. 46. 56 ECJ, 9 December 2003, C-116/02, Gasser, ECR [2003] I-14693. 57 Cf. also M. GEBAUER, Negative Feststellungsklage am Gerichtsstand der unerlaubten Handlung, ZEuP 2013, p. 870, 887-889 (discussing an analogous application of Art. 31(2) Brussels Ibis to other scenarios). 52 53

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Protecting Victims of Cross-Border Torts applying the (substantially more favourable) law in force at the place where the polluting plant is situated, and vice versa.58 It has already been pointed out that Article 7 No. 2 Brussels Ibis constitutes an exception from the principle of actor sequitur forum rei (see supra II.A.2.); likewise, the substantivist bias underlying Article 7 Rome II deviates from the generally Savignyan, policy-neutral conflicts paradigm of Rome II.59 Although the exceptional character of both rules would, in general, support a cautious approach to characterising specific claims as falling under those provisions, the ECJ has, in the Case Čez as, interpreted the forum delicti commissi rather generously with regard to claims for cross-border nuisance.60 The question of whether and if so to what extent claims under international neighbour law fall under jurisdictional or conflicts rules for torts or under the exclusive jurisdiction found in Article 24 No. 1 Brussels Ibis resp. the lex rei sitae rule governing property rights raises some difficulties. This is because, at least in countries belonging to the Germanic legal tradition, injunctive and similar protective claims under neighbour law are divided into tort-related damages claims and property-related claims for revindication. In the context of Article 7 No. 2 Brussels Ibis, however, the Court prefers an autonomous, delictual characterisation of property-related claims against interference.61 This is justified because property- and tort-related claims in neighbour law are comparable in functional terms to the extent that they both serve to protect immovable property against impairments emanating from other pieces of land;62 accordingly, the exclusive jurisdiction provided by Article 24 No.1 Brussels Ibis is not appropriate for these cases.63 It should be noted, on the one hand, that the ECJ, in Čez as, maintained the line of reasoning already developed in the Reinwater case, i.e. focusing exclusively on the procedural advantages of the principle of ubiquity – taking of evidence, efficacious conduct of the proceedings – without the slightest hint at a substantivist favor naturae.64 On the other hand, Čez as was a pre-Rome II case;65 in future cases and in the light of Recital 7 Rome II, the Court may be more receptive towards adding an environmentalist ingredient into its legal analysis.

58 Cf. AG CAPOTORTI, Conclusions of 10 November 1976, C-21/76, Bier v. Mines de Potasse d’Alsace SA, ECR [1976] 1749, 1755; R. GEIMER, in ID./ R. SCHÜTZE, Europäisches Zivilverfahrensrecht, 3rd ed., Munich 2009, Art. 5 Brussels I para. 235. 59 See supra II.B. 60 ECJ, 18 May 2006, C-343/04, Čez as, ECR [2006] I-4557. 61 ECJ, 18 May 2006, C-343/04, Čez as, ECR [2006] I-4557. 62 Cf. ECJ, 18 May 2006, C-343/04, Čez as, ECR [2006] I-4557, paras 24 et seq. 63 ECJ, 18 May 2006, C-343/04, Čez as, ECR [2006] I-4557, paras 35 et seq. 64 Cf. ECJ, 18 May 2006, C-343/04, Čez as, ECR [2006] I-4557, para. 38. 65 Apart from that, Rome II would not be applicable to the Čez as fact pattern because of the exclusion concerning nuclear damage (Art. 1(2)(f) Rome II).

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International Product Liability

1.

Alternative vs. Subsidiary Connecting Factors

The fact that Rome II and Brussels Ibis do not necessarily move in parallel is shown by the Court’s case-law on products liability. Article 5 Rome II strives to create a balance between an effective protection of the victim, who is often a consumer and typically regarded as the weaker party, on the one hand, and the producer’s interest in foreseeability of the applicable law.66 Article 5(1) Rome II essentially refers to the law of the state where the product was marketed, provided that the place of marketing coincides with one of three other territorial factors (the victim’s habitual residence, the place where the product was acquired, the place of damage) and that the person alleged to be liable (usually the producer) could reasonably foresee the marketing of the product or a product of the same type in this country. Contrary to the principle of ubiquity under Article 7 No. 2 Brussels Ibis, however, Article 5(1) Rome II does not provide for an alternative connection, but ranks the connecting factors in a hierarchical order. Firstly, the applicable law is that of the victim’s habitual residence, provided that (1) it coincides with the place of marketing and (2) the producer does not succeed at proving that he could not foresee the marketing of this or a similar product in this country (Article 5(1)(a) Rome II). If one of those conditions (marketing, foreseeability) is not met, the law of the country in which the product was acquired applies, again subject to a coincidence with the place of marketing and the test of foreseeability (Article 5(1)(b) Rome II). If the applicable law cannot be determined at this stage, the law of the country in which the “damage occurred”, applies, if at least in this country the two additional requirements (marketing, foreseeability) are met (Article 5(1)(c) Rome II). If all of the three countries enumerated in Article 5(1) Rome II do not pass the test of foreseeability, the applicable law is that of the producer’s habitual residence. This rather complex “cascade system of connecting factors” (Recital 20) has serious weaknesses with regard to its underlying policy, especially concerning the general preference given to the victim’s habitual residence. Recital 20 Rome II explains that the “conflict-of-law rule in matters of product liability should”, inter alia, “meet the objectives of fairly spreading the risks inherent in a modern hightechnology society [and] protecting consumers’ health”. Just like Article 7 No. 2 66 On Article 5 Rome II and its interplay with Brussels Ibis, cf. S. CORNELOUP, La responsabilité du fait des produits, in ID./ N. JOUBERT (eds), Le Règlement Communautaire „Rome II“ sur la loi applicable aux obligations non contractuelles, Paris 2008, p. 85; J. VON HEIN, Die Produkthaftung des Zulieferers im Europäischen Internationalen Zivilprozessrecht, IPRax 2010, p. 330; P. HUBER/ M. ILLMER, International Product Liability. A Commentary on Article 5 of the Rome II Regulation, YbPIL 2007, p. 31; M. ILLMER, The New European Private International Law of Product Liability - Steering Through Troubled Waters, RabelsZ 2009, p. 269; A. SPICKHOFF, Die Produkthaftung im Europäischen Kollisions- und Zivilverfahrensrecht, in D. BAETGE/ J. VON HEIN/ M. VON HINDEN (eds), Die Richtige Ordnung – Festschrift Kropholler, Tübingen 2008, p. 671; P. STONE, Product Liability under the Rome II Regulation, in J. AHERN/ W. BINCHY (eds), The Rome II Regulation on the Law Applicable to Non-Contractual Obligations, Leiden/ Boston 2009, p. 175.

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Protecting Victims of Cross-Border Torts Brussels Ibis, however, Article 5(1) Rome II is not actually limited to business-toconsumer (B2C) cases, but applies to business-to-business (B2B) cases as well.67 It remains questionable whether an openly plaintiff-favouring conflicts rule for the latter group of cases may be considered as achieving a “fair spreading of risk”. 2.

Frictions between Brussels Ibis and Rome II

a)

Place of Damage

The diverging policies and methodological foundations underlying Article 7 No. 2 Brussels Ibis, on the one hand, and Article 5 Rome II, on the other, inevitably lead to scenarios where jurisdiction and the applicable law do not coincide.68 This is because the territorial connecting factors deployed to allocate jurisdiction under Article 7 No. 2 Brussels Ibis (place of damage and place of the causal event) only play a subsidiary or corrective role in the framework of Article 5(1) Rome II, which is instead primarily focused on the victim’s habitual residence. The method of a “cascade of connections” underlying Article 5(1) Rome II cannot be transposed adequately to the procedural level because according primacy to the victim’s habitual residence (Article 5(1)(a) Rome II) – even in B2B cases – would lead to a complete reversal of the basic principle of actor sequitur forum rei in the context of Brussels Ibis.69 In Zuid-Chemie v. Philippo’s, the Court held that the “place where the harmful event occurred” designates the place where the initial damage occurred as a result of the normal use of the product for the purpose for which it was intended.70 Thus, the mere acquisition of a product in a certain state, although used on the second rung of Rome II’s ladder (Article 5(1)(b)), is not enough to count as a “harmful event” for the purposes of Article 7 No. 2 Brussels Ibis, either.71 Of course, it will happen quite often that this “normal” use of a product occurs at a victim’s – especially at the consumer’s – habitual residence, such that the place of damage may be localized there, but this is certainly not the only fact pattern that one can imagine. b)

Place of the Causal Event

The recently decided Kainz v. Pantherwerke case proves that such concerns cannot be dismissed as purely academic.72 The plaintiff Kainz, who was habitually resident in Austria, had acquired a bicycle in his home state that had been manufactured by the German company Pantherwerke AG. While he was on a cycling tour in Germany, Mr. Kainz suffered injuries in an accident that was allegedly caused by a See M. ILLMER, Product Liability (note 66), at 284. For a detailed analysis, see J. VON HEIN, Produkthaftung (note 66), at 335-342. 69 Cf. ECJ, 16 July 2009, C-189/08, Zuid-Chemie, ECR [2009] I-6917, paras 20-22. 70 ECJ, 16 July 2009, C-189/08, Zuid-Chemie, ECR [2009] I-6917, para. 32. 71 See J. VON HEIN, Produkthaftung (note 66), at 341. 72 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7. 67 68

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Jan von Hein defect in the new bicycle. According to the definition given in Zuid-Chemie, it was beyond doubt that the place of damage had to be localized in Germany.73 Defining the place of the causal event was more problematic, however, because one might argue that the bicycle had been “marketed” to the consumer in Austria and that this “marketing” of the product rather than the preceding process of its manufacturing should count as the decisive action under Article 7 No. 2 Brussels Ibis.74 In this regard, the goal of consistency between Brussels Ibis and Rome II could be deployed as an argument because Article 5 Rome II relies on the foreseeable marketing of the product as the cornerstone of its cascade system of connecting factors.75 Yet the Court would have none of this. “[A]lthough it is apparent from recital 7 [Rome II] that the [EU] legislature sought to ensure consistency between [Brussels Ibis], on the one hand, and the substantive scope and the provisions of [Rome II], on the other, that does not mean, however, that the provisions of [Brussels Ibis] must for that reason be interpreted in the light of the provisions of [Rome II]. The objective of consistency cannot, in any event, lead to the provisions of [Brussels Ibis] being interpreted in a manner which is unconnected to the scheme and objectives pursued by that regulation.”76 To this line of reasoning, one might add that in seven Member States of the EU, the law applicable to product liability is not determined by the Rome II Regulation anyway, but by the Hague Convention of 2 October 1973,77 so that a strict parallelism between Brussels Ibis and Rome II would not create a harmonious solution even among the Member States themselves. In line with its restrictive reading of Recital 7 Rome II, the CJEU decided that the place of the causal event relevant under Article 7 no. 2 Brussels Ibis should be localized at the place where the product was manufactured, not – and contrary to Article 5(1) Rome II – in the country where it was merely marketed.78 The Court argued that the former localization “facilitates, on the grounds of, inter alia, the possibility of gathering evidence in order to establish the defect in question, the efficacious conduct of proceedings and, therefore, the sound administration of justice” and that, for this reason‚ “the attribution of jurisdiction to the courts in that place is consistent with the rationale of the special jurisdiction” in Article 7 No. 2 Brussels Ibis.79 Moreover, this localization complies with the requirement that rules governing jurisdiction should be predictable.80 The Court gave short shift to CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 25. See, e.g., G. WAGNER, in STEIN/ JONAS, Kommentar zur Zivilprozessordnung, Vol. 10, 22nd ed., Tübingen 2011, Art. 5 Brussels I para. 179; for a more detailed discussion of this proposal, see J. VON HEIN, Produkthaftung (note 66), at 337-341, with further references. 75 Cf. G. WAGNER (note 74). 76 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 20. 77 Hague Convention on the Law Applicable to Products Liability of 2 October 1973, RabelsZ 1973, p. 594. 78 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 31. 79 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 27. 80 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 28. 73 74

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Protecting Victims of Cross-Border Torts Mr Kainz’s argument that the interpretation of Article 7 No. 2 Brussels Ibis should “take into account not only the interests of the proper administration of justice but also those of the person sustaining the damage, thereby enabling him to bring his action before a court of the Member State in which he is domiciled”.81 Citing its earlier decision in Folien Fischer (see supra III.A.), the Court reiterated that Article 7 No. 2 Brussels Ibis is “specifically not designed to offer the weaker party stronger protection”.82 Moreover, the Court elaborated that classifying the place of marketing to the end consumer as the relevant factor for establishing jurisdiction would “not guarantee that that consumer will, in all circumstances, be able to bring an action before the courts in the place where he is domiciled since that place may be elsewhere or even in another country”.83 Finally, the Court pointed out the consistency of its result “with the general rule […] that jurisdiction is vested in the courts for the defendant’s place of domicile”.84 3.

Evaluation

Although this decision has been heavily criticized,85 it is submitted that the CJEU is correct as far as the interpretation of Article 7 No. 2 Brussels Ibis in its present state is concerned.86 Since the provision clearly does not distinguish between damages suffered in a B2C- or B2B-context, it is difficult to argue for enhancing the protection of the weaker party under the law as it currently stands. Nonetheless, the Court’s reasoning has some drawbacks from a legal policy perspective. The argument of predictability that the CJEU invokes in favour of the place of manufacture does not seem decisive because, according to the threshold established by Article 5(1) 2nd sentence Rome II, any legally relevant marketing must have been foreseeable anyway. Moreover, the Court’s decision may, as an unintended result, impair the efficacious conduct of proceedings: in the case at hand, only the German Courts had jurisdiction; pursuant to Article 5(1)(a) Rome II, however, they would have had to apply Austrian substantive law.87 In particular, the Pantherwerke case illustrates the wide gap between the almost excessive protection accorded to consumers in contract cases and the total lack of such a protection in tort cases. If Mr. Kainz had bought a used bicycle from a Bavarian trader in Germany without even being aware that the trader also ran a website allowing Austrian consumers to contact him, he would have been entitled to sue the trader – even a small or medium company – in his home state Austria under Articles 17(1)(c), 18(1) CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 30. CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 31. 83 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 31. 84 CJEU, 16 January 2014, C-45/13, Kainz, ECLI:EU:C:2014:7, para. 32. 85 See the critical case notes by R. FREITAG, LMK 2014, No. 355576; T. GARBER, Österreichische Juristenzeitung (ÖJZ) 2014, p. 661; C. SCHMON, ecolex 2014, p. 334; B. SUJECKI, Europäisches Wirtschafts- und Steuerrecht (EWS) 2014, p. 94; E. WAGNER, Betriebs-Berater (BB) 2014, p. 661. 86 See already J. VON HEIN, Produkthaftung (note 66), at 335-342. 87 Cf. the critical case notes cited in note 85. 81 82

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Jan von Hein Brussels Ibis regardless of the place of accident.88 In a tort case, however, Mr. Kainz cannot sue the manufacturer of a defective product in his home State even though (1) the producer had foreseeably marketed the product there, (2) the consumer had acquired this product in his home state and (3) a causal link between the marketing of the product and the harm suffered by the consumer can be established. From a normative point of view, in particular taking into account the legitimate expectations of consumers, it seems difficult to reconcile these results. D.

International Investor Protection

1.

Importance of Tort Jurisdiction for Investor Protection

Article 7 No. 2 Brussels Ibis is of paramount importance in the field of international investor protection.89 The provision is generally applicable to tort claims raised by investors against the issuers of bonds, in particular to claims for prospectus liability90 or false ad-hoc statements.91 Moreover, even if an investor has entered into a contract with a financial service provider, he is frequently forced to rely on non-contractual claims against the provider’s managers or other employees (e.g. investment advisers) because the provider itself has become insolvent.92 2.

Drawing the Line between Contracts and Torts

Pursuant to the clear wording of Article 17(1) Brussels Ibis (“matters relating to a contract”), the provision does not apply to claims sounding in tort.93 This means that an investor’s claim against the issuer of a bond usually does not come within the scope of the provision, because a contract for the sale of securities is, in most cases, not concluded directly between an issuer and its bondholders, but rather between a financial intermediary, such as a bank, and the latter’s customers.94 Although the CJEU has in the past classified claims flowing from a shareholder’s status as a member of a company as “contractual” within the meaning of Article 7 88 CJEU, 17 October 2013, C-218/12, Emrek, ECLI:EU:C:2013:666 = IPRax 2014, p. 63 with a critical case note by G. RÜHL, p. 41 = NJW 2013, p. 3504 with a critical case note by A. STAUDINGER/ B. STEINRÖTTER = JZ 2014, p. 297 with a critical case note by M. KLÖPFER/ C. WENDELSTEIN. 89 For a comprehensive survey, see J. VON HEIN, Finanzkrise und Internationales Privatrecht, Berichte der Deutschen Gesellschaft für Völkerrecht 45 (2012), p. 369, with further references. 90 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 44. 91 OLG Frankfurt (Main), 5 August 2010, ZIP 2010, p. 2217. 92 Cf. the fact patterns in ECJ, 10 June 2004, C-168/02, Kronhofer, ECR [2004] I-6009 and AG JÄÄSKINEN, 29 November 2012, C-228/11, Melzer, ECLI:EU:C:2012:766 (in footnote 9). 93 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 25. 94 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, paras 26 et seq.

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Protecting Victims of Cross-Border Torts No. 1 Brussels Ibis,95 this does not help for claims for damages resulting from misleading capital market information, because claims for prospectus liability or false ad-hoc statements merely concern the pre-contractual phase of a securities transaction.96 Even though the Court has been quite generous in extending jurisdiction under Article 17(1) Brussels Ibis to a contracting partner of the operator with which the consumer had concluded the contract in a case concerning travel arrangements,97 the judges have refused to apply an “economic approach” or the notion of a “chain of contracts” to claims for prospectus liability.98 Thus, claims relating to prospectus liability must in most cases be classified as falling exclusively under Article 7 No. 2 Brussels Ibis.99 The CJEU follows a strictly neutral approach to the classification of claims as contractual or delictual that is not influenced by any hint of a favor laesi or favor consumptoris. Nevertheless, a proper characterization may sometimes be complicated because the line between “contract” and “tort” has to be drawn independently and thus is not necessarily in accordance with the doctrinal distinctions developed in the laws of the Member States.100 The German Federal Court of Justice (BGH), for example, classified claims raised by a German investor against a Swiss bank that did not possess the necessary authorization to sell securities to German customers as contractual although such a claim sounds in tort under German substantive law.101 In another decision, the BGH extended Article 13(1) No. 3 of the Lugano Convention of 1988 to claims arising from a pre-contractual duty to negotiate in good faith (culpa in contrahendo), provided that a contract between the parties had subsequently been concluded.102 In the light of Article 2(1) Rome II, however, this contractual classification calls for an explanation. The BGH implicitly tried to distinguish the case at hand from the CJEU’s diverging Tacconi decision103 by emphasizing that the case before it did not involve a breaking-off of negotiations, but that an agreement had ultimately been reached by the parties.104 This argument is rather weak taking into account that Recital 30 of the Rome II-Regulation explicitly states that culpa in contrahendo as an autonomous concept should include violations of the duty of disclosure. It is a different question, though, whether jurisdiction for contractual disputes should attract concurring claims although the latter claims must be characterized as flowing from non-contractual

ECJ, 22 March 1983, 34/82, Peters, ECR [1983] 871, paras 13 et seq. CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, paras 39 et seq. 97 CJEU, 14 November 2013, C-478/12, Maletic, ECLI:EU:C:2013:735, para. 32. 98 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, paras 27-33. 99 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 44. 100 CJEU, 13 March 2014, C-548/12, Brogsitter, ECLI:EU:C:2014:148, para. 18; CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 43. 101 BGH, 5 October 2010, RIW 2011, p. 73= NJW 2011, p. 532. 102 BGH, 31 May 2011, BGHZ 190, 28 = IPRax 2013, p. 168 with a case note by S. ARNOLD, p. 141. 103 ECJ, 17 September 2002, C-334/00, Tacconi, ECR [2002] I-7357. 104 BGH, 31 May 2011, BGHZ 190, 28 = IPRax 2013, p. 168 paras 42 et seq. 95 96

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Jan von Hein obligations.105 At least with regard to culpa in contrahendo, such an ancillary jurisdiction could be justified by the fact that Article 12(1) Rome II provides for an accessory connection of claims arising from culpa in contrahendo to the contract in question. This choice of law rule should be mirrored in civil procedure at least in so far as a contract has actually been concluded between the parties because such a solution would significantly enhance procedural economy. If, however, no contract has been concluded between the parties, there is no room for an ancillary jurisdiction for tort claims under Article 17(1) and arguably not under Article 7 No. 1 Brussels Ibis either.106 3.

The Place of Damage in Cases Involving Pure Economic Loss

Localizing the place of damage under Article 7 No. 2 Brussels Ibis is complicated when the damage suffered by the victim consists of pure economic loss.107 Until recently, the leading European decision has been the Kronhofer case.108 The German defendants had persuaded the Austrian plaintiff, by telephone, to enter into a call option contract relating to shares. However, they failed to warn him of the risks involved in the transaction. As a result, Mr. Kronhofer transferred a significant amount of money to an investment account in Germany, which was then used to subscribe for highly speculative call options on the London Stock Exchange that resulted in financial loss. Here, the Court decided that Article 7 No. 2 Brussels Ibis must be interpreted as meaning that the expression “place where the harmful event occurred” does not refer to the place where the claimant is domiciled (Austria) or where “his assets are concentrated” by reason only of the fact that he has suffered financial damage there resulting from the loss of part of his assets that arose and was incurred in another Member State.109 Although the result reached by the Court in this specific case must be applauded, the rather formal reasoning underlying the Kronhofer judgment gave to alleged tortfeasors the opportunity of manipulating the allocation of jurisdiction by placing the plaintiff’s assets in jurisdictions that are rather favourable towards the defendant.110 In order to prevent such an “inverse” forum shopping, the BGH

105 See J. KROPHOLLER/ J. VON HEIN (note 49), Art. 5 Brussels I para. 79, with further references. 106 Cf. CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, paras 26-35 (but see also para. 38). 107 For a comprehensive survey, see M. LEHMANN, Where does financial loss occur?, J. Priv. Int. L. 2011, p. 527, with further references. 108 ECJ, 10 June 2004, C-168/02, Kronhofer, ECR [2004] I-6009. 109 ECJ, 10 June 2004, C-168/02, Kronhofer, ECR [2004] I-6009, para. 21. 110 See J. VON HEIN, Deliktischer Kapitalanlegerschutz im europäischen Zuständigkeitsrecht, IPRax 2005, p. 17 et seq., arguing for a restrictive interpretation of Kronhofer that takes into account specific features of various types of torts (“deliktstyporientierte Konkretisierung”).

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Protecting Victims of Cross-Border Torts adopted a rather restrictive reading of Kronhofer.111 The German judges emphasized that the Kronhofer decision only refers to a case in which the harmful act (e.g. a conversion of funds) was committed after the money in question had been transferred to another state,112 whereas, if the scheme developed by the alleged tortfeasor was from the outset aimed at inflicting damage on the victim, e.g. by means of churning,113 the place where the bank account was held from which the investor transferred the money had to be characterized as the place of damage.114 Since victims will usually transfer money from an account located in the state where they are domiciled, this line of reasoning is clearly favourable to investors. The BGH, however, did not rely on the idea of protecting the weaker party, but stressed that its interpretation of Article 7 No. 2 Brussels Ibis was in line with the guidance given by the CJEU’s settled case-law: usually, evidence will be located in the state where the account is kept from which the money was transferred.115 Apart from that, the result is not an unfair surprise to an alleged tortfeasor because he could have reasonably foreseen the place from which deceived victims would transfer money.116 The BGH even considered a request for a preliminary ruling from the CJEU, but ultimately refrained from referring the case because it regarded its own interpretation of Article 7 No. 2 Brussels Ibis as an acte clair.117 This assumption seems rather bold, however and in his conclusions in the Melzer case, Advocate General Jääskinen made very clear that he did not share the German judges’ point of view.118 The AG argued that an investor domiciled in Berlin – who allegedly had not been sufficiently informed about the risks involved in futures trading and of “kick-back agreements” – had suffered damages in London, because “[t]he contested funds were put into an account with the brokerage house in London and BGH, 13 July 2010 – XI ZR 57/08, ZIP 2010, p. 2004 = LMK 2010 No. 308395 with a case note by J. VON HEIN as well as the parallel judgment handed down on the same day (XI ZR 28/09), RIW 2010, p. 723; BGH, 12 October 2010, RIW 2011, p. 77. 112 BGH, 13 July 2010, ZIP 2010, p. 2004, para. 29; BGH, 13 July 2010, RIW 2010, p. 723, para. 31; BGH, 12 October 2010, RIW 2011, p. 77, para. 31. 113 A method of plundering investors whereby money is transferred frequently from one account to another by way of sham transactions in order to artificially generate fees for the provider of financial services; on the applicability of Article 7 No. 2 Brussels Ibis to such claims, see BGH, 12 October 2010, RIW 2011, p. 77, para. 2. 114 BGH, 13 July 2010, ZIP 2010, p. 2004, para. 30; BGH, 13 July 2010, RIW 2010, p. 723, para. 32; BGH, 12 October 2010, RIW 2011, p. 77, para. 32. 115 BGH, 13 July 2010, ZIP 2010, p. 2004, paras 31 et seq.; BGH, 13 July 2010, RIW 2010, p. 723, paras 33 et seq.; BGH, 12 October 2010, RIW 2011, p. 77, paras 34 et seq. 116 BGH, 13 July 2010, ZIP 2010, p. 2004, paras 31 et seq.; BGH, 13 July 2010, RIW 2010, p. 723, paras 33 et seq.; BGH, 12 October 2010, RIW 2011, p. 77, paras 34 et seq. 117 BGH, 13 July 2010, ZIP 2010, p. 2004, para. 33; BGH, 13 July 2010, RIW 2010, p. 723, para. 35; BGH, 12 October 2010, RIW 2011, p. 77, para. 36. 118 AG JÄÄSKINEN, 29 November 2012, C-228/11, Melzer, ECLI:EU:C:2012:766, paras 31 et seq. 111

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Jan von Hein that is where they were lost, since performance of the option contract, or expiry of the option period, resulted in the sums repaid to that account being less than the sums invested”.119 Nevertheless, at least as regards claims for prospectus liability, the CJEU settled the matter in accordance with the German case-law. In its recently decided Kolassa judgment, the CJEU found that “the courts where the applicant is domiciled have jurisdiction, on the basis of the place where the loss occurred, to hear and determine such an action, in particular when that loss occurred itself directly in the applicant’s bank account held with a bank established within the area of jurisdiction of those courts”.120 The Court stressed that this place was, first, easily identifiable, and, second, that the issuer of a certificate who did not comply with his legal obligations in respect of a prospectus distributed in other Member States should anticipate that inadequately informed investors in those states might suffer losses where they are domiciled.121 It seems difficult to justify that certain London brokers intending to defraud investors in Berlin, e.g. by means of “kick-back agreements”, should be treated more leniently in the future. Thus, the Kolassa judgment is a welcome step into the direction of a more differentiated approach towards localizing the place of damage under Article 7 No. 2 Brussels Ibis in view of the particular kind of tort claim involved and the specific interests at stake. The Court did not, however, go so far as to follow suggestions to develop a market-based approach to the PIL of prospectus liability.122 Even after Kolassa, it remains debatable whether an investor may exceptionally rely on Article 7 No. 2 Brussels Ibis if, for example, the alleged tortfeasor commits an intentional fraud against a client at the latter’s domicile, but induces the victim to transfer money to other jurisdictions from an account not held with a bank in the Member State where the investor is domiciled. In such a case, one might argue that, from an economic point of view, the initial damage was already suffered where the victim acted after he or she was deceived, irrespective of the – often more or less fortuitous – location of the account from which the money was eventually transferred. From the words “in particular” that the Court uses in referring to a bank account held in the plaintiff’s Member State,123 one may infer that the Court intends to preserve at least some flexibility for future cases in this regard. In another recent case, ÖFAB, the Court decided that “the concept of «the place where the harmful event occurred or may occur» […] must be interpreted as meaning that as regards actions seeking to hold liable a member of the board of 119

AG JÄÄSKINEN, 29 November 2012, C-228/11, Melzer, ECLI:EU:C:2012:766,

para. 32. CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 55. CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 56. 122 Cf. M. LEHMANN, Vorschlag für eine Reform der Rom II-Verordnung im Bereich der Finanzmarktdelikte, IPRax 2012, p. 399; a preferable solution to this problem, however, lies in an accessory connection (Article 4(3) Rome II) to the law governing the obligation to publish a prospectus, see J. VON HEIN (note 89), at 481 et seq.; B. STEINRÖTTER, Beschränkte Rechtswahl im Internationalen Kapitalmarktprivatrecht und akzessorische Anknüpfung an das Kapitalmarktordnungsstatut, Jena 2014, p. 435-437, with further references. 123 CJEU, 28 January 2015, C-375/13, Kolassa, ECLI:EU:C:2015:37, para. 55. 120 121

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Protecting Victims of Cross-Border Torts directors and a shareholder of a limited company for the debts of that company, that place is situated in the place to which the activities carried out by that company and the financial situation related to those activities are connected”.124 Thus, it is the (real) seat of the company that counts for determining the place of damage and not the localization of the bank accounts held by that company – at least to my mind, a very sensible approach.125 4.

The Place of the Causal Event when Harm is Caused by Multiple Tortfeasors

The precise localization of the place of the causal event may be difficult to determine because harm to investors is frequently caused by several persons (brokers, investment advisers etc.) working together to the victim’s detriment. The Regional Court (Landgericht) of Düsseldorf had requested a preliminary ruling from the CJEU in a case in which the plaintiff claimed to have been harmed by multiple tortfeasors but had sued only the alleged accomplice, a London broker, at the place where the main perpetrator, a German company, had committed the relevant acts, i.e. defrauded the claimant.126 In this case, Melzer v. MF Global UK Ltd, the CJEU refused to apply Article 7 No. 2 Brussels Ibis.127 The Court argued that there was no autonomous concept on the attribution of multiple acts in the Regulation,128 that Article 7 No. 2 Brussels Ibis must be interpreted restrictively129 and that the plaintiff could have rather sued under Article 7 No. 1 or Article 8 No. 1 Brussels Ibis.130 Yet, with due respect, none of those arguments seems, on closer inspection, fully convincing.131 Given the substantial convergence of Member States’ laws on joint and several liability of multiple tortfeasors, the Court could have contributed to the development of an autonomous rule on attribution. Moreover, a tortfeasor who expands his range of activities at the victim’s expense through the intentional involvement of accomplices or accessories should be able to foresee the corresponding procedural risk. The victim’s incentive for forum shopping in search of a favourable substantive law is limited because the Rome II Regulation is focused on the place of damage anyway (see supra II.C.). The doctrine of a restrictive application of Article 7 No. 2 Brussels Ibis is not absolute, but must be balanced against the principle of effet utile, as the CJEU, 18 July 2013, C-147/12, ÖFAB, ECLI:EU:C:2013:490 = EuZW 2013, p. 70 with a critical case note by J. LANDBRECHT. 125 Contra J. LANDBRECHT (note 124), at 708, who, interestingly, criticizes ÖFAB as an exaggerated example of “«deliktstyporientierte Konkretisierung» (von Hein, IPRax 2005, 17 [22])” – I stand accused […]. 126 LG Düsseldorf, 29 April 2011, RIW 2011, p. 810 with a note by J. VON HEIN. 127 CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305 = IPRax 2013, p. 555 with a critical case note by J. VON HEIN, p. 505. 128 CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, paras 32-35. 129 CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, para. 24. 130 CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, paras 37 and 39. 131 For a more detailed analysis, cf. J. VON HEIN, case note on Melzer (note 127). 124

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Jan von Hein Court had already pointed out in the Reinwater case (see supra II.A.1.). In this regard, Article 8 No. 1 is not an adequate substitute for Article 7 No. 2 Brussels Ibis because it only grants jurisdiction to the courts at the place where one of the defendants is domiciled. Therefore, unlike Article 7 No. 2 Brussels Ibis, Article 8 No. 1 Brussels Ibis does not ensure that jurisdiction is attributed to a court at a place that has a substantial proximity to the case at hand, in particular where relevant evidence (documents, witnesses) may be located. The alternatives suggested by the CJEU – generously re-characterizing claims sounding in tort as contractual or suing all alleged tortfeasors at the same time –132 are, in a large number of cases, either not available or lead to unsatisfactory consequences. Blurring the divide between contract and tort raises doctrinal concerns and is a danger to legal certainty as it would have problematic repercussions on the relationship between Rome I and II (see supra III.D.2.). Article 8 No. 1 Brussels Ibis is not an attractive option in a number of cases either. Especially in the Melzer case, a suit against the main perpetrator would not have been admissible because of the latter’s insolvency.133 Although the Melzer judgment, therefore, leaves much to be desired from a doctrinal point of view, its practical importance has been considerably reduced by the CJEU’s subsequent case-law. In cases involving claims for violations of domestic laws on copyright and unfair competition, the Court decided that, where several supposed perpetrators of the alleged damage have acted in different Member States, Article 7 No. 2 Brussels Ibis allows jurisdiction to be established not on the basis of the place where the event giving rise to the damage occurred, but on the basis of the place where the damage occurred.134 Thus, the courts of a Member State where the damage occurred are competent to hear an action against one of the presumed perpetrators of that damage, even though the latter party did not act within the jurisdiction of the court seised.135 Read in conjunction with the rather investor-friendly localization of the place of damage in Kolassa (see supra III.D.3.), this approach will, in most cases, allow an investor to sue all alleged perpetrators in the Member State where he or she is domiciled without having to resort to Article 8 No. 1 Brussels Ibis. Nevertheless, some drawbacks remain. As regards intellectual property rights, the courts at the place of damage only have jurisdiction to rule on the damage caused in the Member State in which the court is situated (see infra III.F.3.); the same restriction arguably applies to cases involving pure economic

CJEU, 16 May 2013, C-228/11, Melzer, ECLI:EU:C:2013:305, paras 37 and 39. See AG JÄÄSKINEN, 29 November 2012, C-228/11, Melzer, ECLI:EU:C:2012:766 (in footnote 9). 134 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 29 (contra the conclusions of AG JÄÄSKINEN of 13 June 2013, ECLI:EU:C:2013:400); CJEU, 3 April 2014, C-387/12, Hi Hotel, ECLI:EU:C:2014:215, paras 33-40; CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, paras 52-59. 135 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 29; CJEU, 3 April 2014, C-387/12, Hi Hotel, ECLI:EU:C:2014:215, paras 33-40; CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, paras 52-59. 132 133

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Protecting Victims of Cross-Border Torts loss.136 Thus, an investor who has transferred funds from various bank accounts located in different Member States may face obstacles in finding a court outside of the defendant’s home state that has jurisdiction to rule on the whole damage. Moreover, the restrictive approach developed by the Court in Melzer creates particular problems in cases concerning infringements of European intellectual property rights because, in this context, the place of damage is excluded as an available forum (see infra III.F.4). 5.

Conclusion

The CJEU’s recent case-law on investor protection shows that the Court treats delictual and contractual claims on a strictly separate basis; in particular, the classification of claims as delictual or contractual follows neutral criteria and is not influenced by a favour towards the weaker party. Likewise, in localizing the places of the causal event and of damage the Court adheres to a strictly neutral paradigm. Whereas this restrictive approach seems to go too far in the Melzer case, leading to results that are problematic with regard to an efficacious conduct of proceedings, the recent Kolassa judgment contains a welcome clarification of the limited reach of the Court’s earlier Kronhofer judgment. In Kolassa, the Court has taken an important step towards differentiating between various types of torts in order to properly localize pure economic loss. From the point of view de lege ferenda, it remains open to debate whether consumer jurisdiction under Article 17(1) Brussels Ibis should in the future remain limited to contractual claims. Since Kolassa will lead to a forum investoris in most cases of prospectus liability anyway, one may argue that opening consumer jurisdiction for delictual claims of investors as well would merely be a logical extension of this approach. Such a step, however, must of course be left to the European legislature. E.

International Violations of Rights Relating to Personality

1.

From Shevill to eDate

With regard to international violations of rights relating to personality, the ECJ established the so-called mosaic principle in the well-known Shevill case.137 While the defendant publisher may be sued for the whole damage at its domicile, the courts at the places where a newspaper article was distributed are limited to ruling on the damage caused in the Member State in which the court is situated.138 However, the Court’s jurisprudence on Article 7 No. 2 Brussels Ibis has evolved considerably since this 1995 case.139 In its eDate judgment, the CJEU modified the P. MANKOWSKI (note 53), Art. 5 Brussels I para. 212. ECJ, 7 March 1995, C-68/93, Shevill, ECR [1995] I-415. 138 ECJ, 7 March 1995, C-68/93, Shevill, ECR [1995] I-415. 139 For closer analysis, see C. HEINZE, Surf global, sue local! Der europäische Klägergerichtsstand bei Persönlichkeitsrechtsverletzungen im Internet, EuZW 2011, p. 947; B. HESS, Der Schutz der Privatsphäre im Europäischen Zivilverfahrensrecht, JZ 2012, 136 137

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Jan von Hein Shevill decisional rules for violations of personality rights committed via the Internet.140 For the latter group of cases, the plaintiff now has three options: (1) suing at the defendant publisher’s domicile for recovering his or her whole damage, (2) suing at his or her habitual residence as the presumptive centre of interests, again for recovering his or her whole damage (3) suing at the various places of damages; in this case, however, the plaintiff remains limited to recovering only the damage that he or she has suffered in the respective forum. In the context of this article, two aspects deserve special attention: firstly, whether eDate is a step towards developing a more differentiated approach to Article 7 No. 2 Brussels Ibis by taking into account characteristic features of specific types of torts; secondly, whether the Court is sensitive to the victim’s specific need of protection in Internet-related cases. 2.

Distinguishing between Cyberspace and Conventional Media

From the Court’s reasoning in eDate, it must be inferred that the judges give up Shevill in cyberspace, but intend to maintain the mosaic principle as far as violations of personality rights by conventional media (print, broadcasting) are concerned.141 Although it is generally welcome that the Court considers the specific characteristics of certain types of torts, it is submitted that this distinction is artificial and raises severe doubts. Media content violating personality rights is, in our modern world, regularly distributed through various media channels simultaneously (print, broadcast, the Internet, Twitter etc.). Differentiating between those channels creates the risk of contradictory decisions concerning the same substantive content. The CJEU, however, justified such a distinction by two reasons: First of all, it referred to “the ubiquity of that [online] content. That content may be consulted instantly by an unlimited number of internet users throughout the world, irrespective of any intention on the part of the person who placed it in regard to its consultation beyond that person’s Member State of establishment and outside of that person’s control”.142 Yet, this factual assumption is hard to square p. 189; M. VON HINDEN, Internationale Zuständigkeit und anwendbares Recht bei Persönlichkeitsverletzungen im Internet, ZEuP 2012, p. 940; M. REYMOND, Jurisdiction in Case of Personality Torts Committed over the Internet: A Proposal for a Targeting Test, YbPIL 14 (2012/13), p. 205; W.-H. ROTH, Persönlichkeitsschutz im Internet: Internationale Zuständigkeit und anwendbares Recht, IPRax 2013, p. 247; K. THORN, Internationale Zuständigkeit bei Persönlichkeitsverletzungen durch Massenmedien, in H. KRONKE/ K. THORN (eds), Grenzen überschreiten – Prinzipien bewahren, Festschrift von Hoffmann, Bielefeld 2011, p. 746. 140 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269; see also the case notes by M. BOGDAN, Defamation on the Internet, forum delicti and the E-Commerce Directive, YbPIL 13 (2011), p. 483 and M. REYMOND, The ECJ eDate decision: A Case Comment, YbPIL 13 (2011), p. 493. 141 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269, paras 44 et seq. 142 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269, para. 45.

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Protecting Victims of Cross-Border Torts with the reality of the Internet. Every user of YouTube, for instance, knows that instead of a video clip sometimes a notice appears informing the viewer that the desired content is protected by copyright and not available in his or her country. Evidently, users are identified by their IP address and their access is restricted accordingly. Apart from that, several types of online media require registration before allowing a user to access the content provided. Thus, it is far from evident that a publisher should be deemed to have absolutely no control of where the content that it places online is accessed. Secondly, the Court assessed that “it is not always possible, on a technical level, to quantify that distribution with certainty and accuracy in relation to a particular Member State or, therefore, to assess the damage caused exclusively within that Member State”.143 It is, however, of course feasible to design websites in such a way that they record the number of times that they have been visited. Every page on SSRN, for example, displays the number of “abstract views” and publisher’s marketing departments collect similar data as well. It is therefore difficult to agree with the Court that it should not be technically possible to quantify distribution of online content in a certain Member State. If the victim does not have access to such figures, this is a problem that may be solved by procedural rules on the disclosure of evidence, but not an issue that should have an influence on the question of jurisdiction. 3.

Favouring the Weaker Party in Cyberspace Cases

On the second question, the need for protecting the weaker party, the eDate judgment is remarkable as well. Although the Court does not explicitly give up its doctrine that the forum delicti commissi is a neutral rule on jurisdiction rooted in concerns for an efficacious conduct of proceedings, it emphasizes that “[t]he difficulties in giving effect, within the context of the internet, to the criterion relating to the occurrence of damage which is derived from Shevill and Others contrasts […] with the serious nature of the harm which may be suffered by the holder of a personality right who establishes that information injurious to that right is available on a world-wide basis”.144 Thus, one can discern an exceptional sensitivity to the need for protecting the victim as the weaker party under Article 7 No. 2 Brussels Ibis in eDate. In fact, one may even pose the question whether the Court goes too far in this regard. Whereas consumer protection with regard to contracts concluded via the Internet depends on a professional consciously directing its activities towards the consumer’s state of habitual residence (Article 17(1)(c) Brussels Ibis), the Court does not deploy a similar test in the context of jurisdiction for torts.145 In view of the defendant’s legitimate need to be protected from an unforeseeable 143 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269, para. 46. 144 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269, para. 47. 145 For a more detailed and critical analysis, see M. REYMOND (note 139), at 207-211.

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Jan von Hein plaintiff's forum both in contract and tort cases, this counter-intuitive divergence calls for an explanation. In this regard, the CJEU maintains that giving jurisdiction to the courts at the victim’s centre of interest is compatible with the aim of predictability, because the “publisher of harmful content is, at the time at which that content is placed online, in a position to know the centre of interests of the persons who are the subject of that content”.146 It is doubtful, however, whether this sweeping assumption necessarily holds true in all cases; it is illustrative to think of political fugitives or V.I.P.’s hiding from intrusive press. Moreover, an act of communication may be deliberately targeted at an audience in a state that differs from the victim’s habitual residence.147 In this regard, it deserves mentioning that, after the eDate judgment had been passed, the legislature felt the need to emphasize in Recital 16 Brussels Ibis that “avoid[ing] the possibility of the defendant being sued in a court of a Member State which he could not reasonably have foreseen […] is important, particularly in disputes concerning non-contractual obligations arising out of violations of privacy and rights relating to personality, including defamation”. F.

International Infringements of Intellectual Property Rights

1.

Introduction

The Court’s rather context-specific, if not idiosyncratic reasoning in eDate has caused considerable legal uncertainty as to whether the approach developed for personality rights should be transposed to other torts committed in cyberspace, particularly infringements of intellectual property (IP) rights, or whether the latter type of torts should rather remain subject to the general principles guiding the application of Article 7 No. 2 Brussels Ibis, including the Shevill doctrine. Unlike Article 8 Rome II, the Brussels Ibis Regulation does not contain a special rule on violations of IP rights; Article 24 No. 4 Brussels Ibis only applies to proceedings concerned with the registration or validity of such rights.148

2.

Principle of Ubiquity

First of all, it is not certain that the traditional principle of ubiquity is applicable to violations of IP rights. With regard to IP rights under the domestic laws of the Member States, many authors have argued that, in view of the principle of territoriality, both the place of the causal event and the place of damage must necessarily coincide in the same Member State because it is impossible to commit an act of 146 CJEU, 25 October 2011, eDate and Martinez, C-509/09 and C-161/10, ECR [2011] I-10269, para. 50. 147 Cf. (on § 32 ZPO) BGH, 29 March 2011, NJW 2011, p. 2059 = RIW 2011, p. 634 („Seven days in Moscow“), plausibly denying jurisdiction of German courts with regard to Russian-language content placed on a Russian website in spite of the victim’s (a Russian national’s) habitual residence in Germany. 148 Cf. J. KROPHOLLER/ J. VON HEIN (note 49), Art. 22 Brussels I para. 50.

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Protecting Victims of Cross-Border Torts infringement in a state where the IP right in question does not enjoy protection.149 In a similar vein, Advocate General Cruz Villalón had pleaded in the Hejduk case that jurisdiction in the case of a copyright violation committed via the Internet should be exclusively vested in the courts of the Member State where the infringing content had been uploaded to a website.150 The fact that the content was accessible in the copyright holder’s state of habitual residence as well should, according to the AG, be discarded in the interest of providing a foreseeable forum.151 The CJEU, however, has repeatedly confirmed that the principle of ubiquity applies to cases involving national trade marks or domestic copyrights, too.152 In contrast, jurisdiction is concentrated in the courts at the place of the causal event in cases arising from an infringement of a unitary IP right under EU laws, e.g. pursuant to Article 97(5) of the Community trade mark Regulation.153 This procedural restriction is in accordance with the choice-of-rule in Article 8(2) Rome II that designates solely the law of the country in which the act of infringement was committed as the law applicable to any question that is not governed by the relevant EU instrument. For European IP rights, the lex loci damni would not allow a clear and unequivocal connection of the non-contractual obligation with a single country in multi-state cases because those IP rights, by definition, enjoy an EU-wide protection. 3.

Place of Damage

Localizing the places of the causal event and of damage poses considerable difficulties in IP cases. As regards the place of damage, the CJEU relies on the principle of territoriality, i.e. that domestic IP rights are only capable of being infringed in each Member State in accordance with the applicable substantive law.154 Again, this solution conforms to European choice of law rules, as the law 149 Cf. H. SCHACK, Internationales Zivilverfahrensrecht, 6th ed. Munich 2014, para. 343; CLIP-Principles, reprinted in J. BASEDOW/ T. KONO/ A. METZGER (eds), Intellectual Property in the Global Arena, Tübingen 2010, Annex II; S. LEIBLE, in T. RAUSCHER (ed.), Europäisches Zivilprozess- und Kollisionsrecht, 3rd ed., Munich 2010, Art. 5 Brussels I, para. 85a. 150 AG CRUZ VILLALÓN, Conclusions of 11 September 2014, C-441/13, Hejduk, ECLI:EU:C:2014:2212, paras 41-47. 151 AG CRUZ VILLALÓN, Conclusions of 11 September 2014, C-441/13, Hejduk, ECLI:EU:C:2014:2212, para. 43. 152 CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 17-20; CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 26, CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 18. 153 Council Regulation (EC) No. 207/2009 of February 26, 2009, on the Community trade mark, OJ L 78 of 26 February 2009, p. 1; cf., on the substantially identical former trade mark regulation, CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, paras 31-38. 154 CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, para. 25; CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 32, CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 29.

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Jan von Hein applicable to violations of domestic IP rights is determined by virtue of Article 8(1) Rome II, i.e. the traditional lex loci protectionis. From a procedural point of view, the Court adds that “both the objective of foreseeability and that of sound administration of justice militate in favour of conferring jurisdiction, in respect of the damage occurred, on the courts of the Member State in which the right at issue is protected. It is the courts of the Member State in which the trade mark at issue is registered which are best able to assess […] whether a situation such as that in the main proceedings actually infringes the protected national mark”.155 This reasoning is, however, not limited to IP rights that depend on being registered, but has been extended to copyrights as well even though the latter rights are automatically protected in all Member States.156 In line with its earlier eDate judgment, the CJEU rejects the idea that jurisdiction should only be conferred on courts in those Member States towards which the alleged tortfeasor had directed its activities.157 Against such a requirement, the Court deploys the argument that, unlike Article 17(1)(c) Brussels Ibis, Article 7 No. 2 Brussels Ibis is silent on this issue.158 This line of reasoning is, however, extremely weak because of the accepted premise that Article 7 No. 2 Brussels Ibis shall provide for a jurisdiction that is foreseeable for the defendant (see supra II.A.2.). In fact, it would have been fairly easy to develop a test of direction on this normative basis.159 As the Court has made very clear recently, however, the mere accessibility of content that possibly infringes an IP right is considered as sufficient in order to establish jurisdiction on the basis of the place of damage.160 Of course, this rejection of any foreseeability test opens the gates wide for forum shopping by the plaintiff. In order to compensate for this danger, the Court applies the Shevill doctrine to violations of IP rights as well, i.e. that “a court seised on the basis of the place where the alleged damage occurred has jurisdiction only to rule on the damage caused within that Member State”.161 Contrary to the eDate decision, however, the Court maintains the mosaic principle even in the context of

155

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27 et seq. 156 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 39; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, paras 27-38. 157 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 42; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 32. 158 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 42; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 32. 159 Cf. M. HUSOVEC, Comment on “Pinckney”, International Review of Intellectual Property and Competition Law (IIC) 2014, p. 370, 373; see also, with regard to claims for unfair competition, BGH, 12 December 2013, NJW 2014, p. 2504. 160 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 43; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 34. 161 CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 36; see also CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 21-26; CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 45.

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Protecting Victims of Cross-Border Torts infringements committed via the Internet.162 In the Wintersteiger case, the Court explicitly rejected transferring the “centre-of-interest”-approach developed in eDate to violations of trademarks;163 in subsequent cases, it confirmed this line of reasoning for violations of copyrights.164 The Court explicitly favours a differentiating approach in this regard, arguing that “the place where the alleged damage occurred […] may vary according to the nature of the right allegedly infringed”.165 In view of the difficulties of controlling the reach of online content and the problems raised by quantifying damage in this context that the CJEU emphasized in eDate (see supra III.E.2.), it is, however, not quite clear why such technical obstacles – if they exist – should only be relevant with regard to violations of personality, but not of IP rights.166 If one takes the concerns that the Court voiced in eDate seriously (see supra III.E.2.), its case-law on infringements of IP rights must give rise to grave doubts with regard to the effet utile of Article 7 No. 2 Brussels Ibis. In particular, it is one thing if a court has to apply multiple laws to various parts of the damage that a plaintiff has suffered; it is quite another if the plaintiff has to sue for each part of this damage separately in various Member States.167 The latter aspect draws attention to the second limb of Article 7 No. 2 Brussels I bis, i.e. the place where the event giving rise to the damage occurred. 4.

Place of the Causal Event

As regards acts infringing IP rights committed in cyberspace, it is difficult to determine the legally relevant action because several technical steps are involved in placing content online; moreover, these steps may occur in different Member States. The CJEU acknowledges that the technical process by which infringing content is displayed depends on an activation carried out, e.g., by the operator of a search engine or another Internet Service Provider.168 Nevertheless, the Court localizes the legally relevant place of the causal event solely at the seat of the defendant company, where the decision on an advertising campaign or on the

CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 36; see also CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 21-26; CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 45. 163 CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 21-26. 164 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 45; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 36; likewise, in a case involving claims for unfair competition, BGH 12 December 2013, NJW 2014, p. 2504. 165 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, para. 32; cf. also CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 21-24. 166 Cf. AG CRUZ VILLALÓN, Conclusions of 11 September 2014, C-441/13, Hejduk, ECLI:EU:C:2014:2212, para. 42. 167 H. SCHACK, case note on Pinckney, NJW 2013, p. 3629, 3630. 168 CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, para. 36; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, para. 24. 162

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Jan von Hein placing of certain photographs online has been made.169 According to the CJEU, this localization is justified by the foreseeability of this place for the defendant and because it will facilitate the taking of evidence and the conduct or proceedings.170 As a consequence, however, the place of the causal event loses much of its practical utility because it will usually coincide with the domicile of the person liable (Article 4(1) Brussels Ibis). The significance of the place of the causal event is further reduced by the transposition of the Melzer doctrine (see supra III.D.4.) to the field of IP rights.171 Whereas the Court allows for an attribution of acts committed at the place of damage to a perpetrator who has not acted within that state as far as domestic IP rights are concerned (see supra III.D.4.), this option is not available to holders of European IP rights that are protected, e.g., by the Community trade mark Regulation.172 Thus, a plaintiff may bring claims based on unfair competition against one of several perpetrators before the courts at the place of damage, but is barred from raising concurring claims arising from the violation of a European IP right in the same forum if the defendant did not commit an act personally in this state.173 Moreover, in the Coty case, the plaintiff could not invoke Article 8 No. 1 Brussels Ibis either because the particular defendant who was domiciled in the state of the court seised had already agreed to an out-of-court settlement.174 In such scenarios, therefore, lawyers must, in the interest of an efficacious conduct of proceedings, advise their clients rather not to settle – whether this peculiar result qualifies as a sound administration of justice is open to doubt. 5.

Conclusion

The CJEU’s case-law on the infringement of IP rights gives rise to considerable legal uncertainty. Although it is generally welcome that the Court attempts to take into account the specific features of certain types of torts, it is questionable whether the distinctions made by the Court in this area of law, in particular concerning cyberspace torts, are fully convincing. By rejecting a test of “direction” in determining the place of damage, the Court needlessly multiplies the number of available fora and, thus, invites the plaintiff to an unprincipled forum shopping that must subsequently be reined in by the mosaic principle. On the other hand, as regards the place of the causal event, the Court adopts an extremely restrictive approach to localizing relevant actions that renders this basis of jurisdiction practically useless because it will coincide with the defendant’s domicile anyway

CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, paras 34 et seq.; CJEU, 22 January 2015, C-441/13, Hejduk, ECLI:EU:C:2015:28, paras 25 et seq. 170 CJEU, 19 April 2012, C-523/10, Wintersteiger, ECLI:EU:C:2012:220, para. 37. 171 CJEU, 3 October 2013, C-170/12, Pinckney, ECLI:EU:C:2013:764, paras 23-30; CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, para. 38. 172 CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, para. 38. 173 CJEU, 5 June 2014, C-360/12, Coty, ECLI:EU:C:2013:764, paras 39-59. 174 Cf. AG JÄÄSKINEN, ECLI:EU:C:2013:764, para. 63. 169

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Protecting Victims of Cross-Border Torts in most cases. Measured by the criteria of effet utile and the sound administration of justice, the court’s case-law in this area still leaves room for improvement.

IV. Conclusion The recent case-law of the CJEU shows that Brussels Ibis and Rome II are functionally interrelated, but independent legal instruments serving different legal purposes. Thus, the fact that European private international law opts for the place of damage as the single decisive connecting factor for torts (Article 4(1) Rome II) does not require giving up the principle of ubiquity with regard to Article 7 No. 2 Brussels Ibis (see supra II.C.). Moreover, the goal of a “consistent” application of Brussels Ibis and Rome II does not demand a strictly uniform interpretation of both legal instruments; rather, the different purposes of rules concerning jurisdiction, on the one hand, and choice-of-law rules, on the other, may justify a diverging interpretation (see supra II.C.). In particular, the different policies and methodological foundations underlying Article 7 No. 2 Brussels Ibis, on the one hand, and Article 5 Rome II, on the other, inevitably lead to scenarios where jurisdiction and the applicable law do not coincide (see supra III.C.). Nevertheless, the idea of taking into account the specific features of certain types of torts for the purpose of localizing the place of the causal event and the place of damage can be a fruitful method not only for choice of law, but in the field of international civil procedure as well. As regards the localization of pure economic loss, the CJEU has made an important step in this direction by distinguishing the fact pattern in the Kolassa case on prospectus liability from the earlier Kronhofer case on the conversion of funds (see supra III.D.3.). In particular, the Court’s case-law on violations of personality rights and IP rights is characterized by an increasing tendency to define the places of the causal event and of damage in the light of the legal nature of the right concerned (personality or IP right, see supra III.E. and F.) and in view of the specific mode in which the tortious act has been committed, i.e. in cyberspace or via conventional media (see supra III.E. and F.). It remains doubtful, however, whether the Court’s case-law in its present state can be considered as a normatively consistent framework (see supra III.F.5.). In this regard, the Court’s objections to establishing the criterion of a directed activity under Article 7 No. 2 Brussels Ibis are not convincing (see supra III.E.3 and III.F.3). Finally, although the Court has correctly emphasized that Article 7 No. 2 Brussels Ibis, as it currently stands, is a neutral forum rooted in concerns for a sound administration of justice and not in the idea of favouring the victim as the weaker party (see supra III.A.), one must not turn a blind eye to the fact that structural imbalances between the parties do exist not only in the field of contractual obligations, but also in the area of tort law, especially in cases involving informational asymmetries (e.g. prospectus liability) or where the victim is in a position characterized by a particular vulnerability, either for technological or social reasons (e.g. Internet-based violations of personality rights, product liability). Whereas the Court has reached a victim-friendly result in localizing the Yearbook of Private International Law, Volume 16 (2014/2015)

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Jan von Hein place of damage in eDate (see supra III.E.3.) and Kolassa (see supra III.D.3.), it remained impervious to such considerations in Kainz (see supra III.C.) and, regarding the place of the causal event, Melzer (see supra III.D.4.). It is not without irony that the latter two decisions may, as an obviously unintended result, actually impair the efficient administration of justice because they either lead to a more frequent divergence between jurisdiction and the applicable law (Kainz) or indirectly force the plaintiff to sue already insolvent “anchor” defendants (Melzer). In view of such frictions, the restriction of consumer protection to contractual claims under Articles 17–19 Brussels Ibis should be reconsidered in the course of future legislation. From a normative point of view, it seems overdue to extend a Member State court’s jurisdiction to non-contractual claims when an alleged tortfeasor has directed commercial or professional activities to the state where the injured consumer is domiciled, provided that there is a causal link between the directed activity and the harm suffered by the consumer.

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SURROGACY ACROSS STATE LINES: CHALLENGES AND RESPONSES ________________

NATIONAL REGULATION AND CROSS-BORDER SURROGACY IN FRANCE Marion MEILHAC-PERRI*

I. II.

III.

I.

Introduction The French Position A. French Cases B. European Court of Human Rights’ Sanctions and the Position of the French Judiciary Regulation of Cross-Border Surrogacy A. International Regulation B. National Regulation

Introduction

Surrogacy, and more particularly the recognition of such questions related to parentage, generates a great deal of litigation in France, highlighted recently with the partial condemnation of France by the European Court of Human Rights.1 The very first case brought before the French courts regarded the legality of associations acting as a “go between” in relation to surrogate mothers and the commissioning parents. In a case dating from 22nd January 1988,2 the Conseil d’État (the French Council of State) approved the decision to deny legal registration to such associations. In another case dating from 30th December 1988,3 the Cour de cassation (French Supreme Court) ruled that these associations were null and void because their object was illegal; accordingly these associations *

PhD at the University of Burgundy. ECtHR, 26 June 2014, No. 65192/11, Mennesson c/ France, D. 2014. 1797, and obs., note F. CHÉNEDÉ; ibid. 1773, chron. H. FULCHIRON/ C. BIDAUD-GARON; ibid. 1787, obs. P. BONFILS/ A. GOUTTENOIRE; ibid. 1806, note L. D’AVOUT; Dalloz actualité, 30 June 2014, obs. T. COUSTET. 2 ECJ, 22 January 1988, No. 80936, Assoc. Les cigognes, Lebon 37. 3 Civ. 1re, 13 December 1989, JCP 1990.II.21526, note A. SÉRIAUX. 1

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 275-288 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

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Marion Meilhac-Perri needed to be dissolved. Other cases raised the problem of recognition of the parentage bonds created abroad in France. A case dating from 31st May 1991,4 l’Assemblée plénière (the most important formation within the French Supreme Court) ruled on surrogacy contracts as follows “la convention par laquelle une femme s’engage, fût-ce à titre gratuit, à concevoir et à porter un enfant pour l’abandonner à sa naissance contrevient tant au principe d’ordre public de l’indisponibilité du corps humain qu’à celui de l’indisponibilité de l’état des personnes”5. Furthermore “ce processus constituait un détournement de l’institution de l’adoption”6. The nullity of such contracts was later confirmed by a law commonly called “la loi bioethique” (30th July 1994), which is now codified in Article 16-7 French Civil Code. This provision states that “all agreements relating to procreation or gestation for the benefit of another are null”. This position was consistently reaffirmed by case law for many years, with the Cour de cassation basing its rulings upon public policy7 in the case where a French couple had resorted to the services of a foreign surrogate mother. Recently, jurisdictions have shifted their reasoning to base their argument on fraud.8 Such reasoning has been 4 Cass., ass. plén., 31 May 1991, D. 1991. 417, note. Y. CHARTIER, note D. THOUVENIN, JCP 1991. II. 21752, note J. BERNARD, concl. DONTENWILLE, note F. TERRÉ, Grands arrêts de la jurisprudence civile, 12e ed., No. 50; concerning the decision, see M. GOBERT, Réflexions sur les sources du droit et les “principes” d’indisponibilité du corps humain et de l'état des personnes (à propos de la maternité de substitution), RTD. civ. 1992. 489; Cass. civ. 1re, 29 June 1994, Bull. civ. I, No. 226, JCP G 1995. II. 22362, note J. RUBELLIN-DEVICHI; 9 December 2003, Bull. civ. I, No. 252, D. 2004. 1998, note E. POISSON-DROCOURT. 5 “An agreement binding a woman, even without commercial purpose, to conceive and carry a child, in order to relinquish it at birth, violates the rules of public policy, as well as the rule establishing that neither the human body nor the legal status of a person can be considered as a commodity” (Author’s own translation). 6 “This process is actually an inappropriate use of the institution of adoption itself” (Author’s own translation). 7 Civ. 1re, 6 April 2011, No. 09-17.130, Dalloz actualité, 14 April 2011, obs. C. SIFFREIN-BLANC; D. 2011. 1522, note D. BERTHIAU/ L. BRUNET; ibid. 1001, F. ROME; ibid. 1064, note X. LABBÉE; ibid. 1585, obs. F. GRANET-LAMBRECHTS; ibid. 1995, obs. P. BONFILS/ A. GOUTTENOIRE; ibid. 2012. 308, obs. J.-C. GALLOUX/ H. GAUMONT-PRAT; ibid. 1033, obs. M. DOUCHY-OUDOT; ibid. 1228, obs. H. GAUDEMET-TALLON/ F. JAULT-SESEKE; AJ fam. 2011. 262; ibid. 265, obs. B. HAFTEL; ibid. 266, interview M. DOMINGO; AJCT 2011. 301, obs. C. SIFFREIN-BLANC; Rev. crit. DIP 2011. 722, note P. HAMMJE; RTD civ. 2011. 340, obs. J. HAUSER. 8 Civ. 1re, 13 September, 2013 No. 12-18.315, D. 2013. 2382, obs. I. GALLMEISTER, 2349, chron. H. FULCHIRON/ C. BIDAUD-GARON, 2377, opinion C. Petit, 2384, note M. FABRE-MAGNAN, 2014. 689, obs. M. DOUCHY-OUDOT, 954, obs. A. DIONISI-PEYRUSSE, 1059, obs. H. GAUDEMET-TALLON, 1171, obs. F. GRANET-LAMBRECHTS, and 1516, obs. N. JACQUINOT/ A. MANGIAVILLANO; AJ fam. 2013. 579, obs. F. CHÉNEDÉ, 532, obs. A. DIONISI-PEYRUSSE, and 600, obs. C. RICHARD/ F. BERDEAUX-GACOGNE; AJCT 2013. 517, obs. R. MÉSA; Rev. crit. DIP 2013. 909, note P. HAMMJE; RTD civ. 2013. 816, obs. J. HAUSER. See also: Civ. 1re, 19 March 2014, No. 13-50.005, D. 2014. 905, note H. FULCHIRON/ C. BIDAUD-GARON; ibid. 901, avis J.-P. JEAN; ibid. 1059, obs. H. GAUDEMET-TALLON/ F. JAULT-SESEKE; ibid. 1171, obs. F. GRANET-LAMBRECHTS.

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National Regulation and Cross-Border Surrogacy in France seen a few times prior to France being held in violation of the European Convention on Human Rights by the European Court of Human Rights on 26th June 2014.9 French judges have never had to directly rule on the issue of breach of contract, but rather indirectly on parentage recognition issues. In fact, even if there was no disagreement between the parties, those agreements and their consequences could never be seen as valid under French Law since the commissioning mother could never achieve the legal status of legal mother according to French Law. French Law is based on the idea that there can be no doubt as to who the mother is since she is the woman who gives birth to the child. The saying mater semper certa est does not take genetics into consideration (the fertile egg could belong to another woman). This fictitious concept also benefits the husband whose paternity is presumed, even in the case of insemination, where neither the birth mother, nor the husband are actually genetically related to the child, and yet are regarded as the legal parents of the child. As a result of this presumption of paternity, any surrogacy agreement between married couples includes a specific clause, in which, the husband of the surrogate gives up his paternal rights to the child to be born. Since the ruling of the ECtHR, no change has been made to the prohibition of surrogacy agreements. Nonetheless, a circular from the Ministère de la Justice,10 (Ministry of Justice) which has been confirmed by the Conseil d’Etat, deals with the possibility to grant French nationality certificates to children born abroad from a French parent who, more than likely, has resorted to surrogacy. This text invites procureurs (state prosecutors) and greffiers en chef (chief clerks) to deliver such a document as long as parentage with a French national is established by virtue of a legal act in accordance with Article 47 French Civil Code. Furthermore, the text adds that any assumption that the parent resorted to such a surrogacy agreement does not provide for a legal ground to refuse the issuance of such a document. However, the greffier en chef of the Tribunal d’Instance (Magistrates’ Court) can refuse to issue such a document if the foreign birth certificate does not satisfy the criteria of Article 47 French Civil Code. However, despite this text and the ECtHR’s condemnation of France, there has been no hint towards the writing of a law to regulate such a practice. The strict prohibition of using surrogate mothers has not produced the intended effect. This prohibition has led to the development of parallel networks or recourse to foreign surrogate mothers. Such a situation creates extremely complex legal situations for the children born under such circumstances. Furthermore, the rapid increase in the number of such international surrogacy agreements has led to great uncertainty with regard to the child’s legal status.11 This question regarding the child’s status occurs in two situations. Firstly, when there is a breach of contract and secondly when the State where the child will ultimately reside does ECtHR, 26 June 2014 (note 1). X. DOMINO, La circulaire “Taubira” sur les certificats de nationalité française validée, D. 2015. 352; H. FULCHIRON/ C. BIDAUD-GARON, La circulaire “Taubira” sur les certificats de nationalité française validée, D. 2015. 357; A. DIONISI-PEYRUSSE, GPA: la “circulaire Taubira” est validée, Conseil d'Etat 12 December 2014, AJ fam. 2015. 53. 11 See, Conclusions et Recommandations de la Commission spéciale de 2010 sur le fonctionnement pratique de la Convention Adoption internationale de 1993 (paras 25 et 26). 9

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Marion Meilhac-Perri not recognise the parentage. Regarding this last point, prohibition is certainly not the appropriate answer in order to protect the child’s interest. In this matter, the question of whether the rules which regulate, in a strict manner, such agreements in France would be a safe means to ensure a stable legal status for the child. Therefore, considering France’s difficulties to uphold this prohibition (II) one can consider whether international law might be able to provide the solution or at least assist in achieving international consensus in limiting surrogacy to French residents (III).

II.

The French Position

In spite of a change of legal basis in order of justify the denial of recognition of parentage from surrogacy, French case law has remained consistent (A), and such consistently has been condemned by the European Court of Human Rights in its ruling of 26th June 2014 (B). A.

French Cases

The birth certificate of a child born of a surrogate mother is an “acte quasi public” which involves a transcription procedure rather than an exequatur procedure. However, the French courts have denied opposability in this case. The Cour de cassation’s reasoning has evolved, after originally pursuing the public policy defence, judges have finally opted to use fraud as a ground to deny the recognition of the parentage of a child born as a result of a surrogacy agreement. In three rulings issued on 26th April 2011, the Cour de cassation sitting as a full court (assemblée plénière) stated that “en l’état du droit positif, il est contraire au principe de l’indisponibilité de l’état des personnes, principe essentiel au droit français, de faire produire, au regard de la filiation, à une convention portant sur la gestation pour le compte d’autrui, qui, fût-elle licite à l’étranger, est nulle d’une nullité d’ordre public aux termes des art. 16-7 et 16-9 du Code civil”.12 This provided the judges with a ground to dismiss any request for transcription of a foreign birth for a child born of surrogacy, arguing that “sur le motif de la contrariété de la pratique à l’ordre public international français”.13 The courts could not rule differently without violating the provisions of Article 16-7 French Civil Code, especially as this practice violated the fundamental principles of French law and more specifically international public policy, and led to failure to recognise the 12 “According to the current position under domestic law, it is contrary to the principle of inalienability of civil status – a fundamental principle of French law – to give effect, in terms of the legal parent-child relationship, to a surrogacy agreement, which, while it may be lawful in another country, is null and void on public order grounds under Articles 16-7 and 16-9 of the Civil Code”. (Author’s own translation). 13 “The practice was contrary to French international public order”. (Author’s own translation).

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National Regulation and Cross-Border Surrogacy in France foreign decision. In these cases, the Courts confirmed their previous position and added this principle as an obstacle in granting any effect to the possession of status invoked in France in order to establish parentage originating from such an agreement. The courts have consistently based their decisions on the infringement of the principle of indisponibilité de l’état des personnes or the inalienability of a person’s legal status. These cases have thus converted this notion into a inviolable principle of French law. Professor Hammje14 has stated “socle inaltérable qui s’imposerait face à une mondialisation des relations familiales, laquelle tendrait au contraire à promouvoir une interchangeabilité des droits, par promotion des volontés individuelles”15. Indeed, the desire to have a child drives parents to seek this possibility abroad. By denying legal status to parentage established abroad which in turn is contrary to France’s prohibition, France’s highest courts are attempting to appeal to international public policies. By making the principles stated in those cases the core of its international policy, France has been given the means to resist the use of foreign laws or rules that have contributed to the creation or endorsement of such situations; situations which are expected to increase in the future. Such practices have violated the “principles of universal justice which to the French holds absolute international value”. But in both cases (13th September 201316 and 19th March 201417), the Cour de Cassation changed its ruling and shifted to the use of fraud as its main argument and based the grounds for denial on Article 336 French Civil Code. According to the French Supreme Court, “En l’état du droit positif, est justifié le refus de transcription d’un acte de naissance fait en pays étranger et rédigé dans les formes usitées dans ce pays lorsque la naissance est l’aboutissement, en fraude à la loi française, d’un processus d’ensemble comportant une convention de gestation pour le compte d’autrui, convention qui, fût-elle licite à l’étranger, est nulle d’une nullité d’ordre public aux termes des articles 16-7 et 16-8 du code civil”.18 The

P. HAMMJE, De l'exequatur d'un jugement étranger d'adoption par la compagne homosexuelle de la mère biologique, Rev. crit. DIP, 2011, p. 747. 15 “Inviolable foundation which would impose itself against a globalisation of family ties that tends to promote through the empowerment of individual will, the idea that rights are becoming interchangeable”. (Author’s own translation). 16 Civ. 1re, 13 September 2013, No. 12-18.315 and No. 12-30.138, D. 2013. 2170, obs. I. GALLMEISTER, 2349, chron. H. FULCHIRON/ C. BIDAUD-GARON, 2377, opinion C. PETIT, 2384, note M. FABRE-MAGNAN, and 2014. 689, obs. M. DOUCHY-OUDOT; AJ fam. 2013. 579, obs. F. CHÉNEDÉ, 532, obs. A. DIONISI-PEYRUSSE, and 600, obs. C. RICHARD/ F. BERDEAUX-GACOGNE; AJCT 2013. 517, obs. R. Mésa; Rev. crit. DIP 2013. 909, note P. HAMMJE; RTD civ. 2013. 816, obs. J. HAUSER; JCP 2013. 985, note A. MIRKOVIC; Dr. fam. 2013. Comm. 151, note C. NEIRINCK; A. GOUTTENOIRE, JCP 2014. Chronique de droit de la famille. Doct. 43; JDI 2014. Comm. 1, note J. GUILLAUMÉ. 17 Civ. 1re, 19 March 2014, No. 13-50.005, FS-P+B+I, D. 2014. 905, note H. FULCHIRON/ C. BIDAUD-GARON, and 901, opinion J.-P. JEAN; AJ fam. 2014. 244, obs. F. CHÉNEDÉ, and 211, obs. A. DIONISI-PEYRUSSE; D. 2 April 2014, obs. R. MÉSA. 18 “According to the current position under domestic law, it is legal to refuse the transcription of a foreign legal document registering the birth of a child born as a consequence of a fraudulent process evading French Law as it is including a surrogacy 14

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Marion Meilhac-Perri Court also added that “l’action en contestation de paternité exercée par le ministère public pour fraude à la loi, fondée sur l’article 336 du code civil, n’est pas soumise à la preuve que l’auteur de la reconnaissance qui n’est pas le père au sens de l’article 332 du même code; […] ayant caractérisé la fraude à la loi commise par M.X, la cour d’appel en a exactement déduit que la reconnaissance paternelle devait être annulée”. In these cases, the Cour de cassation ruled that the elements gathered by the Procureur (Public Prosecutor) established the existence of a surrogacy agreement - a fraudulent process through which the child was born – therefore, making it impossible for the authorities to transcribe the child’s birth certificate. However, this reasoning and reference to fraud did not convince legal commentators of its validity. Some welcomed the ruling of the court,19 but others argued there was no evidence of fraud at all.20 As far as the first category is concerned, all the elements necessary for the existence of fraud were proven. The plaintiff tried to bypass national mandatory rules by concluding an Indian surrogacy agreement, which is legal under Indian Law, and returning to France to request the French court to recognise the legality of the parentage established abroad.21 This analysis seems correct regarding the fact that the father resorted to surrogacy, but the actual situation of the plaintiff raises questions since he had no female companion. In such a case, one can ask whether this agreement can be legally qualified as surrogacy. The plaintiff is the actual biological father of the child and recognition of the parentage does not depend on the circumstances in which the child was conceived.22 However, as was the case in the April 2011 judgment, the European Court of Human Rights is very likely to strike down this decision. B.

European Court of Human Rights’ Sanctions and the Position of the French Judiciary

In October 2011, the Mennesson and Labassé cases were brought before the European Court of Human Rights. The court issued a ruling against France on 26th June 2014.23 The judges were asked to determine whether the filiation of a child born of a foreign surrogacy agreement could legally be recorded in French Etat agreement, which maybe lawful in another country, but is null and void on public order grounds under Articles 16-7 and 16-9 of the Civil”. (Author’s own translation). 19 F. CHÉNEDÉ, obs. Civ. 1, 19 March 2014, AJ Fam. 2014, p. 244. 20 H. FULCHIRON/ C. BIDAUD-GARON, “L’enfant de la fraude […]” Réflexions sur le statut des enfants nés avec l’assistance d’une mère porteuse, D. 2014, p. 905; Note 1re civ. 19 March 2014, CA Versailles, 29 April 2014, Rev. crit. DIP, 103 (3) 2014, p. 617. 21 Ibid. 22 See S. BOLLÉE, note 1re civ. 19 March 2014, CA Versailles, 29 April 2014, Rev. crit. DIP, 103 (3) 2014, p. 617. 23 ECtHR, 26 June 2014, No. 65192/11, Mennesson c/ France, D. 2014. 1797, and obs., note F. CHÉNEDÉ; ibid. 1773, chron. H. FULCHIRON/ C. BIDAUD-GARON; ibid. 1787, obs. P. BONFILS/ A. GOUTTENOIRE; ibid. 1806, note L. D’AVOUT; Dalloz actualité, 30 June 2014, obs. T. COUSTET.

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National Regulation and Cross-Border Surrogacy in France civil (birth registry) documents. After denying the commissioning mother’s maternity on the grounds of the public policy, referring to the fact that “the human body is inalienable,”24 the French Supreme Court further denied the recognition of the biological father’s paternity on the grounds of fraud, as the parties concerned as resorted to the use of a surrogacy agreement.25 The European Court of Human Rights ruled against France in both cases (26th June 2014) on the ground that the child’s identity had not been respected. In this case, the four plaintiffs had signed an American surrogacy agreement. The commissioning couple were the genetic providers of the material used to create the embryo that was implanted in another woman’s womb. The court in the United States of America had granted legal parentage rights to the couple. Once back in France, the couples’ request for transcription of the birth certificate was denied first by the administration and then by the courts. On 6th April 2011,26 the Cour de cassation confirmed the lower court’s ruling on grounds of public policy. The European Court of Human Rights struck down the French High Court’s decision on the grounds of a violation of Articles 8 and 14 European Convention on Human Rights, invoking the right of a child to respect for its private life and for the first time stating that refusing the transcription leads to a child being deprived of his/her identity and therefore violates a child’s human rights. Even though States are granted a margin of appreciation in assessing the actual status of surrogacy, the European Court made it clear that there was no margin for error in regards to the matter of parentage. The European Court stated the French administration’s actions, as well as the French Courts, infringed the plaintiffs’ rights to respect of their privacy and family life (Article 8 European Convention of Human Rights). The European Court stated “that the reason why France refuses to recognise a legal parent-child relationship between children born abroad as the result of a surrogacy agreement and the intended parents is that it seeks to deter its nationals from having recourse to methods of assisted reproduction outside the national territory that are prohibited on its own territory and aims, in accordance with its perception of the issue, to protect children and – as can be seen from the study by the Conseil d’État of 9 April 2009 [...] – surrogate mothers”.27 According to the European Court, the petitioners were not really the ones affected by French rulings. The children, however, were placed in a situation where the very stability of their legal status was in jeopardy. Despite this 24 Civ. 1re, 6 April 2011, No. 09-17.130, Dalloz actualité, 14 April 2011, obs. C. SIFFREIN-BLANC; D. 2011. 1522, and obs., note D. BERTHIAU/ L. BRUNET; ibid. 1001, F. ROME; ibid. 1064, note X. LABBÉE; ibid. 1585, obs. F. GRANET-LAMBRECHTS; ibid. 1995, obs. P. BONFILS/ A. GOUTTENOIRE; ibid. 2012. 308, obs. J.-C. GALLOUX/ H. GAUMONT-PRAT; ibid. 1033, obs. M. DOUCHY-OUDOT; ibid. 1228, obs. H. GAUDEMETTALLON/ F. JAULT-SESEKE; AJ fam. 2011. 262; ibid. 265, obs. B. HAFTEL; ibid. 266, interview M. DOMINGO; AJCT 2011. 301, obs. C. SIFFREIN-BLANC; Rev. crit. DIP 2011. 722, note P. HAMMJE; RTD civ. 2011. 340, obs. J. HAUSER. 25 See Civ. 1re, 19 March 2014, No. 13-50.005, D. 2014. 905, note H. FULCHIRON/ C. BIDAUD-GARON; ibid. 901, avis J.-P. JEAN; ibid. 1059, obs. H. GAUDEMET-TALLON/ F. JAULT-SESEKE; ibid. 1171, obs. F. GRANET-LAMBRECHTS. 26 Ibid. 27 Pt. 62.

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Marion Meilhac-Perri knowledge, the French courts proceeded with the ruling that led the European Court to consider that “a contradiction of that nature undermines the children’s identity within French society”. Moreover, in continuing this reasoning, even if the biological father is French, there is no guarantee that his progeny created from surrogacy will be granted French nationality. In order to recognise the father’s parentage, the European Court bases its argument on the importance of the biological parentage. The European Court judges stated that not only is it an essential element of identity for any individual, but it also raises major legal difficulties for the child, especially with respect to matters of probate. In fact, upon the opening of the will, the part given to the child begotten through a surrogacy convention will be taxed at a much higher rate unlike the actual “biological children” of the deceased. Indeed, the child is not on an equal footing with the legatee. However, the European court held that France had violated its convention obligations due to the impact such a ruling would have upon the child’s identity. With this decision, the European Court is ensuring that children are not the victim of their parent’s choices. What the Conseil d’Etat had qualified as a sort of “putative parentage”, in comparison with Article 201 French Civil Code that acknowledges the interest of child. Regarding the character of public policy considerations attached to the nullity of this practice, the solution of the European Court of Human Rights helps to put this concept into perspective. However, if the effects of such a situation are accepted under French Law it could also mean that such practices, even if prohibited by domestic legislation, could actually be effective, rendering the prohibition in itself ineffective. From now on, judges will have to comply with the European court’s decision which means that the fraud argument will more than likely be forsaken. The European Court ruled that French courts and, therefore, the French State had gone beyond the margin of appreciation granted to it by refusing to recognise the father’s parentage towards his child and in doing so, the French State had violated Article 8 European Convention of Human Rights. With this ruling the European judges have made clear that the interest of the child should always come first. However, although the European Court has ordered France to recognise the effect of the parentage, this by no means entails that the same court has condoned surrogacy. Indeed, these cases “do not impose a direct and mandatory recognition of a filiation born of a foreign surrogacy convention. The legal exception drawn from fraud or public order can still motivate the refusal to cooperate with foreign policies or accept the action of foreign authorities, but it needs to be used with utmost caution in compliance with fundamental rights”. In any case, the fact that it is in the interest of the child to preserve his or her identity and privacy could compel French judges to apply conflict of laws rules in order not to capriciously deprive the child of his or her right to establish biological parentage. In this light, the European Court’s decision appears to be no more than a tempering of the French case law, which could (and probably should) continue to spread the clear intentions of national legislature in the international realm that the restrictions should apply with regard to the actual effect of national rules only to preserve the

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National Regulation and Cross-Border Surrogacy in France interest of a private person acting in honest good faith (i.e., the child and only the child).28 Finally, if we consider those cases within the evolution of the European Court’s case law, Professor D’Avout explains that “[En] apportant de la sorte une réponse autonome, et négative, aux requêtes des parents, les arrêts Mennesson et Labassée restreignent à notre sens considérablement la portée des arrêts antérieurs de la Cour, qui semblaient entériner une obligation positive des États d'admettre le fait accompli à l'étranger et de le transformer en situation juridique valable dans l’ordre juridique interne. Cela devrait constituer un point d’assez grande satisfaction pour tous ceux ayant reçu la jurisprudence Wagner avec scepticisme. Cette jurisprudence Wagner, mise au fondement de la solution des arrêts Mennesson et Labassée, est en réalité tempérée dans une large mesure, pour la double raison de la distinction opérée entre les requérants et de l'absence d'obligation positive de transformation de la famille de fait en une famille de droit”.29 This decision however, is going against the solutions adopted by the French courts and particularly against the Cour de cassation’s rulings regarding surrogacy and its legal consequences. This solution is clearly going against French law which prohibits surrogacy and indicates that the French State will need to modify the law. However, the ministerial circular regarding birth certificates for children born in foreign States could be a solution for the children whose situation has been ruled on by the European Court of Human Rights. The French prohibition now seems to have lost its effectiveness, and the European Court of Human Rights’ decision can just push parents to go abroad to resort to surrogacy.30

III. Regulation of Cross-Border Surrogacy It seems that simply prohibiting surrogacy is ineffective. Indeed, despite the French prohibition, French courts are still confronted with cases involving commissioning couples requesting their parentage towards a child born as a result of surrogacy to 28 L. D’AVOUT, “La reconnaissance” de la filiation issue d’une gestation pour autrui à l'étranger, après les arrêts Mennesson et Labassée (note 1). “L’exception tirée de la fraude ou de l’ordre public continue à constituer le motif possible d'un refus de coopération aux politiques étrangères et à l'action des autorités publiques étrangères, à condition d'être maniée avec prudence à la lumière des droits fondamentaux”. 29 Ibid. “Meeting the Mennesson and Labassée requests with an autonomous yet negative decision, has minimized the impact of previous decisions which seemed to assert the obligation to recognise what had been done abroad and to turn this fact into a legal situation in the national realm. This should satisfy those who were really skeptical after the Wagner decision. The Wagner ruling, which was used as a basis for the Mennesson et Labassée cases, was actually diminished because of the distinction between the petitioners and also the absence of any obligation imposed on the State to turn a de facto family into a legal one.” (Author’s own translation) 30 C. BERGOIGNAN ESPER, Gestation pour autrui à l'étranger et reconnaissance de la filiation en France, note ECtHR, 26 June 2014, M. c/ France n° 65192/11, RDSS 2014 p. 887.

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Marion Meilhac-Perri be recognised in France. Such difficulties lead one to seriously consider the need to create an international instrument (A), or at least specific domestic regulations which would allow surrogacy under a strict legal control (B). A.

International Regulation

Surrogacy is no longer limited to couples in a single country. In fact, it has been common for some years now. Since Eastern European and Asian countries have entered the fertility and procreation “market”, surrogacy has become international, making any national regulation attempt ineffective. However, surrogacy practices must be internationally unified which suggests that the only way to achieve this goal would be through resort to international law. Such a convention seems logical given the international character of surrogacy motherhood. The enormous increase of surrogacy agreements between citizens of different countries leads to questions of whether “reproductive tourism”31 is being supported, thus rendering any legislation initiated in a single State completely useless. The French example given above illustrates this fact. French law, along with French case law, prohibits surrogacy in any form, and yet French courts are still seized of requests for parental orders issued abroad regarding children born as a result of international surrogacy arrangements. This example shows the ineffectiveness of isolated national action. The only way to create unified practices, acceptable to all, appears to reside in the adoption of international binding conventions. Such an instrument would have to be drafted and adopted by an international organisation that is capable of bringing enough key countries together in order to give this new instrument the authority necessary. The Hague Conference appears to be the likely organisation to draft and adopt such a convention, as it was successful with its international adoption convention. It so happens that the Conference is currently working on drafting an non-binding instrument regarding the “Study of Legal Parentage and the issues arising from International Surrogacy Arrangements”32 which would enable the creation of a larger consensus. The existence of such a project is already a great achievement, but it must eventually take the form of a binding convention. Indeed, it seems obvious that a convention can only be effective if it is binding and includes sanctions in case of violation of any of its measures. A text that would only express guidelines for best practices, which would be equivalent to a simple enumeration of good intents taken by the international community, will be of no interest and would not be of any help in the fight against the international commercialisation of surrogacy. Some countries have voiced their concern and expressed their need for such a text, but others, such as the United States of America, are strongly opposed to the adoption of a binding convention. Such 31 J-J. LEMOULAND, Le tourisme procréatif, Actualité du droit international privé de la famille, Petites affiches, 28 March 2001, p. 24; H. BOSSE-PLATIÈRE, Le tourisme procréatif, Informations sociales 3/ 2006 (n° 131), p. 88-99. 32 A study of legal parentage and the issues arising from international surrogacy arrangement, Preliminary Document No 3 C of March 2014 for the attention of the Council of April 2014 on General Affairs and Policy of the Conference, available at .

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National Regulation and Cross-Border Surrogacy in France opposition on the part of a key player in the surrogacy market cripples the process, depriving the text of a broader impact.33 Yet a binding convention which implements sanctions is the only chance to put an end to these highly questionable practices, and to allow the international community to react to permissive states that have been allowed to pursue very liberal policies without any restriction or control. States need to be given the power to act and sanction accordingly. Of course, it will be difficult to control adoption and surrogacy agreements that are concluded without the assistance of licensed agencies. One can only hope that more regulation will encourage future surrogate mothers to contract through legitimate agencies rather than in person. This solution would ultimately ensure greater protection of their rights. Such a procedure would actually require some level of cooperation on the part of the agencies, or maybe the creation of agencies sponsored and controlled by the State according to the convention’s guidelines. In order to help coordinate those services, the text would have to make provisions for the creation of central authorities that would oversee the implementation of the convention. There is, however, very little chance to see such a project through, at least with all the prominent players as States Parties. Disagreements regarding regulation are dividing the international community. An international convention seems to be the only way to reach a consensus between pro-surrogacy countries and those countries that do not support surrogacy in its current form. An international convention would make it possible to provide structure. In the matter of surrogacy, the choice of the applicable law should be neutral, however, it seems that choosing a specific rule could act as a regulator of current practices. So far, surrogacy agreements were based on the law of contract. So long as contract law does not overshadow the “family aspect”, it should be taken into account. The international convention could be based on rules of conflicts of law in this field. However, unlike the Hague Convention on the Protection of Children and Cooperation in Respect of Intercountry Adoption which was based on a spirit of cooperation between countries, it seems difficult to do the same thing with surrogacy agreements. There are too many financial interests at stake, and moreover and unlike international adoption, there is no international consensus regarding surrogacy agreements. Some countries like the United States are adamant about rejecting a biding international text. However, the reality of this market demands an international regulating convention. As Professor Corneloup34 explains, either the law of the State of origin applies, consequently the receiving State cannot apply the conflict of law rules applicable in the field of provision of goods and services which could ultimately strip the child of its protective status. Thus, a more respectful approach of the future parents’ State laws – choosing the rules applicable to the legal status, should be more adapted. In this case there would be two possible criteria: either the nationality or the domicile of the person, both being essential in the designation of Council on General Affairs and Policy of the Conference, Meeting of April 2013. S. CORNELOUP, Le non-marchand en droit international privé, in Droit et Marchandisation, Colloquium organised in Dijon on 18 and 19 May 2009, Travaux du CREDIMI, vol. 33, Paris, LexisNexis Litec, 2010, p. 377-406. 33 34

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Marion Meilhac-Perri the law defining both legal capacity and status. The convention should be based on the national law of the intended parents or lex patriae, rather than on the lex fori. Of course, exceptional situations should be taken into account, in the case of people who do not live in their native country, the law enforced in the country of residence should be chosen unless the legal situation began in their country of origin. Choosing the civil law system in combination with the intended parents’ lex patriae would guarantee the legality of the parentage in the fostering country. This approach would appear to be more respectful of national laws and prevent any violation of national public policy. Until now French courts had not reflected upon the law applicable to surrogacy contracts. So far, judges have been involved in such cases because of their indirect jurisdiction, but the determination of personal law under French law raises problems of application when combined with a surrogacy convention; it is especially true regarding the designation of the law applicable to the mother’s. In fact, Article 311-14 French Civil Code states “Filiation is governed by the personal law of the mother on the day of the child's birth; where the mother is unknown, by the child's personal law”. So, according to French law the mother of the child is the woman who gives birth, which in surrogacy arrangements means the surrogate mother. The very principle of surrogacy is that the woman who gave birth, gives the child to other woman, the commissioning mother, who aims to become the legal mother.35 The article also adds that when the birth mother is unknown, only the personal law of the child can be applied. Choosing the commissioning parents’ personal law, or the child’s personal law, seems to be a better solution in the sense that it is more respectful of national legislation and avoids creating contradictory legal situations with some States with their rules of public policy and mandatory laws. B.

National Regulation

One has to acknowledge that some countries have no interest in regulating the practice. The solution could come from national laws even for countries opposed to this practice. However, the regulation must be quite strict and regulated by the law. It should establish strict criteria regarding the candidates; each nation has to draw rules about both the intended parents and the surrogate mother regarding age, number of children, nationality, and country of residence. But, the problem with parentage recognition comes from the fact that surrogacy contracts are essentially international. The very international nature of such a contract forces the parties to request legal recognition of their parentage. Moreover, the international nature of the contract does not allow French authorities to have control over a contract concluded in another country, therefore being incapable of ensuring that the rights of the parties are protected and especially those of the surrogate mother.

35 This is the position of American case law in the case Johnson v. Calvert (1993) 5 Cal. 4 th 84 [19 Cal. Rptr. 2d 494, 851 P. 2d 776].

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National Regulation and Cross-Border Surrogacy in France The adoption of an international instrument, if ideal, seems quite complicated, even utopian. This is why domestic law has to take over and draft domestic rules that strictly regulate all surrogacy contracts and implement solutions with regard to the child’s status should all else fail. In this manner, if no international convention regulating issues of jurisdiction and applicable law, surrogacy contracts should be limited to people living in France. This solution has already been implemented in the United Kingdom. So, if we transpose UK law to French law, contracts could only be concluded by French residents. All foreign or international contracts would not be valid and parentage would not be recognised by French law. Those measures would enable French authorities to fight against excesses in some international contracts, at the same time it would allow French residents to have access to surrogacy arrangements. All recognition issues would, therefore, be avoided since the contracts would be entirely French. However, this solution would perhaps raise issues of European Law36 and, more specifically, against the prohibition of any discrimination based on nationality. According to this principle, the equality of treatment rule prohibits direct discrimination based on nationality and all direct or indirect forms of discrimination that achieve the same result,37 whatever the nature or seriousness,38 even if such discrimination is based on other criteria. It is important to remove measures that impose harsher conditions on citizens from another Member State or place them in a situation where they are disadvantaged compared to nationals.39 In the Hochstrass case, the European court thought that the principle expressed in article 6 of Traity (new art. 12) “requires that comparable situations should not be treated differently unless such differentiation is objectively justified”.40 This rule, based on parties’ residence, allows States to dodge a new sanction from both the European Court of Human Rights and the Court of Justice of the European Union. Choosing residence as a criterion, for example, allows British citizens living in France to resort to surrogacy. However, as far as French citizens living in foreign countries are concerned, their French nationality would play no role in permitting access to surrogacy since they would have to abide by the laws of their country of residence. Of course, this solution may seem drastic and somewhat unfair to French citizens living abroad, but it also appears to be the only possible way to avoid any recognition issue due to conflicts of law or to the legal status of the child.

P. MORVAN, Rép. Drt européen, V. Travailleurs (régime), No. 82-83. ECJ, 16 February 1978, Commission c/Irlande, 61/77, Rec. 417; 7 June 1988, Roviello c/Landesversicherungsanstalt Schwaben, 20/85, Rec. 2805, Dr. soc. 1989.425, obs. X. Prétot. 38 ECJ, 4 April 1974, Commission c/ France [Marins français], 167/73, Rec. 359, D. 1974.717, note B. PACTEAU, JCP 1974.II.17863, note D. RUZIÉ. 39 ECJ, 28 March 1979, La Reine c/Saunders, 175/78, Rec. 1129; 13 December 1984, Haug-Adrion c/Frankfurter Versicherungs-AG, 251/83, Rec. 4277. 40 ECJ, 16 October 1980, Hochstrass c./ Court of Justice of the European Communities, 147/79, Rec. 3005. 36 37

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Marion Meilhac-Perri Legalising surrogacy seems unavoidable in today’s world. There is no doubt that such practices raise numerous ethical questions, but it has also become obvious that the only way to put an end to unsound practices and to achieve legal protection of the child through a stable legal status, is to accept and regulate surrogacy whether commercial or not.

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NATIONAL REGULATION AND CROSS-BORDER SURROGACY IN EUROPEAN UNION COUNTRIES AND POSSIBLE SOLUTIONS FOR PROBLEMATIC SITUATIONS Konstantinos ROKAS*

I. II.

IV.

Introduction The Impact of English and Greek Legal Framework in Cross-Border Surrogacy A. The British Legal Framework 1. The Basic Features of British Regulation 2. International Surrogacy Cases Involving the United Kingdom B. The Greek Legal Framework 1. The Basic Features of the Greek Regulation 2. International Surrogacy Cases involving Greece Regulation of Cross-Border Surrogacy A. International Level 1. The Basic Features of a Proposal for an International Convention 2. Difficulties in the Conclusion of a Convention and a Possible Common Ground B. National Level 1. Remedies for Liberal Countries 2. Remedies for Restrictive Countries Conclusion

I.

Introduction

III.

This contribution aims to review and clarify the legal framework in the United Kingdom and Greece on surrogacy, its impact on cross-border access to surrogacy and to formulate some potential solutions to problems that arise especially due to * Teaching and research assistant at the University of Cergy-Pontoise. I would like to thank in particular Professor Gian Paolo ROMANO for his help, Professor Nikos KOUMOUTZIS and Lecturer Katarina TRIMMINGS for their help and constructive comments, and Kristian SKREDE-GLEDITCH and Jill ROBBIE for their linguistic help. All errors are mine. Thanks also to Natalie GAMBLE, attorney specialised in medically assisted reproduction and Michael WELLS-GRECO who provided me helpful information. Additionally, I would like to thank the staff of the Swiss Institute of Comparative Law for its continuous support for my research on medically assisted reproduction in private international law and especially Sadri SAIEB and Caroline CHRISTIANSEN.

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Konstantinos Rokas the international dimension of such arrangements. We will start by examining how the UK and Greek legal provisions influence cross-border access to surrogacy services within European Union and contribute to regulatory competition in the field of family law within the European Union.1 We will show through specific examples that despite limitations on access to surrogacy – basically spatial – in both countries, individuals from other countries are not completely excluded from access to surrogacy. Moreover, although the European Union legal system does not directly promote cross-border reproductive care, it nonetheless facilitates a movement of the family situations created in Member States. Thus, cross-border surrogacy is propagated even through models which are somewhat restrictive. Although cross-border reproductive care is not a phenomenon that should be condemned per se, it is generally agreed that crossing borders for such purposes can make issues arising in the context of surrogacy more difficult to handle.2 The cross-border nature of a procedure can aggravate risks and difficulties for participants.3 First, the existence of borders and the divergence in the regulation of different legal aspects might make people believe that they can act with impunity and not be held accountable for abusive behaviours, such as when intended parents abandon children born through surrogacy. Further, the language differences entailed by the process can be a hurdle for the mutual understanding of the participants, a concern that may be crucial for creating trust. For these reasons we argue that there is a need for regulation taking into consideration the cross-border element in surrogacy procedures either at a national, international or regional context. We will examine proposals already envisaged in the context of The Hague Conference, as well as alternatives at a national level. We will analyse the basic features of these proposals, address their feasibility and evaluate their impact. We will start with the examination of the regulated models of surrogacy in the United Kingdom and Greece.

II.

The Impact of English and Greek Legal Framework in Cross Border Surrogacy

United Kingdom and Greece are the two countries of the European Union that have adopted a comprehensive and regulated model of altruistic surrogacy. These two models are liberal in their conception, and have among other conditions enforced 1 B.C. VAN BEERS, Is Europe “Giving in to Baby Markets?” Reproductive Tourism in Europe and the Gradual Erosion of Existing Legal Limits to Reproductive Markets, Medical Law Review 2015, p. 103 et seq., esp. p. 119. 2 B.C. VAN BEERS, (note 1), at 106. 3 On the concerns that arise especially in the context of cross-border surrogacy see also: L. BRUNET and others, A Comparative Study on the Regime of Surrogacy in EU Member States, Directorate General for Internal Policies, Policy Department C: Citizens’ Rights And Constitutional Affairs, May 2013, available at , esp. p. 193-194.

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National Regulation and Cross-Border Surrogacy in European Union Countries specific limits, mostly spatial, in relation to access to surrogacy and establishing parentage by the intended parents in order to constrain the development of crossborder reproductive care, often characterised as fertility tourism.4 Here we will review the basic features of regulations in both countries and show how individuals from countries with greater restrictions have not always been excluded from access to surrogacy services, despite the constraints of these legal frameworks. A.

The British Legal Framework5

1.

The Basic Features of British Regulation

The United Kingdom was the first country in the European Union to authorise and regulate explicitly surrogacy. The first Act on surrogacy arrangements was enacted as early as in 1985. Later, the Human Fertilization and Embryology Act of 2008 amended the Human Fertilization and Embryology Act of 1990, which is the core of surrogacy regulation. Also relevant to surrogacy are the Adoption and Children Act 2002,6 the Human Fertilisation and Embryology (Deceased Fathers) Act 2003 and statutory instruments including the Human Fertilisation and Embryology (Parental Order) Regulations 2010. The legislation has authorised surrogacy under specific and strict requirements. Except for technical conditions required for all kinds of medically assisted reproduction techniques, the core of the surrogacy regulation lies in the conditions for the grant of a parental order to the intended parents set out in section 54 of the Human and Embryology Act of 2008 (hereafter HFEA 2008). This procedure is necessary because the legal mother of the child born from the surrogacy is the woman who has carried the child (HFEA 2008 section 33 (1))7 and if she is married, then her husband/partner is the legal father. In order to have the child connected with the intended mother and her spouse/partner an application for a parental order must be filed.

4 Similar constraints have been adopted in the legislation of other countries that have authorised surrogacy. In the Australian Capital Territory, for instance, a residence requirement has been adopted to prevent forum shopping. For these provisions, see M. KEYES, Cross-border Surrogacy Agreements, Australian Journal of Family Law 2011/26, p. 28 et seq., esp. p. 33, 36-37. 5 For a thorough analysis of the UK legal framework see: M. WELLS-GRECO, The Status of Children Arising from Inter-Country Surrogacy Arrangements: The Past, The Present, The Future (Doctorate dissertation), Maastricht 2015. I would like to express my gratitude to the author for providing me with a chapter of his doctoral thesis dealing with the UK regulation of surrogacy; see also M. WELLS-GRECO, United Kingdom, in P. BEAUMONT/ K. TRIMMINGS, International Surrogacy Arrangements: Legal Regulation at the International Level (Studies in Private International Law), Oxford/ Portland 2013, p. 367 et seq. 6 For Scotland it is the Adoption and Children (Scotland) Act 2007. 7 Section 33 (1) “The woman who is carrying or has carried a child as a result of the placing in her of an embryo or of sperm and eggs, and no other woman, is to be treated as the mother of the child.”

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Konstantinos Rokas The granting of the parental order is dependent first on a genetic connection between at least one of the applicants and the child conceived and carried by the surrogate (section 54 (1) (b) HFEA 2008). By contrast, the genetic link of the surrogate is not relevant. Thus, a traditional surrogacy, with the genetic material of the surrogate, is also possible (section 54 (1) (a) HFEA 2008). Access, however, is restricted to couples – regardless of their sexual orientation – who are married, in a civil partnership or able to prove that they live as “partners in an enduring family relationship” (section 54 (2) HFEA 2008). The application of the intended parents8 for the parental order must as a principle be filed within six months from the birth of the child, but not earlier than six weeks after its birth (section 54 (3) in combination with section 54 (7) HFEA 2008). The surrogate and her partner, who is also considered a parent of the child at the moment of its birth, must give their full and informed consent to the granting of the order (section 54 (6) HFEA 2008). The court can decide to dispense with the requirement of consent if the person who needs to give it cannot be found or is incapable of giving agreement (section 54 (7) HFEA 2008). Furthermore, the surrogacy arrangement that has led to the birth of the child cannot be commercial. Therefore, section 54 (8) states that no money or benefits other than reasonable expenses can be received or given by any of the applicants for any part of the surrogacy agreement. Finally, it has been stipulated that at the time of the application and of the making of the order the child must live with the applicants (section 54 (6) (a)) and one at least of the applicants must be domiciled in the United Kingdom, or in the Channel Islands or the Isle of Man (section 54 (4) (b) HFEA 2008). This condition could potentially limit cross-border surrogacy. The reality has proven to be slightly different. 2.

International Surrogacy Cases Involving the United Kingdom

More specifically, the domicile requirement for granting a parental order could be understood as a measure to deter couples from travelling to the United Kingdom for access to a surrogacy procedure or to deter UK residents from travelling out of United Kingdom to foreign countries to have access to surrogacy under more flexible legal frameworks. With regards to the latter, the regulation of section 54 does not only govern surrogacies that take place in the United Kingdom but also the parentage of children born through surrogacy that has taken place abroad.9 However, judicial practice reveals that these conditions have not sufficed to discourage people from travelling to countries with a more lenient legal 8 They must have attained the age of 18 at the day of the application (section 54 (5) HFEA 2008). 9 Section 54 (10) seems to be the foundation for the extraterritorial application of U.K. law on parentage which provides: “Subsection (1)(a) applies whether the woman was in the United Kingdom or elsewhere at the time of the placing in her of the embryo or the sperm and eggs or her artificial insemination.” As to the extraterritorial nature of these provisions see also: N. GAMBLE, Made in the U.S.A.-Representing U.K. Parents Conceiving Through Surrogacy and ART in the United States, Family Law Quarterly 2012/46, p. 155 et seq., esp. p. 161.

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National Regulation and Cross-Border Surrogacy in European Union Countries framework.10 They have also not prevented people habitually resident in countries that prohibit surrogacy to come to the UK to have access to it, as the following case shows. The Re G case.11 Mr and Ms G, a couple of Turkish nationality, have initiated a surrogacy procedure in the UK, following several attempts to have a child through artificial insemination. The couple got in contact with Ms J, who accepted to become their surrogate. An embryo was created from the genetic material of Mr G and an egg of Ms J through an insemination that had taken place at Ms J’s home. Following this procedure a girl, M, was born, on the 29 of September 2006, who was registered at the local District Registry. Ms J was named as the mother of the child and Mr G as the father. The difficulties started once the intended parents applied to have the parental order granted. Their application was adjudicated under the Human Fertilisation and Embryology Act of 1990 (sections 30 (1) – (7)). The applicants mistakenly thought – when they initiated the procedure – and asserted before the Court that they had a domicile in United Kingdom, although their permanent domicile was in Turkey. To support their argument they invoked having rented an apartment in the UK. This is not deemed sufficient to obtain a domicile according to UK law. As a result, Mr and Ms G could not become M’s parents by means of a parental order. The case lead to a deadlock. Lengthy and costly hearings were conducted before the High Court in order to find a solution to the problem of the parental status of the child. The solution that was deemed as the most appropriate was based on adoption. Under section 84 of the Adoption and Children Act12 the High Court had the possibility to make an order attributing parental responsibility to the people intending to adopt a child according to the law of a country or territory outside the British Isles upon their application. An order under section 84 also had the effect of terminating parental responsibility of any other person.13 Thus, an authorisation was granted to the Turkish couple to travel back to Turkey with the child in the hope that they could adopt him/her there. The solution was not obvious since it should be determined in advance that such an adoption would be possible in Turkey. For this purpose an expert report on Turkish law was requested by the court to determine whether the order would be recognised and the adoption would be feasible. The answer of the expert was positive, and the judge granted the order to the Turkish couple so they could return to their country with their child. Apart from the legal problem of parentage, the court in its judgment notes the existence of several other cases of couples domiciled in foreign countries that have managed to have access to a surrogacy procedure as well as to obtain a See in that sense N. GAMBLE (note 9), at 165-166. Re G (Surrogacy: Foreign Domicile) [2007] EWHC 2814 (Fam) available at . 12 Section 84 (1) “The High Court may, on an application by persons who the court is satisfied intend to adopt a child under the law of a country or territory outside the British Islands, make an order giving parental responsibility for the child to them.” 13 See Re G (Surrogacy: Foreign Domicile) (note 11), at No. 47. 10 11

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Konstantinos Rokas parental order in the United Kingdom.14 It seems that prior to this case the domicile requirement did not always alert the judges. This observation and the facts of this case clearly demonstrate that the domicile requirement has not sufficed to deter people from other countries to travel to the United Kingdom to have access to surrogacy. Of course, one could argue that the existence of the limitation might have reduced the number of people coming. This assumption cannot be affirmed categorically, but it can certainly be said that the UK has not become a major destination for couples seeking surrogacy. On the other hand, in some cases the domicile condition could even facilitate cross-border surrogacy attempts by a couple with habitual residence in a country prohibiting access to surrogacy as depicted in the following case. The Q case.15 In this case two applicants – one of French and one of British origin – had access to a surrogacy procedure with the help of a US surrogate in Minnesota. From their journey a little boy was born, Q, who on the day of the decision was one year old. At the time the couple applied for the parental order, they were living in France, which is known for its prohibitive approach towards surrogacy. Ms C was born overseas to British parents, who moved later to England, where they still live. She grew up in England, were she remained until she met Mr C in 2006. After this she moved to France to live with Mr C. Nonetheless, she maintained connections with England, and returned on a regular basis. Notwithstanding the strong connections that the couple had with the French and the UK’s legal order, they went to the United States to have a child through surrogacy. With the help of an agency based in Minnesota they concluded a surrogacy contract under the law of Iowa, where the surrogate Ms D and her husband Mr D live. After a first unsuccessful attempt with a donor’s egg, a second attempt took place with the eggs of Ms D, which led to the birth of Q. A post-birth judicial procedure followed in Minnesota, where the child was born and resided temporarily. This procedure confirmed the legal link of Mr C as the father of the child and terminated the motherhood of Ms D. At the same court hearing, a step-parent adoption order secured the motherhood of the intended mother Ms C, permitting as a consequence both the intended parents to appear on Q’s birth certificate as his legal parents. The second stage of this case took place before UK Courts, where the parents applied for a parental order. The court had to decide whether the conditions set out by section 54 HFEA 2008 were met and whether “Q’s lifelong welfare would be secured” by granting the parental order. A doubt was raised in particular as to the necessity to ask for a parental order, given the fact that a step-parent adoption order had already been made in the United States.16 14 Re G (Surrogacy: Foreign Domicile) (note 11), at Nos 19, 22-24. A support worker of the organisation who helps couples to have children through surrogacy has reported at least twenty cases which involved foreign countries. 15 CC v. DD [2014] EWHC 1307 (Fam); See also L. THEIS/ N. GAMBLE/ L. GHEVAERT, Re X and Y (Foreign Surrogacy): “Α Trek Through A Thorn Forest”, Fam Law, March 2009, p. 239 et seq. This case concerned a British couple who has undergone a surrogacy programme in Ukraine. 16 The necessity of the parental order was questioned because of the existence of the step-parent adoption. According to English law such an order from the United States could

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National Regulation and Cross-Border Surrogacy in European Union Countries The Court found that all the conditions set by section 54 were met. Payments made in the United States were authorised retrospectively, despite the commercial character of the process followed there, but a difficulty arose over the existence of domicile. The issue was whether Ms C had acquired a domicile of choice in France due to her long stay there, in which case she might not have the right to apply for a parental order. The Court reviewed the principles governing the domicile of choice. These principles were summarised as follows: “(i.) (ii.) (iii.) (iv.)

a domicile of origin adheres unless the acquisition of a domicile of choice is proved to the required standard (balance of probabilities) by the person asserting such a change; to acquire a domicile of choice there must be both “animo et facto” i.e. a person must both reside in a new country and also form a sufficient intention to live permanently or indefinitely in that country; acquisition of a domicile of choice is not to be lightly inferred; and important factors which are relevant in considering whether a person has formed the necessary intention are whether they intend to return to live in their country of origin on the happening of a realistically foreseeable contingency, and whether they are resident in a country for a general or limited purpose.”

The judge concluded that several circumstances indicated clearly that Ms C had not given up her domicile of origin. Among these it was highlighted that she intended to return to England upon retirement, that she had two properties there and that she had not initiated any procedure to acquire French nationality. This decision shows that although domicile could be perceived as limiting access to surrogacy to people domiciled in the UK but at the same time facilitates under certain circumstances the possibility to people habitually resident in third countries to access to surrogacy. The couple in this case had its habitual residence in France at the moment they went to Minnesota to have access to surrogacy. Nonetheless, the connection that Ms C maintained with the UK allowed her to claim the application of British legislation and have her parentage established there. Additionally, the fact that the intended parents were recognised as the legal parents in the United Kingdom could affect positively a decision of the French authorities on the same issue, due to the freedom of movement of European Union citizens. The aforementioned incidents show that even a legal framework of assisted reproduction that is spatially confined leaves some space for individuals from prohibitive legal orders to have access. This finding will be examined also in relation with the Greek legal framework.

be recognised. Notwithstanding that, its sole recognition would lead to the paradox to have the legal motherhood recognised, but not the paternity of Mr C, since the surrogate Ms D was married. It must be noted that no similar procedure of recognition of parental orders that have taken place abroad exists. Consequently, if the parents relied only on the recognition of the adoption order, an additional procedure would be required for the acquisition of the British citizenship by Q, whereas with the granting of the parental order the child would become automatically British. Therefore, the parental order was considered the best way to secure the welfare of the child.

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Konstantinos Rokas B.

The Greek Legal Framework

1.

The Basic Features of the Greek Regulation17

The Greek legislator regulated surrogacy with the law 3089/2002.18 The legal framework has been completed with two pieces of legislation, the Law no 3305/2005 on Application of Medically Assisted Reproduction (hereafter LAMAR) and the articles 14 – 21 of the law 4272/2014.19 Greek legislation provided the possibility for couples of having access to surrogacy exclusively for medical reasons. Thus, the intended mother can have recourse to a surrogacy procedure if she has a medical problem that makes it impossible for her either to become pregnant or pregnancy would entail a serious risk to her health. Such a medical condition could be e.g. Rokitansky syndrome, hysterectomy or even a renal failure. Unlike the British legal framework, the Greek legislation does not require that the couple of the intended parents or the woman who has access must be genetically linked to the child that will be born. However, it is forbidden to use the genetic material of the surrogate for the conception of the child (article 1458 Greek civil code, hereafter GCC). The applicant, provided that she is not beyond the age of natural ability to reproduce,20 must submit an application before the For surrogacy in general see, among others: A.C. PAPACHRISTOU, Le don d’utérus et le droit hellénique, in F. MONÉGER (ed.), Gestation pour autrui: Surrogate Motherhood, Paris, Société de Législation Comparée, 2011, p. 169 et seq.; E. KOUNOUGERI-MANOLEDAKI, Surrogate Motherhood in Greece (According to the New Law on Assisted Reproduction), in A. BAINHAM (ed.), The International Survey of Family Law (published on behalf of the International Society of Family Law (Bristol, Jordan Publishing Limited, 2005), p. 267 et seq.; N. KOUMOUTZIS, Arts 1457–1458 GCC, in A. GEORGIADES/ M. STATHOPOULOS (eds), (2007) VII Commentary of the Greek Civil Code, p. 582 (in Greek); E. KOUNOUGERIMANOLEDAKI, Artificial Fertilisation and Family Law, 2nd edn (Athens-Thessaloniki, Sakkoulas, 2005), p. 57 et seq.; P. AGALLOPOULOU, Surrogate Motherhood, Digesta (2004/A), p. 1 et seq. (in Greek); P. FILIOS, Family Law, 4th edn (Athens-Thessaloniki, Sakkoulas, 2011, p. 199 (in Greek); A. KOUTSOURADIS, Die gerichtliche Erlaubnis zur unterstützten Fortpflanzung durch eine Leihmutter in Griechenland, Zeitschrift für das gesamte Familienrecht — Ehe und Familie im privaten und öffentlichen Recht 2004, p. 1426 et seq.; V. VATHRAKOKILIS, ERNOMAK, Interpretation — Case law of the Greek Civil Code, Arts 1346–1694, vol. V, Family Law, Athens, 2004 (in Greek); K. PANTELIDOU, Reflections about the New Institution of Surrogate Motherhood, in Studia in Honorem Loucas Theocharopoulos et Dimitra Kontogiorga — Theocharopoulou, vol I, p. 503 et seq., Thessaloniki, Aristotle University of Thessaloniki, 2009 (in Greek); A.C. PAPACHRISTOU, Family Law, Athens, P.N. Sakkoulas, 2014, (in Greek); E. KOUNOUGERI-MANOLEDAKI, Family Law, 4th edn, Athens-Thessaloniki, Sakkoulas, 2008, (in Greek); E. ZERVOGIANNI, Künstliche Fortpflanzung in Griechenland, in Künstliche Fortpflanzung und Europäisches Familienrecht, conference which took place at the University of Regensburg, 2-4 Oktober 2014 (to be published); K.A. ROKAS, Greece, in P. BEAUMONT/ K. TRIMMINGS, International Surrogacy Arrangements: Legal Regulation at the International Level (Studies in Private International Law), Hart Publishing, Oxford/ Portland, 2013, p. 143 et seq. 18 Official journal A no 327/23.12.2002. 19 Official journal A no 145/11.07.2014. 20 This age is fixed at 50 years for women (section 4 §1 LAMAR). 17

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National Regulation and Cross-Border Surrogacy in European Union Countries one-member Court of First instance either of the habitual residence of the intended mother or that of the surrogate (article 799 Greek Code of civil procedure). The judge proceeds to an examination of the legal conditions and the written surrogacy agreement, which must not entail a financial benefit for the surrogate (article 1458 GCC). The decision of the Court is limited to granting an authorisation to proceed with surrogacy, and the judge cannot assess the fitness of the future parents. The law attaches indirect consequences to the judgment in relation to the parentage. The woman who receives authorisation is subsequently presumed to be the mother of the child (article 1464 § 1 GCC). Consequently, the parentage is solved when the judgment is issued. The legal link of the intended mother can be challenged only in cases where the genetic material of the surrogate has been used for the conception of the child, and only within six months from the birth of the child (article 1464 § 2 GCC). The parentage of the mother’s partner is established if he is married or in a civil union with her, given the presumption of paternity applying in these cases (see article 1465 GCC and article 8 of the law 3719/2008, respectively) or otherwise given through notarized consent prior to the medically assisted technique, recognised by the law as equivalent to an acknowledgment (article 1456 § 1 in combination with article 1475 § 2 GCC). Finally, an additional condition for the authorisation being granted was initially that the intended mother and the surrogate must be domiciled in Greece (article 8 of the law no 3089/2002). This requirement was adopted so as to prevent Greece from becoming a country of reproductive tourism.21 It has recently been abolished22 and one might thus believe that Greece could soon become a destination for surrogacy-seeking couples. We will show, however, that even before its abolition, this provision has not deterred very effectively couples from other countries to visit the Country in order to have access to a surrogacy procedure. 2.

International Surrogacy Cases involving Greece

Important data on surrogacy practices in Greece have been revealed through extensive study of the decisions granting authorisation for surrogacy, recently conducted under the aegis of the Greek Bioethics Commission.23 This research and the data retrieved show that judges have not followed strict standards in order to prove the domicile requirement. The Court does not go into detail to ascertain the permanent character of the domicile. Thus, the domicile requirement has not constituted an 21 P. AGALLOPOULOU/ A. KOUTSOURADIS, Medical Assistance in Human Reproduction, Law no 3089/2002, Preparatory works — Parliamentary Discussions, p. 238 (in Greek); P. AGALLOPOULOU, La loi hellénique concernant les procréations médicalement assistées, Droit de la famille 2004, p. 11 et seq., esp. p. 12; E. KOUNOUGERI-MANOLEDAKI, Artificial Fertilisation and Family Law, 2nd edn, Athens-Thessaloniki 2005, p. 64 (in Greek). 22 See article 17 Law 4272/2014 Official journal A no 145/11.07.2014. 23 P. RAVDAS, Surrogate Motherhood: Legislator’s expectations under the challenge of statistical data, in A.C. PAPACHRISTOU/ E. KOUNOUGERI-MANOLEDAKI (eds), Family law in the 21st Century, from incidental to structural changes, Athens-Thessaloniki, Sakkoulas, 2012, p. 67, et seq. (in Greek).

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Konstantinos Rokas insurmountable barrier for access to surrogacy. It has furthermore been demonstrated that a number of couples, mostly from European Union countries, have already travelled to Greece to have access to surrogacy.24 The following two decisions provide examples of this tendency. The decision concerning Réunion.25 Ms M.-L. was unable to carry a child after her ovaries and uterus were surgically removed. Thus, together with her husband, Mr. M. J., they initiated a surrogacy procedure in Thessaloniki. They came in contact with Ms S. A. and her husband Mr Th. Τ., and entered into an agreement stipulating that Ms S. A. agrees to carry an embryo that would be transferred to her body, without any financial compensation. The court found that the legal conditions were met and gave permission to proceed. The particularity in this case lies in that the woman who applied and her husband originally had their habitual residence in the French island of Réunion. Nonetheless, they produced at the court a series of documents to prove that their residence was in Thessaloniki. Among other documents they produced exact copies of their tenancy agreement at Thessaloniki, a declaration from their real estate agent proving that they had sold their principal residence at Réunion on 31 November 2006, a certificate from the director of the High School in Réunion where the husband was working, indicating that he had resigned in order to settle in Greece, and a certification from the director of an insurance company declaring that the husband of the applicant has asked for the annulment of the insurance coverage of their house and two vehicles because of their departure from Réunion. The above might seem sufficient to prove a definite departure from Réunion but not to prove permanent residence in Greece and Thessaloniki. One can observe that the judge did not examine the duration of the residence in Greece so as to be certain about its permanent character. We cannot doubt the sincerity of the declarations of the applicants, but the evidence produced in relation to the domicile was incomplete. The same can be said about the following case. The decision concerning UK.26 In this case a married couple who lived permanently in the United Kingdom were granted access to a surrogacy in Greece. The intended parents, Mr X of British & Norwegian citizenship and Ms Y of Greek and British citizenship concluded a contract with Ms P and her husband Mr P, both of Polish citizenship, who were permanently residents in Greece. The couple applied before the Greek court for an authorisation, which was granted since all the conditions required were met. This case also reveals that the court did not proceed to an extensive scrutiny of the domicile requirement of article 8 of the Greek law. There was strong evidence to prove the domicile of the surrogate. Apart from a 24 Indications of this can be found in the press: see e.g. J. MILLS, Triplets make it a grand total of 12 babies for the super-surrogate mother, 25 March 2008, available at ; information found in P. RAVDAS (note 23), at 73, fn 24; in that sense also Decision 159/2012, one member Court of First Instance of Hania, (unpublished-in Greek). 25 Decision 17056/2008, one-member Court of First Instance of Thessaloniki, legal database Ιsokratis (in Greek). 26 Decision 87/2014, peace Court of Athens, not published (in Greek).

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National Regulation and Cross-Border Surrogacy in European Union Countries tenancy agreement, a document submitted proved that one of the children of the surrogate attended primary school in Greece. For the domicile of the intended mother the testimony of a relative of the family was deemed to be sufficient. Moreover, the couple had also been married in Greece and their marriage certificate stipulated Greece as their domicile. This fact, combined with the Greek citizenship of the intended mother and her Greek identity card, demonstrated a strong connection with Greece. Notwithstanding this strong connection, the aforementioned documents and facts do not suffice to prove beyond any doubt a domicile in Greece. Thus, this case also supports the conclusion that the domicile requirement and its permanent character were not systematically and meticulously controlled by the competent courts. Furthermore, it has been argued in the Greek doctrine that refusing a Greek citizen the possibility to have recourse to this procedure on the basis of his domicile abroad would amount to a violation of equal rights protection.27 Moreover, it has already been argued that the domicile requirement should be construed so as not to obstruct European Union citizens from access to surrogacy in Greece, since such a restriction would be contrary to the freedom of provision of services.28 These doctrinal opinions might have been among the reasons that led the Greek legislature to abolish the domicile requirement among the conditions of access to a surrogacy procedure. The law no 4272/2014 provides in article 17 amending article 8 of law no 3089/2002 that: “Articles 1458 and 1464 of the Civil code are applied only in cases where the applicant woman or the woman that will carry the child have their domicile or their provisional residence in Greece”. One could claim that the spatial limit of the domicile was not necessary. Why prohibit a technique that is considered legal for people on the basis of a spatial requirement? Although such a position merits some reflexion we believe that in the case of Greece this change was premature for two reasons. First, the supervision of fertility centres in Greece by the Greek authority on Medically Assisted Reproduction does not at the moment seem sufficiently guaranteed, despite the serious efforts that have been undertaken in the last months. The absence of agencies or organisations in Greece to help find surrogates leads to a lack of transparency. As a consequence, a modification in the law that could be beneficial for a number of infertile couples from other countries could lead to difficult situations that can discredit the majority of the medical practitioners that exercise their duties conscientiously. This risk should not be underestimated, since the legislation was not completed with more specific rules to provide adequate protection in cross-border situations. Such rules could be provided both at an international and national level. We will try to review the proposals and efforts that have been made in that respect so far and then express our thoughts in that direction.

A. KOUTSOURADIS, Issues in Relation to Surrogacy, Especially After the Adoption of the Law no 3305/2005, Nomiko Vima 2006, p. 337 et seq., esp. p. 343 (in Greek). 28 A. KOUTSOURADIS (note 27), at 343-345. 27

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III. Regulation of Cross-Border Surrogacy The aforementioned analysis has shown that even the legal framework in the European Union countries can facilitate cross-border surrogacy procedures. This factor reinforces the necessity to reflect on the problems that can arise in the context of cross-border surrogacy cases. Unfortunately, the complicated nature of the problems and the morally controversial character of the process have often led to surrogacy being presented in an exaggerated way. Documentaries, TV series and films dealing with surrogacy issues have a tendency to oversimplify and to dramatize. Such coverage results in a poor comprehension and analysis of the problems, which in turn leads to categorical positions that obstruct responding effectively to the situations and risks inherent in surrogacy procedures, especially when they implicate several countries. Among the specific issues that should be dealt with is the protection of the rights of people at a risk of exploitation in international surrogacy arrangements.29 Delicate situations occur with the parental responsibility and the parentage of children born through surrogacy. Recent incidents, such as the much publicised case in Thailand where intended parents apparently abandoned a child with Down’s syndrome, highlight situations where intended parents act irresponsibly. Furthermore, the protection of the surrogate is uncertain due to insufficient information and counselling, especially with regards to the risks inherent in a pregnancy and personal autonomy rights. A key issue of counselling concerns the exercise of the right of the surrogate to terminate the pregnancy. Irrespective of the position that a national legal order adopts as regards surrogacy, at least some of the aforementioned problems can lead to uniform solutions. Greater international cooperation between authorities could help make it easier to solve some of the problems. In this regard, a multilateral instrument widely approved by the most important stakeholders could be the best solution. Such solutions have already been envisaged. Nonetheless, the difficulties in reaching a consensus among countries concerned urges us to also pay attention to alternatives that could be adopted at national level. We will present here some of the recently formulated propositions and evaluate the added value of such proposals. A.

International Level

It has been suggested that an international Convention could be a solution for problems related to cross-border surrogacy.30 Serious efforts to address these issues 29 P. BEAUMONT/ K. TRIMMINGS, General Report, in P. BEAUMONT/ K. TRIMMINGS, International Surrogacy Arrangements: Legal Regulation at the International Level (Studies in Private International Law), Hart Publishing, Oxford/ Portland 2013, p. 439 et seq., esp. p. 442. 30 In favour of this solution see among others: P. BEAUMONT/ K. TRIMMINGS, General Report, in P. BEAUMONT/ K. TRIMMINGS, International Surrogacy Arrangements: Legal Regulation at the International Level (Studies in Private International Law), Hart Publishing, Oxford/ Portland, 2013, p. 439 et seq.; H. FULCHIRON, La lutte contre le

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National Regulation and Cross-Border Surrogacy in European Union Countries have been undertaken in the context of the Hague Conference.31 Furthermore, the organs of the Hague Conference have conducted a study on “Legal Parentage and the issues arising from International Surrogacy Arrangements” and continue to explore the feasibility of drawing up a multilateral instrument in this area. Extensive studies on the subject have also been conducted by Universities as well as institutions like the European Parliament. Another important effort to take into consideration is the research on the regime of surrogacy in EU member states that has taken place under the auspices of the European Union Parliament.32 The research conducted so far provides an improved understanding of the real problems. The research team of Professor Paul Beaumont and Lecturer Katarina Trimmings of the University of Aberdeen have formulated one of the most complete and comprehensive proposal for an international convention. We will focus on the basic features of this proposal. 1.

The Basic Features of a Proposal for an International Convention

The model proposed by Paul Beaumont and Katarina Trimmings takes as a template the very successful Hague Convention on Inter-country Adoption of 1993.33 It is based on an altruistic but pragmatic model of surrogacy, in that it authorises payments to a certain extent. It sets out three major objectives, which are the minimum standards for surrogacy procedures, the establishment of a mechanism to secure the protection of those standards and the promotion of cooperation and communication among the authorities of the countries involved in cross-border surrogacy arrangements.34 The Convention is centred on a pre-approval system of each surrogacy arrangement. The legal status of the intended parents with children born as a result of a pre-approved arrangement will be guaranteed and benefit from automatic recognition in the country of origin of the intended parents.35 Further, it is hoped that with the adoption of a multilateral instrument the exchange of information will be facilitated, decreasing limping family situations, and averting tourisme procréatif: vers un instrument de coopération internationale, Clunet 2014, p. 563 et seq., esp. p. 566 et seq. 31 See: Hague Conference on Private International Law/Permanent Bureau, The Desirability and Feasibility of Further Work on the Parentage / Council on General Affairs and Policy of the Conference, p. 21, no 51, available at . 32 L. BRUNET and others, A Comparative Study on the Regime of Surrogacy in EU Member States, DIRECTORATE GENERAL FOR INTERNAL POLICIES, POLICY DEPARTMENT C: CITIZENS’ RIGHTS AND CONSTITUTIONAL AFFAIRS, May 2013, available at. 33 P. BEAUMONT/ K. TRIMMINGS (note 30), at 534. 34 P. BEAUMONT/ K. TRIMMINGS (note 30), at 535. The report prepared for the European Parliament while examining an EU-level response also considers that the Intercountry adoption convention of 1993 is the best legislative model but believes that it must be supplemented with choice of law rules: L. BRUNET and others (note 3), at 175 et seq. 35 P. BEAUMONT/ K. TRIMMINGS (note 30), at 546-547.

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Konstantinos Rokas trafficking of women and children, at least indirectly.36 The functioning of the system will be based on two fundamental principles, namely the best interest of the child and the principle of a genetic connection.37 According to the first principle, an assessment of the suitability of the intended parents will always precede the decision, whereas the principle of the genetic connection will permit surrogacy only when there is a genetic connection with at least one of the intended parents.38 Furthermore, as with the Inter-country Adoption Convention, a crucial role is to be entrusted to the Central Authorities of contracting states.39 Each country implicated in a procedure will assume specific responsibilities. Accordingly, the authorities of the habitual residence of the intended parents will control the conditions of suitability that intended parents must fulfil (age limits, family status) as well as the “consequential effects of the surrogacy arrangements”. The authorities of the country of birth will provide the conditions under which residents can become surrogates (medical checks, marital status, children of their own),40 and ensure a full and informed consent and the adequate reimbursement of women etc. The system examined is noteworthy in that it takes into account and proposes a pragmatic regulation of the major issues that arise in the context of a cross-border surrogacy, i.e., the legal status of the child born and the rights of all the parties implicated. It has the merit that it builds on an existing model. This approach has the advantage that it could attain economies of scale. Finally, the research carried out in support of this proposal has the irrefutable value of clarifying the realities and difficulties of cross-border surrogacy practices. Nonetheless, there are specific points in the function of this system that raise scepticism over its feasibility and its effectivity. We address these concerns below. 2.

Difficulties in the Conclusion of a Convention and a Possible Common Ground

One of the important hurdles in the conclusion of an international Convention lies in the contrasting positions and interests of countries in surrogacy practices. On the one hand, there is a flourishing business in several countries, especially India and several states of the United States, which generates huge profits. On the other hand there are countries that categorically prohibit surrogacy. It is easy to predict that countries where surrogacy procedure constitutes a lucrative activity will have an interest in boycotting such an international Convention or its recommendations. Indeed, the study conducted by The Hague conference revealed that the United States, a major player in cross-border surrogacy, opines that no further work P. BEAUMONT/ K. TRIMMINGS (note 30), at 534. P. BEAUMONT/ K. TRIMMINGS (note 30), at 539. 38 P. BEAUMONT/ K. TRIMMINGS (note 30), at 539. 39 P. BEAUMONT/ K. TRIMMINGS (note 30), at 541. Practical difficulties such as the operational cost of Authorities is proposed to be answered either by extending the role of Central authorities competent for Inter-country Adoption either by charging an administrative fee the intended parents. 40 P. BEAUMONT/ K. TRIMMINGS (note 30), at 542-543. 36 37

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National Regulation and Cross-Border Surrogacy in European Union Countries “towards a multilateral instrument specifically on International Surrogacy Arrangements should be undertaken”.41 As a consequence, it may be that only a limited number of countries will have a tangible reason to ratify the Convention, which would limit its persuasive effect. Beyond contradictory interests among countries, it may be difficult to agree on an international convention due to specific provisions of the proposal. Among other things, the provision for a pre-approval procedure during which the suitability of intended parents will be assessed, does not conform to the reality of surrogacy procedures. It runs counter to the whole economy of surrogacy in most countries that allow it.42 These countries do not control the fitness of the intended parents, in ways similar to screening for adoption procedures. When jurisdictions or authorities intervene, it is only to control that the legal conditions are met. Hence, a similar condition would constitute a serious limit on the practice of liberal countries, which would seriously undermine the chances of ratification of such an international Convention. Moreover, it has been shown that concluding an international convention presupposes a minimum explicit acceptance of surrogacy procedures, at least when they are conducted in foreign countries. The proposal advances that the country of the habitual residence will govern the suitability criteria for the intended parents. This provision seems to be in contradiction with the fact that some of those countries prohibit surrogacy and therefore do not have provisions on the suitability of intended parents.43 Moreover, not even moderately favourable countries provide for such an assessment. Thus, the proposal appears to take as granted that restrictive countries will permit and regulate surrogacy, or at least accept the effects of cross-border surrogacies. Such a step will be difficult to be accepted in legal orders where surrogacy has provoked political debate under much polarised terms, as was the case in France.44 Likewise, the rising influence of conservative See: Hague Conference on Private International Law, (note 31) at 21. M. WELLS-GRECO (note 5), Maastricht University, 2015 under: “1.1.7 Birth registration and records”; for Greece see A.C. PAPACHRISTOU, Family Law (in Greek) (note 17), at 219. 43 See also in that sense J. TOBIN, To Prohibit or Permit: What is the (Human) Rights Response to the Practice of International Commercial Surrogacy?, I.C.L.Q. 2014, p. 317 et seq., esp. p. 333-334. 44 Surrogacy has generated a lot of litigation in France already from 1986 till very recently; TA, Strasbourg, 17.06.1986, JCP 1987, II, 20719; Cour de cassation, 13.12.1989, JCP 1990, II, 21526, note by SÉRIAUX; obs. by J.-L. AUBERT, D. 1991, p. 318; p. 273, J. MASSIP; RTD civ. 1990, p. 254, obs. by J. RUBELLIN-DEVICHI; Cass. civ., 31.05.1991, RCDIP 1991, p. 711 et seq., note by C. LABRUSSE-RIOU; Cass. civ. 1re, 29.06.1994, D. 1994, p. 581-582, note by Y. CHARTIER; Cass. civ. 1re, 9.12.2003, D. 2004, p. 1998 et seq., note by E. POISSON-DROCOURT; TGI Lille, 22.03.2007, D. 2007, p. 1251 et seq, note by X. LABBÉE; CA Paris, 25.10.2007, Gaz. Pal., nos 27-29, 27 - 29.01.2008, p. 20 et seq, note by G. de GEOUFFRE de la PRADELLE; Cass. civ. 1re ,17.12.2008, J.D.I. 2009, p. 577 et seq. note by S. BOLLÉE; Cass., civ. 1re, 6 avril 2011; D. BERTHIAU/ L. BRUNET, L’ordre public au préjudice de l’enfant, D. 2011, p. 1522 et seq; Cass. civ., 1re, 6.04.2011, n° 09-17.130, n° 09-66.486, n° 09-19.053; Rev.crit. DIP 2011, p. 722 et seq., note by P. HAMMJE, Cass. Civ. 1re, 13.09.2013, n° 12-18.315, n°12-30.138; M. FABRE-MAGNAN, Le refus de transcription: la Cour de cassation gardienne du Droit, D. 2013, p. 2384 et seq.; 41 42

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Konstantinos Rokas political powers throughout European Union countries is another feature likely to delay any progress in attempts for an international regulation. In addition, if restrictive national legal orders adopted within specific limits the possibility to have recourse to surrogacy, this would also limit the practical interest of an international convention. The above concerns over the difficulties in concluding an international Convention are not meant to suggest that no common ground or points of convergence can be found among liberal and prohibitive national legal orders. It is beyond doubt that there are significant differences in the way surrogacy and its effects are perceived and regulated. Nonetheless, there are also specific issues of surrogacy where we can delineate points of convergence. There are at least two issues of major importance for every cross-border surrogacy. The first is the parental responsibility of children born through surrogacy in foreign countries and the second the protection of the rights of individuals who take part in the process and especially of the surrogate. In relation to the first issue, we observe that the majority of countries prohibiting surrogacy agree to finally attribute or at least not to disrupt the parental responsibility that intended parents receive from a foreign decision or on the basis of a public act.45 The recent double decision of the European Court of Human rights in the Mennesson and Labassee cases is likely to consolidate this practice.46 And of course, the majority of both prohibitive and C. PETIT, Statut juridique des enfants nés d’une gestation pour autrui réalisée à l’étranger, D. 2013, p. 2377 et seq.; H. FULCHIRON/ C. BIDAUD-GARON, Dans les limbes du droit, À propos de la situation des enfants nés à l’étranger avec l’assistance d’une mère porteuse, D 2013, p. 2349 et seq.; Cass. civ., 19.03.2014, Rev.crit. DIP 2014, note by S. BOLLÉE; J. HEYMANN, Convention de mère porteuse et refus de transcription de l’acte de naissance étranger: bis repetita non placent!, JCP 2014, p. 1051 et seq.; CE 12 déc. 2014, n° 367324, Association Juristes pour l’enfance et autres, D. 2015, 355, note by H. Fulchiron, C. BidaudGaron; RTD civ. 2015, p. 114, note by J. Hauser; On the arguments in France against surrogacy see esp. FABRE-MAGNAN Muriel, La gestation pour autrui. Fictions et réalité, Paris, Fayard, 2013; see however a more moderate approach, in R. THÉRY/ A.-M. LÉROYER, Filiation, origines, parentalité, Le droit face aux nouvelles valeurs de responsabilité générationnelle, Rapport du groupe de travail Filiation, origines, parentalité, Ministère des affaires sociales et de la santé, Ministère délégué chargé de la famille, 2014, p. 185 et seq. 45 Apart from a recent decision of the Italian Supreme Court (Corte di Cassazione, sez. I Civile, sentenza 26 settembre – 11 novembre 2014, n. 24001) the jurisdictions of countries prohibiting surrogacy have almost never deprived the intended parents of the custody of children born as a result of surrogacy procedures abroad. 46 ECHR, Mennesson v. France, 26.06.2014 (application no. 65192/11) and Labassee v. France, 26.06.2014 (no. 65941/11); In these decisions see in particular: L. D’AVOUT, “La reconnaissance” de la filiation issue d'une gestation pour autrui à l'étranger, après les arrêts Mennesson et Labassée, D. 2014, p. 1806 et seq.; C. BIDAUDGARON/ H. FULCHIRON, Ne punissez pas les enfants des fautes de leurs pères. Regards prospectifs sur les arrêts Labassée et Mennesson de la CEDH du 26 juin 2014, D. 2014, 1773 et seq.; J.D.I. 2014, p. 1265 et seq. note by J. GUILLAUMÉ; For a very critical position towards this decision see F. CHÉNEDÉ, Les arrêts Mennesson et Labassée ou l'instrumentalisation des droits de l'homme, D. 2014, p. 1797 et seq. In these decisions the European Court of Human rights found that an absolute prohibition of the establishment of a relationship between a father and his biological children born following surrogacy abroad constitutes a violation of a child’s right for respect of its private life.

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National Regulation and Cross-Border Surrogacy in European Union Countries permissive countries agree that the practice of some intended parents abandoning children born following cross-border surrogacy must be condemned. With regard to the second issue of the protection of the rights of the participants we can observe that no country denies that the surrogate must enjoy special protection. Further, there is no doubt that the surrogate and her husband must give a full and informed consent prior to any process of surrogacy. In addition a consensus is possible on several other issues that require nonetheless more thorough analysis. These concern the right of the surrogate to her personal autonomy and more precisely her right to terminate the pregnancy, the need for an appropriate medical and legal counselling of all the participants, medical issues such as the number of embryos that can be implanted into a surrogate, the number of permitted attempts of transfer of an embryo to the surrogate and the medical screening of participants must be submitted to. In view of the above we believe that an international text at present should be limited to focus on the aforementioned key issues. Eventually, it would be better to abandon the prospect of a text aiming to regulate ex ante cross-border surrogacy so as to concentrate on the recognition of the legal status of the children. Similarly, it is advisable to leave the choice of the specific status to regularize the legal link of children with intended parents at the discretion of each state. The added value of the Convention is that people who go to countries that conform to a number of specific conditions set by the Convention will enjoy the presumption of the recognition of the legal link of parentage created or access to an alternative legal status guaranteeing the continuity of the family link. By contrast, people who access surrogacy in countries where the respect for fundamental rights of parties and especially of the surrogate cannot be proven, should be subject to some kind of sanctions, probably of financial nature. Money paid for those sanctions could be reserved for compensating surrogates whose rights might have been encroached, or endowed to a fund created by contracting states to further research on the consequences and psychological welfare of people implicated in a surrogacy procedure. It could also be invested in campaigns providing more information to surrogate mothers as to their rights and especially their right of personal autonomy. The information can be translated in the language of countries where surrogates are often sought and may be at risk. Finally, a mechanism of cooperation among national authorities on surrogacy is perhaps the most useful tool and the easier to attain, even if the part concerning recognition of family status should fail to be accepted. Such cooperation could facilitate the exchange of information in a rapidly changing legal environment so as to better secure the protection and rights of the most vulnerable. Cooperation among authorities can be a way to protect the rights of the surrogate. They can, for instance, have the duty to intervene when intended parents do not assume the parental responsibility of the child born or when they leave the country where surrogacy took place without paying the agreed compensation.47 It would be 47 In that direction a specific role could be reserved as well to the consulate authorities that exercise their duties in countries which are known to have a developed sector of reproductive care services. Consulate authorities could be vested with the duty to protect surrogate mothers abandoned with the children they have given birth to or of those whose rights might have been violated during the whole procedure.

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Konstantinos Rokas wise in this context to provide for a mechanism allowing the surrogate or the authority where the procedure took place to track the intended parents so as to force them to assume their responsibilities. Cooperation can also facilitate gathering information on the practices of countries that authorise surrogacy (for instance in screening of individuals), in order to have a picture of how legal frameworks work in practice and whether the rights of people in surrogacy arrangements are respected. The exchange of information is aided by the research already carried out at the level of the European Union and of the Hague Conference. It is essential that this information is kept up to date. Cooperation should be promoted in relation to the legal status of children born, both in an international context and within the European Union. European Union countries, which in general have a more reserved stance towards surrogacy, should accelerate the regional establishment of a mechanism for cooperation. Such an initiative can push liberal third countries that are reluctant or even try to block the conclusion of an international convention to participate more actively in the work towards a global instrument. Of course, any initiative at a regional and even more at the international level can be lengthy and costly. Therefore, one should draw attention to the positive impact of changes at a national level on the regulation of cross-border surrogacy. B.

National Level

National legislators should not stay inert. Depending on the approach a country adopts, there are specific measures that can be envisaged to deal with some of the most challenging issues posed by cross-border surrogacy procedures. We will present some thoughts on provisions that could contribute directly or indirectly to the challenges that arise from cross-border surrogacy cases and also examine other suggestions made. The ideas formulated here are based on the premise that a complete prohibition of surrogacy is neither possible nor desirable. 1.

Remedies for Liberal Countries

Pro surrogacy countries have the means to limit the probability of difficult situations already from the outset of a cross-border procedure. In that sense a coordination of national legal orders can be achieved if permissive countries limit the ambit of the application of their legislation so as not to allow access for people with habitual residence or domicile in other countries.48 A milder alternative recommends not to indiscriminately limit access to surrogacy for people that do not meet a residency requirement but limit access for individuals who will face subsequently problems to have the personal status of the child recognised in the

48 See in that sense: S. BOLLÉE, La gestation pour autrui en droit international privé, presentation before the French Committee on Private International Law (Comité Français de droit international privé), Paris, 28 March 2014. We would like to express our gratitude to Professor Sylvain Bollée, who kindly gave us the text of his presentation before its publication.

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National Regulation and Cross-Border Surrogacy in European Union Countries country of their habitual residence.49 Except for the UK that has provisions in that sense, it seems that some liberal countries are on the way to adopt similar limitations. Among those countries, India might try to coordinate with the practices of the country where the child will move after the birth.50 Thailand, which has attracted recent media attention for a case of a child born with trisomy-B abandoned by its intended parents and for a case of a 24 year old Japanese man who has been in an arrangement with different Thai surrogates leading to the birth of 15 children,51 has adopted a law prohibiting commercial surrogacy.52 Notwithstanding the potential of similar approaches that might be adopted in a number of countries, we do not believe that they constitute a very efficient solution to tackle the range of problems that arise. Firstly, one has to take into account the growing number of countries that allow commercial surrogacy with no similar limits. Secondly, some clinics might move their practice to friendlier jurisdictions. Thirdly, one must consider that to restrict access to surrogacy in some legal orders can lead couples to other countries53 where a less secure model persists or to black markets where there is absolutely no control. Finally, we have seen above that even in the UK and Greece where similar limitations have been adopted – at least originally – individuals from other countries have not been completely excluded from access to surrogacy. Such limitations can nonetheless be of some value when the legal order that organises the procedure has not taken appropriate measures to protect the surrogate, the child and the intended parents from adverse events, which are particularly likely to arise in a cross-border context. This selflimitation of liberal legislations does not suffice to respond to several serious issues that arise in a cross-border context. Therefore, we would like to present some thoughts that can be useful in this context. The first concern for participants is the regulation of parentage after birth, like in the case of the UK. The fact that parentage is determined after the birth of 49 K. BOELE-WOELKI, (Cross-Border) Surrogate Motherhood: We Need To Take Action Now, in (Permanent Bureau Of The Hague Conference On Private International Law), Festschrift Hans Van Loon 2013, p. 47-58, esp. p. 57-58; A. BUCHER, La migration de l’état civil, in (Permanent Bureau Of The Hague Conference On Private International Law), Festschrift Hans Van Loon 2013, p. 101 et seq., esp. p. 109-110. 50 See: ; R. CARR, India to enforce visa restrictions on those seeking surrogacy, Bionews no 729 4/11/2013, available at ; More recently, it seems that there have been some proposals of legislation to exclude foreign nationals from surrogacy in India . 51 A. AHMAD/ J. BROOKS, Thai surrogates battle for babies birthed for Japanese millionaire, Bionews no 786, 19.01.2015, available at. 52 See: J. HEAD, Thailand bans commercial surrogacy for foreigners, 20.02.2015, available at ; J. SHARPE, Thai parliament votes to outlaw commercial surrogacy, Bionews no 782, 01.12.2014, available at . 53 See in that sense: La Thaïlande veut interdire le recours à une mère porteuse, (Source AFP) available at .

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Konstantinos Rokas the child can be a source of serious problems. For example, such a situation arises in the event of the sudden death of the intended parents prior to the initiation of the procedure for the attribution of the parental status. The child will be deprived of any succession rights towards its intended parents and the surrogate remains responsible for the child contrary to her original intention. To prevent such problems it has been proposed to replace the ex post regulation of parentage with an alternative regulation permitting the creation of the intended parent-child relation immediately at the child’s birth.54 This proposal does not necessarily exclude the right of the surrogate to revoke her consent to the regulation of the parentage even after the conception has occurred. In addition, in favour of such regulation of parentage, one could argue that it allocates responsibilities in a better way and can make the intended parents aware of the complexity of the operation they engage in and their obligations towards the surrogate and the child to be born. The second concern we insist on is the protection of the rights of the surrogate. For this purpose, it would be advisable that the surrogate and her family receive counselling prior to the procedure from an independent authority such as the Human Fertilization and Embryology in the case of the UK. In addition, the intended parents should be obliged to sign an insurance contract covering healthcare costs to improve the protection of the surrogate and her family.55 Finally, countries that authorise surrogacy must create mechanisms to guarantee the reimbursement of the surrogate, since there have been cases where intended parents left for the country of origin with the child but without paying the surrogate. One way to avoid such situations is to require intended parents to deposit a guarantee in a bank account in the country where the whole procedure is effectuated. Some states in the United States require the deposition of a sum of money in an escrow account. The above proposals need more thought and analysis, which is beyond the scope of this article. They show, however, some of the concerns that should be a priority for the regulation of cross-border cases from the point of view of the liberal legal orders. Restrictive states, however, should also contribute responses to some of those problems, and more precisely the protection of the rights of participants, since the rationale of their prohibitive approach often is the protection of the most vulnerable in surrogacy.

54 R. D’ALTON-HARRISON, Mater Semper Incertus [sic] Est: Who’s Your Mummy?, Medical Law Review 2014, p. 357 et seq., esp. p. 373 et seq.; N. KOUMOUTZIS, The Establishment of Motherhood in Surrogacy Cases, in Assisted Reproduction in Europe: Social, Ethical and Legal Issues, conference organized by Aristotle University of Thessaloniki, 11-13 December 2014 (To be published). N. KOUMOUTZIS justifies his position on the basis of the reproductive rights of the women participating in a surrogacy arrangement. He explains that such regulation conforms to the will of the intended parent to create a family and the will of the surrogate not to create one. 55 A problem could result in cases where the insurance market does not provide for a policy covering dangers from a surrogacy procedure. Personal research carried out on the Greek legal order revealed that insurance companies do not provide adequate insurance contracts for surrogacy procedures.

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National Regulation and Cross-Border Surrogacy in European Union Countries 2.

Remedies for Restrictive Countries

Many countries still strictly prohibit surrogacy and do not envisage legalizing it soon. This position, however, would not be inconsistent with an attempt to adopt measures to protect surrogates or to discourage people from access in countries lacking a comprehensive legal framework and transparency. On the contrary, to not differentiate the legal treatment of individuals with access to surrogacy is both unrealistic and inconsistent with the positive law of most of the countries that prohibit surrogacy. The majority of countries prohibiting surrogacy allow in one or another way for the creation of a legal link with the intended parents and certainly do not go so far as to disrupt the parental responsibility which is de facto exercised by the intended parents.56 Therefore, until any initiative for an international convention succeeds, it would be wise to provide a simplified procedure at a national level for recognising the legal status of children and intended parents with recourse to countries with a minimum degree of standards. By contrast, people seeking surrogacy in countries without sufficient information on the respect of the rights of the children and the participants should incur monetary sanctions. Some of the measures envisaged above in the context of an international mechanism could thus be adopted by states concerned over the violation of the rights of surrogates. However, this solution should, as already suggested, be accompanied by less strict regulation of surrogacy and a legalisation of at least the less controversial forms of surrogacy.57 In support of this position we would like to critically examine some of the arguments invoked against surrogacy. Before we provide little more detail of the arguments, we have to review some facts that have clouded the discussion on surrogacy and created reasonable suspiciousness. On the one hand, the press and media coverage often focuses on the most negative situations generated by surrogacy procedures. On the other hand, people from prohibitive countries who have had access to surrogacy often try to deny or minimize the commercial aspect of surrogacy in efforts to defend their parental status. The first approach neglects the fact that surrogacy is currently a widely accepted practice, regulated in many developed countries, and in the vast majority of cases no problems occur in the process. Further, it emphasizes the contractual aspect of the procedure, neglecting how in most of the legal orders that have legalised surrogacy, it is still the law, written or judge-made, that permits the change in the conception of legal parenthood. Even the most surrogacy friendly 56 L. BRUNET and others, A Comparative Study on the Regime of Surrogacy (note 3), at 72-104, 112-114, 120, 123. The legal link in Belgium and the Netherlands is often created through adoption or by recognition of the biological father as the legal father. On the other hand, Austria proceeds to the recognition of the status created abroad. Similar solutions have been found in Italy and in Germany that adopt a strict prohibition. Finally, even in France, where a very categorical refusal of any legal link with the intended parents was adopted, intended parents were never deprived of the custody of the child. 57 In favour of a less restrictive legislation on Surrogacy see also F. SHENFIELD, Crossing borders for gametes donation and surrogacy: a legal puzzle?, in Assisted Reproduction in Europe: Social, Ethical and Legal Issues, conference organized by Aristotle University of Thessaloniki, 11-13 December 2014 (To be published).

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Konstantinos Rokas jurisdictions do not leave individuals utterly free to dispose as they wish the parentage link. The second approach understates how the surrogates who rendered service might have had primarily financial motivation. People generally do not engage in onerous activities without compensation. In addition to individuals that try to hide the financial aspects of surrogacy, legislation also tries to underplay this aspect by calling a surrogacy procedure “altruistic”. As regards the approach of some relatively liberal countries like the UK and Greece, to speak about “altruistic” surrogacy is somewhat hypocritical. In the UK the legislation allows only reasonable compensation whereas the Greek authority on Assisted Reproduction fixes the maximum amount that can be given to the surrogate.58 The two solutions do not allow for seeing clearly how those altruistic surrogacies differ from surrogacy practices characterized as commercial. Despite differences that might exist in practice, one has to admit that it is difficult to set a clear dividing line between commercial and altruistic. Except for cases where a family member or a close friend will serve as a surrogate, the financial aspects will constitute an important incentive. Therefore, we believe that it is better to be explicit on the commercial aspects whenever one is trying to state whether surrogacy is an acceptable means to have children. We now turn to our view that arguments invoked against surrogacy are not sufficiently solid to warrant an absolute ban. We will start by examining the objection highlighting the commercialisation of the human body. It has been argued in several countries that surrogacy should be illegal since it constitutes a commodification of the human body. The argument is not convincing in that such commodification is implicitly or explicitly accepted for other legal professional activities, which are more harmful for people exercising them. The majority of European Union countries have professional or semiprofessional armies. Mining, working in a shipyard, or in chemical industries also imply the commercialization of physical forces and consequently of human body. Both activities mentioned often lead to serious accidents – sometime lethal – and both categories of “workers” have often lower life expectancy than other categories of workers.59 Unlike surrogacy these activities are more likely to provoke irreparable harm to individuals practicing them, yet nonetheless they are accepted.60

58 See K. PARIZER-KRIEF, Gestation pour autrui et intérêt de l’enfant en Grande Bretagne, De l’indemnisation raisonnable de la gestatrice prevue par la loi à la reconnaissance judiciaire des contrats internationaux à but lucrative, RIDC 2011, p. 645. In Greece according to Art 2 of Ministerial Decision no 36 [OG B’ 670/16.04.2008] the amount of money cannot exceed 10,000 €. 59 See in that sense T. VIDALIS, Surrogacy and Reproductive Tourism, in Assisted Reproduction in Europe: Social, Ethical and Legal Issues, conference organized by Aristotle University of Thessaloniki, 11-13 December 2014 (to be published). 60 It is not possible to deny that a basic motivation or at least one of the motivations of people that enrol in professional armies is of financial nature. The same is true about an important number of surrogacy procedures. Women that serve as surrogates often aim at the relief that the financial gain will offer them, but no one has proven that this is their sole and exclusive motivation. It is not contradictory to claim that a person who takes into consideration the financial gain of his acts can also be inspired by other altruistic

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National Regulation and Cross-Border Surrogacy in European Union Countries Besides this, one must consider the position suggesting that surrogacy is a form of exploitation, limiting to an unacceptable degree the private autonomy of women. In response to the exploitation, one has to observe that it is not surrogacy per se that creates exploitation, but rather the living conditions in specific societies where people make such choices. In support of this, one can observe that incidents reported in the press suggesting exploitation of surrogates systematically pertain to countries with poor living standards. By contrast, there is no evidence that such exploitation exists in developed countries such as the various states in the United States, Canada and Australia, New Zealand or the UK, who all allow surrogacy under specific conditions and limits. Further, poor living conditions seem to push individuals in underdeveloped societies to sell their organs. Such concerns have not led legal orders to ban organ donation among relatives.61 It has been preferred to regulate62 such donations providing for strict screening of donors, including psychiatric assessment and detailed descriptions of the risks. As regards limitations of private autonomy, one has to observe that similar limitations are conceivable in several fields of labour law. In that sense it has been shown that athletes in the contracts they sign give significant power to team owners to control their diet and behaviour, and accept as part of their obligations to be submitted to periodic tests.63 Serious limits exist also in military service contracts, where individuals cannot quit whenever they wish.64 Further, it has been claimed that commercial surrogacy should be banned as it constitutes a prohibited sale of a child.65 We do not believe that even commercial surrogacy can be compared to the sale of children. Custody of a child is transferred not because of the remuneration but because of the fact that the persons who initiated the surrogacy arrangement have been involved from the outset in the conception of the child. Intended parents are very often involved in the conception motivations. It is not unreasonable to believe that the surrogate and her family can feel gratified by helping a – very often infertile – couple or individual to create its own family. 61 The risk of psychological pressure on potential donors among relatives cannot be excluded in advance in countries where the donation of human organs among relatives is accepted. Only an efficient legal framework providing for adequate screening, counselling and control of such procedures can guarantee the protection of the most vulnerable. Finally, it should be borne in mind that such acts of donation entail a much greater direct attack to the integrity of the human body than surrogacy, since the capacity of the donor is irremediably compromised, unlike the physical powers of a woman to gestate. 62 In that sense see D. SATZ who believes that the exploitation concern can be addressed by the appropriate regulation as in other fields where such a danger exists, in D. SATZ, Why Some Things Should not Be for Sale, The Moral Limits of Markets, Oxford University Press, 2012, at p. 125. 63 D. SATZ (note 62), at 119. 64 D. SATZ (note 62), at 119. 65 For this argument see TOBIN, To Prohibit or Permit: What is the (Human) Rights Response to the Practice of International Commercial Surrogacy? (note 43), at 335 et seq. According to the author commercial surrogacy – which he distinguishes from altruistic surrogacy (at 318, fn. 7) – amounts to the sale of a child and is contrary to article 35 of the Convention on the Rights of the Child and to article 2(a) of the Optional Protocol of this Convention. Against see: D. SATZ (note 62), at 124.

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Konstantinos Rokas of the child genetically, emotionally and financially. The fact that legislations accept such a process means that the custody of the child is no longer an issue resting exclusively on the decision of the woman that carries the child. Intended parents are not deemed to be related to the child only in the case of a genetic connection, but primarily because their intention is the main reason of the child’s existence. Therefore, even in the most liberal countries in relation to surrogacy, the transfer of the child cannot be considered as dependent on the remuneration. This can easily be shown with an example. Would the surrogate be entitled by the law to refuse to transfer the child if the intended parents went bankrupt? The answer must be negative. Similarly, in several countries such as Greece and South Africa – the intended parents cannot withdraw from the process and refuse to assume the parental responsibility towards the child born without suffering legal consequences. Moreover, countries that allow surrogacy as a foundation for the creation of legal parentage explicitly recognise that the intention of the intended parents and their personal investment is materialised by their involvement in the surrogacy process and their personal investment. In addition, the financial parameter is not per se sufficient to condemn surrogacy and the resulting legal link of parentage. Surrogacy is a complicated process which necessitates the participation of several specialists in order to succeed and generates specific costs. Similar costs exist also in adoption procedures, for instance for social worker’s reports on the suitability of adoptive parents. Such reports have a cost which is often assumed by the state. If this was not the case it would be easier to see how money is also a condition for the transfer of a child in the case of an adoption. However, the necessity of money changing hands alone does not make it reasonable to compare surrogacy to the sale of a child. Finally, one should examine the objection that surrogacy reproduces gender inequality among men and women. According to SATZ “Markets in women’s reproductive labour are troubling to the extent that they reinforce gender hierarchies – unequal status between men and women – in a way that other, accepted labor markets do not.”66 Her claim is based on two arguments. The first is that surrogacy contracts provide for a significant control of women’s bodies and reproduce stereotypes of women as “baby machines”. We are reluctant to embrace this reasoning. Firstly, it has to be taken into consideration that clauses in surrogacy contracts on abortion are not necessarily valid. Second, the gender inequality argument presupposes that a surrogate is necessarily in a vulnerable situation, and this assumption is not necessarily correct. Third, surrogacy empowers women rather than generates inequality with men in that it allows them to contribute to the parental project of third persons in a much more significant way that men can. The fact that she is compensated for her contribution does not render it less meaningful. Similarly, the fact that some surgeons operate for fees that sometimes are extraordinary does not make them feel less gratified for saving lives. In addition, it must be taken into consideration that to carry a child does not entail the same level of difficulty or dangers for all the women. This means two things. The first is that not all women can become surrogates. The second is that 66 D. SATZ (note 62), at 117, 127-133; on this argument see also J. TOBIN (note 43), at 346-347.

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National Regulation and Cross-Border Surrogacy in European Union Countries women who have become pregnant, carried a child and given birth under exceptionally good conditions are more likely to wish to become surrogates. To have such ability – if we can characterise it in this way – and contribute to the dream of a couple to have their own family can by many women be seen as a means of self-fulfillment that does not undermine equality. In any case, it should be noted that the above objection does not lead Satz to suggest an absolute prohibition of surrogacy procedures, since she is in favour of a regulated model.67 Given the above considerations, we believe that surrogacy constitutes a method that should not strictly be excluded, even where compensation is permitted for within the relevant legal framework. Even if surrogacy cannot in the short term be envisaged when a financial compensation is required, one must consider that countries that have authorised surrogacy have a significant number of arrangements whereby the person who decides to carry a child does not receive any kind of financial reimbursement apart from medical expenses. It is most often the case where a close member or friend of the family agrees to become a surrogate.68 Hence, it is reasonable to propose that restrictive countries should provide for the creation of a limited and regulated surrogacy practice, even if this is limited to family members, as it is the case in Brazil.69 Even such a restricted model can reduce the number of people travelling to unregulated countries or countries where there is not sufficient transparency over the practices followed. Such regulation is likely to reduce difficulties linked with the cross-border character of a surrogacy procedure. Such a change in national regulations is surely the worst fear of countries where a lucrative surrogacy business has developed.

IV. Conclusion We have presented above two regulated models of altruistic surrogacy that adopt different solutions with regards to parentage. We have seen how the UK and Greece have adopted some spatial criteria for access to surrogacy, yet these did not exclude couples and individuals from other countries from using these techniques. We have tried to show that some of the difficulties of surrogacy result precisely D. SATZ (note 62), at 132. For Greece see P. RAVDAS (note 23) at 81; see also C. AUTIN/ M.L. GUSTIN/ A. DELVIGNE, In vitro fertilization surrogacy: experience of one Belgian centre’, 26 Human Reproduction 2011, (suppl 1) i80–i82. This article appears in Abstracts of the 27th Annual Meeting of the European Society of Human Reproduction and Embryology, Stockholm, Sweden, 3–6 July 2011, Selected Oral Communication Session, Session 53: “Cross Border Reproductive Care & ART in Developing Countries”, Tuesday, 5 July 2011, available at . 69 N. de ARAUJO/ D. VARGAS/ L. de CAMPOS VELHO MARTEL, Brazil, in P. BEAUMONT/ K. TRIMMINGS, International Surrogacy Arrangements: Legal Regulation at the International Level (Studies in Private International Law), Hart Publishing, Oxford/ Portland, 2013, p. 85 et seq., esp. p. 87. 67 68

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Konstantinos Rokas from the cross-border character of the procedure, and we have stressed the need to address the concerns that arise in this context. We have analysed the efforts carried out so far for global regulation and expressed our scepticism over the feasibility of existing proposals. We have further maintained that such attempts might stand a better chance if they focused more on some of the technical issues surrounding surrogacy, which could secure better protection of the rights of the participants. For this, a more active role of European Union institutions would be helpful. Before such efforts bear fruit, national legal orders should not spare efforts to address the problems that arise. Irrespective of their position, countries can adopt some measures to limit the frequency and extent of the problems that can result from cross-border surrogacy arrangements. Thus, permissive countries should reconsider the regulation of parentage after surrogacy, moving towards a model that creates a legal status before the birth of the child. These countries should not limit their interest in cooperation mechanisms, since regulating surrogacy does not entail an approval of surrogacy arrangements, irrespective of the circumstances. Prohibitive countries also have an interest in clarifying their recognition practices of surrogacies that take place in foreign countries. By facilitating the recognition of the family status of children born in countries where minimum respect has been secured, individuals can be discouraged from travelling to countries where practices are more likely to lead to violations of the rights of surrogates. Finally, easing the strict legislation would in the long term be a better approach to tackling the difficulties of cross-border surrogacy. The prominent French economist, Jean Tirole, Nobel award for Economics laureate 2014, emphasizes that it is better to analyse the markets’ failures to determine the best public policies instead of simply become indignant against them.70 We would like to close this presentation by citing his words: “Nos sentiments de repulsion sont très peu fiables comme source d’inspiration éthique. Il nous faut mieux comprendre les fondements de la moralité et ceux des craintes vis-à-vis de la marchandisation” [“Our feelings of repulsion are not a reliable guide to ethics. We have to better understand the foundations of morality and the fears of commodification”].71

70 71

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INTER-COUNTRY SURROGACY AND PUBLIC POLICY: LESSONS FROM THE EUROPEAN COURT OF HUMAN RIGHTS Michael WELLS-GRECO* / Henry DAWSON**

I. II.

III. IV.

Introduction The Role of Public Policy A. National Examples of Public Policy in Practice in the Context of Inter-Country Surrogacy B. Examples of Public Policy in Practice in the Context of Inter-Country Surrogacy Emerging from the Case Law of the European Court of Human Rights 1. Mennesson and Labassee: Recognition of Parent-Child Relationships that Had Been Legally Established Abroad 2. D and Others v Belgium: Delay in Authorising the Arrival of a Surrogate-Born Child to the Home State of the Intending Parents 3. Paradiso and Campanelli v Italy: Separation of a Child from Intending Parents Specific Lessons from the European Court of Human Rights Towards a Child-Centred Approach

I.

Introduction

Surrogacy arrangements are a known and increasingly popular method for couples (heterosexual or homosexual), and singles (again, heterosexual or homosexual),1 seeking to become parents.2 While a number of jurisdictions are now regulating

* Lecturer, Maastricht University, Partner at law firm Charles Russell Speechlys. This paper is based on Michael WELLS-GRECO’s doctorate dissertation entitled “The Status Of Children Arising From Inter-Country Surrogacy Arrangements: The Past, The Present, The Future”, Maastricht University, to be published in 2015. ** Trainee solicitor at law firm Charles Russell Speechlys. The comments are of a personal nature and do not represent the views of the firm. 1 Prel. Doc. No 11 of March 2011 for the attention of the Council of April 2011 on General Affairs and Policy of the Conference (available at “Work in Progress” then “General Affairs”); see Section IV(a). 2 With foreign fertility clinics in places in India and the USA actively promoting their services, and with global information at everyone's fingertips, it is not uncommon to regard international or cross-border surrogacy as “procreative” or “fertility tourism” (or,

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Printed in Germany

Michael Wells-Greco / Henry Dawson certain aspects of surrogacy this is by no means the general rule. Some jurisdictions, such as Belgium,3 have no legislation expressly permitting or prohibiting surrogacy arrangements; opting instead for voluntary guidelines or no form of regulation at all. Other countries, including France4 and Italy,5 have expressly banned the practice or introduced partial bans by making it impossible in conjunction with assisted reproductive treatment. Prohibiting surrogacy, however, does not of itself prevent these arrangements from occurring and all estimates point towards surrogacy being a practice that does in fact occur and is not particularly rare. There are a number of reasons for this. If intending parents6 have the financial means, it is possible for them to enter into surrogacy arrangements in countries where medically assisted surrogacy is available, surrogacy is lawful, there are a greater number of willing surrogates and the law of the place of birth of the child provides that the intending parents are the legal parents of the child at birth.7 Moreover, those who wish to enter into a surrogacy arrangement may attempt to do so through private surrogacy arrangements.8 Surrogacy has become an object of multiple debates. Outside law, surrogacy has interested commentators in a range of subjects, from medical science to more recently, “cross-border reproductive care”) but it is not a phenomenon which is likely to go away. 3 See J. VERHELLEN/ G. VERSCHELDEN, National Report on Belgium, in K. TRIMMINGS/ P. BEAUMONT (eds), International Surrogacy Arrangements: Legal Regulation at the International Level, Chapter 3, Oxford 2013. 4 Article 16-7 French Civil Code. 5 In Italy, Law n. 40 of 2004 prohibits both heterologous artificial insemination and “utero in affitto” (“rent of the womb”), thus effectively forbidding any form of surrogacy. 6 In this paper, unless quoting directly from legislation or case law, “intended parent” or “intending parent” is used given that not all surrogacy arrangements are necessarily commercial, which is what the term “commissioning parent”, seems to allude to and persons who are willing to act as surrogates, whether for altruistic and/or, more usually, commercial reasons, often wish to be assured that their rights of parentage ascribed to them at the birth of the child can be revoked and vested in the intending parent(s). 7 The surrogate may also be referred to as the “gestational mother”. There has been some debate over whether it is the intended mother or the gestational mother who is the surrogate. See D. MORGAN, A surrogacy issue: Who is the other mother?, International Journal of Law and the Family 1994, p. 386 et seq. In this paper, “surrogate” or “surrogate mother” is used to refer to a woman who agrees to carry and deliver a child for another individual or couple because alternate references to this role (“contract mother” and “gestational mother”) are not entirely accurate; e.g. woman who bears a child for another person may never perceive of herself as a mother. The phrase “contract mother” is arguably confusing, given that in a surrogacy agreement there is more than one potential mother, both of whom enter a contract. The term “gestational mother” is also ambiguous, since it clouds the fact that a surrogate might have both a gestational and genetic relationship with the child she bears. 8 Additionally, intending parents, previously unable to consider a surrogacy arrangement due to financial constraints, have become viable fertility tourists in the competitive global market place drives costs down and the internet enhances access to information.

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Inter-Country Surrogacy and Public Policy psychology,9 sociology,10 taxation,11 (bio)ethics12 and feminist13 studies. In addition to recent domestic initiatives connected to surrogacy arrangements,14 several international bodies and scholars have been working on projects with the aim of identifying and resolving the “problem” areas connected to surrogacy.15

E.g. S. GOLOMBOK et al., Surrogacy Families: Parental Functioning, Parent-Child Relationships and Children’s Psychological Development at Age 2, Journal of Child Psychology and Psychiatry 2006, p. 213-220; O. VAN DEN AKKER, Psychosocial Aspects of Surrogate Motherhood, Human Reproduction Update 2007, p. 53-62. 10 E.g. E. TEMAN, The Social Construction of Surrogacy Research: An Anthropological Critique of the Psychosocial Scholarship on Surrogate Motherhood, Social Science and Medicine 2008, p. 1104-1112. 11 E.g. B. CRAWFORD, Taxing Surrogacy, in Challenging Gender Inequality in Fiscal Policy Making: Comparative Research on Taxation 2011, p. 95-108. 12 E.g. E. STEHR, International Surrogacy Contract Regulation: National Governments’ and International Bodies’ Misguided Quests to Prevent Exploitation, Hastings International and Comparative Law Review 2012, p. 253-287. 13 E.g. D. SATZ, Why Some Things Should Not Be for Sale: The Moral Limits of Markets, New York 2010. 14 In the context of the Netherlands, for example, see K. BOELE-WOELKE et al, Draagmoederschap en illegale opneming van kinderen, Familie & Recht 2012 (the comparative report for the Dutch Ministry of Justice completed in 2011). With respect to Switzerland, see R. COOK et al. (eds.), Surrogate Motherhood: International Perspectives Oregon 2011; F. MONÉGER, Gestation pour autrui: Surrogate Motherhood, Societe de legislation compare 2011, p 127-128; the 2013 report of the Swiss Federal Council, Rapport sur la maternité de substitution, 29 novembre 2013 en exécution du postulat 12.3917 du 28 septembre 2012. 15 Four key research projects must be cited: the first of these concerns the work being carried out by the Hague Conference on Private International Law. The Permanent Bureau published a comprehensive report in April 2014, which incorporates the views of certain Members and other stakeholders further to the issuance and review of four questionnaires (HCCH study “A Study of Legal Parentage and The Issues Arising From International Surrogacy Arrangements”, Prel. Doc. No 3 C of March 2014 for the attention of the Council of April 2014 on General Affairs and Policy of the Conference). In February 2015 the Permanent Bureau drafted “An Updating Note”, Prel. Doc. No 3A, which sought to inform Members of key developments relevant to its “Parentage/Surrogacy Project” since the last Council meeting. In March 2015 the Council decided that an Experts’ Group should be convened to explore the feasibility of advancing work in this area and that the Group should meet in early 2016 and report to the 2016 Council meeting. The second project on intercountry surrogacy issues that requires special mention is the European Parliament’s comparative study on surrogacy in the EU Member States, which was published in May 2013 (L. BRUNET et al., A comparative study on the regime of surrogacy in EU Member States, European Parliament (2013)). The third project is the published work of P. BEAUMONT and K. TRIMMINGS of Aberdeen University (K. TRIMMINGS/ P. BEAUMONT (eds) (note 3). Finally, the synopsis of the International Commission on Civil Status concerning the law and practice in the context of surrogacy, notably as regards the legality of surrogacy contracts and the registration of the birth of the child, must also be cited (L’établissement de la filiation maternelle et les maternités de substitution dans les Etats de la CIEC, February 2014). 9

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Michael Wells-Greco / Henry Dawson The research corpus to date has highlighted the dilemmas for states in responding to inter-country surrogacy. The dilemmas are best reflected in the English High Court decision in X and Y (2008), Mr Justice Hedley commented that this made the process of authorisation of the surrogacy arrangement most uncomfortable: What the court is required to do is to balance two competing and potentially irreconcilably conflicting concepts. Parliament is clearly entitled to legislate against commercial surrogacy and is clearly entitled to expect that the courts should implement that policy consideration in its decisions. Yet it is also recognised that as the full rigour of that policy consideration will bear on one wholly unequipped to comprehend it let alone deal with its consequences (i.e. the child concerned) that rigour must be mitigated by the application of a consideration of the child’s welfare.16 [Emphasis added] It is perhaps unsurprising that surrogacy is a controversial and complex subject which raises social, ethical and legal issues. It is a subject that has aroused considerable interest following widespread publicity given to recent instances of such arrangements in a number of countries. The matter of Baby Gammy reported in the media in August 2014 (child born in Thailand to a surrogate who was allegedly abandoned by his Australian intending parents because he has Down’s syndrome) led to a public outcry.17 The concerns extend across the political spectrum and confound the usual divisions of “left” and “right”, “progressive” and “conservative”. As Cook and others have written, surrogacy creates “anxieties”.18 Nevertheless, what is important to consider at the outset is that as some jurisdictions become more permissive in their approach to surrogacy, and fertility treatments continue to grow in popularity and become more available, many jurisdictions are having to face these anxieties and difficult new challenges.19 Faced with [2008] EWHC 3030 (Fam), para. 24. See, e.g. from the main news stories, Gammy-Chanbua-and-the-surrogate-babiesleft-behind, The Telegraph 5 August 2014 available at . 18 R. COOK et al. (eds) (note 14) at 16. 19 According to the French magazine Libération, it has been reported there could be thousands of surrogate-born children in France on the basis that since around 400 French couples travel each year to a foreign country to carry out the practice. See C. ROTMAN, Gestation pour autrui: les enfants fantômes de la République, Libération 20 May 2009. The problem has already arisen before the Courts of France: G. CUNIBERTI, available at ; B. FEUILLET, Quel sort pour l’enfant né d’une gestation pour autrui à l’étranger?, available at . The most prevalent of these challenges (and the main focus of this thesis) are the themes of legal parenthood. See T. STRUYCKEN who observes the emergence of a new “refugee law” in Surrogacy, A New Way To Become A Mother? A New PIL Issue, in Convergence And Divergence In Private International Law 2010, p. 357-372. It should be noted that in many of the first reported cases (particularly in the USA) attention focused on disputes over the custody (residence) of children born as a result of surrogacy arrangements but the issues involved range well beyond the question of custody and the nationality of the surrogate-born child. See C. ROTMAN (as above). See also R. STORROW who speaks of “international surrogacy 16 17

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Inter-Country Surrogacy and Public Policy actually-existing children at risk of being denied access to family life and status, and, indeed, of being stateless, some courts and policy-makers have invoked the best interests of the child to legitimate the establishment of filiation that would otherwise run counter to prohibitionist national public policies. As noted in the English decision of Re L,20 the English Court’s paramount consideration is the welfare of the child and it will only be in the clearest case of the abuse of public policy that the court will be able to withhold an order, if otherwise welfare considerations support the parental order being made in the UK. This brings us to the actual point of this paper. Private international law (“PIL”) is a complex subject, both in terms of the technical character of its rules, and the range of competing policy interests at stake. The policy complexity is perhaps best understood as a consequence of the fact that PIL issues cut across a range of “private” and “public” interests, and can thus be viewed from a variety of perspectives. In the context of inter-country surrogacy, it is clear that the differing recognition policies with respect to parentage at the national level may result in a situation where a parental status established in one state may not be recognised in another state (i) after that child’s movement from the state of birth to the home state of the intending parents or (ii) migration from the home state of the intending parents to a third state. The consequence of non-recognition is the non-continuity of the child’s personal status and thus a (multiple) limping legal relationship – the fact that a status, though validly acquired under one state’s PIL system, is not recognised as valid under another’s. The determination of who has legal parentage for a child is very likely to have far reaching consequences, which will affect the child not only in childhood but also into adulthood. Non-recognition of the parentchild relationship may have a number of serious consequences for the rights and welfare of the child, in particular regarding the child’s right to acquire a nationality, and a state’s obligation to ensure that children do not end up stateless. No area of family law has remained untouched by the European Convention on Human Rights (the “ECHR”); recent case law demonstrates that surrogacy is now on the radar of the European Court of Human Rights (the “Strasbourg Court”). Limping family law relationships used to be, and to some extent still are, considered as part of the facts of private international law life. They are inevitable, it is said, because of the variety of legal systems: conceptions of public policy vary from state to state, as do connecting factors, and so on. With reference to examples of national approaches to inter-country surrogacy and the case law of the Strasbourg Court, the aim of this paper is to show that this view of PIL, if inflexibly maintained by the state of recognition can come into conflict with human rights norms that are binding on that state. The difficult questions of public policy in the context of inter-country surrogacy and the implications for the Contracting States to the ECHR of the judgments in Mennesson v France,21 Labassee v France,22 D and Others v Belgium23 and Paradiso and Campanelli v Italy24 are and the new illegitimacy” in The Phantom Children of the Republic: International Surrogacy and the New Illegitimacy, Journal of Gender, Social Policy and the Law 2012. 20 (Commercial Surrogacy) [2010] EWHC 3146 (Fam). 21 Application No. 65192/11. Judgment handed down on 26 June 2014. 22 Application No. 65941/11. Judgment handed down on 26 June 2014.

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Michael Wells-Greco / Henry Dawson considered. This paper examines whether the principle of the best interests of the child and doctrine of proportionality (forming part of the assessment of necessity) found in the jurisprudence of the Strasbourg Court might play a role in dismantling surrogacy prohibitionist laws.25 The apparent paradox that results from the Strasbourg Court’s approach is that a particular state’s rules may, on the basis of an Article 8 ECHR assessment, permit an activity that its own domestic laws may disallow.26 Yet this human rights dimension does not of itself conflict with the role and positive functioning of PIL. This paper predicts that a proportionality review of national surrogacy laws (or policy) is likely to lead to a softening of restrictive responses to the recognition of a parental status lawfully established abroad.

II.

The Role of Public Policy

Understanding a state’s recognition policy in the field of parentage and intercountry surrogacy requires an assessment of the meaning of public policy in the context of (inter-country) surrogacy. The public policy exception is well known to national systems of PIL and to international conventions and supranational instruments.27 Public policy is understood as a defence aimed at protecting substantive values as may be regarded as essential to the identity of the legal system of the forum. Public policy serves as a tolerance limit with regard to repugnant or otherwise unacceptable outcomes of the application of foreign law and to unacceptable foreign judgments. It is a barrier raised as the last resort to protect fundamental principles of the forum from the intolerable effects of foreign norms or judgments. There is, however, no bright line dividing what constitutes a tenet of the law of the forum and what is simply the result of a misguided elevation of

Application No. 29176/13. Judgment handed down on 11 September 2014. Application No. 25358/12. Chamber judgment handed down on 27 January 2015. 25 For more on the topic of proportionality and reproductive travel, see the work and on-going research of R. STORROW (CUNY School of Law). See R. STORROW, The Proportionality Problem in Cross-Border Reproductive Care in The Globalization of Health Care: Legal and Ethical Issues, New York 2013. 26 Reference should also be given to the step-parent adoption case of Wagner and JMWL v Luxembourg, Application No. 76240/01, a single woman from Luxembourg had travelled to Peru to adopt a child, and had returned to Luxembourg to recognise the adoption as valid. Luxembourg authorities refused to do so, since their conflict-of-laws rules designated Luxembourg law as applicable, which, at that time, excluded single persons from “full” adoption (i.e. adoption that breaks ties with the family of origin). The Strasbourg Court held that the refusal to recognise the “crystallised” relationship between the applicant and the child and the “reality” of their family unity to be in violation of the applicant’s right to respect for private and family law and the principle of non-discrimination. 27 See, e.g. A. MILLS, The Confluence of Public and Private International Law, Cambridge 2009. 23 24

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Inter-Country Surrogacy and Public Policy “local values […] into public policy on the transnational level”.28 It is difficult to define the limits of a general legal concept as broad as public policy and it is, therefore, not surprising that problems have arisen across all legal fields, including family law and children’s rights. The function of the public policy exception is not to control foreign law or a foreign judgment in the abstract,29 but to bar the effects and particular result that its application or recognition may produce in the forum in a concrete case.30 Insofar as the public policy exception is applicable, it is also generally accepted that its application is restricted to exceptional cases. This is mainly due to the exceptional character of these clauses which only apply in extreme cases and usually require a “manifest” contradiction to fundamental values or for such values to be irretrievably frustrated. Despite this position, very few supranational or national instruments specify which values might be regarded by states as belonging to their public policy. While the meaning of public policy changes from time to time and can be contingent upon the facts of an individual case, it does not lack a principled foundation. A plurality of sources may need to be looked at for the purpose of answering the public policy question. Domestic law will normally play an important role in this respect. Both constitutional and infra-constitutional rules governing private relationships may be relevant, to the extent that they reflect the existence of fundamental principles of the legal system they belong to. International conventions, too, may be relevant, in particular those in the field of human rights, be they regional (such as the ECHR) or international (such as the Convention on the Rights of the Child (“CRC”31) or the Convention on the Elimination of Discrimination against Women32). Rules on recognition will come into play in those cases where the intending father and/or the intending mother or second intending parent have been declared the child’s legal parents automatically by law (as may occur under the laws inter alia of California,33 Greece,34 Illinois,35 Nevada,36 and Ukraine37). This means that, in 28 Kuwait Airways Corporation v Iraqi Airways Company and Others [2002] UKHL 19 at [114] (“Local values ought not lightly to be elevated into public policy on the transnational level”). 29 P. MAYER, Le Phénomène De La Coordenation des Ordres Juridiques Étatiques en Droit Privé, Recueil des Cours 2007, p 11 et seq; P. NYGH, Foreign Status, Public Policy and Discretion, I.C.L.Q. 1964, p. 39-50. 30 Ibid 217. 31 Convention on the Rights of the Child (1989) UNTS 1577 3. 32 Convention on the Elimination of All Forms of Discrimination against Women (1979) A/RES/34/180. 33 Cal. Fam. Code §§ 7600 – 7730. 34 K. ROKAS, National Report on Greece, in K. TRIMMINGS/ P. BEAUMONT (note 3), Chapter 9. 35 750 Ill. Comp. Stat. Ann. 47/15(B)(1). 36 Nev. Rev. Stat. Ann. § 126.045 (2). 37 Article 123(2) Family Code of Ukraine.

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Michael Wells-Greco / Henry Dawson practice, a key question more likely to arise in the context of inter-country surrogacy is whether legal parentage of the intending parents lawfully established in one state is capable of recognition38 in another.39 It is mainly at the moment of recognition of a foreign birth certificate or a foreign judgment on parentage that the question arises as to whether legal parentage violates mandatory rules and/or the public policy of the recognising state.40 As many legal systems oppose surrogacy, some courts will either resort to their own rules prohibiting the practice, if such rules exist (e.g. by reference to a national constitution or act), and/or find it contrary to public policy. National law is likely to provide that recognition of a foreign judgment or authentic act on civil status in relation to parentage be subject to a public policy exception: that the foreign judgment manifestly violates public policy (substantive and/or procedural law); if the foreign court did not have jurisdiction; the foreign court did not base its decision on a proper procedure; or that the choice for the foreign court is fraudulent. Other possible requirements of a procedural nature may include the need for legalisation41 and translation.42 38 That the meaning of “recognition” in this context, and whether the term is appropriate at all, will often depend upon the view taken by a state of the nature of parentage and birth certificates. Moreover, in some states, different rules may apply depending upon the use which it is sought to make of a foreign birth certificate: for example, one rule may apply if the document is relied upon as evidence of the findings of fact of the foreign authority, and a different (more invasive) procedure may be required if “full recognition” of the document – i.e., recognition of the legal relationship established or evidenced therein – is sought. 39 For surrogate-born children, legal parentage might be established ex lege, by juridical act such as the acknowledgment of paternity or maternity or by a judgment. Following the birth of a child through inter-country surrogacy in a surrogacy-friendly jurisdiction, the child is normally transferred immediately into the physical care of the intending parents. Given the absence in most states of statutory rules on parentage (and, as a result the absence of specific conflict rules on parentage) and nationality in the context of inter-country surrogacy, it should be anticipated that the determination of parentage is therefore more likely to arise in the context of a foreign judicial judgment on parentage or an authentic act. 40 D. GRUENBAUM, Foreign Surrogate Motherhood: Mater semper certa erat, American Journal of Comparative Law 2011, p. 13. 41 The authenticity of a foreign public document is established by means of the legalisation of that document. Legalisation is the formality by which diplomatic or consular agents certify the authenticity of the signature, the capacity in which the person signing the document has acted and, where appropriate, the identity of the seal or stamp which it bears. 42 Bilateral or multilateral agreements exist concerning these matters: e.g., see the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents, as well as the work of ICCS (www.ciec1.org). In addition, within the EU, the European Commission has proposed a regulation which would aim to abolish legalisation and apostillisation between EU Member States for certain categories of public documents: see further “Proposal for a Regulation of the European Parliament and of the Council on promoting the free movement of citizens and businesses by simplifying the acceptance of certain public documents in the European Union and amending Regulation (EU) No 1024/2012” (COM(2013) 228 /2). The proposed new rules would not, however, have any impact on the recognition of the content or the effects of the documents concerned (see Article 2 of the Proposal). See also the 2010 Green Paper, “Less bureaucracy for

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Inter-Country Surrogacy and Public Policy Public policy is increasingly viewed as a negative concept, i.e. it is only used as a defence mechanism against foreign law or the recognition of foreign judgments. The positive role of public policy aimed at the enforcement of mandatory law finds less prominence. These mandatory rules have different sources. They are either created unilaterally to protect the fundamental values of society,43 or they are created at the regional level, or even at an international/multilateral level. If created within the international legal order, they may qualify as jus cogens rules.44 National public policy clauses in respect of the recognition of foreign judgments also concern violations of basic values (often of a human rights nature) and always require a result-oriented examination of the individual case. A public policy provision laid down in Swiss law, for example, concerns the prerequisites for the recognition of foreign judgments.45 The recognition of a foreign judgment is excluded where the recognition of the judgment would produce a result which would be manifestly irreconcilable with fundamental principles of Swiss law, especially where the recognition is irreconcilable with basic constitutional rights. Similar public policy provisions are laid down in other national regulations.46 At the European level public policy is, increasingly, no longer only understood as an instrument for the protection of individual state’s values. On the contrary, the content of public policy has become increasingly European. Whilst it is not possible to define European public policy with any precision, all accounts of the concept would make reference to the ECHR and, in the context of the EU,47 the EU Charter on Fundamental Freedoms.48 For the interpretation of European public citizens: promoting free movement of public documents and recognition of the effects of civil status records”, COM(2010) 747 final. 43 The values can be cultural, human, sociological, economic or political. See, the codified private international law rules in Belgium, the Netherlands, France, Austria and Switzerland. By way of an example, Article 20 of the Belgian Code for Private International Law reads: “Mandatory rules – The provisions of the present statute do not prejudice the application of the Belgian mandatory or public policy provisions, which, by virtue of the law or their particular purpose, are aimed to govern the international situation irrespective”. 44 For a description of jus cogens rules and human rights, see A. BIANCHI, Human Rights and the Magic of Jus Cogens, European Journal of International Law 2008. 45 See, e.g. Article 27 of the Swiss Federal Code on Private International Law 1987. 46 See, e.g. Article 64(g) Italian Statute on Private International Law. 47 Some recent European regulations follow the principle of mutual recognition with no reference to public policy. Accordingly, the regulations on the European Enforcement Order of 2004 and on the European Order for Payment of 2006 do not contain any public policy clauses. Here, the expressly stated abolition of exequatur or, alternatively, “intermediate proceedings” has restricted the examination of foreign decisions; domestic and foreign judgments are on the same footing. A public policy review is thus no longer possible; the only remedies for the debtor are now those in the context of the execution proceedings themselves. An abolition of exequatur can also be found in the Maintenance Regulation for judgments rendered in Member States which are bound by the Hague Protocol of 2007 (Article 17(1) Regulation 4/2009). 48 Case C-295/04, Manfredi, [2006] ECR I-6619. The approach in the Manfredi case is not foreign to European human rights law. In its case law, the ECtHR has on some occasions referred to the ECHR as a constitutional instrument of European public policy.

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Michael Wells-Greco / Henry Dawson policy the procedural safeguards of the ECHR have been taken into account. In particular, the defendant’s right to a fair trial (Article 6 ECHR) is an element of the public policy exception. To that extent it is possible to talk of a common European Union public policy in this field, in which the constitutional traditions of the Member States and the general principles of law flowing from the relevant treaties are also taken into account.49 It is therefore plain that a mere difference between the substantive law (or the PIL rules) of the original court and that of the court of recognition is not sufficient to justify non-recognition. The public policy implications of a surrogacy arrangement are broadly identifiable and include: (i)

the inalienability of the human body in that the human body cannot be an object of commerce; (ii) the inalienability of a personal status (e.g. parentage) by private agreement; (iii) public policy against the commodification of children and the unlawful placement of children; (iv) public policy against the exploitation of women; (v) the protection of the family life of the mother and her child (including the non-relinquishment of a child against a mother’s wishes); (vi) the social family life of the established legal family; (vii) the interest of the child to know his genetic affiliation; (viii) public policy against the infringement of the law of adoption, including terms of consent, termination of parental rights and the payment of funds; and (ix) statutes and case law governing legal custody and physical placement focusing on the best interests of the child.50 Yet even with this non-exhaustive list, public policy does not correspond to a particular group of legal static norms which can be defined in advance and must This expression was used for the first time in the Loizidou case (Loizidou v Turkey (Preliminary Objections) ECHR (1995) Series A. No. 310, para. 75), thereafter in the important Bosphorus case (Bosphorus Hava Yolları Turizm ve Ticaret Anonim Sirketi v Ireland ECHR (2005) Appl. No. 45036/98). In Loizidou, the Court found the following on limitations as regards obligations of the ECHR: “Such a system, which would enable States to qualify their consent under the optional clauses, would not only seriously weaken the role of the Commission and Court in the discharge of their functions but would also diminish the effectiveness of the Convention as a constitutional instrument of European public order (ordre public)”. 49 Whereas the content of an EU Member State’s public policy is a matter of that State alone, the role of that public policy within the EU framework is a matter for the Court of Justice of the European Union. Before it may find recognition contrary to public policy, the court addressed must conclude that recognition would conflict, to an unacceptable degree, with the legal order in the state of recognition because it would infringe a fundamental principle, or would involve a manifest breach of a rule of law which is regarded as fundamental within that legal order. For more information, see M. HORSPOOL/ M. HUMPHREYS, European Union Law, Oxford 2014, Chapter 12. 50 M. WELLS-GRECO, The Status Of Children Arising From Inter-Country Surrogacy Arrangements: The Past, The Present, The Future, Maastricht University, to be published in 2015.

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Inter-Country Surrogacy and Public Policy always be applied to any case with a foreign element, but rather, to certain fundamental principles of the forum which vary along time and space. This has a consequence in PIL: a court, confronted with a public policy exception, must apply the public policy as defined at the time it has to make a decision and not at the time the facts occurred.51 This is the so-called temporal relativity of public policy (relativité de l’ordre public or zeitliche Relativität).52 Applying this discussion to the topic of surrogacy, although a national court may hold that surrogacy is contrary to a fundamental principle of the forum, it may still allow nonetheless some of its effects to be produced. A state’s analysis (via its judicial or national authorities) of what offends public policy in the context of surrogacy appears to depend on the intensity of the relation between the case and the forum, in that the tolerance towards the particular result produced by the foreign norm or judgment should be inversely proportional to the proximity of the case with the forum: although there is no scale, the stronger the connections, the stricter the control, whereas the weaker the connections (especially in incidental or preliminary questions) the more tolerant one should be. Nussbaum, in speaking of the public policy doctrine remarks: “[A]ll depends on the circumstances, or, more precisely, on the importance of the “contacts” of the case with the territory of the forum”.53 This point is particularly emphasised in German law (Inlandsbeziehung), as well as in Swiss, French (ordre public de proximité) and Belgian law.54 The public policy requirements may therefore vary. The closer the links of the case with the forum – in time or distance – the more severe the requirements may be. But, as considered below, some values are such as to justify public policy to be invoked even in cases that present only modest links with the forum.

51 A. MILLS, The Dimensions of Public Policy in Private International Law, Journal of Private International Law 2008, p. 201-236. According to Mills, “public policy is both a ubiquitous and fundamentally important part of private international law, defining the limits of the tolerance of difference implicit in rules on choice of law and the recognition and enforcement of foreign judgments. It has, however, been frequently criticised for its uncertainty and discretionary character”. 52 See generally, e.g., L. GANNAGE, L’ordre Public International À L’épreuve Du Relativisme Des Valeurs, Travaux du Comité Français de Droit International Privé: Années 2006-2008, 2009, p. 205; H. VERHEUL, Public Policy and Relativity, Netherlands International Law Review 1979, p. 19. 53 A. NUSSBAUM, Public Policy and the Political Crisis in the Conflict of Laws, Yale Journal of Law 1940, p. 1027-1031. 54 Loi du 16 juillet 2004 portant le Code de droit international privé, Moniteur Belge 27 July 2004, 57344, Article 21 al. 2 (establishing that the incompatibility between a foreign norm and the public policy should be appreciated “taking into account, notably, the intensity of the relationship between the situation and the Belgian legal system and the severity of the effect that would be produced by the application of that foreign law”).

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Michael Wells-Greco / Henry Dawson A.

National Examples of Public Policy in Practice in the Context of InterCountry Surrogacy

In interpreting and applying a public policy exception, states have to pay close regard to national and international human rights provisions and the circumstances of each individual case in concreto. The application of the public policy exception is also complicated by the possible existence or development (in the context of the ECHR) of family life between the intending parents and the child in the state of recognition. That being so, across Europe and beyond, it can be observed, perhaps unsurprisingly given the “anxieties”, that different states house differing approaches to recognition. In France, the Cour de Cassation faced the question of the applicability of a public policy exception in three cases judged the same day, all involving French intending parents who entered into surrogacy agreements abroad.55 All three judgments gave the same reasons: (i) (ii) (iii) (iv)

The foreign (i.e. American) birth certificate could not be transcribed in the French civil status registry. The foundation of the birth certificate was a foreign judgment on parentage, which violated French public policy. The fundamental principle of French law is the principle that civil status is inalienable. Pursuant to this principle, the law of parenthood by contract cannot be derogated by contract.56 This outcome does not violate Article 8 ECHR, as the children have a father in any case (i.e. the genetic father), a mother under the law of the relevant US state, and may live together with the French couple in France. This outcome does not violate either Article 3(1) CRC or the best interest of the child rule (although no reason is given for this statement). The Court held that it did not, as the Civil Code provides that surrogacy is forbidden in France, and that the rule is mandatory (public policy).57

France is not alone in adopting this line of reasoning. The Supreme Court of Japan has also refused to recognise a judgment of a Nevada State Court because the judgment established the Japanese intending parents as the parents of a surrogateborn child as “incompatible with the fundamental principle or fundamental philosophy of the rules of law on personal status in Japan”.58 In 2009, a Dutch court (Rechtbank’s-Gravenhage) refused to recognise the legal paternity of a Dutch national that had been established in France, because the mother of the child gave birth anonymously (as permitted under French law).59 The Court observed that according to international law (Article 7 CRC) the child has 55 Cass. civ. 6 April 2011 – n. 09-17130 and Sénat: Journal Officiel de la République Française no 58 S, 10 June 2011, 4664-4665, available at . Two of these cases led to proceedings before the European Court of Human Rights, in the cases of Mennesson and Labassee discussed below. 56 See Article 16(7) and 16(9) French Civil Code. 57 See Article 16(9) French Civil Code. 58 Supreme Court of Japan 23 March 2007 at 4(3). 59 Rechtbank’s-Gravenhage, 14 September 2009, LJN BK1197.

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Inter-Country Surrogacy and Public Policy the right to know his origins as much as possible. According to the Court, it is for the child at a later stage to form his identity and, to do that, the child must have access to all the information on his filiation. That being so, the legal basis establishing the legal maternity of the birth mother (based on the mater semper certa est is principle) is such a fundamental rule of Dutch family law that it expresses Dutch public policy. It would seem that a birth certificate that does not name the surrogate as birth mother while she is known therefore violates Dutch public policy. In another Dutch case the Rechtbank’s-Gravenhage refused to recognise two men as the legal parents of a child who had been born to a surrogate mother in California.60 At the moment of birth, the men were also living in the United States. In essence the Court held that the legal parenthood of both the genetic father and his male spouse could not be recognised because the Californian authorities did not establish the legal maternity of the surrogate mother. The case raises two issues. The first is whether the refusal to recognise the legal parenthood of the two intending fathers is consistent with Dutch policy that legal parenthood of intending parents can be established through acknowledgment of paternity and adoption. The answer to that question is likely to be no. The second issue touches upon the concept of the public policy exception. Does it matter that the intending parents and the surrogate at the moment of the birth of the child lived in the United States? At the moment of the establishment of legal parentage, their only connection with the Netherlands was rather abstract, namely the Dutch nationality of the child’s genetic father; when the surrogacy arrangement was concluded and when the children were born the intending parents lived in the United States. Would it be consistent to develop a public policy whereby the recognition of the legal parentage of the intending parents depends on the degree of proximity between the case and the legal order of the recognising state? Here, the intending parents had engaged in a lawful practice in a state where they were lawfully resident. It is difficult to see how the recognition could be against public policy in a case where the identity of the surrogate is easily traceable, e.g. in California by reference to the pre-birth parental judgment. Since the child has access to information regarding his or her status (i.e. as a child conceived through surrogacy), as well as his or her genetic parents (i.e. the intending parents), the fact that the lack of a reference on the birth certificate should lead to non-recognition in all cases seems erroneous. In contrast, a Belgian court has adopted a different line of reasoning to that of the Dutch Court.61 The American surrogacy arrangement in question did not, for Belgian law purposes, violate the mater semper certa est principle because the surrogate was known and she had given her consent in accordance with a local regulation that cannot be deemed to be contrary to Belgian public policy. The fact that this consent, it seems, preceded the birth of the child and that there is no legislation on surrogacy in Belgium cannot be reasons to refuse recognition. Moreover, it is noted by the Court that it is in the best interests of these children to have 60 District Court of The Hague, 23 November 2009, case no. 328511/FA (unpublished) quoted, in I. CURRY-SUMNER/ M. VONK National Report on the Netherlands, in K. TRIMMINGS/ P. BEAUMONT (eds) (note 3), at 292. 61 Nederlandstalige rechtbank van eerste aanleg Brussels 2012/5418/B.

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Michael Wells-Greco / Henry Dawson filiation established and that the effects of both judgments for the Belgian legal order are the same as those of a full adoption by two persons of the same sex. The Austrian Constitutional Court has found a surrogacy arrangement not to be, per se, a breach of Austrian public policy.62 In that case, when the intending mother claimed child benefits, the Austrian Ministry of Interior requested the City of Vienna to withdraw the Austrian nationality of the children arguing that surrogacy was illegal under Austrian law, that the surrogate remained the children’s mother under Austrian law (irrespective of the genetic relationship) and that the American Court’s decision establishing parental rights of the Austrian mother could therefore not be recognised by Austria. The Constitutional Court rejected this argument on four grounds: (i) (ii)

(iii)

(iv)

It pointed out that the American judgment establishing legal motherhood of the Austrian genetic mother was taken without reference to Austrian law and was valid under norms of private international law. While Austrian law prohibiting surrogacy was part of Austria’s public policy thus overriding the relevant American decision, the Court outlined that the federal law on Assisted Reproductive Technology had neither constitutional status nor protects fundamental rights. The Court held that while public order constitutes the underlying principles of Austrian law, Constitutional rights are paramount; amongst them the best interests of the child. It was stated that the American surrogate could not be forced into the position of the legal mother against her will by Austrian law. In the words of the Court: “It would be in contradiction to the child’s well-being to impose the child on the surrogate mother, against her will and her inability of creating a family bond. As a consequence, the child would be excluded from custody, shelter and other inheritance provided by the genetic mother. These far-reaching and negative consequences are not justified in light of the child’s well-being.”63 It was held that the Austrian Ministry of Interior had taken the decision to withdraw the Austrian nationality of the children arbitrarily by neglecting scholarly opinion and case law on public policy and by neglecting the welfare of the children as a key concern while determining their nationality.

The approach of the Supreme Court of Germany64 broadly mirrors the approach of the Austrian Constitutional Court albeit in the context of a same-sex couple. The issue in this case was whether two men are the legal parents of a child born through surrogacy in California (with one of the intending father’s also being the genetic father of the child). The Supreme Court ordered the child’s birth to be transcribed and both applicants to be registered as the child’s legal parents. Citing the judgments of Mennesson and Labassee (considered below), the Supreme Court found that any consideration of whether a foreign court decision is contrary to German 62 Austrian Constitutional Court, B13/11-10, judgment handed down on 14 December 2011. 63 Ibid (13, para. 25 of judgment. Translation into English). 64 Decision XII ZB 463/13 (Bundesgerichtshof Beschluss XII ZB 463/13).

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Inter-Country Surrogacy and Public Policy public policy must take into account the human rights guaranteed by the ECHR. A foreign judgment assigning parenthood to a child’s intending parents – rather than to the surrogate mother as provided by German law – does not automatically constitute a breach of German public policy if at least one of the intending parents is genetically related to the child. This also applies where the foreign court decision establishes the parenthood of the registered civil partner of the genetic father of the child, as well as the genetic father. Article 8 ECHR would be infringed if the German authorities only recognised one of the intending parents because every child has the right to a legal parent-child relationship with two parents. According to the Court, the Californian judgment ruling that two same-sex partners are the child’s legal parents is not against the fundamental principles of German law as parenthood shared between two same-sex partners can be equivalent to that of opposite-sex parents if parenthood is legally established. As the surrogacy arrangement in this case was lawfully carried out abroad, the Court found similarities to cases of adoption as the surrogacy was carried out freely by the surrogate mother who had consented to the arrangement and to the handing of the child at birth to the intending parents. B.

Examples of Public Policy in Practice in the Context of Inter-Country Surrogacy Emerging from the Case Law of the European Court of Human Rights

When it comes to the right to private and family life, the case law of the Strasbourg Court indicates that two main types of obligation stem from Article 8 ECHR: the first is to give legal recognition to family ties and the second is to act to preserve family life.65 It is not the intention of this paper to provide an extensive analysis of the Article 8 case law.66 What is important for this subject matter is that the concept of family life for the purposes of engaging Article 8 is a developing one. Indeed, van Bueren maintains that the Article 8 case law on the meaning of family life “has generally been dynamic and progressive” taking into account social change and “in this way, paradoxically acting as a catalyst for further change”.67 To date, the Strasbourg Court has considered five surrogacy related cases: Lavisse v France,68 Mennesson v France,69 Labassee v France,70 D and Others v Belgium71 and Paradiso and Campanelli v Italy.72 See, generally, the comprehensive work of U. KILKELLY: The Child and the ECHR, Aldershot 1999; Children’s Rights: a European Perspective, Judicial Studies Institute Journal 2004, p. 68-95; and Protecting Children’s Rights Under the ECHR: the role of positive obligations, Northern Ireland Legal Quarterly 2010, p. 245-261. 66 Each of the judgments, and a significant selection of decisions and reports, are published in the HUDOC database, accessible at . See also M. WELLS-GRECO (note 50). 67 G. VAN BUEREN, Child Rights in Europe, Convergence and Divergence in Judicial Protection 2007, p.165. 68 Application No. 14223/88. Lavisse concerned the French refusal to register in the late 1980s a French association called “les Cicognes”, which has the defence of the moral and material interests of surrogate mothers and promotion and moral endorsement of 65

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Michael Wells-Greco / Henry Dawson 1.

Mennesson and Labassee: Recognition of Parent-Child Relationships that Had Been Legally Established Abroad

Mennesson and Labassee concerned France’s refusal to grant legal recognition to parent-child relationships legally established in the United States between surrogate-born children and French resident national intending parents. In both cases the Court held, unanimously, that there had been no violation of Article 8 ECHR concerning the applicants’ right (the applicants being the intending parents and the surrogate-born children) to respect for their family life but a violation of Article 8 concerning the children’s right to respect for their private life.73 Relying on Article 8, the applicants complained that, to the detriment of the children’s best interests, they were unable to obtain recognition in France of parent-child relationships that had been legally established abroad. The applicants in the Mennesson case further alleged, in particular, a violation of Article 14 (prohibition of discrimination) taken in conjunction with Article 8, arguing that their inability to obtain recognition placed the children in a discriminatory legal situation compared with other children when it came to exercising their right to respect for their family life. In Mennesson the Court found that Article 8 ECHR was applicable in both its family life aspect and its private life aspect. First, there was no doubt that Mr and Mrs Mennesson had cared for the twins as parents since birth and that the family had lived together in a way that was indistinguishable from family life. To be able to speak of family life within the meaning of Article 8 ECHR, the persons concerned must generally have had a genuine relationship, which may be evidenced by factual circumstances, such as their cohabitation, the personal contacts which they maintain with each other and other familial facts; the mere fact of a genetic link is not of itself sufficient to support the conclusion that family life exits. Indeed, on the reported facts of the case, there was no reason to doubt that a unit of the most profound emotional, personal, social, cultural significance had been created between the child and her intending parents and, based on the Strasbourg surrogate motherhood as a goal. The European Commission held that this refusal to register did not violate Article 11 or Article 14 ECHR. The interference of the right to freedom of assembly and association was considered to be necessary in a democratic society for the prevention of crime, i.e. the incitement to abandon a child. 69 Application No. 65192/11. Judgment handed down on 26 June 2014. 70 Application No. 65941/11. Judgement handed down on 26 June 2014. 71 Application No. 29176/13. Judgment handed down on 11 September 2014. 72 Application No. 25358/12. Chamber judgment handed down on 27 January 2015. The judgment is not final. The parties have three months to request that the case be referred to the Grand Chamber. If such a request is made and accepted, the Grand Chamber will reexamine the case and will not deliver a judgment for several months. If neither party requests referral, the judgment will become final and will be transmitted to the Committee of Ministers (the decision-making body of the Council of Europe), which supervises execution of the Court’s judgments. It will then be for Italy to identify, under the supervision of the Committee of Ministers, the general measures to be taken following this judgment in order to prevent future breaches of the Convention. 73 M. CATTO, La gestation pour autrui: d’un problème d’ordre public au conflit d’intérêts?, [2013] 3 Revue des droits de l’homme.

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Inter-Country Surrogacy and Public Policy Court’s broad assessment of what constitutes family life, the intending parents have acted as the children’s parents in every respect since 2001; the intending father is genetically related to the children; and the children have been living in France with the intending parents for over 11 years. The Strasbourg Court noted that the interference with the applicants’ right to respect for their private and family life resulting from the French authorities’ refusal to recognise the legal parent-child relationship had been “in accordance with the law” within the meaning of Article 8 ECHR. Therefore the Court had to examine if France had complied with its obligations under Article 8 ECHR.74 Where the existence of a family tie with a child has been established, the Contracting State must act in a manner calculated to enable that tie to be developed and establish legal safeguards that render possible the child’s integration in his family.75 The positive obligations that Article 8 lays on the Contracting States in this matter must also be interpreted in the light of the CRC.76 The Court accepted that the interference in question had pursued two of the legitimate aims listed in Article 8, namely the protection of health and the protection of the rights and freedoms of others. Protecting women from exploitation or the commodification of reproduction can be considered as legitimate aims a state can invoke in order to justify this interference with Article 8 ECHR. 77 It observed that the refusal of the French authorities to recognise the legal relationship between children born as a result of surrogacy treatment abroad and the couples who had the treatment stemmed from a wish to discourage French nationals from having recourse outside of France to a reproductive technique that was prohibited in that country with the aim, as the French authorities saw it, of protecting the children and the surrogate. Moreover, even if these arguments remain contentious (and it is conceded that they do), the margin of appreciation accorded to Contracting States when implementing their human rights obligations is such that they could still rely on these arguments to justify the prohibition of commercial surrogacy. The Court went on to examine whether the interference had been “necessary in a democratic society”. While it stressed that a wide margin of appreciation had to be left to Contracting States in making decisions relating to surrogacy, in view of the difficult ethical issues involved and the lack of consensus on these matters in Europe, the features and context of the complaint and the absence of a consensus amongst the Contracting States are all relevant in determining the margin of appreciation. When it came to the question of parentage, which involved a key aspect of individuals’ identity, that margin of appreciation was narrow.78 For reasons that are not particularly clear, the Court held that it is necessary to distinguish between the purported right of family life of the intending parents on the one hand and the purported right to private life for the surrogate-born children (as applicants) on the other. With regard to each of the four applicants’ right to Mennesson v France, infra, paras. 48-49, Labassee v France, infra, para. 49. See Kroon and Others v the Netherlands, judgment of 27 October 1994, Series A no. 297-C, at 32. 76 See Maire v Portugal, Application No. 48206/99, ECHR 2003 VII, at 72. 77 Mennesson v France, infra, para. 62, Labassee v France, infra, para. 54. 78 See Mennesson v France, infra, paras 40 to 42 and 78. 74 75

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Michael Wells-Greco / Henry Dawson family life, the Court observed that it was inevitably affected by the lack of recognition under French law of the parent-child relationship between Mr and Mrs Mennesson and the twins. However, it noted that the applicants had not claimed that the obstacles they faced had been insurmountable, nor had they demonstrated that they had been prevented from the enjoyment in France of their right to respect for their family life. It noted that the four of them had been able to settle in France shortly after the birth of the children, that they lived there together in circumstances which, by and large, were comparable to those of other families, and that there was nothing to suggest that they were at risk of being separated by the authorities because of their situation under French law. Furthermore, the French courts had examined their specific situation before concluding that the practical difficulties faced by the applicants did not exceed the limits imposed by respect for family life. Consequently, a fair balance had been struck between the adult applicants’ interests and those of the state, in so far as their right to respect for their family life was concerned.79 However, when extending the same analysis to the rights of the children, the Strasbourg Court found that their Article 8 ECHR right to private life had been violated because of, among others, the repercussions of the situation on the definition of the children’s own identity. The Court noted that the children were in a state of legal uncertainty: the French authorities, although aware that the twins had been identified in the US as the children of Mr and Mrs Mennesson, had nevertheless denied them that status under French law. The Court also noted that – according to French succession laws – the children would only be able to inherit from the intending parents as legatees, which meant that they would be put in a less favourable situation. The Court considered that the contradiction undermined the children’s identity within French society. Moreover, although their genetic father was French, the children faced worrying uncertainty as to the possibility of obtaining French nationality, a situation that was liable to have negative repercussions on the definition of their own identity. The Court regarded this as depriving them of a further component of their identity in relation to their parentage. The children’s right to respect for their private life had to be understood such that everyone should be able to establish the essence of his or her identity, including his or her parentage: “private life requires that everyone can establish details of his human identity”.80 There was therefore a serious issue as to the compatibility of the situation with the children’s best interests. The inability of the intending fathers to acknowledge the children, to proceed with an adoption or to benefit from the rules of apparent status is held to be a breach of surrogate born children’s right to identity.81 In thus preventing the recognition and establishment of the children’s legal relationship with their genetic father, the French State had overstepped the permissible margin of appreciation. The Court held that the children’s right to respect for their private life had been See Mennesson v France, infra, paras 88, 90 and 91. See Mennesson v France, infra, paras 46 and 99. In so doing, the Court extends Article 8 ECHR by developing the idea of a right to identity present in both the Jaggi v Switzerland (13 July 2006, Application No. 58757/00) and Mikulic v Croatia, (7 February 2002, Application No. 53176/99) judgments. 81 See Mennesson v France, infra, paras 100 and 101. 79 80

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Inter-Country Surrogacy and Public Policy infringed, in breach of Article 8. In view of its finding of a violation of Article 8 concerning the applicant children, the Court did not consider it necessary to examine the applicants’ complaint under Article 14.82 In Labassee v France, the Court adopted the same approach as in the Mennesson case finding that there had been no violation of Article 8 concerning the applicant parents’ right to respect for their family life but a violation of Article 8 concerning the right of Juliette Labassee to respect for her private life.83 2.

D and Others v Belgium: Delay in Authorising the Arrival of a Surrogate-Born Child to the Home State of the Intending Parents

In its decision in the case of D and Others v Belgium the Strasbourg Court decided, unanimously, to strike the application out of its list in so far as it concerned the Belgian authorities’ refusal to issue a travel document for a surrogate-born child in the Ukraine and to declare inadmissible the remainder of the application. This refusal, maintained until the applicants had submitted sufficient evidence to permit confirmation of a family relationship with the child, resulted in the child effectively being separated from the applicants, and amounted to interference in their right to respect for their family life. The Court noted that this interference had been provided for by law and pursued several legitimate aims, namely the prevention of crime, especially trafficking in human beings, and the protection of the rights of others – those of the surrogate mother and of the child.84 Belgium had acted within its margin of appreciation to decide on such matters.85 The Court also considered that there was no reason to conclude that the child had been subjected to treatment contrary to Article 3 (prohibition of inhuman or degrading treatment) of the ECHR during the period of his separation from the applicants.86 In view of developments in the case since the application was lodged, namely the granting of a laissez-passer for the child and his arrival in Belgium, where he has since lived with the applicants, the Court considered this part of the dispute to be resolved and struck out of its list the complaint concerning the Belgian authorities’ refusal to issue travel documents for the child.

82 The Court held that France was to pay EUR 5,000 to each of the children in respect of non-pecuniary damage and EUR 15,000 to the applicants in respect of costs and expenses. 83 The Court held that France was to pay EUR 5,000 to the latter in respect of nonpecuniary damage and EUR 4,000 to the applicants in respect of costs and expenses. 84 D and Others v Belgium, infra, paras 52 and 53. 85 Ibid, paras 54 and 63. 86 Ibid, paras 70 and 71.

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Michael Wells-Greco / Henry Dawson 3.

Paradiso and Campanelli v Italy: Separation of a Child from Intending Parents

The case of Paradiso and Campanelli concerned placement in social-service care of a nine-month-old child who had been born in Russia following a gestational surrogacy agreement entered into by an Italian national resident couple; it subsequently transpired that they had no genetic relationship with the child.87 The case concerns a married couple who tried to become parents, but could not succeed because of the infertility of the woman. In 2006 the couple were declared ineligible for adoption of young children.88 They travelled to the Russian Federation to have access to in vitro fertilization using the second applicant’s sperm and the ova of an unknown donor woman, implanting the embryo in the surrogate mother’s womb (unlawful in Italy but possible in the Russian Federation, due to lack of specific legislation there.89). They concluded a surrogacy agreement with the private company “Rosjurisconsulting”. In February 2011 a child resulted, who was handed by the surrogate mother to the applicants in exchange of EUR 50,000, the applicants being recognised as parents, according to Russian Federation law. When the applicants returned with the child to Italy, they unsuccessfully tried to register the birth. Their demand of the transcription of the birth certificate of the child was rejected, as the birth certificate contained false information about the parents of the child - the DNA test proving that the applicant was not the genetic father of the child. After it was revealed that neither parent was genetically related to the child, in October 2011, the Campobasso Court ordered that the child be removed from the applicants and placed under guardianship. The child was placed in a children’s home, and later foster care, with no contact with the applicants and no formal identity. In April 2013, the refusal to register the Russian birth certificate was confirmed on the ground that its registration would be contrary to public policy, given that the certificate was inaccurate and the lack of a genetic relationship between the child and the applicants. The child received a new birth certificate indicating that he had been born to unknown parents. The prosecutor at the Campobasso Court opened proceedings to free the child for adoption, since, for the purposes of Italian law, he had been abandoned.90 The Court dismissed at the outset the complaint submitted in the child’s name, finding that the applicants did not have standing to act on the child’s behalf, given that the child had been out of their care for over two years and was in the process of being adopted by a different family under a different identity.91 The complaint of alleged a violation of Article 8 in that it was impossible to have the child’s birth certificate registered in Italy was also dismissed, for failure to exhaust domestic remedies.92 Had that claim been declared admissible, the decision in Paradiso and Campanelli v Italy, infra, Application No. 25358/12. Ibid, paras 12 and 77 and joint partially dissenting opinion of Judges Raimondi and Spano, para. 12. 89 Ibid, para. 43. 90 Ibid, paras 5 to 35. 91 Ibid, paras 48 to 50. 92 Ibid, para. 4. 87 88

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Inter-Country Surrogacy and Public Policy Paradiso may have been closer to that of Wagner and J.M.W.L. v Luxembourg,93 which concerned civil proceedings to have an adoption judgment, delivered in Peru, declared enforceable in Luxembourg.94 With regard to the complaint concerning the child’s removal and placement under guardianship, the Court, noting the existence of de facto family life between the applicants and the child, held that Article 8 was applicable in this case and declared this complaint admissible.95 The Strasbourg Court found in particular that the public policy considerations underlying the Italian authorities’ decisions – finding that the applicants had attempted to circumvent the prohibition in Italy on using surrogacy arrangements and the rules governing international adoption – could not take precedence over the best interests of the child, in spite of the absence of any genetic relationship and the short period during which the applicants had cared for him.96 The Court considered that, in the present case, the conditions justifying a removal had not been met. The authorities had decided to remove the child and to place him under guardianship on the ground that he had no genetic relationship with the applicants and that the applicants had been in an unlawful situation (by contacting a Russian agency in order to become parents and subsequently bringing to Italy a child whom they passed off as their child, they had circumvented the prohibition in Italy on using gestational surrogacy arrangements and the rules on international adoption). In particular, the authorities had not recognised the de facto relationship between the applicants and the child and had imposed an extreme measure, reserved for cases where children were in danger. The Court held that the removal of the child by the Italian authorities constituted an interference with their family life in breach of Article 8 because the authorities had not properly considered the balance between Italy’s public policy considerations, on the one hand, and the best interests of the child, on the other.97 However, the Court also noted that its decision should not be read to require return of the child to the applicants, as the child has no doubt developed a bond with the family with whom he has been living since April 2013.98 It is questionable whether the Government had advanced sufficient reasons relevant to the welfare of the child to justify this. While this conclusion may seem appropriate given the Court’s

Application No. 76240/01, 28 June 2007. See P. KINSCH, Private International Law Topics before the European Court of Human Rights Selected Judgments and Decisions (2010-2011), Yearbook of Private International Law 2011, p. 263-266. 95 Paradiso and Campanelli v Italy, infra, para. 67. 96 Ibid, paras 73 and 75. 97 Ibid, para. 86 and 87. Note that the Court held that Italy was to pay the applicants EUR 20,000 in respect of non-pecuniary damage and EUR 10,000 in respect of costs and expenses. As an observation, this appears to be a significant award for the Court in comparison with its awards for just satisfaction (Article 41 ECHR) in Mennesson and Labassee. 98 Ibid, para. 88. 93 94

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Michael Wells-Greco / Henry Dawson role and the specific circumstances set out in the judgment, the decision would appear to be a pyrrhic victory for the applicants.99 The decision in Paradiso is significant for a number of reasons. In the cases of Mennesson and Labassee, the intending father (an applicant before the Strasbourg Court) was the child’s genetic father: it was his gametes which were used in the IVF procedure carried out abroad. In Paradiso, unknown gametes were used, erroneously according to the applicant, who claimed that he was unable to explain why his seminal fluid was not used by the Russian clinic as planned. As discussed above, the existence of this genetic relationship in the French cases is decisive in the Court’s finding of a violation. Nevertheless and in continuation of the Article 8 reasoning in Mennesson, it should be noted that the Court in Paradiso found that family life exists in a surrogacy arrangement even in the absence of a genetic relationship. As observed below, this may prove to be a watershed ruling for those intending parents without a genetic relationship with the surrogate-born child, who now fall within the scope of protection afforded by Article 8 ECHR. With respect to this child’s identity, the Court notes that the child received a “new” identity only in April 2013, which means he was “non-existent” for more than two years. The Court stresses that no child should be disadvantaged because he was born to a surrogate mother; whether in terms of nationality or identity, which are of paramount importance (citing Article 7 CRC).100 The joint partially dissenting opinion of Judges Raimondi and Spano must be noted. The dissenting judges thought that a fair balance had been struck between competing public and private interests in this case and there was no reason to question the assessment of the Italian courts. In their opinion, where national courts are faced with difficult questions of balancing interests, the Court should restrain itself only to confirming that the assessment of the national judges was not arbitrary.101

III. Specific Lessons from the European Court of Human Rights The Strasbourg Court’s consideration of the cases of Paradiso, Labassee and Mennesson attest to the topicality of surrogacy and the complexity of the legal (and See also, in the context of adoption, the Court’s decision in Keegan v Ireland 18 EHRR 342 1994: Irish law at that time permitted the secret placement of the child for adoption without the applicant's (the genetic father’s) knowledge or consent, leading to the bonding of the child with the proposed adopters and to the subsequent making of an adoption order. This amounted to an interference with the applicant's right to respect for family life. By the time these proceedings had terminated, the scales concerning the child's welfare had tilted inevitably in favour of the prospective adopters. 100 Para. 85. Article 7 CRC (Registration, name, nationality, care): All children have the right to a legally registered name, officially recognised by the government. Children have the right to a nationality (to belong to a country). Children also have the right to know and, as far as possible, to be cared for by their parents. 101 Joint partially dissenting opinion of Judges Raimondi and Spano, paras 13 to 15. 99

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Inter-Country Surrogacy and Public Policy ethical) issues involved in regulating it. In deciding concrete cases, the Court continues to apply assessed human rights standards in an individualised and casesensitive manner.102 The readiness of the Court in Mennesson, Labassee and Paradiso to confirm that, in accordance with its case law, the relationship between the applicants amounted to family life within the meaning of Article 8 is noteworthy.103 In Mennesson and Labassee, the French Government had not disputed that applicability. These judgments are reminders that the meaning of family life under the Convention has moved beyond “traditional” families. This is illustrative of the Court’s recognition of de facto (and very real) family ties in its case law, which suggests that the definition of the family under the Convention is inclusive and based on the social and emotional realities of family ties (or to put it another way, it does not rely solely upon definitions of the family found in national laws). In particular, it implicitly recognises that a range of relationships may be important to a child’s development, and not necessarily only the relationship with his or her genetic parents. Also, given that the Convention is a living instrument, to be interpreted in present-day conditions, the state, in its choice of means designed to protect the family and secure respect for family life as required by Article 8, must necessarily take into account developments in society and changes in the perception of social, civil-status and relational issues, including the fact that there is not just one way or one choice when it comes to leading one’s family or private life. None of these judgments rules on the question of prohibiting or authorising surrogacy arrangements. The Court’s finding of a violation of Article 8 in Mennesson and Labassee did not refer to France’s decision to prohibit surrogacy; the Contracting States have a large margin of appreciation with respect to the national approach to surrogacy.104 The violation of Article 8 arose from the fact that France undermined the children’s identity within French society by denying them their status under French law as the children of the Mennesson and Labassee 102 Gerards observes: “[…] this approach of individualised application of general standards permits the Court to build slowly on the acquis of fundamental rights protection, adding to the minimum level of protection and the scope of a Convention right if a case allows for doing so. Simultaneously, it allows the Court to respect differences in application by the national authorities that may be explained from national constitutional value choices. Indeed, it appears that the Court does not need any margin of appreciation doctrine to do so: fact-specific decision-making leaves as much leeway to the national authorities as any margin of appreciation would.” See J. GERARDS “Diverging Fundamental Rights Standards and the Role of the European Court of Human Rights”, M. CLAES and M. DE VISSER (eds.), Constructing European Constitutional Law (Oxford, Hart 2014, forthcoming), available at . 103 Mennesson v France, infra, para. 46; Labassee v France, infra, para. 37; Paradiso and Campanelli v Italy, infra, para. 69. 104 Three similar cases against France are currently pending before the Court: Laborie v France (Application No. 44024/13): impossibility for a French couple to obtain recognition in France of the parent-child relationship between them and children born in Ukraine through a surrogate pregnancy. Foulon v France (Application No. 9063/14) and Bouvet v France (Application No. 10410/14): impossibility for a French national to obtain recognition in France of the parent-child relationship between him and a child born in India through a surrogate pregnancy.

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Michael Wells-Greco / Henry Dawson couples, a status that had been recognised in the United States, and from the total prohibition on establishing a legal relationship between genetic fathers and children who are born as a result of surrogacy treatment abroad. It should also be noted that the Court stresses in Paradiso that Article 8 ECHR neither guarantees a right to found a family in all circumstances nor a right of adoption.105 However, the decision to separate a surrogate-born child from his or her intending parents and any consideration of whether a foreign court decision (or foreign civil status document) is contrary to public policy must take into account the human rights guaranteed by the ECHR and CRC. These judgments must be “read down” in such a way as to ensure that the essence of the protected right to family and private life is not impaired on the basis that the family units that are created are, in most cases, likely to be indistinguishable from other close family relationships. That a similar status could not have been acquired under national law is not, in itself, enough. To treat the second intending parent differently with regard to the acquisition of parental status requires an objective and reasonable justification for the difference in treatment. This is on the basis that the child’s sense of personal identity and security within his or her family would be affected by the fact that the persons who actually assume the role of parent are not legally recognised as such. Yet there are important public policy factors to be considered. With respect to surrogacy and modern reproductive techniques, the protection of health or morals, the prevention of crime, or the protection of rights and freedoms of others (in particular the child, the surrogate and gamete providers) are legitimate objectives. Those restrictions must, however, be provided for by law and be necessary in a democratic society, i.e. proportional to the objective aimed at and acceptable in an open, free, tolerant, and pluralistic society. The Strasbourg Court in Mennesson considered the legitimate aims submitted by the French Government and held that the Court was not convinced that the aims to defend ordre public and breach of criminal law were proportionate in the circumstances. Instead, the aims of protecting health (presumably the health of the surrogate and the child) and protecting the rights and freedoms of others (presumably, again, of the dignity of the surrogate and the child and the informed consent of the surrogate to the arrangements) were considered to be legitimate aims pursuant to Article 8. The lawfulness of the arrangements in the state in which these children were born (e.g. in California) is also relevant and distinguishable from illegal domestic or inter-country surrogacy. In D and Others v Belgium, the Court points out that the respondent State had a margin of appreciation to decide on such matters such as the issuance of a travel document in these circumstances and that any interference in family life had to be provided for by law and pursue legitimate aims, namely the prevention of crime, especially trafficking in human beings, and the protection of the rights of the surrogate and the child. From the discussion above, the judgments suggest that any blanket ban on the recognition or non-establishment of parenthood in favour of the intending parents may not satisfy the standard of proportionality as developed and applied by 105 With respect to a “purported” right to adopt: E.B. v France, Application No. 43546/02, para. 41, 22 January 2008.

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Inter-Country Surrogacy and Public Policy the Strasbourg Court. Although the judgments are not necessarily predictive of the approach to be adopted in each of the 47 court systems of the Contracting States, the decisions in Mennesson and Labassee do, nevertheless, suggest that the approach adopted in Austria and Germany provides an interesting comparative example of how proportionality in approach and the application of the public policy assessment might apply in the context of surrogacy. These decisions are undoubtedly landmarks for the rights of surrogate-born children and as such will have significant impact on the future development of European family law. It is predicted that a proportionality review of national surrogacy laws (or policy) will lead to a softening of restrictive responses to the recognition of a parental status established abroad. It must be remembered that the lack of a legal relationship between the child and the intending mother or the second intending parent creates the same disadvantages and uncertainties regarding inheritance rights, child custody, and other day-to-day parental duties as the historical position of the unmarried father considered above, which, to paraphrase the Strasbourg Court, is likely, in many cases, to “fly in the face of both established fact and the wishes of those concerned without actually benefiting anyone.”106 In matters relating to the family rights of children, the Strasbourg Court has articulated the following key principles: (i) (ii)

(iii)

“The community as a whole has an interest in maintaining a coherent system of family law which places the best interests of the child at the forefront.”107 “Respect for family life implies [...] the existence in domestic law of legal safeguards that render possible as from the moment of birth the child’s integration in his family.”108 The Court has a tendency towards adopting an increasingly broad and pragmatic view of which relationships may constitute family life. The Court has held that “the institution of the family is not fixed, be it historically, sociologically or even legally”.109 States are required to have in place a legal framework that ensures family life can be meaningfully enjoyed by a child. Although in the subsidiary system established by the ECHR Contracting States enjoy a variable margin of appreciation on the means to reach their objectives, the margin of manoeuvre, however, is at variance with the seriousness of the situation and the interests at stake: it seems that the margin of appreciation is restricted when the issues are the right of access or other legal safeguards needed for children to preserve the right to private and family life. In matters concerning the status of children and matters concerning a child’s identity,110 the role that genetic relationships play in the

Kroon v the Netherlands (1995) 19 EHRR 263, para. 40. X, Y & Z v UK, infra, para. 47 108 Marckx v Belgium, 13 June 1979, Series A No. 31, para. 31. 109 Mazurek v France, Application No. 34406/97, para. 52. 110 In its judgment in Evans v the United Kingdom, Application No. 6339/05, ECHR 2007-IV, concerning an obligation to obtain the father’s consent for the preservation and implantation of fertilised eggs, the Court summed up the issue of the width of the margin of appreciation in this Article 8 context as follows: “77. A number of factors must be taken into 106 107

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Michael Wells-Greco / Henry Dawson

(iv)

(v)

life task of identity formation and their significance in forming one’s selfknowledge and identity renders surrogacy and anonymous gamete donation inherently problematic. In determining whether an interference with family life is justified, the Strasbourg Court “attaches special weight to the overriding interests of the child”111 and the circumstances as a whole. In order to assess the proportionality of an interference with a right, it is appropriate to examine its impact on that right, as well as the grounds and consequences for the applicant and the context. It is for the state to justify the interference. Spielmann notes that the grounds “must be “relevant and sufficient”, the need for a restriction must be “established convincingly”, any exceptions must be “construed strictly” and the interference must meet “a pressing social need”.112 For the purposes of Article 8 ECHR, the public policy of a Contracting State cannot be understood as being made exclusively of national values and principles.113 Rather, public policy represents for the Court a focus point where national values and supra-national imperatives including the CRC, interconnect: public policy, in order to properly play a role in respect of the recognition of foreign judgments in matters of personal status and family relationships, should be treated “as the result of a dynamic process of osmosis between local and regional policies […] i.e. a perspective where the point of view of the forum is no longer a merely national one, but embodies that state’s international undertakings concerning, inter alia, the protection of human rights.”114

account when determining the breadth of the margin of appreciation to be enjoyed by the State in any case under Article 8. Where a particularly important facet of an individual’s existence or identity is at stake, the margin allowed to the State will be restricted (see, for example, X and Y v the Netherlands, 26 March 1985, §§ 24 and 27, Series A No. 91; Dudgeon v the United Kingdom, 22 October 1981, Series A No. 45; Christine Goodwin v the United Kingdom, Application No. 28957/95, § 90, ECHR 2002-VI). Where, however, there is no consensus within the Member States of the Council of Europe, either as to the relative importance of the interest at stake or as to the best means of protecting it, particularly where the case raises sensitive moral or ethical issues, the margin will be wider (see X, Y and Z v the United Kingdom, 22 April 1997, para. 44, Reports of Judgments and Decisions 1997-II; Fretté v France, Application No. 36515/97, para. 41, ECHR 2002-I). There will also usually be a wide margin if the State is required to strike a balance between competing private and public interests or Convention rights (see Odièvre v France).” 111 Bronda v Italy, Application No. 22430/93, para. 62. 112 D. SPIELMANN Allowing the Right Margin. The European Court of Human Rights and the National Margin of Appreciation Doctrine: Waiver or Subsidiarity of European Review?, 2012 CELS Working Paper Series, p. 22. 113 P. FRANZINA, Some remarks on the Relevance of Article 8 of the ECHR to the Recognition of Family Status Judicially Created Abroad, [2011] 5(3) Diritti Umani e Diritto Internazionale. M. FORTEAU, L’ordre public “transnational” ou “réellement international”: l’ordre public international face à l’enchevêtrement croissant du droit international privé et du droit international public, [2011] Journal du droit international, p. 3 et seq. 114 P. FRANZINA (note 113) and P. KINSCH (note 94), at 273.

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Inter-Country Surrogacy and Public Policy (vi)

(vii)

Together, the judgments of the Strasbourg Court in the context of the recognition or establishment of a parental status can stand for a general idea: a status validly acquired abroad, whether through a judgment or otherwise, is entitled to protection under human rights law – specifically, in the European context, under the right, guaranteed by the ECHR, to protection of private and family life.115 As FRANZINA observes there are two broad preconditions: the parties must have acquired the family status in good faith116 under the foreign system, and the parties’ expectation of stability regarding their status must have been a legitimate expectation. However, Article 8 ECHR does not prevent Contracting States from resorting to any particular technique for the recognition of foreign judgments or civil status documents, provided that the overall operation of the relevant rules does not lead to a result inconsistent with the rights protected by the Convention.117 Good faith will depend on the parties’ actions and the lawfulness of the arrangement in the jurisdiction in which the surrogacy arrangement takes place. Legitimacy will depend upon the intensity of the links with the foreign legal system under which the status was acquired. The mere fact that the parties’ expectations are entitled to protection does not mean that they can never be disturbed. But such reasons for disturbing their expectations must be assessed against the parties’ interests in the stability of their family status, in light of the principle of proportionality (balancing exercise of the interest of the community and the individuals). As concluded above, that a similar status could not have been acquired under the recognising forum’s own system of law or public policy will not, in itself, be enough. Article 8, to put it otherwise, should merely “rectify the functioning” of the relevant PIL rules, “whenever the latter bring about an illegitimate restriction on an established Article 8 right to respect for private and family life”.118 The apparent paradox that results from the Strasbourg Court’s approach is that a particular country’s (private international) rules may, on the basis of an Article 8 ECHR assessment, permit an activity that its own domestic laws may disallow.119 This dimension does not conflict with the role and positive functioning of PIL. The Strasbourg Court does not legislate. There are some things which ought to be decided by a democratically elected Parliament rather than by the courts. The law should not simply legitimise an offence, nor should it be forced to recognise a practice which is prohibited. Legislatures are free to

See also P. KINSCH (note 94), at 272-275. Wagner, para. 155. 117 P. FRANZINA (note 113) and P. KINSCH (note 94), at 273. 118 P. KINSCH, Recognition in the Forum of a Status Acquired Abroad – Private International Law Rules and EuropeanHuman Rights Law, in K. BOELE WOELKI et al. (eds), Convergence and Divergence in Private International Law – Liber Amicorum Kurt Siehr The Hague, 2010, p. 272. 119 H. MUIR WATT, Concurrence d’ordres juridiques et conflits de lois de droit privé, in M. LAGARDE, Vers de nouveaux équilibres entre ordres juridiques: Mélanges en l’honneur d’Hélène Gaudemet-Tallon, Dalloz 2008, p. 617. 115 116

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Michael Wells-Greco / Henry Dawson enact laws as long as those laws are rationally related to achieving legitimate aims. Restrictions on children’s identity and other rights of fundamental importance, though, must satisfy a higher standard of proportionality. This standard does not prohibit a state from passing laws in order to achieve certain (ethical) objectives but it does prevent legislature from imposing restrictions that have too little to do with the achievement of those normative goals. In cases where fundamental rights are at issue, proportionality requires that legislatures adopt the only or the least intrusive means of achieving the aim pursued. The fact that, at the end of a gradual evolution, a country finds itself in an isolated position as regards one aspect of its legislation does not necessarily imply that, for example, that aspect conflicts with the ECHR, particularly in a field such as parenthood which is so closely bound up with the cultural and historical traditions of each society and its deep-rooted ideas and aspirations about the family unit.120 Asking herself if Strasbourg Court or the UK Supreme Court is Supreme, Baroness Hale proposes as follows: “where it was necessary to strike a balance between competing Convention rights, the Court should be particularly cautious about interfering with the way in which the national courts have struck the balance when they have been applying the Convention principles and have reached a decision which is “on its face reasonable and not arbitrary”.121 Indeed, as the Strasbourg Court has observed, recognition of a foreign judgment may (and actually should) be denied in some circumstances.122 Surrogacy must be approached on its very special facts. If a child is born as a result of surrogacy, the child’s welfare must be of the highest priority. A decision taken by a state has and will have a fundamental impact on the future of the child. If the child has been entrusted to the intending parents, forcing the surrogate to take the child back or placing him or her into care may not promote the child’s welfare; nor will criminalising a child’s parents or the surrogate. Paradiso serves as a reminder of the dilemmas. Long-term solutions must be found in the best interests (considered in context of the fundamental and long-term impact on the child’s life) of the surrogate-born child. In establishing this position, the Strasbourg Court has expressed a strong awareness of the importance of legal recognition for family relationships, even if it has not applied this approach equally to all forms of family relationships.

120 See F. v Switzerland, 18 December 1987, § 33, Series A No. 128, para. 33 (this case concerned limitations on the right to remarry). 121 B. HALE, Argentoratum Locutum: Is the Strasbourg or the Supreme Court Supreme?, [2012] Human Rights Law Review, p. 65-78, 77. 122 See, for further developments and in a different perspective, O. LOPES PEGNA, L’incidenza dell’Articolo 6 della Convenzione europea dei diritti dell’uomo rispetto all’esecuzione di decisioni straniere, [2011] Riv. dir. int., p. 54. Commercial surrogacy is particularly problematic. Indeed, the margin of appreciation accorded to states when implementing their human rights obligations is such that they could still rely on these arguments to justify the prohibition of commercial surrogacy; see M. WELLS-GRECO (note 50), at 315-320.

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IV. Towards a Child-Centred Approach Given the effect of the Court’s judgments in other Council of Europe States, those exercising restrictive laws and policies on surrogacy, as France and Italy do, will likely pull their practice around legal parentage in inter-country surrogacy situations into line with the Paradiso, Mennesson and Labassee decisions.123 Reaching solutions in these cases require careful attention to the individual relationships concerned and the responsibilities that arise from them. The solutions are to be fashioned from the relationships themselves because, whatever else happens, the child and his or her carers will need to continue in their relationships together and those relationships are worth more than any abstract legal rights. The pressure to extend Article 8 case law to require states to give legal recognition to less traditional family forms is arguably growing, especially where children are affected.

Three cases against France are currently pending before the Court: Laborie v France (Application No. 44024/13): impossibility for a French couple to obtain recognition in France of the parent-child relationship between them and children born in Ukraine through a surrogate pregnancy. Foulon v France (Application No. 9063/14) and Bouvet v France (Application No. 10410/14): impossibility for a French national to obtain recognition in France of the parent-child relationship between him and a child born in India through a surrogate pregnancy. 123

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UNIFORM PRIVATE INTERNATIONAL LAW IN CONTEXT ________________

RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS IN GREECE UNDER THE BRUSSELS I-BIS REGULATION Apostolos ANTHIMOS*

I. II.

III.

IV.

Introduction Grounds for Refusal A. Public Order 1. Procedural Public Policy 2. Substantive Public Policy B. Improper Service of Process 1. Default Judgment 2. Ex parte Decisions 3. Document Instituting Proceedings 4. Sufficiency of Time 5. Failure to Challenge the Judgment in the Court of Origin 6. Translation of the Claim 7. Service of the Foreign Judgment C. Irreconcilability of Judgments D. Lack of International Jurisdiction E. Revision of the Merits F. Lack of Enforceability in the Court of Origin Recognition and Enforcement in Light of the Brussels I-bis Regulation A. The Preparatory Stage of Enforcement B. Enforcement of Mediated Settlements C. Translation of Documents D. Refusal of Recognition and Enforcement Conclusion

*

Visiting lecturer, European University of Cyprus, Attorney at law, Thessaloniki, Greece; Panelist, Czech Arbitration Court [.eu ADR]; Editor, Civil Procedure & International Civil Litigation, Armenopoulos [Thessaloniki Bar Review]. Yearbook of Private International Law, Volume 16 (2014/2015), pp. 345-363 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Apostolos Anthimos

I.

Introduction

The Hellenic Republic became a member of the European Economic Community in 1981. Greece ratified the Brussels Convention by virtue of law Nr. 1814/1988.1 A special report was prepared by Professor KERAMEUS and the late Professor EVRIGENIS.2 The overall implementation of the Convention by Greek courts has been positive.3 Almost 12 years later, Regulation (EC) No 44/2001[Brussels I Regulation] replaced the Brussels Convention. On the whole, the application of the Regulation in the country can be described as satisfactory. Courts proved to be open minded in exequatur proceedings, thus fulfilling the mandate for a free circulation of judgments dictated by the European Union. There were some minor issues that caused scepticism, the majority of which could have been solved by means of an implementing act to the Regulation. Regrettably, Greek governments persistently omit to issue any such acts in the course of “communitarisation” in civil and commercial matters. Consequently, primarily academics and courts are called upon to find viable solutions to problems faced or potentially confronted in the future. Both the Convention and the Regulation have been the subject of scientific research by many Greek academics. The fruits of the above efforts are reflected in a series of monographs since 1990,4 unlike the admittedly poor literature of the distant past.5 Official Gazette, Part Α 249/11.11.1988. D.I. EVRIGENIS/ K.D. KERAMEUS, Report on the accession of the Hellenic Republic to the Community Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, OJ C 298, 24.11.1986. 3 A special conference was organized back in 1998, the findings of which have been published in honor of Prof. KERAMEUS, see N. NIKAS, The Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters. Ten years of its implementation in Greece, in Liber Amicorum Constantinos D. Kerameus, Sakkoulas Publications (2000) [Ν. Θ. Νίκας (Επιστημονική επιμέλεια), Liber Amicorum Κωνσταντίνου Δ. Κεραμέως - Η σύμβαση των Βρυξελλών για τη διεθνή δικαιοδοσία και την εκτέλεση αποφάσεων. Δέκα χρόνια εφαρμογής της στην Ελλάδα]. 4 Primarily see P. YESSIOU-FALTSI, On the enforcement of judgments, Vol. III – Enforcement of judgments in the international context, Sakkoulas Publications (2006) [Δίκαιο Αναγκαστικής Εκτελέσεως III – Η διεθνής αναγκαστική εκτέλεση], and in chronological order: S. GIAFIS, On the requirements for the recognition of foreign judgments between EEC member states, Ant. N. Sakkoulas Publishers (1990) [Προϋποθέσεις αναγνωρίσεως δικαστικών αποφάσεων μεταξύ των κρατών της ΕΟΚ]; A. ANTHIMOS, Recognition and enforcement of foreign default judgments, Sakkoulas Publications (2002) [Αναγνώριση και εκτέλεση ερήμην αλλοδαπών αποφάσεων]; A. KAISSIS, Public policy aspects in the process of recognition and enforcement of foreign judgments and arbitral awards, Sakkoulas Publications (2003) [Εκφάνσεις της δημόσιας τάξης στην αναγνώριση και εκτέλεση αλλοδαπών δικαστικών και διαιτητικών αποφάσεων]; H. MEIDANIS, Public policy in EU Private International Law, Ant. N. Sakkoulas Publishers (2004) [Η δημόσια τάξη στο κοινοτικό ιδιωτικό διεθνές δίκαιο]; P. YIANNOPOULOS, Creditor’s protective measures during exequatur pursuant to Regulation 44/2001, Sakkoulas Publications (2007) [Προσωρινή προστασία του δανειστή στο στάδιο κηρύξεως της εκτελεστότητας κατά τον Κανονισμό 44/2001]; Ch. TRIANTAFYLLIDES, Protective measures in international private disputes, NOMIKI BIBLIOTHIKI GROUP (2008), p. 231 et seq. [Τα ασφαλιστικά μέτρα 1 2

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis The purpose of this paper is to briefly present the major findings of the nearly 25-year implementation of the aforementioned instruments in the Greek legal order. The paper will elaborate briefly on the new landscape following the entry into force of Regulation (EU) No 1215/2012 [Brussels I-bis Regulation]. It will focus on the available case law regarding the grounds for refusal, reported6 and unreported, avoiding any scrutiny of doctrinal issues discussed and published in the Greek legal press (Part II). It will then attempt a brief analysis of Articles 36 et seq. Brussels I-bis Regulation, regarding their future implementation in the Greek legal order, placing emphasis on some salient issues from the Greek perspective (Part III).

II.

Grounds for Refusal

The most crucial part of the process unfolds before the courts hearing the appeal under Article 43 of the Brussels I Regulation. Statistically the grounds of public policy and improper notice of the defendant are the prevailing questions with which courts are confronted. Article 45 of the Brussels I Regulation clearly sets the στις διεθνείς ιδιωτικές διαφορές]; and recently A. ANTHIMOS, Foreign Judgments and Arbitral Awards (2014) [Αλλοδαπές δικαστικές και διαιτητικές αποφάσεις], passim. Last but not least, mention needs to be made to the book of Prof. N. NIKAS, European Civil Litigation [Ευρωπαϊκό Δικονομικό Διεθνές Δίκαιο], Sakkoulas Publications, 2nd edn (2008), which is a collection of all relevant Regulations, offering a detailed reference on reported case law on the Brussels Convention and Regulation 44/2001. A collection of (mostly) reported cases on International Civil Litigation (in full text) can be found in the book of E. VASSILAKAKIS (ed.), International Civil Litigation, NOMIKI BIBLIOTHIKI GROUP (2008), p. 153 et seq. [Δικονομικό Διεθνές Δίκαιο - Σχολιασμένη νομολογία]. 5 From a review of past scholarship, one finds only the seminal work of the late Prof. G. MARIDAKIS, On the enforcement of foreign judgments, published in 1943, and its third and last edition in 1970. 6 The law reviews mentioned thereon are the following: Armenopoulos [in Greek: Αρμενόπουλος, Thessaloniki Bar Review]; Ionian Law Review [in Greek: Ιόνια Επιθεώρηση Δικαίου]; Review for Bank, Securities and Stock Exchange Law [in Greek: Επιθεώρηση Τραπεζικού, Αξιογραφικού & Χρηματιστηριακού Δικαίου]; Chronicles of Private Law [in Greek: Χρονικά Ιδιωτικού Δικαίου]; Crete Appellate Law Reports [in Greek: Νομολογία Εφετείου Κρήτης]; Hellenic Justice [in Greek: Ελληνική Δικαιοσύνη]; Commercial law Survey [in Greek: Επισκόπηση Εμπορικού Δικαίου]; Legal Tribune [in Greek: Νομικό Βήμα]; Case Law Archive [in Greek: Αρχείον Νομολογίας]; Civil Procedure Review [in Greek: Επιθεώρηση Πολιτικής Δικονομίας]; Enterprises & Companies Law Review [in Greek: Δίκαιο Επιχειρήσεων & Εταιριών]; Achaian Law Reports [in Greek: Αχαϊκή Νομολογία]; Piraeus Law Reports [in Greek: Πειραϊκή Νομολογία]; Dike [in Greek: ΔΙΚΗ]; Theory and Practice of Private Law [in Greek: Εφαρμογές Αστικού & Αστικού Δικονομικού Δικαίου]. Information on some of the above reviews can be found in: P. YESSIOU-FALTSI, Hellas, in R. BLANPAIN, International Encyclopedia of Laws - Civil Procedure, Kluwer Law International 2004, p. 62 et seq. In addition, reference is made to the following legal data bases: 1) ISOCRATES, i.e. the data base of the Athens Bar, and 2) NOMOS, a privately owned data base, which has been the pioneer in the field.

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Apostolos Anthimos stage and limits the scope of the appeal exclusively on the grounds specified in Articles 34 and 35. As explained below, Greek courts have revoked exequatur on the basis of other grounds that are not explicitly stipulated in the provisions mentioned above. At the same time however, courts were reluctant to accept grounds that were totally incompatible with the architecture of the Regulation. In particular, it has been reported that an appeal invoking the non-application of the Brussels I Regulation for the dispute in question is to be dismissed.7 The same result was reached regarding a ground, which aimed to revoke enforceability on the basis of vexatious proceedings.8 A.

Public Order

Article 34(1) of the Brussels I Regulation regulates the public policy exception, which – at least in Greece – is by far the most preferred ground of refusal for judgment debtors, both in its procedural and material dimension. 1.

Procedural Public Policy

In their pursuit to revoke the declaration of enforceability, judgment debtors have invoked the following arguments: (a)

That a United Kingdom (UK) court order is contrary to public order if it requires the debtor to challenge the proceedings only before the London Court of Arbitration. The Piraeus Court of Appeal revoked the decision rendered by the court of first instance, stating that the content of the English order contravenes basic notions of fairness, as stipulated under Article 20(1) of the Greek Constitution and Article 6(1) European Convention on Human Rights (ECHR).9 Hence, there is a clear tendency to impede UK anti-suit injunctions from being recognized in Greece.

(b)

That the judgment creditor, despite knowledge of the defendant’s whereabouts, deliberately had the defendant served by publication. This is clearly a matter of evidence. In one reported case, the court decided in favour of the judgment debtor.10

7 Athens CoA 8237/2004, Hellenic Justice 2005, p. 1530. However, instead of dismissing the action as inadmissible, the court examined the ground on its merits and rejected it as unfounded. 8 Athens CoA 8237/2004, Hellenic Justice 2005, p. 1530. Again the court went into the merits, stating that no abuse of right could be established, since the appellant did not challenge the debt in question in the proceedings before the Belgian court. 9 Piraeus CoA 110/2004, Piraeus Law Reports 2004, p. 92 = Dike 2005, p. 831. Similarly Piraeus CoA 31/2012, ΝΟΜΟS. 10 Under the Brussels Convention regime, the Drama 1st Instance Court 251/2000, Armenopoulos 2001, p. 535, examined the issue on its own motion, and found that the applicant had been served proceedings earlier by the debtor, whose residence was of course

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis (c)

That the foreign judgment lacked reasoning. Almost unanimously, courts are dismissing this ground based on various reasons. First, this ground is not stated under the restrictive list of Article 45 of the Brussels I Regulation.11 Second, the mere lack of reasoning is not equivalent to a violation of public policy.12 Third, such a ground should have been raised in the proceedings before the court of origin by virtue of a legal remedy; if not, or if the remedy is not accepted by the foreign court, the point cannot be put forward in the court of destination.13

(d)

That the applicant did not produce a leave from the Greek Ministry of Justice, which is imperative pursuant to Article 923 of the Greek Code of Civil Procedure (CCP) if the judgment debtor is a foreign state. The court dismissed the ground on two reasons: (1) such a leave is not a pre-requisite for the declaration of enforceability, but rather for the initiation of the enforcement; and (2) the appellant was a foreign public body, not a State.14

(e)

Excessive cost orders. The issue has been brought several times before Greek courts within the last decade. From the Greek perspective, it is impossible for costs to exceed the amount in dispute in the main proceedings. This was reason enough for the Supreme Court to establish the doctrine of public policy violation, on an appeal against a judgment of the Athens Court of Appeal back in 2006.15 The Supreme Court held that granting enforceability to similar orders would violate the principle of proportionality, which is embedded both in the Greek Constitution and the European Court of Human Rights. This reasoning by the Supreme Court is followed by subsequent case law. In a judgment of the Corfu Court of Appeal, the court reiterated the line of argumentation stated by the Supreme Court, and refused to grant exequatur to an English order for costs.16 Two years later, the Larissa Court of Appeal followed the opposite direction, based on the fact that costs were far lower than the amount in dispute.17 Recently, again the Corfu Court of Appeal refused to grant enforceability of a cost order and a default cost certificate of the York County Court on grounds that Greek courts would not have imposed such an excessive amount as costs for a similar case in Greece. In particular, the court found

written in the claim served. This was reason enough for the court to assume that the applicant was aware of the debtor’s whereabouts. 11 Supreme Court 877/2004, ΝΟΜΟS. 12 Supreme Court 349/2012, Private Law Chronicles 2012, p. 745. 13 Piraeus CoA 419/1994, Armenopoulos 1995, p. 506, making reference to earlier decisions rendered before the entry into force of the Brussels Convention. Similarly Thessaloniki CoA 2121/2002, unreported, and Corfu CoA 193/2007, Legal Tribune 2009, p. 557 (under the Brussels I Regulation regime). 14 Thessaloniki CoA 267/1999, Armenopoulos 1999, p. 718 = Commercial Law Survey 1999, p. 275. 15 Supreme Court 1829/2006, Private Law Chronicles 2007, p. 635 et seq. 16 Corfu CoA 193/2007, Legal Tribune 2009, p. 557. 17 Larissa CoA 484/2011, Armenopoulos 2013, p. 765.

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Apostolos Anthimos that, granting costs of more than 80.000 £ for a case in which the amount in dispute was 17.000 £ contravenes Greek public policy perceptions. Thus, the costs were considered manifestly disproportionate and excessive. Consequently, the Court of Appeal granted exequatur for the remaining sums, and refused recognition of the above-mentioned costs, which could not be tolerated by a court of law in Greece.18 In sum, the decisive element in the courts’ view is the interrelation between the subject matter and the costs: if the latter is higher than the former, then there should be no expectations of enforcement. If however, the latter is lower than the former, then public policy considerations do not usually prevail. (f)

Violation of the right to be heard. Drawing a clear line between procedural public policy and the ground under Article 34(2) of the Brussels I Regulation seems to be the work of Sisyphus for Greek jurisprudence. This is the reason why many courts are opting for a cumulative reference to both provisions, without assuming the laborious task of distinguishing their boundaries.19 Courts frequently apply Article 34(1) instead of Article 34(2) of the Brussels I Regulation.20

Ex parte provisional measures are not deemed contrary to public policy, given the fact that similar provisions are embedded in the domestic Code of Civil Procedure (Art. 687(1) and Art. 691(1)).21 The same applies to German payment orders.22 In addition, service by publication has been considered to be in line with public policy requirements, considering that the notion is also established in the Greek CCP (Art. 135).23 Finally, no violation has been found in a Belgian decision, which adjourned the counterclaim of the judgment debtor on a later hearing, making use of Article 735 of the Code Judiciaire.24

Corfu CoA 130/2012, Armenopoulos 2013, p. 767. What’s worse: Frequently courts are accumulating provisions from both the Greek CPC (Art. 323(3) and 323(5)) and the Brussels regime, although their nature varies [the CPC refers to positive requirements, which the applicant has to prove, unlike the grounds of refusal, for which it is the appellant who has the burden of proof], see for instance Thessaloniki CoA 363/2004, unreported. 20 Thessaloniki CoA 363/2004, unreported: Although the issue at hand was related to the document instituting proceedings, the court invoked the public policy ground. 21 Thessaloniki CoA 2121/2002, unreported. 22 Thessaloniki CoA 200/2008, unreported. 23 Thessaloniki CoA 139/2001, Armenopoulos 2001, p. 529, Thessaloniki CoA 164/2010, Civil Procedure Review 2010, p. 709. 24 Athens CoA 8237/2004, Hellenic Justice 2005, p. 1530. 18 19

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis 2.

Substantive Public Policy

Just as for procedural public policy, judgment debtors have invoked, with respect to substantive public policy, a set of arguments in order to revoke the declaration of enforceability granted in the first stage of proceedings. What follows is a survey of reported and unreported case law. (a)

There is no contradiction to substantive public policy when the judgment debtor is obliged to pay the sum of $220,252.31 in interest on a total of $714.999.89.25

(b)

A UK judgment that does not specify the nature of the liability of the judgment debtors (i.e. joint and several or in equal shares) is not contrary to substantive public order.26

(c)

Public policy is not violated if no Greek mandatory law provisions have been applied in the foreign proceedings. A contradiction of the foreign judgment with domestic conflict of laws or mandatory provisions pursuant to Article 3 of the Greek Civil Code is insignificant. The decisive element is whether the solution given in the specific case would cause results which would be contrary to fundamental principles of the Greek legal order.27 On the other hand, it has been decided that two German judgments may not be enforced in Greece on the grounds of a manifest violation of public policy, because their execution will hinder – if not annul - the application of the beneficial provisions of the law on reorganisation of enterprises, which have been set for the benefit of the national economy and general interest.28

(d)

No violation of public policy is accepted on the basis that a certain issue is regulated in a manner unknown to Greek legal perceptions.29 It has been reported, that the liability issue of the ship administrator, who is not the ship owner, is not an unknown institution in Greek law, nor does his liability under given circumstances contravene the Greek public order.30 Similarly, no public policy violation is caused by the declaration of enforceability of an English judgment, which grants relief on the basis of a Forward Freight Agreement (FFΑ).31

(e)

No public order violation has been viewed in the enforcement of an English judgment, which has been rendered against an estate. The appellant invoked Article 313 d of the Greek CCP, which states that a decision is non-existent, if it has been rendered against a non-existent person or legal entity;

Piraeus CoA 419/1994, Armenopoulos 1995, p. 506. Athens CoA 10698/1995, Hellenic Justice 1996, p. 1404. 27 Piraeus CoA 617/2004, Piraeus Law Reports 2004, p. 351. 28 Athens CoA 7701/2004, Enterprises & Companies Law Review 2005, p. 441. 29 Athens CoA 1356/2007, Hellenic Justice 2008, p. 1498. 30 Piraeus CoA 711/2004, Piraeus Law Reports 2004, p. 489. 31 Piraeus 1st Instance Court 4784/2005, Enterprises & Companies Law Review 2006, p. 297. 25 26

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Apostolos Anthimos consequently, the above decision could not be enforced in Greece. The Greek court clarified that the English institute of liable estate of a deceased person constitutes a vital part of English law on inheritance. The enforcement of any decision, however, is not directed to the estate itself, but against the heirs or the trustee. Hence, no merit can be given to the ground raised by the appellant on the basis of Article 27(1) of the Brussels Convention in conjunction with Article 313 d of the CCP.32 (f)

Finally, a German judgment obliging the husband to pay alimony may not be considered as a violation of public policy, which was further analysed by the appellant as a violation of the principle of equal treatment, and discrimination against the male spouse. The court stated that maintenance claims are granted against one of the spouses in case of break-down of cohabitation according to domestic law too.33

B.

Improper Service of Process

Of equal importance is the second ground for refusal (Art. 34(2) of the Brussels I Regulation, ex Art. 27(2) of the Brussels Convention). To date, interpretation issues have reached the Supreme Court five times. This is evidence of the frequency with which this provision is invoked if one also adds case law from appellate courts (over 20 rulings). As demonstrated below, Greek courts have the tendency to invoke domestic provisions, even if a case falls under the ambit of the Brussels I Regulation.34 1.

Default Judgment

An essential requirement of Article 34(2) is the existence of a default judgment, without which the provision is inapplicable.35 This has been verified by the Supreme Court in a 2003 ruling: the appellant’s complaint was that the term of 14 days was insufficient to arrange for his defence. The complaint was dismissed on the basis of the Court of Appeal’s findings. The latter court held that the English judgment was not given in default. In particular, the foreign decision was Piraeus CoA 71/2005, Hellenic Justice 2005, p. 541. Thessaloniki CoA 2121/2002, unreported. 34 See for instance Supreme Court 2293/2009, TPCL 2010, 1139, Thessaloniki CoA 139/2001, Armenopoulos 2001, p. 529, Thessaloniki CoA 363/2004, unreported, and Piraeus CoA 71/2005, Private Law Chronicles 2006, p. 807. 35 See however Athens CoA 2667/1994, Legal Tribune 1995, p. 252, examining the requirements under Art. 27(2) of the Brussels Convention, although no default judgment was rendered in the English proceedings. See also Athens CoA 8237/2004, Hellenic Justice 2005, p. 1530, which examined the matter from the public policy point of view, reaching the same conclusion, namely that no violation of the defendant’s right to be heard can be accepted, given the fact that he submitted his pleadings and filed a counterclaim in the state of origin. 32 33

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis challenged by the appellant, who filed an application to set aside the default judgment. Following that, a decision was rendered, requiring the appellant to pay the amount of 216.150 £. This was the judgment brought before Greek courts, which was by no means given in default of appearance.36 On a similar footing, no application of Article 27(2) of the Brussels Convention was accepted since the judgment debtor was the one filing the appeal in the court of origin and was present in the pertinent proceedings.37 2.

Ex parte Decisions

One of the most controversial issues under Article 34(2) of the Brussels I Regulation is whether an ex parte foreign decision, i.e. a decision which was rendered without any notice to the debtor, is eligible to be declared enforceable in the country of destination. The European Court of Justice has decided that it is not.38 The Greek Supreme Court (and an earlier unreported Court of Appeal decision39) followed a different path. In a 2009 ruling, it dismissed the appeal on a matter of law, invoking a violation of Article 34(2), by referring to the domestic pertinent procedural provision, i.e. Article 323(3) CCP. According to the latter, a judgment shall be recognised and enforced, even if no fair hearing was given, if the deprivation of the right to be heard is also applied to nationals of the country of origin.40 3.

Document Instituting Proceedings

As evidenced in the wording of Article 34(2) of the Brussels I Regulation (27(2) Brussels Convention), this ground for refusal is examined solely with respect to deficiencies relating to service of the document instituting proceedings. Accordingly, it has been decided that the above provision does not apply with regard to subsequent documents,41 such as the adjournment protocol of a French court. The defendant must be careful and make his own enquiries as to the new date of the hearing.42 Supreme Court 36/2003, Private Law Chronicles 2003, p. 450. Thessaloniki 1st Instance Court 825/1996, Armenopoulos 1998, p. 1520. 38 ECJ, 21 May 1980, Denilauer v. Couchet, C-125/79, ECR [1980], 1553 et seq. 39 Thessaloniki CoA 2121/2002, unreported. 40 Supreme Court 1028/2009, Civil Procedure Review 2010, p. 55. 36 37

41 Thessaloniki CoA 3299/2000, Armenopoulos 2001, p. 377: The court underlined that neither Art. 171 of the Italian CPC, nor Art. 27(2) Brussels Convention provide for a requirement to serve subsequent documents, if the claim has been served duly and timely to the defendant. What’s more interesting is that the court clarified that the scope of Art. 27(2) Brussels Convention is not to be confused with that of Art. 323(3) Greek CPC, which protects the right to a fair hearing of the defendant throughout the course of the proceedings. Similarly Athens CoA 2163/2003, Hellenic Justice 2004, p. 1476. 42 Athens CoA 7307/2002, Commercial Law Survey 2003, p. 203, Athens CoA 2163/2003, Hellenic Justice 2004, p. 1476.

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Apostolos Anthimos 4.

Sufficiency of Time

Based on the wording introduced by the Brussels I Regulation, the appellant has the onus of proving that the claim was not served in sufficient time and in such a way as to enable him to arrange for his defence. The previous version in Article 27(2) of the Brussels Convention, which provided that the document should have been duly served,43 is no longer relevant, and not examined by Greek courts. Following the Klomps/Michel decision of the ECJ, Greek courts make an autonomous interpretation of the matter,44 and are not bound by domestic provisions.45 Normally the court has to examine the issue only if the debtor defaults.46 Greek courts have demonstrated a liberal approach on the matter. In particular, the Athens Court of Appeal reversed the decision of the court of first instance which refused exequatur to an English judgment, stating that the term of 21 days set by the court to the defendants was not insufficient, since the only act they were obliged to do was to return an acknowledgment of receipt to the English court, coupled with a statement that they will appear at the hearing.47 Similarly, by virtue of Article 53(2), courts have dismissed the ground based on the non-production of the certificate of service.48 The sufficiency of time has been confirmed even in cases where the claim was served by publication,49 as long as it could not be proven that the applicant deliberately opted for such service despite his knowledge of the defendant’s residence.50

See Supreme Court 2293/2009, TPCL 2010, p. 1139 and Athens CoA 3209/2006, Hellenic Justice 2007, p. 271, dealing with the same facts: No service of process irregularities have been found in the document being notified to an agent pursuant to an agreement made between the parties based on Lloyds internal regulations. 43

44 Thessaloniki CoA 267/1999, Armenopoulos 1999, p. 718 = Commercial law Survey 1999, p. 275. 45 Athens CoA 2163/2003, Hellenic Justice 2004, p. 1476. 46 See however Athens CoA 2667/1994, Legal Tribune 1995, p. 252, under the Convention regime though. 47 Athens CoA 10698/1995, Hellenic Justice 1996, 1402. Similarly Thessaloniki CoA 267/1999, Armenopoulos 1999, p. 718 = Commercial law Survey 1999, p. 275. 48

Athens CoA 1356/2007, Hellenic Justice 2008, 1498.

Thessaloniki CoA 164/2010, Civil Procedure Review 2010, p. 709: The court construed the rule of Art. 34(2) Brussels I Regulation in conjunction with Art. 3(2) of the 1961 Greek-German bilateral agreement on the recognition and enforcement of decisions. See however Drama 1st Instance Court 251/2000, Armenopoulos 2001, p. 535: The court refused to declare a Dutch judgment enforceable, because service by publication was chosen deliberately, although the creditor was aware of the debtor’s whereabouts. The judge based however his decision on public policy reasons (Art. 27(1) Brussels Convention). 50 Thessaloniki CoA 2321/2007, unreported. 49

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis 5.

Failure to Challenge the Judgment in the Court of Origin

Following the amendment by the Brussels I Regulation, a defendant who has omitted to take steps to challenge the judgment in the court of origin is faced with debarment in the ensuing proceedings before the court of destination. This has been verified by a 2009 Supreme Court ruling51 in which the appellant (a Greek company) had argued that it had not received the notice of the French proceedings. Consequently, the appellant was not present in the court of origin, where the default judgment was served to the company together with the decision granting exequatur in Greece. It then lodged an appeal, which was dismissed by the Athens Court of Appeal. The Supreme Court confirmed the ruling of the appellate court, stating that, even under those circumstances, the debtor could have challenged the French judgment pursuant to Article 490 of the French CCP, but it failed to do so. The same course has been followed in a 2012 Supreme Court ruling. This time with respect to a Dutch judgment: despite the deficiencies in the service of the document instituting the proceedings, it led to a default decision being served on the appellants. They had eight weeks to file an application to set aside the decision, pursuant to Article 14 of the Dutch CCP, but they failed to do so. Consequently, the court found that there was no violation of the appellants’ right to be heard.52 Finally, if the defendant does challenge the foreign judgment in the court of origin, he is not allowed to bring the matter de novo before the court of destination, most notably because the latter court is bound by the prohibitive rule of a révision au fond.53 Under these circumstances, it would be unacceptable to claim that the right to a fair hearing has been violated.54 This rule applies even if the remedies were not requested in a timely manner by the defendant in the court of origin.55 6.

Translation of the Claim

Under the Brussels Convention, courts have considered the translation of the document instituting proceedings as an essential element of the term “duly”.56 After the entry into force of the Brussels I Regulation, the issue is to be examined during the course of instituting proceedings, inspecting whether the document was served “in such a way, as to enable [the defendant] to arrange for his defence”.

51 Supreme Court 7/2009, Civil Procedure Review 2009, p. 480. Similarly Thessaloniki CoA 434/2010, Armenopoulos 2011, p. 79 = Civil Procedure Review 2011, p. 199. 52 Supreme Court 349/2012, Private Law Chronicles 2012, p. 745. 53 Thessaloniki CoA 139/2001, Armenopoulos 2001, p. 529. 54 Thessaloniki CoA 200/2008, unreported: The appellant filed an opposition against a German order for payment, which was dismissed as unfounded. For this reason the CoA saw no violation of Art. 34(2) Brussels I Regulation. 55 Thessaloniki CoA 1257/2011, Civil Procedure Review 2011, p.770. 56 Athens CoA 2163/2003, Hellenic Justice 2004, p. 1476.

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Apostolos Anthimos 7.

Service of the Foreign Judgment

The difficulties that arise from Article 47(1) of the Brussels Convention are surpassed by those arising from Article 42(2) of the Brussels I Regulation. The judgment creditor has to effect service of the foreign judgment by the time the domestic decision on the declaration of enforceability is served. In following this provision, courts are dismissing the 34(2) ground as long as the applicant can provide evidence of service within the time limit stated above.57 Moreover, the ground lacks substance if the appellant has filed an appeal before the foreign court.58 C.

Irreconcilability of Judgments

The ground of irreconcilable judgments has rarely been invoked by appellants before Greek courts. The leading case in which this ground was invoked is a 2004 Supreme Court ruling, which reversed a Court of Appeal decision that found no irreconcilability between the English judgment on damages based on tortious liability, and a previous domestic ruling, which had dismissed a claim of the English party as legally unfounded59 in the same matter.60 Irreconcilability was also established in a case where the enforceability of a German judgment was revoked on the grounds of a domestic decision authenticating an agreement between the appellant and its creditors.61 Interestingly, the German company was not part of the Greek proceedings sealing the agreement because there is no duty to serve the creditors in the hearing in question. An application for third party proceedings filed by the foreign company was dismissed. In light of the above, the Court of Appeal revoked the decision of the court of first instance, furnishing public policy reasons, namely that by granting enforceability to the German judgment, the foundation of domestic reorganisation laws would have been endangered. On the other hand, an irreconcilable domestic decision which was rendered after the ex parte proceedings of the court of first instance, and reversed before the appeal hearing, is not a valid ground according to Article 34(3) of the Brussels I

57 Thessaloniki CoA 2321/2007, unreported; Athens CoA 1356/2007, Hellenic Justice 2008, p. 1498: Foreign judgment served with the decision granting enforceability, as evidenced by a certificate of service of a Greek bailiff; Piraeus CoA 606/1997, Hellenic Justice 1997, p. 1896: Service of English judgment evidenced by a certificate of the foreign court according to Rule 5.65 RSC. 58 Piraeus CoA 711/2004, Piraeus Law Reports 2004, p. 489: It is easily concluded by the appeal, that the judgment debtor was aware of the foreign judgment and its content. 59 In Greek: Νόμω αβάσιμη. For the exact meaning in Greek law on Civil Procedure, see P. YESSIOU-FALTSI, Civil Procedure in Hellas, Sakkoulas/ Kluwer (1995), p. 185. 60 Supreme Court 1321/2004, Armenopoulos 2005, p. 1620 = Hellenic Justice 2005, p. 1434: The court underlines that by dismissing a claim as legally unfounded the judge has entered into an examination on the merits. The opposite would have been the case if the court had rejected the claim as vague, i.e. on the level of admissibility of the action. 61 Athens CoA 7701/2004, Enterprises & Companies Law Review 2005, p. 441.

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis Regulation.62 Furthermore, an application solely for interim measures before Greek courts is not sufficient for refusing the enforcement of a German freezing order.63 D.

Lack of International Jurisdiction

In the course of exequatur proceedings, issues pertaining to international jurisdiction are rarely brought to the attention of the courts, which have dismissed the ground without exception. Starting from the Supreme Court, it has dismissed a ground of cassation, which invoked issues of international jurisdiction and lis pendens in conjunction with public policy considerations. The court referred to Article 28(3) of the Brussels Convention, and clearly concluded that the above cannot be reviewed in the court of destination as a component of public policy.64 Other courts of first instance have reached the same conclusion before and after the Supreme Court ruling.65 E.

Revision of the Merits

Similarly, efforts to review foreign judgments substantively are met with the unanimous contrary position of Greek courts on the basis of Article 45(2) and 36 of the Brussels I Regulation. In particular, an assertion that the appellant does not owe the amount stated in the foreign judgment has been declared inadmissible on the basis of Article 45(2) of the Brussels I Regulation.66 Likewise, no violation of public policy is accepted by a presumably mistaken application of the law since the matter may not be reviewed according to the clear wording of Article 29 of the Brussels Convention.67 F.

Lack of Enforceability in the Court of Origin

As previously noted, Article 45(1) of the Brussels I Regulation makes clear reference to the grounds for refusal specified in Articles 34 and 35. The question that has been examined by the courts was whether the appellant is allowed to invoke the lack of enforceability of the foreign judgment in spite of the exclusive character of the wording in Article 45(1). Greek courts have unanimously decided Thessaloniki CoA 2253/2010, Armenopoulos 2014, p. 996. Thessaloniki 1st Instance Court 10387/2002, Armenopoulos 2002, p. 1350. 64 Supreme Court 36/2003, Private Law Chronicles 2003, p. 450 = Hellenic Justice 2004, p. 431. 65 Athens CoA 2667/1994, Legal Tribune 1995, p. 252; Piraeus CoA 617/2004, Piraeus Law Reports 2004, p. 351; Athens CoA 1356/2007, Hellenic Justice 2008, p. 1498 [international jurisdiction]; Athens CoA 7307/2002, Commercial Law Survey 2003, p. 203 [lis pendens]. 66 Thessaloniki CoA 2321/2007, unreported. 67 Piraeus CoA 711/2004, Piraeus Law Reports 2004, p. 489. 62 63

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Apostolos Anthimos that the above issue is to be examined de novo, in line with Article 38(1) of the Brussels I Regulation, even if it is not explicitly mentioned. Still, it is not a prerequisite that the foreign judgment is final and conclusive,68 or that it is considered to be enforceable pursuant to domestic law.69 Two interesting unreported decisions, both from the prevailing GreekGerman ambit, deserve special attention. The facts in the first ruling were as follows: the judgment debtor filed an appeal against the judgment of the German court. Soon afterwards, the parties appeared in front of the Frankfurt Court of Appeal, where the following was agreed: the appellant will withdraw his appeal and the creditor will withdraw his action regarding the amount of DM 641,44. At the same time, he will refrain from using any enforcement actions if the parties reach an agreement no later than December 31, 2000, setting a clear payment schedule in instalments by the debtor and on condition that the latter will abide by it. Apparently the agreement was not kept, so the German creditor initiated exequatur proceedings in Greece. Upon a successful result of his application, an appeal was filed by the Greek debtor, stating that the German ruling was repealed by the latter agreement before the Frankfurt Court of Appeal, which should be considered as being equivalent to a judicial settlement. These arguments did not convince the Thessaloniki Court of Appeal, underlining that a judicial settlement is usually affixed with an enforceability clause; there was nothing in the produced document that proved the above. Hence, the legal nature of this agreement cannot be deemed to be that of a judicial settlement, but rather a copy of the hearings protocol.70 In the second ruling, the German maintenance order contained data regarding the value of the dispute. In the exequatur proceedings, the Greek court of first instance mistakenly declared the above value of € 2.892 enforceable, as it was under the impression that this amount was related to an order for the costs of the first proceedings. In the ensuing appeal, the Greek debtor challenged the decision on the above point. The Thessaloniki Court of Appeal dismissed the appeal, stating that the mistake made by the first court could not be examined in the proceedings at hand; the appellant could bring the point at a later stage if the German creditor initiates execution steps; then the ordinary domestic remedies could be activated against the enforcement of this particular point of the judgment.71

68 Piraeus CoA 606/1997, Hellenic Justice 1997, p. 1896, regarding an English judgment; Thessaloniki CoA 3299/2000, Armenopoulos 2001, p. 377, regarding an Italian judgment. 69 Thessaloniki CoA 3299/2000, Armenopoulos 2001, p. 377. 70 Thessaloniki CoA 31/2003, unreported. 71 Thessaloniki CoA 3098/2005, unreported.

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis

III. Recognition and Enforcement in Light of the Brussels I-bis Regulation This chapter will focus on issues that have to be carefully examined, so as to safeguard a smooth implementation of the new chapter III72 Brussels I-bis Regulation73 in the Greek legal order. These include: the preparatory stage of enforcement [A]; enforcement of mediated settlements [B]; translation of documents [C], and finally, the particulars with respect to the application for refusal of recognition and enforcement [D]. A.

The Preparatory Stage of Enforcement

Article 42 sets forth that the applicant shall provide the competent enforcement authority with the particulars set out under Articles 42(1)(a), (b) and 42(2)(a), (b) for the purposes of enforcement. The main organ in charge of the execution process in Greece is the bailiff.74 Given that exequatur proceedings have been made redundant, no Greek judicial authority (i.e. a court of law or a court clerk) will be needed for the entering of the enforcement stage. The foreign judgment shall be enforceable immediately.75 This creates a new task for Greek bailiffs: they are the ones said to prove the requirements set out under Article 42.76 It is anticipated that a translation of both the certificate and the foreign title will always be requested by the bailiff in charge, so as to avoid any future oppositions, invoking procedural irregularities. 72 With respect to the procedure followed under the Brussels I regime, see A. ANTHIMOS, Exequatur proceedings according to the Brussels I Regulation in Greece, Revue Hellenique de Droit International 67 (2014), p. 1007 et seq. 73 So far, material on the subject matter in Greek is sparse: see Ch. PAMBOUKIS, International jurisdiction, recognition & enforcement of judgments in civil and commercial matters – The new revised Brussels I bis Regulation 1215/2012 [Διεθνής δικαιοδοσία, αναγνώριση & εκτέλεση αποφάσεων σε αστικές και εμπορικές διαφορές – Ο νέος αναθεωρημένος Κανονισμός 1215/2012 Βρυξέλλες (Ιbis)], pp. 57 et seq.; and A. ANTHIMOS, Amendments to the chapter on recognition and enforcement [Τροποποιήσεις στο κεφάλαιο για την αναγνώριση και εκτέλεση], Armenopoulos 2013, p. 2079 et seq. 74 For more details, see P. YESSIOU-FALTSI (note 6), at 238 et seq., para. 446; K.D. KERAMEUS/ Ph. KOZYRIS (eds), Introduction to Greek Law, 3rd edn, Kluwer Law International 2008, p. 373 et seq. 75 As Ch. PAMBOUKIS (note 73), at 58, para. 74, points out, foreign judgments falling under the scope of Brussels I-bis Regulation shall be included to Art. 904(2)(a) Greek CPC, i.e. placed next to final and provisionally enforceable judgments rendered by any Greek court. Alternatively, they could be included in Art. 904(2)(f), i.e. placed next to foreign titles declared enforceable, by adding the following wording: “[…] or foreign judgments falling under the scope of the Brussels I-bis Regulation”. However, it is doubted whether a similar enrichment will take place. The draft law on amendments to the Greek Code of Civil procedure submitted to the Hellenic Parliament in November 2014 makes no such reference. Besides this, the draft is unlikely to become law, in light of recent political developments. 76 See A. ANTHIMOS, Armenopoulos 2013, p. 2082.

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Apostolos Anthimos A second issue deals with the so-called first enforcement measure (Article 43(1)). The definition provided under Recital 32 of the Preamble does not shed light on the content of the term.77 According to the domestic doctrine, enforcement proceedings start with a formal notice (επιταγή) by the creditor to the debtor, inviting him to voluntarily perform (Art. 924 Para. 1 CCP). The general rule in practice is that the creditor simultaneously serves a true copy of the enforceable title and an attached formal notice to the debtor. Article 43(1) of the Brussels I-bis Regulation seems to be altering the landscape: a creditor must serve the certificate (and possibly the foreign judgment, if it is not served already) prior to78 the first enforcement measure, i.e. the formal notice. This raises a plausible question regarding the time sequence of the above. When approaching the matter from the Greek perspective, a parallel service should not be discarded as inappropriate: pursuant to Article 926 Para. 1 of the CCP, no other enforcement measure may take place within three working days following the service of the formal notice. Hence, Greek law presently provides for a reasonable time, granting the debtor time to reflect on his available options. B.

Enforcement of Mediated Settlements

Chapter IV (Art. 58-60) of the Brussels I-bis Regulation deals with authentic instruments and court settlements in the same way as did the previous Articles 5758 of the Brussels I Regulation. The question that is raised is whether mediated settlements may be enforced under the above-mentioned provisions. Article 2(b) and (c) provides the definitions of the terms that are included in Article 58 (authentic instruments) and 59 (court settlements). The term “mediation” is however not included. From the Greek perspective, it is rather unlikely that out-ofcourt mediation settlements would stand a chance of being enforced abroad because they lack certain elements inherent to the definition given under Article 2 (b) of the Brussels I-bis Regulation.79

77 Beyond that, the Greek translation suffers from pleonasm, because it reiterates verbatim the French text by referring to service of process using two terms, i.e. επίδοση & κοινοποίηση, without that being necessary, since only the first one is used in civil proceedings (see e.g. Art. 122 et seq. Code of Civil procedure). The above approach is not followed in the English (service), German (Zustellung) and Spanish (notificación) versions, to name but a few. 78 Recital 32 prefers the expression “in reasonable time before”. 79 The provision requires an approval by a court or that the settlement is concluded before a court in the course of proceedings. On the other side, mediated settlements concluded in Greece do not seem to have this requirement: the law provides for settlements to be submitted to the court clerk: see A. ANTHIMOS, in G. DE PALO / M. TREVOR (eds), EU Mediation Law and Practice (2012), p. 151 et seq. There is no reference to an approval: see Art. 9(3) law 3898/2010 on mediation in civil and commercial matters. See also A. ANTHIMOS, ibid, p. 475, and Art. 214 b (5) CPC. At the same time, the definition seems to leave, outside the scope of the Regulation, all mediated settlements not concluded in the course of proceedings, i.e. those concluded before lis pendens.

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis C.

Translation of Documents

As already mentioned above, it is to be expected that the Greek bailiffs will routinely ask for a translation of both the certificate and the judgment.80 The formal notice should be drafted in Greek, preferably by a Greek lawyer, so as to avoid complications and irregularities, potentially leading up to delays in the enforcement procedure. A terminological issue is to be outlined with respect to Article 57(3): unlike in other text versions, the Greek wording makes reference to an “official translator” [επίσημο μεταφραστή], which is by no means equivalent to “a person qualified to do translations”, as stated in the English version. This wording narrows the scope of the potential persons entrusted with translation in Greece, such as lawyers, who are allowed to translate and certify documents that are written in a foreign language by virtue of Article 36 of the Lawyers Code. Consequently, it imposes an additional burden on creditors, who would have to request an official translation through governmental channels (i.e. the Translation Department of the Ministry of Foreign Affairs), and tolerate the unavoidable delays in the delivery of the expected services. D.

Refusal of Recognition and Enforcement

Perhaps the most significant amendment made in chapter III of the Brussels I-bis Regulation is the new procedure for refusing recognition and/or enforcement. Focusing on Section 3, one should take note of Articles 45(4) and 47(1)(2), which assign particular obligations to Member States: the procedure for the application of refusal is to be specified by each country. Not surprisingly, every legal order will have to come to terms with the new challenges, scrutinise the new provisions and their content, and adapt them to their domestic landscape. Primarily, Member States are called upon to define the competent courts for each remedy. This is not a novelty, and the task set out under Article 75 of the Brussels I-bis Regulation will be easily met. Regarding Greece, the Government’s communication81 resembles the one submitted under the Brussels Convention and Brussels I Regulation: the court of first instance [Μονομελές Πρωτοδικείο] for the application for refusal; Court of Appeal [Εφετείο] for the purposes of Article 49 of the Brussels I-bis Regulation; and the Supreme Court [Άρειος Πάγος], for the final appeal under Article 50 of the Brussels I-bis Regulation. There are, however, some issues which need to be addressed from a different perspective in comparison to those of the Brussels I regime. The first is the term for filing an application for refusal. The governmental notification lacks any data on the matter. The second point is the place where the application will be tried, i.e. which court will have territorial competence (venue)

80 Cypriot judgments being most probably the sole exception, given the fact that they are issued in Greek too. 81 Available at .

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Apostolos Anthimos to examine the application. The information provided under Article 75(a) of the Brussels I-bis Regulation by the Hellenic Government is as follows: (i)

for applications for refusal of enforcement, the Single Member Court of First Instance (“Μονομελές Πρωτοδικείο”) of the place of residence of the person against whom enforcement is requested;

(ii)

for applications for a decision that there are no grounds for refusal of recognition under Article 36(2), the Single Member Court of First Instance (“Μονομελές Πρωτοδικείο”) of the place of residence of the person against whom the application is made for recognition that there [are] no grounds for refusal. The Single Member Court of First Instance (“Μονομελές Πρωτοδικείο”) is also competent for applications for refusal of recognition (Article 45).82

A number of questions raised above are left unanswered. First, why is the place where enforcement is sought not taken into account? This omission becomes even more surprising, if one considers that the place of enforcement is provided by the Greek CCP as the forum for opposition proceedings to enforcement (Article. 933(2)). Second, which court will be competent, if the applicant is not a resident of Greece? Presently, it is obvious that both lawyers and judges will have to improvise, unless the state decides to draft an implementing act to the Regulation.83 The third point is the nature of the proceedings for the refusal of recognition and/or enforcement. Previously, Greece was to establish voluntary proceedings for the declaration of enforceability. It is now apparent that this approach cannot be maintained for the proceedings under Article 45-51 of the Brussels I-bis Regulation. What we are dealing with here is a dispute between two parties for which voluntary proceedings are not appropriate. Hence, a shift to contradictory proceedings is inevitable. Once again the information given by the Hellenic Government is unclear on the matter: the notification simply mentions the competent courts, with no indication as to the nature of the proceedings that need to be followed. The issue solely concerns the court of first instance proceedings: pursuant to domestic CCP provisions, proceedings before the court of first instance (the single member division) may vary depending on their nature. Beyond the ordinary proceedings, certain cases84 are tried by virtue of special or particular proceedings85 that are governed by a different set of procedural rules. Without an implementing act or at least a clarification made by the State in any other fashion (e.g. decree, ministerial decision), it is to be expected that confusion will prevail, at least in the short run.

Ibid. Needless to say that this would be a most welcome development. However, unlike other member states (Germany, the UK, Spain, the Netherlands), Greece has never passed legislation on the implementation of EC Regulations in the field of judicial assistance in civil matters […]. 84 I.e. family, labour, and lease cases, to name but a few. 85 See in detail P. YESSIOU-FALTSI, Civil Procedure in Hellas (1995), p. 365 et seq. 82 83

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Recognition and Enforcement of Foreign Judgments in Greece under Brussels I-bis The fourth point deals with the unification of two proceedings previously functioning separately in the past, i.e. the appeal against exequatur pursuant to Article 43 of the Brussels I Regulation, and the opposition to enforcement in accordance with domestic law. It should be noted that Recital 30 of the new Regulation promotes uniformity. Once again, however, the communication made by Greece lacks any information in this respect: Without any guidance, parties are expected to open two sets of proceedings, i.e. one for the purposes of Article45-47 of the Brussels I-bis Regulation, and the other for the purposes of Article 933 CPC (opposition to enforcement).

IV. Conclusion The present paper is a survey of the application of the Brussels Convention and the Brussels I Regulation in the field of recognition and enforcement of foreign judgments in Greece in the last 25 years. The overall conclusion is a positive one: courts have demonstrated a liberal stance, showing tolerance in different procedural patterns. As a consequence, the most favourable grounds for refusal throughout the EC, namely public policy and improper notice (Articles 34(1) and 34(2)), although repeatedly invoked, were rarely accepted by Greek courts. In a nutshell, it was highly probable that a foreign litigant would have good prospects for having a judgment declared enforceable in Greece. Starting from January 2015, exequatur is no longer an issue for foreign creditors. The past case law findings (as presented under chapter II) will maintain their importance at the application stage for the refusal of recognition or enforcement. It is expected that the new regime will not pose major difficulties. As demonstrated by the statistics of the Commission, only 5 % of the decisions granting exequatur were challenged by judgment debtors. The percentage in Greece has been even lower. In other words, the anticipated additional bulk of work for the judiciary will be minimal; consequently, no delays are to be expected, and Article 48 Brussels I-bis Regulation will hopefully not be deprived of its meaning.

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HARMONIZATION OF PRIVATE INTERNATIONAL LAW IN THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY Annelies NACHTERGAELE*

I. II.

III.

IV.

Introduction Private International Law and Economic Integration in SADC A. The Southern African Development Community B. Private International Law and Economic Integration 1. Relationship between Private International Law and Economic Integration a) At the Community Level: Differences in Private International Law as an Obstacle to Trade b) At the Member States Level: Private International Law as a Source of Investment 2. Coordination of Private International Law in SADC a) Lack of Coordination of Private International Law b) At the Community Level: Harmonization of Private International Law c) At the Member States Level: Comparative Law C. Conclusion Private International Law in SADC A. Legal Families of Southern Africa B. Recognition and Enforcement in SADC 1. Applicable Rules Regulating Recognition and Enforcement a) Common Law b) Statutory Regimes c) Conclusion 2. Grounds of Non-Recognition: Need to Harmonize Jurisdiction and Choice of Law? a) Grounds for Non-Recognition b) Potential Obstacles in the Rules of Jurisdiction of the Roman-Dutch Countries 3. Facilitating Recognition and Enforcement in SADC Conclusion

* Teaching Assistant in European Law and Private International Law at the KU Leuven (Belgium).

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 365-403 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Annelies Nachtergaele

I.

Introduction

The area of law of private international law deals with problems that arise out of legal relationships which involve a foreign element.1 International organisations which aim at economic integration generally facilitate international relations which might encounter such problems.2 However, the rules of private international law form part of the private national law of each State, and may thus significantly differ from one State to the other.3 These differences can lead to legal uncertainty, and thus form an obstacle to the proper functioning of the economic organisation. It might, therefore, be desirable to harmonize these rules. Consequently, some economic communities have given considerable attention to this possibility. In the European Union, the policy on private international law has fundamentally changed throughout the years from a mere reference to the possibility for Member States to conclude treaties on the recognition and enforcement of foreign judgments to a more or less standard EU competence.4 Similarly, the Organisation for American States (OAS) plays a central role in the harmonization and codification of private international law rules in that region.5 The Southern African Development Community (SADC) is currently pursuing economic integration in the Southern African region.6 Its principal objective is to foster closer economic and political ties among its Member States and establish an economic community.7 The SADC Treaty, therefore, requires Member States “to cooperate in all areas necessary to foster regional development and integration on the basis of balance, equity and mutual benefit”.8 Harmonization of laws, however, is not included in the list of areas in which the signatories have agreed to cooperate. A number of scholars are, nevertheless, of the opinion that harmonization of private international law is critical to the process of economic integration for the aforementioned reasons.9 The purpose of this paper is, therefore, to analyse whether these assertions are correct, and thus, whether there is really a need to harmonize private international law in SADC. Furthermore, it will explore whether M. BOGDAN, Concise introduction to EU Private International Law, 2012, p. 3. R. OPPONG, Private international law and the African Economic Community: a plea for greater attention, (2006) 55(4) I.C.L.Q., p. 911. 3 O. REMIEN, European private International Law, the European Community and its emerging area of freedom, security and justice, (2001) 38(1) CML, p. 63. 4 G. VAN CALSTER, European Private International Law, 2013, p. 13. 5 J.D. AMADO, Recognition and Enforcement of Judgment in Latin American Countries: an overview and an update, (1990 – 1991) 31 Virginia Journal of International Law, p. 99-100; A. GARRO, Unification and harmonization of Private Law in Latin America, (1992) 40(3) Am. J. Comp. L., p. 593. 6 R. TAVARES/V. TANG, Regional economic integration in Africa: impediment to progress?, (2011) S. A. J. of Int’l Affairs, p. 221. 7 M. NDULO, The need for the harmonization of trade laws in the Southern African Development Community (SADC), (1997) African Yearbook of International Law, p. 196. 8 Art. 21, 2 Southern African Development Community Treaty 1992. 9 M. NDULO (note 7). 1 2

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Harmonization of Private International Law in SADC harmonization would be possible in SADC, taking into account the possible differences in the legal systems of the Member States. This analysis is restricted to commercial private international law (excluding family private international law), as this is most relevant in an economic community. As a result of the research carried out on the subject, this article will make a case for the adoption of limited regional conventions harmonizing certain aspects of private international law where problems are being felt and where harmonization would enhance legal certainty. This article is divided into two chapters. The first chapter consists of a general analysis of the relationship between private international law and economic integration. Furthermore, it also explores the need for harmonization of private international law in an economic organisation and the difficulties related to this. In the second chapter, the focus will be on the legal systems in SADC and the private international law of the SADC Member States.

II. Private International Law and Economic Integration in SADC Thus far, SADC has not shown any concern to the function of private international law within an economic organisation. The following chapter is, therefore, dedicated to explaining the relation between private international law and economic integration. After a brief introduction on SADC, this chapter will focus on the relationship between private international law and economic integration. The first part of this analysis will examine how private international law can affect economic integration. Subsequently, coordination of this area of law will be discussed. A.

The Southern African Development Community

SADC is a regional economic organisation in Southern Africa consisting of fifteen Member States: Angola, Botswana, the Democratic Republic of Congo (DRC), Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.10 It was created in 1992 when the founding Member States11 adopted the “Declaration and Treaty establishing the Southern African Development Community”.12 The ultimate Southern African Development Community Website, Member States, available at (accessed 29 July 2014). 11 These were the following ten States: Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Tanzania, Zambia and Zimbabwe. 12 Declaration and Treaty establishing the SADC of 1992 signed in Windhoek (Namibia), available at (accessed 29 July 2014). S. SMIS/ S. KINGAH, Southern African Development Community, in J. WOUTERS, International Encyclopedia of Laws on Intergovernmental Organizations, 2009, p. 23. 10

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Annelies Nachtergaele objective was to create an organisation that would pursue economic well-being, the improvement of standard and quality of life, freedom and social justice and peace and security for the population of Southern Africa.13 Furthermore, the preamble of the SADC Treaty expresses the intention of the Member States to achieve these objectives in the framework of economic integration.14 Pursuant to this, the SADC became a Free Trade Area in 2008 and by 2010 the organisation should have evolved towards a customs union. However, this goal has not been reached yet.15 B.

Private International Law and Economic Integration

1.

Relationship between Private International Law and Economic Integration

Private international law can have two functions in an economic community. At the Community level, divergence in the rules of private international law may cause legal uncertainty and thus form an obstacle to international trade. At the Member State level, on the other hand, a national regime of private international law adapted to the needs of international trade can be beneficial to attract investments. a)

At the Community Level: Differences in Private International Law as an Obstacle to Trade

A large number of authors have argued that divergences between the laws of the different SADC Member States in matters relating to trade, including private international law, are a major barrier to intra-regional trade and international trade transactions.16 Indeed, economic and commercial life is based on advance planning so that the lack of certainty on the applicable legal provisions may raise transaction costs and undermine efficient business.17 Legal certainty may therefore be essential

See (note 12). R. OPPONG, Legal aspects of economic integration, 2011, p. 25 and 26. 15 Integration Milestones, available at (accessed 29 July 2014). 16 M. NDULO (note 7); M. NDULO, Harmonization of trade laws in the African Economic Community, (1993) 42(1) I.C.L.Q., p. 101-118; L. CASTELLANI, International trade law reform in Africa, (2008) 1 Yearbook of Private International Law, p. 547-563; P. DLAGNEVOKA, The need to harmonise trade-related laws in countries of the African Union: an introduction to the problems posed by legal divergence, (2009) 14(2) Fundamina, p. 1-37; OPPONG (note 14), at 271-309. This has also been affirmed by a UN Report: Progressive development of the law of international trade: Report of the Secretary-General, Official Records of the General Assembly, Twenty-first session, Annexes, agenda item, docs A/6396, Add. 1. 17 T. TRIDIMAS, General Principles of EC Law, 2nd edn, Oxford University Press 2006, p. 242. 13 14

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Harmonization of Private International Law in SADC for the production of economically consistent results.18 Divergent private international law rules can have a particularly negative effect on international trade. When looking at a certain international transaction, traders want to assess the legal risks related to this transaction.19 They are therefore concerned with protecting their legal position and thus with knowing the legal regime under which their rights will be determined, in which forum their dispute will be settled and how effectively these rights can be enforced. Answers to these concerns can be found in the rules of private international law.20 However, since these are part of the Member States’ national law, they may differ from one State to another, which can lead to different outcomes for similar disputes and thus cause legal uncertainty.21 It might therefore be necessary to harmonize private international law in an economic organisation in order to achieve more legal certainty and consequently facilitate international trade. This line of argumentation forms the basis of justification for the harmonization of private international law in the EU. The Report Jenard, for example, stated the following: “The purpose of the Convention is […], by establishing common rules of jurisdiction, to achieve, in relations between the Six and in the field which it was required to cover, a genuine legal systematization which will ensure the greatest possible degree of legal certainty.”22 Similarly, according to the preamble to the Rome I Regulation: “[t]he proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought.”23 However, many Common law scholars have criticized the harmonization of private international law rules in the EU because of a lack of clear evidence of the needs of 18

E. SHARPSTON, Legitimate expectations and economic reality, (1990) 15 ELR,

p. 103. 19 A.H. PERSSON, A Review of Regional Integration in Southern Africa: Comparative International Perspectives on the Legal Dimensions of Cross-Border Trade, in C. CLAPHAM, et al., Regional Integration in Southern Africa: Comparative International Perspectives (SAIIA 2001), p. 121. 20 G. BAMODU, Transnational law, unification and harmonization of commercial law in Africa, (1994) 38(2) J. Afr .L, p. 135. 21 S. VIEJOBUENO, Private international law rules relating to the validity of international sales contracts, (1993) 26 CILSA, p. 173; G. RÜHL, The problem of international transactions: conflict of laws revisited, (2010) 6(1) J. Pr. I. L, p. 59-91. 22 Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, [1979] OJ C 59, p. 15. 23 Regulation (EC) No 593/2008 on the law applicable to contractual obligations, [2008] OJ L 177.

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Annelies Nachtergaele such a legislative initiative.24 These authors feel that in order to accept European initiatives in the field, it should be more apparent how they improve legal certainty. The assumption that harmonization provides legal certainty should, therefore, be proven by hard empirical information about the effects in practice of divergences between different national regimes.25 One author observes: “even if the law [introduced by the legislative organs of the European Union] [...] was not invariably objectionable, it was not always necessary”.26 Furthermore, in a Report of the House of Lords Select Committee on the EU, the British government expressed serious scepticism about whether legal certainty would be improved by the harmonization of rules on the applicable law to non-contractual obligations.27 These criticisms should be taken into account when discussing harmonization of private international law at the level of SADC and research should therefore be done to assess to which extent differences in the private international law of its Member States cause legal uncertainty and whether this impedes intra-regional trade and international transactions. Independently of possible differences between the national legal systems, it seems that some existing private international rules might hamper international and intra-regional trade. As will be explained in the next chapter, the substantive laws as exist in the various African countries were imported during the period of colonisation or originate in colonial laws. They have therefore, in some instances, been labelled as “outdated”.28 This can have a negative impact on transactions to which one of the parties is from another continent. Indeed, these parties might believe that the legal systems of African countries are insufficiently developed or of inadequate sophistication for international commercial activity.29 Even though this belief is often unfounded, it is true that there are some private international rules that do not encourage international trade. The South African Roman-Dutch rules of jurisdiction, for example, make it impossible for a foreigner to sue another foreigner in South Africa solely on the basis of a choice of forum clause.30 These kinds of rules 24 A DICKINSON, European Private International Law: embracing new horizons or mourning the past?, (2005) 1(2) J. Priv. Int’l L., p. 115-137; T.C. HARTLEY, The European Union and the systematic dismantling of the common law conflict of laws, (2005) 54(4) I.C.L.Q., p. 813-828; C.F. FORSYTH, The eclipse of private international law? The judicial process, interpretation and the dominance of legislation in the modern era, (2005) J. Priv. Int’l L., p. 199. 25 Ibid, at 200. 26 A. BRIGGS, Agreements on Jurisdiction and Choice of Law, Oxford University Press 2008, p. 537-538. 27 Report of the House of Lords Select Committee on the EU on the Rome II Regulation, 8th session 2003 – 2004, paras 53-54. 28 A. THOMASHAUSEN, The enforcement and recognition of judgements and other forms of legal cooperation in the SADC, (2002) 35(1) CILSA, p. 27; P. DLAGNEVOKA (note 16), at 22. 29 G. BAMODU (note 20), at 130. 30 C.F. FORSYTH, The impact of de domestic on the international: some crucial deficiencies in the South African law of Jurisdiction with their Regional and International consequences, (2006) 6 S. Afr. Mercantile L.J., p. 6.

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Harmonization of Private International Law in SADC do not seem adapted to the needs of international trade and reform might thus be essential. b)

At the Member States Level: Private International Law as a Source of Investment31

According to one author, a national regime of private international adapted to the needs of international economic transactions can offer important benefits for a State. Indeed, it can function as a direct source of investment, employment and foreign exchange, provided it creates a climate that encourages “jurisdictional tourism”. It could make the different Member States of SADC more attractive to investors and entrepreneurs by providing them with a neutral, accessible and potentially cheaper forum for the settlement of commercial disputes in Africa. London has been considered as an example to follow in this regard.32 It attracts contracting parties with no association to England to litigate there because of its accommodating jurisdiction rules and respect for choice of law and forum agreements. As explained in the previous section, certain private international law rules of the Member States of SADC have exactly the opposite effect. It would thus seem advisable to revise these rules so as to welcome foreign investors instead of deterring them from litigating in the national courts of the Member States. 2.

Coordination of Private International Law in SADC

Due to the negative effects that divergent rules of private international law might have on economic integration, the coordination of these rules might be desirable in SADC. This could be achieved in two different ways: the harmonization of these rules at the level of the community, or the use of comparative law by the national judiciaries. a)

Lack of Coordination of Private International Law

There seems to be only little cooperation between the Member States of SADC on issues of private international law.33 The only form of cooperation has been the drafting and adopting of bilateral agreements between some of these States on the recognition and enforcement of judgments.34 SADC itself has been unable to R. OPPONG (note 14), at 287. C.F. FORSYTH, Private International Law: The Modern Roman-Dutch Law Including the Jurisdiction of the High Courts, 5th edn, Juta 2012, p. 231. 33 R. OPPONG, Private International Law in Africa: The Past, Present and Future, (2007) 55 Am. J. Comp. L., p. 679. 34 An example is “The Agreement between the Government of the Republic of South Africa and the Government of the Republic of Namibia Relating to Co-operation in the Field of Administration of Justice between the Republics of South Africa and Namibia of 25 February 1994”. 31 32

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Annelies Nachtergaele conclude, or even to draft and propose, any regional legal cooperation agreements.35 It has, nevertheless, created a Cluster Committee for Legal Affairs and Judicial Matters, but this institution only has an advising function.36 SADC also adopted a Protocol on Legal Affairs with the aim of encouraging and supporting legislative initiatives between the Member States.37 The protocol makes no reference to private international law, but a creative legislator could use Article 2 as a legal basis for further cooperation in this area of law. Indeed, this provision determines that the legal framework established by this protocol has, inter alia, the objectives to facilitate the adoption of appropriate schemes of co-operation in criminal and civil matters; develop, as far as possible, common strategies and standards dealing with the administration of justice and law enforcement; and promote the harmonization of administrative and legislative measures in civil and criminal matters. These objectives are formulated in such an open way that harmonization or, at least coordination, of private international law could become a field of work of this institution. However, I have not encountered any document suggesting any initiative taken in the field.38 Despite this lack of initiatives at the level of SADC, there seems to be a growing academic interest in the field of private international law.39 The 38th volume of the South African Mercantile Law Journal, for example, was fully dedicated to commercial private international law.40 There have also been institutional efforts to encourage the development of the subject. An example is the creation of the Institute for Private International Law in Southern Africa in 2001, as part of the University of Johannesburg.41 This institution conducts research, inter alia, in order to draft the so-called “African Principles on the Law Applicable to Contracts for the International Sale of Goods and the African Principles on the Law Applicable to Contractual Obligations” for future use by the African Union, its organs and/or Member States.42 This research centre is also an official information centre for the Hague Conference on Private International Law.43 A. THOMASHAUSEN (note 28), at 34. Southern African Development Community Website, SADC Institutions, available at (accessed 29 July 2014). 37 Southern African Development Community Website, Protocol on legal affairs, available at http://www.sadc.int/files/3513/5292/8366/Protocol_on_Legal_Affairs2000.pdf (accessed 29 July 2014). 38 N.D. LENO, Development of a Uniform Insolvency Law in SADC: Lessons from OHADA, (2013) 57(2) J. S. Afr. L., p. 262. 39 R. OPPONG (note 33). 40 Volume 38 South African Mercantile Law Journal. 41 University of Johannesburg, Institute for Private International Law in Africa, (accessed 29 July 2014). 42 Business Plan 2013-2017 of the Research Centre for Private International Law in emerging Countries. 43 Annual Report 2012 of the Research Centre for Private International Law in Emerging Countries. 35 36

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Harmonization of Private International Law in SADC At the international level, Africa’s participation in legislative-making bodies has been very limited, due to restricted financial resources and expert capacity.44 An important organisation in this regard is the Hague Conference on Private International Law, which has developed a number of conventions in an attempt to unify private international law rules.45 Unfortunately, only three SADC Member States (i.e. Mauritius, South Africa and Zambia) are members of the Hague Conference,46 and only eight others have ratified Conventions drafted by the Conference.47 It appears, however, that participation increases when instruments are perceived as best serving the interests of developing countries.48 To this end, the participation of these countries in legislative making activities seems quite important. Indeed, States will be more interested in adopting conventions on which they have been able to pronounce their views during the drafting process.49 This suggests the need for an increased cooperation between the Conference and Africa. The appointment of the Institute for Private International Law in Southern Africa as an official information centre for the Hague Conference is already an encouraging first step. The reason why participation to the work of the Hague Conference can be important is that, in some cases, the adoption of an international convention by all the Member States may bring the desired unification without the need to elaborate a separate regional text. Moreover, the Hague conventions and the methods of the Hague Conference could serve as models for the development of regional conventions on private international law.50 b)

At the Community Level: Harmonization of Private International Law

i)

Harmonization of Private International Law

Harmonization of laws can be defined as “the removal of discord, the reconciliation of contradictory elements, between the rules and effects of two legal systems which continue in force as self-sufficient bodies of law”.51 Thus, the existing legal systems are maintained, but the incompatible results are eliminated. As pointed out before, the harmonization of private international law rules in SADC may have interesting benefits. Eliminating divergences between the different legal systems G. BAMODU (note 20), at 138. HCCH, (accessed 29 July 2014). 46 HCCH, Members, available at (accessed 29 July 2014). 47 Those States are Botswana, Lesotho, Madagascar, Malawi, Namibia, Seychelles, Swaziland and Zimbabwe. HCCH, Non-member contracting States, available at (accessed 29 July 2014). 48 L. CASTELLANI (note 16), at 549. 49 R. OPPONG, The Hague Conference of Private international Law in Africa: a plea for greater cooperation, (2006) VIII YPIL, p. 196. 50 M. NDULO (note 7), at 217. 51 A. ALLOTT, Towards unification of laws in Africa, (1965) 14 I.C.L.Q., p. 877. 44 45

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Annelies Nachtergaele by adopting clear and precise legal provisions could mean more legal certainty for parties to international transactions.52 This in turn could reduce transaction costs and promote efficient business and thus foster intra-regional trade.53 However, harmonization of private international law rules necessarily also encounters a number of problems, which stem from the difficulty of having to reconcile different legal systems with one another. The experiences of both the EU and the Hague Conference have shown that there are downsides to this. First of all, harmonization necessarily also means the codification of rules. While this will probably not be a problem for the Civil law countries, the Common law countries and other legal families having inherited the legal procedural traditions of the Common law54 might find this a difficult point. Indeed, Common law lawyers tend to be suspicious towards any legislative intervention in the field of private international law. This has, indeed, been one of the criticisms of English lawyers on the harmonization of private international law rules in the EU.55 Prior to the accession to the EU, English private international law used to be a product of the common law. Some author would therefore have preferred this area of law to be left to the courts and the development of rules through the English doctrine of precedent. Accordingly, legislative intervention has been seen as being remedial, meaning that it is only necessary “where the law has taken a wrong turn”.56 The downside of having a code of private international law with fixed rules is that you lose a lot of flexibility, which is exactly what made England attractive for international commercial litigation.57 Also, the legal certainty that could be attained by harmonizing private international law rules must not be overestimated. Unsurprisingly, harmonized legislation often has to be interpreted, which can lead to divergent judicial decisions.58 In the EU, the Court of Justice of the European Union (CJEU) assures the uniform interpretation of the European private international law instruments.59 In SADC, this function could be attributed to the SADC Tribunal, but the future of this institution is rather unclear.60 Moreover, this shift from the R. OPPONG (note 14), at 108. As explained in a previous section, some authors have raised doubts about the positive effect of harmonization on legal certainty. 54 Those are the Roman-Dutch family and the mixed legal system of Mauritius and Seychelles, as will be explained in the next chapter. 55 J. HARRIS, Understanding the English response to the Europeanisation of Private International Law, (2008) 4 J. Priv. Int’l L., p. 354. 56 T.C. HARTLEY (note 24), at 813. 57 T.C. HARTLEY, Civil Jurisdiction and Judgments, Sweet & Maxwell 1984, p. 9; C.F. FORSYTH (note 24), at 199. 58 C.F. FORSYTH, The provenance and future of private international law in Southern Africa, (2002) 130 J. S. Afr. L, p. 72. 59 Art 19, 3 (b) Treaty Establishing the European Union, [2012] OJ C326. 60 The SADC Tribunal was created in 2000 to ensure adherence to, and proper interpretation of the provisions of, the SADC Treaty and subsidiary instruments, and to adjudicate upon disputes referred to it. However, after several judgments ruling against the Zimbabwean government, the Tribunal was de facto suspended in 2010. In 2012, the Heads of Governments decided that a new Tribunal should be negotiated with a much more limited 52 53

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Harmonization of Private International Law in SADC interplay between the judiciary and academic writing to that between the international negotiator and the legislator has been criticized for losing much intellectual excitement and creativity.61 Also, the interpretations of the CJEU have been largely criticized for attaching too much weight to certainty and uniformity to the detriment of, what is seen as, the needs of litigants and international commerce.62 These criticisms should be taken into account when harmonizing private international rules in SADC. Secondly, the work of the Hague Conference demonstrates how difficult it may be to reach international agreements on certain points of private international law where the existing legal systems differ from each other.63 The failure of the parties of the Hague Conference to reach consensus on a preliminary draft for a new convention on jurisdiction and the recognition and enforcement of foreign judgments exemplifies this problem.64 This is also illustrated by the large number of English commentators criticizing certain rules of private international law introduced by the EU. According to one writer, such harmonizing conventions are of rather poor quality because they tend towards the “lowest common denominator” in order to reach an agreement.65 Moreover, even when an agreement is reached the result is often left unratified and unimplemented. The Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, for example, has only been ratified by three countries.66 Finally, even where harmonization would be desirable, it is important to note that there might be some specific obstacles due to the political context of SADC.67 It is questionable whether there is any political support for the subject in the region.68 Indeed, one author asserts that many African countries seem to have gone into economic integration agreements without any intention of parting with some measure of sovereignty.69 The creation of an economic organisation has thus mandate. Indeed, it should only be confined to interpretation of the SADC Treaty and Protocols relating to disputes between Member States. See M. HANSUNGULE, The suspension of the SADC Tribunal, (2013) 35 Strategic Review for Southern Africa, p. 135145; L. NATHAN, The Disbanding of the SADC Tribunal: A Cautionary Tale, (2013) 35 Human Rights Quarterly, p. 870-892. 61 C.F. FORSYTH (note 24), at 95. 62 T.C. HARTLEY (note 24), at 813-828; A. DICKINSON, Legal certainty and the Brussels Convention – Too much of a good thing?, in P. DE VAREILLES-SOMMIÈRES, Forum shopping in the European Judicial Area, 2007, p. 115-137; J. HARRIS (note 55), at 368. 63 C.F. FORSYTH (note 58), at 72. 64 P. MAYER, Forum non conveniens et application uniforme des Règles de competence, in P. DE VAREILLES-SOMMIÈRES (note 62), at 143; HCCH, The judgments project, available at (accessed 29 July 2014). 65 C.F. FORSYTH (note 58), at 72. 66 Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters. 67 A. ALLOTT (note 51), at 871. 68 C.F. FORSYTH (note 58), at 72. 69 M. NDULO (note 7), at 209.

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Annelies Nachtergaele not necessarily been followed by a transfer of power to these institutions.70 For example, Zimbabwe’s refusal to enforce judgments of the SADC Tribunal relating to human rights breaches due to land reform policy shows that the country is not ready to give up sovereignty to such a supranational institution.71 Moreover, even if the SADC Member States were willing to harmonize their national laws, they would probably not look at private international law first.72 The fact that, thus far, SADC has only considered cooperation in criminal law seems to confirm this assumption.73 Taking all these elements into account, the most advisable way forward in SADC seems to be through the adoption of limited regional agreements harmonizing aspects of private international law where problems are being felt and where harmonization would enhance legal certainty, leaving other areas to the development at the national level.74 ii)

Private International Law Rules versus Substantive Rules

Some authors plead for the harmonization of substantive trade laws instead of rules of private international law.75 Accordingly, harmonization of private international rules wouldn’t solve the problems of legal uncertainty since the courts would have to apply domestic legal principles, which would probably be foreign to at least one of the parties and would probably be unsuitable to govern cross-border situations.76 However, it is very uncertain whether there is sufficient political will to achieve such far-reaching harmonization.77 Indeed, many rules represent an expression of deeply held state policy and States are reluctant to abandon those policies by agreeing to harmonization of those rules.78 It is therefore more interesting to look at harmonization of private international law rules, since it only regulates cross-border disputes, while maintaining the integrity of the national legal

L. CASTELLANI (note 16), at 549. M. MKANDAWIRE, The SADC Tribunal perspective on enforcement of judgments: state support and cooperation, (2010) 36 Commonwealth Law Bulletin, p. 567-573. The relevant case of the SADC Tribunal is Mike Campbell (Pvt) Ltd v Republic of Zimbabwe [2008] SADCT 2. Registration of this judgment was refused by the Zimbabwean High Court in Gramara (Private) Ltd v Government of The Republic of Zimbabwe H 169-2009 HC 33/09. 72 C.F. FORSYTH (note 58), at 72. 73 SADC, Protocol on mutual legal assistance in criminal matters, available at (accessed 29 July 2014). 74 C.F. FORSYTH (note 58), at 73. 75 P. DLAGNEKOVA (note 16). 76 H. KOCH, Private International Law: a “soft” alternative to the harmonization of private law?, (1995) 3 E. R. Pr. L., p. 331. 77 L. CASTELLANI (note 16), at 554. 78 C.F. FORSYTH (note 24), at 100. 70 71

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Harmonization of Private International Law in SADC systems.79 This might be especially interesting in the SADC, for it is still in the early stages of economic integration and this characteristic of private international law reassures the executives and legislatures of their control over substantive laws. Harmonization of private international law can thus secure significant uniformity and agreement on such harmonization is much easier to reach.80 iii)

Methods of Harmonization

Now that the benefits and disadvantages of harmonization of private international law have been discussed, the next question that needs to be tackled relates to the methods of harmonization. According to one author, this process should be started with the harmonization of the national private international law rules of Member States of the same legal tradition.81 This first step is founded on the idea or assumption that the legal principals with the same legal tradition are very similar.82 Consequently, this should proceed fairly easily and quickly and would result in uniform regimes within each legal family. Subsequently, the results of this first harmonization would have to be harmonized to one regime of private international law principles. It is evident that this stage will be much more difficult, since different legal families will have to reconciled with each other. c)

At the Member States Level: Comparative Law

It appears from the foregoing analysis that the harmonization of private international law in SADC will be a difficult to achieve and long-term project.83 However, in the meantime, a certain degree of uniformity could be pursued through the national judiciaries. Indeed, it would be desirable if courts would rely on the case law of other Member States to deal with legal questions. This could thus be a path to harmonization in the absence of regional conventions.84 It is interesting to note that the Roman-Dutch countries already frequently rely on each other’s jurisprudence,85

O. REMIEN (note 3), at 64. However, in some areas of private international law, harmonization can have fundamental consequences for the national legal order of the Member States. J. HARRIS (note 55), at 366-367. 80 C.F. FORSYTH (note 24), at 101. 81 R. OPPONG (note 14), at 111-112. 82 Whether this is true obviously requires more research. The next chapter forms a first but only small part of this research. 83 C.F. FORSYTH (note 58), at 71. 84 C.F. FORSYTH (note 24), at 101. 85 See for example Zwyssig v Zwyssig 1997 (2) SA 467 (W) where reference is made to the Zimbabwean judgment Coluflandres Ltd v Scandia Industrial Products Ltd 1969 (3) SA 551 (R). 79

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Annelies Nachtergaele even though the focus is mainly on South African judgments and doctrine.86 In Silverston Ltd v Lobatse Clay Works, for example, the judge affirmed the following: “[T]he courts of Botswana have never been reluctant, in their own adaptation of the common law to the requirements of modern times, to have regard to the approach of the South African courts and to the writings of authoritative South African academics.”87 The Common law countries, on the other hand, do not seem to rely on each other’s jurisprudence, nor on the case law of other Member States.88 On the contrary, there seems to be an “over-reliance” on English cases to resolve local problems.89 Although this seems to lead to uniformity among the Common law countries, it would be more advisable to also rely on other sources of persuasive authority. However, in order to achieve this, the legal materials of the different Member States should be more accessible. C.

Conclusion

This chapter has shown that divergent rules of private international law can form an obstacle to international trade in an economic community such as SADC, due to a lack of legal certainty. Harmonization of these rules may, therefore, be beneficial. However, there might also be a number of downsides to this, as the experiences of the EU and the Hague Conference have shown. As a consequence, it is my opinion that harmonization should only be carried out where serious problems arise due to significant divergent rules of private international law. Furthermore, as long as legislative harmonization is not necessary or feasible, uniformity should be sought through the use of comparative foreign materials by the national judiciaries.

III. Private International Law in SADC The previous chapter has suggested that harmonization of certain parts of private international law might be necessary in SADC. However, harmonization is only necessary where the private international law rules of the Member States differ 86 See for example Coluflandres Ltd v Scandia Industrial Products Ltd where reference is made to J. HERBSTEIN/ L. VAN WINSEN, The civil practice of the superior courts in South Africa, 4th edn 1966, vol. 1, p. 833, at 554 E. 87 1996 BLR 190, at 195 B-C. 88 R. OPPONG (note 14), at 283. 89 E.K. TETTEH, Law reporting in Anglophone Africa, (1971) 20 (1) I.C.L.Q., p. 87; R. OPPONG, Recognition and enforcement of foreign judgments in commonwealth African countries, (2013/2014) XV YPIL, p. 386. See for example Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001), where all the established principles are borrowed from English judgments.

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Harmonization of Private International Law in SADC from each other to such a significant extent that they impede international trade. This chapter will therefore explore whether there any such divergences in the rules of private international law of the SADC Member States, after having given an overview of the various legal families in SADC. A.

Legal Families of Southern Africa

The contemporary legal systems in Africa are still largely based upon the legal systems of their former colonizing countries.90 Indeed, the European colonial powers imported and imposed a foreign western legal system as the general law of each territory in Africa.91 However, they also permitted the continuance of traditional African customary law and judicial institutions, although in a subordinate way.92 As a consequence of this colonial legal history, the legal diversity of Europe has been imported into Africa.93 The legal families in Africa can therefore be seen as clusters of inherited or adopted legal cultures.94 Since only a limited number of European powers possessed colonial territories in Africa, Africa is only fragmented between a small number of legal families, with French and English law claiming predominance on the Civil and Common law sides.95 As one author points out, there is thus no legal system in contemporary Africa that is uniquely African.96 Upon independence, the existing laws remained applicable, but isolated from further development of the law in the former colonial powers.97 There was therefore no complete rupture between the colonial legal systems and the legal systems of the newly independent States.98 Furthermore, even where African States changed their legal heritage upon independence, the basic connection with the parent legal system remains.99 Amongst the SADC Member States we can distinguish four different legal families.100 The first legal family consists of Angola and Mozambique, which were former colonies of Portugal, Madagascar, which was a French colony until 1960, and the DRC, which was subject to Belgian ruling.101 Since the legal systems of G. BAMODU (note 116), at 127. A. ALLOTT, The unification of Laws in Africa, (1968) 16 Am. J. Comp. L., p. 54; D. MCCLEAN, A common inheritance? An examination of the private international law tradition of the commonwealth, (1996) 260 Recueil des Cours, p. 22. 92 A. ALLOTT, The future of African law, in H. KUPER/ L. KUPER (eds), African law: Adaptation and development, 1965, p. 220. 93 A. ALLOTT (note 51), at 371. 94 A.K. MENGAH-BROWN, Introduction to law in contemporary Africa, 1976, p. 8. 95 A. ALLOTT (note 92), at 55. 96 S. SMIS/ S. KINGAH (note 12), at 10. 97 A. THOMASHAUSEN (note 28), at 27. 98 P.-F. GONIDEC, Les droits Africains: evolutions et sources, 1976, p. 36. 99 A. ALLOTT (note 51), at 54. 100 M. NDULO (note 7), at 196; P. DLAGNEKOVA (note 16), at 20. 101 A.K. MENGAH-BROWN (note 94), at 13. 90 91

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Annelies Nachtergaele these different colonial powers were closely related, the legal systems of these Member States are also closely related. They, therefore, form the Civil law family.102 The Common law countries form the second legal family, consisting of Malawi,103 Tanzania104 and Zambia105. These countries have, directly or indirectly106, inherited or adopted the common and statute law introduced by England.107 However, Tanzania has also felt a German-law influence although the importance of it ceased when Germany lost the country as one of her colonial territories. This influence is still discernible mainly in the sphere of land rights.108 Thirdly, Botswana, Lesotho, Namibia, South Africa, Swaziland and Zimbabwe are all part of the Roman-Dutch legal family.109 Due to the colonial history of these countries, this legal family is quite unique. The Roman-Dutch law was introduced in South Africa with the establishment of a refreshment station at the Cape of Good Hope by the Dutch East India Company.110 This Dutch version of Civil law was a blend of Roman law, canon law and Germanic law as found in Holland during that time. When the English gained the power, they retained the pre-existing Roman-Dutch law as the general law of the Cape but then proceeded to introduce English law by means of legislation.111 This legal system was extended to Namibia when it came under the administration of South Africa.112 Botswana, Lesotho, Swaziland and Zimbabwe adopted the Roman-Dutch law as applicable in “the Cape of Good Hope Colony” when they came under British control during the late nineteenth century.113 Because of this mixture of Civil law and Common law, some authors have A. ALLOTT (note 92), at 372. M. CHILENGA, Malawi, in P. TAELMAN (ed.), International encyclopaedia of Civil Procedure, 2009, p. 19-20; S. ROBERTS, Malawi, in A. ALLOTT (ed.), Judicial and legal systems in Africa, 1970, p. 203. 104 N. JACONIAH, Tanzania, in H. VANHEES (ed.), International encyclopaedia of Intellectual Property, 2009, p. 16; E. COTRAN, Tanzania, in A. ALLOTT (ed.), Judicial and legal systems in Africa, 1970, p. 146. 105 Ibid. 106 In Tanzania, the codified law of British India, supplemented by the common and statute law of England, was taken over. See A. ALLOTT, New essays in African law, 1970, p. 19. 107 A.K. MENGAH-BROWN (note 94), at 12. 108 A. ALLOTT (note 91), at 372; S. THANAWALA, Foreign inter partes judgments: their recognition and enforcement in the Private International Law of East Africa, (1970) 19 I.C.L.Q., p. 430; P.-F. GONIDEC (note 98), at 21. 109 Ibid. 110 E. SCHOEMAN, South Africa, in B. VERSCHRAEGEN (ed.), International Encyclopaedia for Private international law, 2009, p. 11. 111 C.M. FOMBAD/ E.K. QUANSAH, The Botswana Legal system, 2006, p. 56. 112 O.C. RUPPEL/ K. RUPPEL-SCHLICHTING, Legal pluralism in Namibia and Beyond, (2011) J. Legal Pluralism, p. 37. 113 G. VAN NIEKERK, The application of South African law in the courts of Botswana, (2004) 37 CILSA; V. PALMER/ S. POULTER, The legal system of Lesotho, 1972, p. 44; G. VAN NIEKERK, The convergence of legal systems in Southern Africa, (2002) 35 CILSA, p. 310. 102 103

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Harmonization of Private International Law in SADC suggested that it would be more accurate to refer to it as “Anglo-Roman-Dutchlaw”.114 Lastly, Mauritius and Seychelles have a mixed or hybrid legal system that has been influenced both by the French Civil law and the English Common law.115 The private international law of Mauritius, for example, emanates from the Code Civil Mauricien, which is based on the French Code Civil, but has further been developed by Common law lawyers. Despite the influence of the Common law, the basic principles of French Civil law thus remain of great importance. As a number of scholars have pointed out, law reporting in Africa appears to be rather lacunose and hard to access outside the country itself.116 However, during my research at the University of Stellenbosch in South Africa, I have been able to access most legal materials of the Roman-Dutch countries (Botswana, Lesotho, Namibia, South Africa, Swaziland and Zimbabwe). Furthermore, the only extensive work on Private International Law in Africa is restricted to the Commonwealth countries on the continent.117 For these practical reasons, the analysis of the applicable law in SADC will be limited to the law of the RomanDutch countries and the law of the Common law countries (Malawi, Tanzania and Zambia). B.

Recognition and Enforcement in SADC

This analysis will be restricted to the law governing the recognition and enforcement of foreign judgments for this part of private international law can be particularly interesting in an economic organisation. Indeed, the rules regulating recognition and enforcement may be of such nature that they hamper economic relationships. International litigants may have to wait until their case has been relitigated because the court does not allow the recognition of the foreign judgment, or they may be confronted with high transaction costs due to delay in the recognition of their judgment.118 These reasons convinced the Member States of the EU to set up uniform requirements and a largely uniform procedure for the recognition and enforcement of Member State judgments.119 Consequently, reform A. ALLOTT (note 92), at 372. C.M. FOMBAD/ E.K. QUANSAH (note 111), at 56, fn. 20; A. ANGELO/ V. GLOVER, Mauritius, in B. VERSCHRAEGEN (ed.), International Encyclopaedia for Private international law, 2009, p. 16. 116 E.K. TETTEH (note 89), at 87-98; G. BAMODU, Transnational law, unification and harmonization of commercial law in Africa, (1994) 38(2) J. Afr .L, p. 125-143; M. NDULO (note 7), at 195-225; C. SCHULZE, On Jurisdiction and the Recognition and Enforcement of Foreign Money Judgments, 2005, p. 3. 117 R. OPPONG, Private International Law in Commonwealth Africa, 2011. 118 F. JUENGER, The recognition of money judgments in civil and commercial matters, (1988) 36 Am. J. Comp. L., p. 3-4; G. WALTER/ S. BAUMGARTNER (eds), Recognition and enforcement of foreign judgments outside the scope of the Brussels and Lugano Conventions, 2000, p. 2. 119 Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, [1979] OJ C 59. F. JUENGER (note 118), at 3. 114 115

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Annelies Nachtergaele and simplification of these rules in SADC might be essential for the proper goals of such an organisation. This section will, therefore, examine the existing regimes of recognition and enforcement of the Common law and the Roman-Dutch law Member States. Also, the divergences between these rules and the obstacles these rules may cause to international trade will be indicated. Furthermore, the reasons courts invoke for not recognizing foreign judgments may indicate problematic differences in other parts of private international law, necessitating the harmonization of these rules. There might, for example, be a problematic divergence in grounds of jurisdiction where the courts of one Member State systematically refuse to recognize and enforce judgments from another Member State on the ground that the foreign courts base their jurisdiction on an exorbitant ground of jurisdiction. In the EU, the legal basis for adopting the Brussels Convention120, Article 220 EC, only provided for the “simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards”.121 This provision did not list “jurisdiction” per se as one of the elements of private international for which harmonization through Treaty could be sought.122 The drafters of the Convention deemed it, nevertheless, necessary to harmonize this field of private international law for reasons of legal certainty.123 Also, as the Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (hereafter Report Jenard) pointed out, the establishment of “an autonomous system of international jurisdiction in relations between the Member States, […] [made] it easier to abandon certain rules of jurisdiction which are generally regarded as exorbitant”.124 As a consequence of this harmonization, the recognition of a judgment of another Member State could no longer be refused on grounds of jurisdiction and the reasons for non-recognition were thus kept to a minimum.125 The harmonization of jurisdiction therefore facilitated the free movement of judgments within the EU.126 The case law of the countries under study will be analysed in order to establish on which grounds the courts in these countries decline enforcement and whether these reasons are related to the national rules regulating the other two steps of private international law.

120 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968. 121 A. FIORINI, The evolution of European Private International Law, (2008) 57(4) I.C.L.Q., p. 970. 122 G. VAN CALSTER (note 4). 123 Report Jenard (note 119), at 7. 124 Ibid. 125 W. KENNETT, Harmonization and the judgments convention: historical influences, (1993) 1 E. R. Pr. L, p. 88. 126 Report Jenard (note 119), at 7; M. WESER, Convention Communautaire sur la compétence judiciaire et l’exécution des décisions, 1975, p. 82.

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Harmonization of Private International Law in SADC 1.

Applicable Rules Regulating Recognition and Enforcement

For reasons of territorial sovereignty, a foreign judgment does not have direct operation and will thus not be executed in other countries.127 Foreign judgments can nevertheless be recognized and enforced in certain circumstances. To this effect, each of the Member States under study has adopted two regimes for the recognition and enforcement of foreign judgments: a statutory regime and a common law regime.128 These two regimes complement each other. Contrary to the common law, the statutes do not require the initiation of an action before a local court. They therefore facilitate the enforcement of foreign judgments, avoiding certain problems related to these actions, such as trouble, expense and delay.129 However, their scope of application is limited to judgments of specific courts of certain designated countries.130 The courts will therefore apply the common law rules where the statutory provisions are not applicable.131 a)

Common Law

The Common law regimes in the countries under study have been developed through their national case law and the suggestions of the legal doctrine on the topic. However, it is not possible to state with confidence the criteria for recognition and enforcement of foreign judgments in these countries, since there seems to be only a limited amount of judgments on the subject.132 Indeed, private international law does not seem to be a subject which commands great attention amongst African scholars.133 One author has described this area of law as “the D. PISTORIUS/ W. POLLAK, Pollak on jurisdiction, 2nd edn 1993, p. 202. 128 There seems to be one exception to this, i.e. the only Swazi case I have been able to access suggests that no common law regime exists for the enforcement of foreign judgements in Swaziland. See Mamba v Mamba, No. 1451/09, High Court Swaziland 2011. 129 R. OPPONG (note 33), at 438. 130 They will only apply to judgments of specific courts of certain countries. See hereafter. 131 Botswana: Barclays Bank of Swaziland v Koch 1997 BLR 1294 (HC); Lesotho: Adam v Adam CIV/APN/327/94 (High Court Lesotho 1994) at 3; Malawi: Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001); Namibia: Argos Fishing Co Ltd v Friopesca SA 1991 (3) SA 255 (NM) at 260 A and 262 C; South Africa: Jones v Krok 1995 (1) SA 677 (A) at 685 B-C; Tanzania: Willow investment v Mbomba Ntumba 1996 TLR 377 (HC); Zambia: Attorney Genneral v Frederick Chiluba, case no. 2007/HP/FJ/004 (High Court Zambia 2010); Zimbabwe: Coluflandres Ltd v Scandia Industrial Products Ltd 1969 (3) SA 551 (R). 132 I have found access to most of the judgments found in legal doctrine on the topics, with the most inclusive being R. OPPONG (note 117). It is difficult to assess whether these texts only include a small amount of the existing judgments or whether there is simply a lack of case law on the subject. However, the last possibility seems more likely. See also what was said in the introduction on law reporting in SADC. 133 P.S.G. LEON, Roma non locuta est: the recognition and enforcement of foreign judgments in South Africa, (1983) 16(3) CILSA, p. 325. 127

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Annelies Nachtergaele Cinderella subject seldom studied [and] seldom understood”.134 Moreover, the existing judgments are sometimes rather confusing and thus criticized by the legal commentators.135 Even the most elaborate case law, i.e. the South African, has been described as “lacunose and somewhat confused”.136 Moreover, the South African case law on this question is much more elaborate, which hinders the possibility of a sensible comparison with the other countries. This section will, nevertheless, attempt to give an overview of the applicable principles in these countries and the obstacles they might cause to international trade. i)

Procedural Aspects

There are different reasons why the Common law and the Roman-Dutch law courts enforce foreign judgments. The High Court of Botswana referred to the comity of nations and international commerce as a justification,137 whereas the Namibian High Court invoked that “the exigencies of international trade and commerce require that final foreign judgments be recognised as far as is reasonably possible […] and that effect be given thereto”.138 According to the High Court of Malawi, on the other hand, the courts enforce those judgments at common law not because of comity or reciprocity, but because the defendant has a duty to the foreign court and the contract.139 Consequently, in the States under study a foreign judgment is seen as creating a debt enforceable by an action of debt.140 These judgments are thus not directly enforceable, but constitute a cause of action that will be enforced by the courts.141 The person wishing to enforce a foreign judgment has to commence an action founded on that judgment as a cause of action. In the Roman-Dutch countries a foreign judgment may be enforced by an ordinary action,142 or, if it is for a liquidated sum of money, proceedings may be by way of provisional C.F. FORSYTH, Private International Law: The Modern Roman-Dutch Law Including the Jurisdiction of the High Courts, 5th edn 2012, p. 43. 135 SOUTH AFRICAN LAW REFORM COMMISSION, Project 121 on consolidated legislation pertaining to international judicial co-operation in civil matters 2006, p. 31. 136 P.S.G. LEON, Roma non locuta est: the recognition and enforcement of foreign judgments in South Africa, (1983) 16(3) CILSA, p. 325. Similarly, it has been said that “the law on recognition and enforcement in South Africa is not as modern and well-elaborated as in many other countries and regional organisation”, see P. BÄDER/ T. KRUGER, The recognition and enforcement of foreign judgments in South Africa, (2013/2014) XV YPIL, p. 468. 137 Barclays Bank of Swaziland v Koch 1997 BLR 1294 (HC) at 1297 C. 138 Westdeutsche Landesbank Girozentrale (Landesbausparkasse) v Horsch 1992 NR 313 (HC) at 314 F. 139 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001); S. THANAWALA (note 108), at 439. 140 Willow investment v Mbomba Ntumba 1996 TLR 377 (HC). See R. OPPONG, (note 117), at 317. 141 Jones v Krok 1995 (1) SA 677 (A) at 685 A. 142 R. OPPONG (note 33), at 473. 134

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Harmonization of Private International Law in SADC sentence.143 In the Common law countries the judgment-creditor has to bring an action of debt on the foreign judgment.144 Having commenced such an action, the plaintiff will then have to establish that the foreign court had international jurisdiction and that the foreign judgment was final and conclusive.145 Thereafter, the defendant has the possibility to raise a failure to fulfil one of the other requirements as defences to the action. It goes without saying that this entails a potentially slow and cumbersome process, which can have negative consequences for international transactions.146 ii)

Jurisdiction to Enforce Foreign Judgments

Before looking at the requirements for enforcement of a judgment, a court will first need to establish its jurisdiction to enforce such a foreign judgment according to its national jurisdictional rules for dealing with claims involving a foreign judgment. I will not dwell on the different rules of jurisdiction applicable in the countries under study, but there is one situation that needs to be pointed out. Namely, the RomanDutch courts will not accept jurisdiction to enforce foreign judgments where both the judgment-creditor and the judgment-debtor are peregrines147 of the court, unless there is a local ground of jurisdiction.148 As the High Court of Botswana pointed out, “the time of Court should not be taken up with disputes, having nothing to do with Botswana, between persons neither domiciled nor resident here”.149 A foreign plaintiff will thus not be able to enforce a foreign judgment against a foreign defendant in these countries, even though he possesses assets there. This might be very inappropriate, since an action to enforce a foreign judgment is often founded on a cause of action unrelated to the country in which enforcement is sought. As one author observed, “no country should be a haven for recalcitrant debtors adjudged as such by a court of competent jurisdiction, even if they and their

143 Barclays Bank of Swaziland v Koch 1997 BLR 1294 (HC) at 1297 D; Jones v Krok 1995 (1) SA 677 (A) at 685. See also R. OPPONG (note 117), at 326; A.B. EDWARDS, updated by E. KAHN, Conflict of Laws, in W.A. JOUBERT, The Law of South Africa, 2nd edn 2003, vol. 2 part 2, para. 344. For explanation of this procedure, see footnote 416 in R. OPPONG (note 117), at 473. 144 Attorney General v Frederick Chiluba, case no. 2007/HP/FJ/004 (High Court Zambia 2010). 145 SOUTH AFRICAN LAW REFORM COMMISSION REPORT (note 135), at 29. 146 A. THOMASHAUSEN (note 28), at 32. 147 A peregrinus is one who is neither resident nor domiciled in the area of jurisdiction of the court, in contrast to an incola. These terms derive from Roman law. C.F. FORSYTH (note 32), at 213. 148 This is clearly established by the Botswana cases in the context of foreign judgments: Paver v Roper & Roper 1974 (1) BLR 8; Pretorius v Sweiger 1979-1980 BLR 124 (HC). C.F. FORSYTH (note 32), at 474; C. SCHULZE (note 116), at 11. 149 Pretorius v Sweiger 1979-1980 BLR 124 (HC) at 125.

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Annelies Nachtergaele creditors are peregrines”.150 Hence, these rules do not seem to encourage international trade, quite the contrary. iii)

International Jurisdiction

Each State not only has rules which determine when its courts will assume jurisdiction over a dispute (adjudicatory jurisdiction), but also rules to determine whether it will regard a foreign State as having had jurisdiction over a dispute (international jurisdiction).151 Thus, as Van Dijkhorst J made clear in the South African case of Reiss Engineering Co Ltd v Isamcor (Pty) Ltd: “[T]he fact that the [foreign]…court may have had jurisdiction in terms of its own law does not entitle its judgment to be recognised and enforced in South Africa. It must have had jurisdiction according to the principles recognised by [South African] law with reference to the jurisdiction of foreign courts.”152 The requirement that the foreign court needed to have international jurisdiction for the judgment to be enforceable is well established in the countries under study.153 However, it is not wholly clear in all the different countries which grounds establish international jurisdiction. Since this requirement is crucial for the recognition and enforcement of foreign judgments,154 this lack of clarity might be a serious obstacle to international transactions. (1)

Residence

The Roman-Dutch legal doctrine has accepted residence within the foreign court’s area of jurisdiction as sufficient to establish international jurisdiction.155 Furthermore, the South African case of Purser v Sales recognized, in an obiter dictum, residence as a ground of international competence.156 This can also be deducted from De Naamloze Vennootschap Alintex v Von Gerlach where the South African judge stated that “in all personal actions it is the courts of the country in which the defendant resides which must be resorted to”.157 The Court therefore didn’t recognize the Dutch judgment in casu since the defendant didn’t have C.F. FORSYTH (note 32), at 474. W. KENNETH (note 125), at 84. 152 1983 (1) SA 1033 (W) at 1037H. 153 See note 149 for reference to relevant judgments, and also Acutt, Blaine and Company v Colonial Marine Assurance Company (1880-1882) 1 SC 402. 154 R. OPPONG (note 117), at 326. 155 A.B. EDWARDS (note 143), at 212-213; C.F. FORSYTH (note 32), at 421-422; D. PISTORIUS/ W. POLLAK (note 127), at 209-211; C. SCHULZE (note 116), at 18-19. 156 2001 (3) SA 445 (A) at 451 A. 157 1958 (1) All SA 283 (T) at 285. 150 151

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Harmonization of Private International Law in SADC residence in the Netherlands.158 However, no other Roman-Dutch country, to my knowledge, has expressly approved residence as a ground of international competence. Of the common law countries, on the other hand, both Malawi and Zambia have recognized this ground.159 The actual meaning of residence, however, has only been discussed in the South African case law and doctrine.160 (2)

Submission

Both the South African legal commentators161 and the case law of the countries under study162 have recognized that submission by the defendant to the jurisdiction of the foreign courts grants international competence to that court, even if it would otherwise not enjoy that competence. There are two ways in which a defendant can submit to the jurisdiction of the foreign court. Firstly, parties may, either expressly or impliedly, enter into binding agreements to submit their dispute to a particular court which might otherwise lack jurisdiction.163 This was clearly stated in the Namibian case Argos Fishing Co Ltd v Friopesca SA, in which the enforcement of an English judgment was sought before the High Court.164 The Court ruled that even though both parties were peregrines of England, the English court had international jurisdiction pursuant to an agreement between the parties vesting that court with jurisdiction.165 Contractual submission has also been expressly accepted in Malawi,166 South Africa,167 Zambia168 and Zimbabwe169. However, there are a few principles related to contractual submission which have only been developed in the South African case law. Firstly, whether a contract really contains a submission

Ibid, at 284. Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001). R. OPPONG (note 117), at 325, where he refers to the Zambian case Mileta Pakou v Rudnap Zambia Ltd 1998 ZR 233. I haven’t been able access to this judgment. 160 C.F. FORSYTH (note 32), at 122, citing Tick v Broude 1973 (1) SA 462 (T) at 468. See also Zwyssig v Zwyssig 1997 (2) SA 467 (W) at 470 D. 161 A.B. EDWARDS (note 143), at 215; D. PISTORIUS/ W. POLLAK (note 127), at 216; C. SCHULZE (note 116), at 19; C.F. FORSYTH (note 32), at 422. 162 See discussion hereinafter. 163 C.F. FORSYTH (note 32), at 427; C. SCHULZE (note 116), at 21. 164 1991 (3) SA 244 (NM). 165 Argos Fishing Co Ltd v Friopesca SA 1991 (3) SA 255 (NM) at 262 A – C. 166 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001), “where he has contracted to submit himself to the forum in which the judgment was obtained”. 167 Blanchard, Krasner & French v Evans 2002 (4) SA 144 (T). 168 Mileta Pakou v Rudnap Zambia Ltd 1998 ZR 233. See note made at footnote 175 about this judgment. 169 Coluflandres Ltd v Scandia Industrial Products Ltd and 1969 (3) SA 551 (R) at 560 A. 158 159

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Annelies Nachtergaele will have to be determined according to the proper of law of the contract.170 Moreover, the South African courts have accepted that parties may tacitly submit to the foreign jurisdiction, where they agreed to submit but failed to take record of that agreement in their contract (tacit submission).171 However, “a choice of a domicilium citandi et executandi172 can never amount to or support the inference of a submission to jurisdiction”.173 And finally, a choice of proper law does not amount to an implied submission to jurisdiction.174 Whether these principles will be followed by the other countries remains to be seen. Secondly, some courts have accepted that submission can be deduced from the conduct of the defendant. In Vehicle Delivery Services (Zimbabwe) (Private) Ltd v Galaun Holdings Ltd, the High Court of Zimbabwe ruled that the applicant had submitted to jurisdiction, for no objections to the court’s jurisdiction were filed.175 In Cloete v Brink, the High Court of Botswana accepted submission to jurisdiction as a ground for international competence, provided it was clearly made.176 However, in casu the High Court didn’t consider the defendant’s conduct as acquiescing to the court’s jurisdiction, since the defendant challenged the jurisdiction of the court as a first point in the case.177 According to an authoritative South African author there are no reported cases in South Africa in which submission by conduct has been accepted as a ground for international jurisdiction.178 Courts should therefore “exercise appropriate caution and not find that there has been submission unless the parties have clearly accepted the foreign court’s jurisdiction”.179 However, in my view, there seems to be one case where submission by conduct was accepted. Indeed, in Purser v Sales, the court considered the appellant’s conduct as a submission to the jurisdiction of the English court, for he had raised no objection to the jurisdiction of the Court and had asked to dismiss the claim on its merits.180 Finally, the High Court of Malawi has also pointed out that a foreign court will have international jurisdiction where the defendant in the character of plaintiff has selected the forum in which he is afterwards sued and where he has voluntary appeared.181

Blanchard, Krasner & French v Evans 2002 (4) SA 144 (T) at 149 A – B. Standard Bank Ltd v Butlin 1981 (4) SA 158 (D) at 161 E. 172 This is the choice of a convenient address for the service of process and the execution of judgment. 173 1981 (4) SA 158 (D) at 165 D. 174 Reiss Engineering Co Ltd v Insamcor (pty) Ltd 1983 (1) SA 1033 (W) at 1039 D. 175 2003, HH 171-03 HC 8191/2002, at 3. 176 1996 BLR 224 (HC) at 227 B. 177 Ibid, at 227 C. 178 C.F. FORSYTH (note 32), at 425. 179 Ibid. This was approved in Supercat Incorporated v Two Oceans Maritime CC 2001 (4) SA 27 (C) at 32 G-I. 180 2001 (3) SA 445 (SCA) at 453 § 22. 181 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001). 170 171

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Harmonization of Private International Law in SADC (3)

Other Grounds

It appears from the previous analysis that residence and submission are more or less established grounds of international competence in the countries under study. Besides these two grounds, there are a number of other bases of international jurisdiction. However, most of those bases have not been widely accepted and thus seem rather controversial.182 These grounds are the following: domicile within the jurisdiction of the foreign court;183 where the cause of action arose within the foreign court’s jurisdiction;184 where the defendant is subject to the foreign country in which the judgment has been obtained;185 and where the defendant is a fugitive from justice186. Since they do not seem widely recognized, I will not discuss these in further detail. However, there is one base of jurisdiction which requires a more thorough discussion, i.e. presence within the jurisdiction of the foreign court. It has been much debated among the South African legal commentators whether this should be recognized as a ground of international competence.187 So far, the only judgment where this has been expressly accepted is the South African case of Richman v Ben-Tovim.188 In this case, the Supreme Court of Appeal ruled that a foreign court had jurisdiction to entertain an action even if the defendant was at the time of institution of proceedings merely physically present in that foreign State. However, this case has not been followed nor rejected by any court in South Africa, or any of the other Roman-Dutch law countries. It remains to be seen whether this judgment will be followed in these countries. Furthermore, there seems to be no judgment of any of the Common law countries accepting or rejecting this as a base of jurisdiction. However, voluntary presence in the country where the judgment has been given has been accepted by the English case law as a ground of international jurisdiction.189 Since the Common law countries in SADC frequently rely on English case law to establish certain principles, it is very likely that these countries will also recognize presence as a ground of jurisdiction. 182 A.B. EDWARDS (note 143), at para. 346; C.F. FORSYTH (note 32), at 429-437; C. SCHULZE (note 116), at 22-26. 183 Acutt, Blaine and Company v Colonial Marine Assurance Company (1880-1882) 1 SC 402; Purser v Sales 2001 (3) SA 445 (1) at 451 A; Adam v Adam CIV/APN/327/94 (High Court Lesotho 1994). 184 Duarte v Lissack 1973 (3) SA 615 (D). However this was case was considered as of no persuasive value in Supercat Incorporated v Two Oceans Maritime CC 2001 (4) SA 27 (C) at 31 A-C. 185 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001). 186 Steinberg v Cosmopolitan National Bank of Chicago 1973 (4) SA 564 (RA). 187 D. PISTORIUS/ W. POLLAK (note 127), at 214; R. OPPONG (note 117), at 337-338; S. EISELEN, International Jurisdiction in Claims Sounding in Money, (2006) 18 S. Afr. Mercantile L. J., p. 45-65; R. OPPONG, More presence and International Competence in Private International Law, (2007) 3 J .Priv. Int’l L., p. 321; C. SCHULZE, International Jurisdiction in Claims Sounding in Money: Is Richman v Ben-Tovim the Last Word?, (2008) 20 S. Afr. Mercantile L. J., p. 61-73; C.F. FORSYTH (note 32), at 429-431. 188 2006 (SCA) 148. 189 P. NORTH/ J.J. FAWCETT, Cheshire and North’s Private International law, 13th edn 1999, p. 408; C.M.V. CLARKSON/ J. HILL, The conflict of laws, 4th edn 2011, p. 168.

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Final Judgment

For a foreign judgment to be recognized and enforced, it also has to be final and conclusive. This requirement is widely recognized in all the countries under study and does not seem to pose a substantial obstacle to international trade.190 After all, it would be undesirable if a foreign judgment was enforced in a foreign country and was thereafter set aside or altered by the court which made it in the first place.191 However, one point of divergence relates to the question of finality of default judgments. The Malawian High Court has accepted that a default judgment may be final, even though the foreign court may set it aside.192 In South Africa, a default judgment granted by a Californian court was enforced, since the time limit for appeal had expired.193 In a Namibian case, on the other hand, the court ruled that an English default judgment could still be set aside by the English court and hence lacked the character of finality required.194 It is thus rather uncertain whether or not a default judgment will be enforced in the countries under study. v)

Defences to Recognition and Enforcement

In addition to a lack of international jurisdiction or want of finality, recognition of foreign judgments can be refused on other grounds under the common law. Normally these grounds are set up by way of defence by a defendant who seeks to resist the enforcement of a judgment in the plaintiff’s favour or by a plaintiff who seeks to resist the enforcement of a judgment in the defendant’s favour.195 Most countries have established that foreign judgments will not be recognized where they have been reached by fraud,196 or are contrary to public policy197 or natural justice198.199 190 Accurist (SA) (Pty) Ltd v Jan Jacob Van Zyl 1982 (1) BLR 1 (HC) and obiter dictum in Barclays Bank of Swaziland v Koch 1997 BLR 1294 (HC) (Botswana); Adam v Adam CIV/APN/327/94 (High Court Lesotho 1994) (Lesotho); Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001) (Malawi); Bekker NO v Kotzé and Another 1994 NR 345 (HC) and Argos Fishing Co Ltd v Friopesca SA 1991 (3) SA 255 (NM) (Namibia); Jones v Krok 1995 (1) SA 677 (A), C Hoare & Co v Runewitsch and Another 1997 (1) SA 338 (W) (South Africa); Coluflandres Ltd v Scandia Industrial Products Ltd 1969 (3) SA 551 (R) and Knight v Baldi 1966 (3) All SA 303 (R) (Zimbabwe). 191 C.F. FORSYTH (note 32), at 457. 192 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001). 193 Blanchard, Krasner & French v Evans 2004 (4) SA 427 (W), at 434 F. 194 Argos Fishing Co Ltd v Friopesca SA 1991 (3) SA 255 (NM). See the criticizing comments on this judgment in C.F. FORSYTH, Submission as a ground for international competence and the finality of foreign default judgments, (1992) 109 SALJ, p. 5. 195 A.B. EDWARDS (note 143), at § 345. 196 Joffe v Salmon 1904 TS 317. 197 Jones v Krok 1996 (1) SA 504 (T) at 685 C and Taylor v Hollard 1886 (2) SAR 78 (South Africa); Gramara (Private) Ltd v Government of The Republic of Zimbabwe H 169-2009 HC 33/09, It is important to note that this case was special, since it related to the enforcement not of a judgment of a foreign court but of the SADC Tribunal.

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Harmonization of Private International Law in SADC In South Africa, there are two other defences to the recognition of foreign judgments. First, South African courts do not recognize nor enforce foreign penal or revenue judgments200. As the South African Law Commission observed, “South African courts are prepared to enforce foreign judgments giving effect to private rights, but [its] judicial facilities may not be used to give effect to another State’s sovereign acts”.201 This defence does not pose an obstacle to international transactions since it does not affect private rights of individuals. However, the second possible defence based on the Protection of Businesses Act 99 of 1978 is particularly problematic. According to this Act: “[E]xcept with the permission of the Minister of Economic Affairs, no judgment, order delivered, given or issued or emanating from outside [South Africa] [shall be enforced in South Africa] if it arises from “an act or transaction which took place at any time” and “is connected with the mining, production, importation, exportation, refinement, possession, use or sale of or ownership to any matter or material, of whatever nature, whether within, outside, into or from [South Africa].”202 The principal aim of the Protection of Businesses Act was to protect South Africans from the draconian effects of certain foreign laws, in particular those allowing awards of penal or multiple damages.203 However, it has been said that this legislation is the “classic example of legislative overkill”. 204 On a literal reading of the Act, it seems that only rarely will a judgment be able to be enforced without the permission of the Minister, since most foreign judgments touch “ownership [of] […] any matter or material”. The courts have adopted a restrictive approach to the interpretation of this Act and it has not been successfully invoked as of yet.205 Both the legal doctrine and the Law Reform Commission have, nevertheless, suggested

Nevertheless, the Court explicitly recognized that “a foreign judgment cannot be recognised and enforced if it is contrary to public policy”. 198 Lissack v Duarte 1974 (4) SA at 564 B and Corona v Zimbabwe Iron and Steel Co Ltd 1985 (2) SA 432 (TkA) (South Africa); Coluflandres Ltd v Scandia Industrial Products Ltd 1969 (3) SA 551 (R) (Zimbabwe), at 557 B. 199 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001); Section 11 Tanzania Civil Procedure Code 1966. 200 Commissioner of Taxes, Federation of Rhodesia v McFarland 1965 (1) SA 470 (W). P.S.G. LEON (note 136), at 344. 201 SOUTH AFRICAN LAW REFORM COMMISSION REPORT (note 135), at 30. 202 Section 1(1), (2) and (3). 203 P.S.G. LEON (note 136), at 347; J. DUGARD, Public International law, (1978) Annual Survey of South African Law, p. 67. 204 C.F. FORSYTH (note 32), at 466. 205 Tradex Ocean Transportation SA v MV Silvergate 1994 (4) SA 119 at 121; Jones v Krok 1996 (1) SA 504; Chinatex Oriental Trading Co. v Erskine 1998 (4) SA 1087 (this case was reversed on appeal but the part related to this defence was not discussed); Richman v Ben-Tovim 2007(2) SA 283 (A).

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Annelies Nachtergaele that this legislation should be repealed, “for it undermines confidence in international commerce”.206 b)

Statutory Regimes

To expedite the procedure of recognizing and enforcing foreign judgments and to avoid the problems and difficulties related to the enforcement at common law, all the countries under study have adopted statutory provisions to facilitate the enforcement of such judgments. These statutes provide for a procedure of recognition through registration which is relatively straightforward and automatic. This section will analyse these statutes, while pointing out the effects they might have on international trade. i)

Uniformity Due to Colonial Heritage

All of the statutes under study seem to have been derived from earlier British statutes on the subject. Indeed, the Reciprocal Enforcement of Judgments Act of 1922 of Lesotho, the British and Commonwealth Judgments Act of 1922 of Malawi207 and the Swazi Reciprocal Enforcement of Judgments Act of 1922 seem to have been modelled on the United Kingdom’s Administration of Justice Act of 1920, which was imported in these countries during colonization.208 Similarly, a slightly modified version of the United Kingdom’s Foreign Judgments (Reciprocal Enforcement) Act of 1933 appears to have been introduced during the British ruling in Tanzania and Zambia, where the Tanzanian Foreign Judgments (Reciprocal Enforcement) Ordinance of 1935 and the Zambian Foreign Judgments (Reciprocal Enforcement) Act of 1937 govern the enforcement and recognition of foreign judgments.209 The British Act of 1933 has also inspired the Judgments (International Enforcement) Act of 1981 of Botswana, the Namibian Enforcement of Foreign Civil Judgments Act of 1994 and the South African Enforcement of Foreign Civil Judgments Act of 1988, although this happened after independence.210 Finally, the provisions of the Zimbabwean Civil Matters (Mutual Assistance) Act of 1995 seem to have been borrowed from both statutes. The United Kingdom’s Foreign Judgments (Reciprocal Enforcement) Act of 1933 brought some important changes to the regime of recognition and enforcement

206 P.S.G. LEON (note 136), at 345; C.F. FORSYTH (note 32) at 466; R. OPPONG (note 117), at 342; C.F. FORSYTH (note 58), at 71-72. 207 Unfortunately I have not been able to access this Act. The following discussion of the regimes in force will, therefore, not include Malawi. 208 D. MCCLEAN (note 91), 31-32. 209 S. THANAWALA (note 108), at 439-440. 210 C.F. FORSYTH (note 32), at 441; SOUTH AFRICAN LAW REFORM COMMISSION (note 135), at 81.

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Harmonization of Private International Law in SADC under the United Kingdom’s Administration of Justice Act of 1920.211 However, the regime of recognition and enforcement was not fundamentally changed, since most changes were rather procedural.212 Consequently, the only divergences between the countries under study are along those lines. It is also important to note that the British Acts were modelled on the common law existing during that time in the United Kingdom.213 It is thus questionable whether the statutes applicable in the countries of SADC, which are based on the British common law of respectively 1920 or 1933, are adapted to the needs of modern international trade. ii)

Requirements for Recognition through Registration

The different statutes under study provide for the registration with the local courts of judgments from certain courts of the designated countries. Once a foreign judgment is registered, it has the same force and effect as if it had been originally given in the registering court and entered on the date of registration.214 However, registration is only possible for judgments which are final and conclusive.215 There is an important difference between the Acts modelled on the two different British Acts. According to the Acts of Lesotho, Swaziland and Zimbabwe, which are based on the British Act of 1920, registration is discretionary, since it will only be granted if “in all the circumstances of the case” the court is satisfied that it is “just and convenient for the judgment to be enforced”.216 Moreover, registration is not allowed in a number of situations, which the local court will have to assess.217 Registration under the Acts of the other countries, on the other hand, “shall”218 be ordered on application of the judgment-creditor and is thus as of right.219 In L. COLLINS (ed.), Dicey, Morris and Collins on the conflict of laws, 14th edn 2006, p. 571-572. 212 The most important changes related to the designation of countries (the scheme of the 1933 Act is wider but still based on reciprocity, see Section 1) and the fact that the registration became as of right under the 1933 Act, whereas it was only discretionary under the 1920 Act, see Section 2. 213 L. COLLINS (note 211). 214 Section 5(3)(a) Botswana Act, section 3(1) Lesotho Act, section 4(1) Namibian Act, section 4(1) South African Act, section 3(3)(a) Swazi Act, section 4(2) Tanzanian Act, section 4(2) Zambian Act and section 7(1) Zimbabwean Act. 215 Section 3(2) Botswana Act, section 7(1) Lesotho Act, section 1 Namibian Act, section 1 South African Act, section 7(1) Swazi Act, section 3(2) Tanzanian Act, section 3(2) Zambian Act and section 6(2) Zimbabwean Act. 216 Section 3(1) Lesotho Act, Section 3(1) Swazi Act and section 6(1) Zimbabwean Act. 217 Section 3(2) Lesotho Act, Section 3(2) Swazi Act and section 6(2) Zimbabwean Act. 218 Section 5(1) Botswana Act provides that registration “may” be ordered. It is not quite clear whether this gives any discretion to the Court. 219 Section 3(1) Namibian Act, section 3(1) South African Act, section 4(1) Tanzanian Act and section 4(1) Zambian Act. 211

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Annelies Nachtergaele Botswana, Tanzania and Zambia registration, nevertheless, can only be achieved where the judgment sought to be registered is not satisfied yet and is enforceable by execution in the country of the original court.220 There are also some differences in the time limits for the application for registration. A judgment-creditor has six years to lodge an application for registration of a judgment in Botswana, Tanzania, Zambia and Zimbabwe, whereas he only has twelve months to lodge such application in Lesotho and Swaziland.221 In Namibia and South Africa no time frame is provided, but registration will be set aside if the judgment has become prescribed under the laws of Namibia and South Africa, or the laws of the original country.222 Also, the clerk of the court registering a judgment in these countries has to issue a notice to inform the judgment-debtor of the registration.223 These differences may be important from a procedural point of view for the different parties, but it is very unlikely that they (will) hinder international trade. iii)

Execution

Execution of a foreign judgment is delayed until the period of time has elapsed during which the judgment-debtor may apply to have the registration set aside.224 In the countries where registration is as of right, the grounds for setting aside are vital to the operation of the legislation.225 These grounds are very similar to the possible defences against enforcement of a foreign judgment under common law: judgment was obtained in breach of natural justice or by fraud; and enforcement would be contrary to public policy.226 Furthermore, registration can also be set aside where the foreign court had no jurisdiction in the case.227 The Acts set out in which circumstances a court shall be deemed to have had jurisdiction. In actions in personam, these grounds include submission by the judgment-debtor (both by

220

Section 5(2) Botswana Act, section 4(1) Tanzanian Act and section 4(1) Zambian

Act. Section 5(1) Botswana Act, section 3(1) Lesotho Act, section 3(1) Swazi Act, section 4(1) Tanzanian Act, section 4 Zambian Act, section 5(1) Zimbabwean Act. 222 Section 5(1)(i) Namibian Act, section 5(1)(i) South African Act. 223 Section 3(2) Namibian Act, section 3(2) South African Act. 224 Section 5(4) Botswana Act, section 4(2) Namibian Act, section 4(2) South African Act, section 17 Swazi Reciprocal Enforcement of Judgments Rules 1923, section 11 Tanzanian Foreign Judgments (Reciprocal Enforcement) Rules 1936, section 12 Zambian Foreign Judgments (Reciprocal Enforcement) Rules 1958 and Section 7(4) Zimbabwean Act. 225 C.F. FORSYTH (note 32), at 438. 226 Section 7(1)(a) Botswana Act, section 12 Reciprocal Enforcement of Judgments Rules of Court 1923 juncto section 3(2) Act, section 5(1) Namibian Act, Section 5(1) South African Act, section 15 Swazi Rules juncto section 3(2) Act; section 6(1)(a) Tanzanian Act, section 6(1)(a) Zambian Act and section 8(4) junction section 6(2) Zimbabwean Act. 227 Ibid. 221

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Harmonization of Private International Law in SADC conduct228 and by agreement229), residence of the judgment debtor230 and place of business of the judgment debtor for juristic persons231. In the case of a judgment given in an action of which the subject matter was immovable property or in an action in rem of which the subject matter was movable property, the foreign court will be deemed to have had jurisdiction if the property in question was situated in the country of that court at the time of the proceedings in the original court.232 Furthermore, in the case of a judgment given in any other type of action, the competence of the foreign court will be accepted where it is recognized by the law of the registering court.233 It enhances legal certainty that these Acts clearly state which grounds of jurisdiction are recognized. However, there is still quite some room for interpretation of those grounds. Although they broadly correspond to the grounds recognized under the common law, courts will, nevertheless, have to further clarify these grounds, since the current case law does not offer enough guidance. It would be advisable for the national courts to rely on each other’s case law when interpreting these terms, in order to achieve uniformity. The procedure of the statutory regimes appears to be much more beneficial for the judgment-creditor than the common law regimes. Indeed, where the judgment-debtor does not apply to set the registration aside during the period of time given to him, the registration will be definitive and the judgment-creditor will be able to enforce the judgment. Also, a judgment-creditor will not have to establish the international jurisdiction of the foreign court in order to have his judgment recognized, unless the judgment-debtor successfully raises lack of jurisdiction as a defence.

Section (7)(2)(a)(i) Botswana Act, section 7 (4)(a)(i) Namibian Act, section 7 (4)(a)(i) South African Act, section 6(2)(a)(i) Tanzanian Act, section 6 (2)(a)(i) Zambian Act, section 9(4)(a)(i) Zimbabwean Act. 229 Section (7)(2)(a)(iii) Botswana Act, section 7 (4)(a)(ii) Namibian Act, section 7 (4)(a)(ii) South African Act, section 6(2)(a)(iii) Tanzanian Act, section 6 (2)(a)(iii) Zambian Act, section 9(4)(a)(ii) Zimbabwean Act. 230 Section 7(2)(a)(iv) Botswana Act, section 7 (4)(a)(iii) Namibian Act, section 7 (4)(a)(iii) South African Act, section 6(2)(a)(iv) Tanzanian Act, section 6 (2)(a)(iv) Zambian Act, section 9(4)(a)(iii)(A) Zimbabwean Act. 231 Section 7(2)(a)(v) Botswana Act, section 7 (4)(a)(iv) Namibian Act, section 7 (4)(a)(iv) South African Act, section 6(2)(a)(v) Tanzanian Act, section 6 (2)(a)(v) Zambian Act section 9(4)(a)(iii)(B) Zimbabwean Act. 232 Section 7(2)(b) Botswana Act, section 7(a)(b) Namibian Act, section 7(4)(b) South African Act, section (6)(2)(b) Tanzanian Act, section 6(2)(b) Zambian Act, section 9(4)(b) Zimbabwean Act. 233 Section 7(2)(c) Botswana Act, section 7(a)(c) Namibian Act, section 7(4)(c) South African Act, section (6)(2)(c) Tanzanian Act, section 6(2)(c) Zambian Act, section 9(4)(c) Zimbabwean Act. 228

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Limited Application

The problem with these different Acts lies not with the procedures but with their extremely limited range of application.234 Firstly, all the different Acts are restricted to money judgments, including compensation awards made in criminal proceedings.235 This means that injunctions, orders of specific performance and other non-monetary remedies can only be enforced through the common law regime.236 Secondly, these Acts are only applicable to judgments from courts of countries designated by the national executive (i.e. the President in Botswana, Tanzania and Zambia; the King in Lesotho;237 the Prime Minister in Swaziland; and the Minister of Justice in Namibia, South Africa and Zimbabwe).238 Moreover, with the exception of South Africa239 and Zimbabwe,240 the applicability of these regimes is based on the principle of reciprocity, meaning that countries are only designated if the executive is satisfied that substantial reciprocity of treatment is assured to their national judgments.241 This wouldn’t impede economic transactions in SADC if the different Member States would designate each other under their statutory regimes. However, only very few SADC countries have been designated under the statutory regimes.242 Consequently most Member States do not benefit from the expedited procedure of recognition and enforcement of these regimes. Enforcement of a This was also the criticism given by the South African Law Reform Commission when evaluation the South African Act (note 135), at 83. 235 See definition of “judgement” in section 2 Botswana Act, section 2 Lesotho Act, section 1 Namibian Act, section 1 South African Act, section 2 Swazi Act, section 2(1) Tanzanian Act, section 2(1) Zambian Act, section and section 2 Zimbabwean Act. 236 According to OPPONG non-monetary remedies cannot be enforced at common law neither, especially in the Common law countries. However, I cannot make a sensible appreciation of this, due to a lack of information. See R. OPPONG (note 14), at 292. 237 I have not been able to access the relevant legislation of Lesotho. This section is therefore solely based on the account OPPONG gives to this legislation in R. OPPONG (note 117), at 369-370. 238 Section 3(1) Botswana Act; Section 3(1) Tanzanian Act; Section 3(1) Zambian Act; Section 5(1) Swazi Act; Section 2(a) Namibian Act; Section 2(1) South African Act; Section 3(2) Zimbabwean Act. 239 The South African Act repeals (see section 11) the Reciprocal Enforcement of Civil Judgments Act 9 of 1966, which was based on reciprocity but never came into operation. It would appear that political considerations prevented the conclusion of mutually acceptable agreements between South Africa and foreign governments. Hence the replacement Act is not founded on reciprocity. A.B. EDWARDS (note 143), at § 346. 240 Section 3(2) does not make any express requirement of reciprocity for the designation of countries. 241 See the provisions mentioned in footnote 239. 242 The countries that have designated the most SADC countries are Lesotho (Swaziland, Zimbabwe, Zambia, Tanzania and Malawi), Swaziland (Lesotho, Zimbabwe, Zambia, Tanzania, Malawi and Botswana) and Tanzania (Botswana, Lesotho, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe). R. OPPONG (note 117), at 369; see Notice no. 9 of 1922, as reproduced in C. SCHULZE (note 116), at 277; See Judgements Extension Ordinance 1935 as reproduced in C. SCHULZE (note 116), at 288. 234

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Harmonization of Private International Law in SADC South African judgment has, for example, been refused in Malawi under its statutory regime because South Africa is not a designated country under any of its applicable statutes.243 Furthermore, the possibility of enforcement under the statutory regimes is often limited to judgments of the superior courts.244 Enforcement of judgments of lower courts and of countries that haven’t been designated can therefore only be sought through the common law regimes. Evidently, this counters the whole purpose of the enactment of those statutes, which was exactly to provide for procedures which would avoid the problems related to actions under the common law. Furthermore, the regimes of Botswana, Tanzania and Zambia are exclusive, meaning that the judgment-creditor cannot seek enforcement under the common law where the judgment is registrable under the statutory regime.245 It seems rather undesirable that a plaintiff does not have the freedom to choose for the common law regime of recognition and enforcement, since he might have good reasons for not wanting to use the statutory regime.246 Another very questionable limitation on the enforcement of foreign judgments can be found in the Acts of Botswana, Tanzania and Zambia. Those Acts provide that the executive has the power to make foreign judgments unenforceable, where it appears that treatment in respect of recognition and enforcement accorded by the courts of any country (e.g. Namibia) to judgments given in the superior courts of those three countries (i.e. respectively Botswana, Tanzania or Zambia) is substantially less favourable than that accorded by its own courts to judgments of the superior courts of that other country (in my example, Namibia).247 Accordingly, the executive of those three countries can order that no proceedings shall be entertained in its courts for the recovery of any sum alleged to be payable under a judgment given in a court of that other country (Namibia, in my example). These provisions might have particularly negative consequences for individuals. The rights of a judgment-creditor are indeed made conditional on the reciprocal treatment of judgments by the foreign State, which is something a judgmentcreditor has no influence on.248

Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001). In Swaziland, for example, the Reciprocal Enforcement of Judgments Act 1922 is only applicable to the High Courts or Supreme Courts of the designated countries. See Reciprocal Enforcement of Judgments Rules 1922 as reproduced in C. SCHULZE (note 116), at 277. 245 Section 9 Botswana Act, section 8 Tanzanian Act and section 8 Zambian Act. 246 R. OPPONG (note 117), at 354. 247 Section 11 Botswana Act, section 11 Tanzanian Act, and section 12 Zambian Act. 248 R. OPPONG (note 117), at 357. Note also the comment on a similar provision in the Australian Foreign. Judgments Act 1991 (section 13): “Fortunately, no regulations have been made under this parochial provision.” See M. TILBURY/ G. DAVIS/ B. OPESKIN, Conflict of laws in Australia, 1st edn 2002, p. 178, fn. 25. 243 244

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Conclusion

It appears from the foregoing analysis that there are no major differences in the applicable regimes for the recognition and enforcement of foreign judgments in the countries under study. The only differences that have been established are procedural in nature and they do not, therefore, form a major barrier to international trade. However, there seem to be other problems related to these regimes which might hamper the recognition and enforcement of judgments in SADC and therefore impede intra-regional trade. Indeed, the analysis of both the statutory regimes and the common law regimes of the different countries suggests that the recognition and enforcement of foreign judgments in those countries is still far from straightforward. The expedited procedure provided for by the statutory regimes is only applicable to a limited number of SADC Member States, which means that a majority of cases can only be enforced through the common law. However, the analysis of the common law regimes has shown that there is a serious lack of clarity as to the requirements for recognition and enforcement, especially with regard to the grounds of international jurisdiction. Even more problematic is the fact that Roman-Dutch courts will not accept jurisdiction to enforce judgments where both the judgment-creditor and the judgment-debtor are peregrines of the court, unless there is a local ground of jurisdiction. These problems should be addressed by the Member States in order to facilitate the enforcement of foreign judgments in SADC. 2.

Grounds of Non-Recognition: Need to Harmonize Jurisdiction and Choice of Law?

This section will examine on which grounds courts have declined enforcement of foreign judgments, for it may indicate whether the harmonization of other two steps of private international law is necessary. Indeed, fundamental differences between national rules on jurisdiction and choice of law may induce courts to refuse the recognition of judgments of certain countries. a)

Grounds for Non-Recognition

As mentioned before, there appears to be only a limited number of judgments on the question dealing with the recognition and enforcement in the countries under study.249 Furthermore, the majority of these cases deal with the enforcement of judgments given in countries outside of SADC, with a predominance of American and English cases.250 This might be an indicator that intra-regional trade still R. OPPONG (note 117), at 388. Namibia: Argos Fishing Co Ltd v Friopesca SA 1991 (3) SA 255 (NM) (English judgment), Westdeutsche Landesbank Girozentrale (Landesbausparkasse) v Horsch 1992 NR 313 (HC) (German judgment); South Africa: Reiss Engineering Co Ltd v Insamcor (pty) Ltd 1983 (1) SA 1033 (W) (English judgment), Blanchard, Krasner & French v Evans 2002 (4) SA 144 (T) (American judgment), Purser v Sales 2001 (3) SA 445 (1) (English 249 250

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Harmonization of Private International Law in SADC remains rather limited. With regard to judgments coming from SADC Member States, a distinction needs to be made between judgments where enforcement was being sought either through the statutory regimes or through the common law regimes. Of the different judgments dealing with enforcement through the statutory regimes, only once was recognition of the judgment granted.251 In another case, the setting aside of the registration of a Zambian judgment in Zimbabwe was refused because the judgment-debtor did not establish that the foreign court lacked jurisdiction and enforcement was thus possible.252 All the other judgments dealt with applications for registration and were all refused on the ground that the country from which the judgment was emanating was not a designated country under the applicable act.253 In some of these cases, the court indicated that the judgmentcreditor should have instituted an action under the common law, since it stemmed from a non-designated country.254 It is thus quite clear that the limited amount of SADC countries as designated countries forms a major obstacle to recognition of judgments in SADC. Most cases where recognition was sought through the common law were also unsuccessful. The reasons for non-recognition were very diverse and include the following: the judgment was not final;255 the foreign court lacked jurisdiction;256 it concerned a foreign revenue judgment;257 the requirements judgment), Supercat Incorporated v Two Oceans Maritime CC 2001 (4) SA 27 (C) (American judgment), De Naamloze Vennootschap Alintex v von Gerlach, 1958 (1) All SA 283 (T) (Dutch judgment), Zwyssig v Zwyssig 1997 (2) SA 467 (W) (American judgment), C Hoare & Co v Runewitsch and Another 1997 (1) SA 338 (W) (English judgment), Jones v. Krok 1995 (1) SA 677 (A) (American judgment), Taylor v Hollard 1886 (2) SAR 78 (English judgment), Eden and another v Pienaar 2001 (1) SA 158 (W) (Israeli judgment), Richman v Ben-Tovim 2006 (SCA) 148 (English judgment), Chinatex Oriental Trading Co. v Erskine 1998 (4) SA 1087 (English judgment); Zambia: Mileta Pakou v Rudnap Zambia Ltd 1998 ZR 233 (Yugoslavian judgment), Attorney Genneral v Frederick Chiluba, case no. 2007/HP/FJ/004 (High Court Zambia 2010) (English judgment), Zanetta Nyendwa v Kenneth Paul Spooner SCZ No. 20 of 2010 (English judgment); Zimbabwe: Coluflandres Ltd v Scandia Industrial Products Ltd 1969 (3) SA 551 (R) (Belgian judgment), Steinberg v Cosmopolitan National Bank of Chicago 1973 (4) SA 564 (RA) (American judgment), Harman v Leaf 1954 (2) SA 270 (SR) (English judgment). 251 Siwela Holdings (Pvt) Ltd v Nyirongo & Anor 1985 (1) ZLR 58 (HC), which is a Zimbabwean case on the enforcement of a Zambian judgment. 252 Vehicle Delivery Services (Zimbabwe) (Private) Ltd v Galaun Holdings Ltd 2003, HH 171-03 HC 8191/2002. 253 ABSA Bank Limited v Latela CIV/APN/466/01 (High Court Lesotho 2004) (South African judgment not enforced in Lesotho); Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001) (South African judgment not enforced in Malawi); Willow investment v Mbomba Ntumba and Another 1996 TLR 377 (HC) (in this case the application to set the registration of a Congolese judgment in Tanzania was accepted). 254 Heyns v Demetriou Civil Cause Number of 2001 (High Court of Malawi 2001); Willow investment v Mbomba Ntumba and Another 1996 TLR 377 (HC). 255 Knight v Baldi 1966 (3) All SA 303 (R) (South African judgment not enforced in Zimbabwe); Accurist (SA) (Pty) Ltd v Jan Jacob Van Zyl 1982 (1) BLR 1 (HC) (South African judgment not enforced in Botswana). 256 Standard Bank Ltd v Butlin 1981 (4) SA 158 (D) (Zimbabwean judgment not enforced in South Africa).

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Annelies Nachtergaele of natural justice were not respected;258 the judgment-creditor did not procure the court with the necessary information to establish whether the local court had jurisdiction to enforce the judgment;259 the necessary documents were not annexed to the application;260 the applicant for enforcement was not the judgment-debtor;261 and the local court did not have jurisdiction to enforce the foreign judgments.262 This diversity of grounds makes it impossible to draw any conclusions on the need to harmonize the other parts of private international law. It is quite plausible that the number of judgments dealing with enforcement of foreign judgment will increase with the intensification of intra-regional trade in SADC. It might thus be too early to conclusively decide whether harmonization of the rules on jurisdiction and/or choice of law is necessary in SADC. b)

Potential Obstacles in the Rules of Jurisdiction of the Roman-Dutch Countries

There are a number of Roman-Dutch rules of jurisdiction which are very peculiar and might pose obstacles to recognition and enforcement of foreign judgments in the future. These rules are based on a doctrine which cannot be found in the Common law rules of jurisdiction, i.e. the doctrine of attachment (arrest) of assets situated within the court’s jurisdiction. This doctrine has been brought to these countries through the reception of Germanic custom in the Netherlands.263 It serves a dual purpose, namely to found jurisdiction and afford security in order to satisfy the judgment of the court.264 The possibility of arrest and attachment very much favours incolae, for its objective is to enable them to sue peregrines as if they were incolae of the forum.265 In order to ascertain the applicable rules, a distinction needs to be made on the ground of the plaintiff being an incola or a peregrinus. Where the plaintiff is an incola and the defendant a peregrinus, an order for the attachment of defendant’s goods is required to confirm the jurisdiction of the court,

257 Commissioner of Taxes, Federation of Rhodesia v McFarland 1965 (1) SA 470 (W) (Zimbabwean case not enforced in South Africa). 258 Corona v Zimbabwe Iron and Steel Co Ltd 1985 (2) SA 432 (TkA) (Zimbabwean case not enforced in South Africa). 259 Cloete v Brink 1996 BLR 224 (HC) (South African judgment not enforced in Botswana). 260 Barclays Bank of Swaziland v Koch 1997 BLR 1294 (HC) (Swazi judgment not enforced in Botwana). 261 Design Unit (Properietary) Ltd v Tuli Lodge (Proprerietay) Ltd 1979-1980 BLR 311 (HC) (South African judgment not enforced in Botswana). 262 Pretorius v Sweiger 1979-1980 BLR 124 (HC) (Namibian judgment not enforced in Botswana). 263 C.F. FORSYTH (note 32), at 196. 264 R. OPPONG (note 117), at 84. 265 Ibid, 200.

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Harmonization of Private International Law in SADC provided that the cause of action arises within the court’s area.266 Where this last requirement is not fulfilled, the attachment will have to be ordered to found the jurisdiction of the court.267 Where both the plaintiff and the defendant are peregrines, on the other hand, the court will only have jurisdiction where the cause of action arose within the court’s jurisdiction and attachment to confirm the jurisdiction has been ordered.268 Furthermore, as noted above, submission to the jurisdiction of a Roman-Dutch court does not necessarily confer jurisdiction on these courts.269 Indeed, submission by a peregrinus defendant to the jurisdiction of a court will only serve as a ground of jurisdiction where the plaintiff was an incola.270 However, where both parties are peregrines, submission does not confer jurisdiction to the court and is thus only a supplement to attachment.271 Two negative consequences of these rules can be ascertained. Firstly, they are clearly to the detriment of peregrines whose disputes have but little connection with the Roman-Dutch courts, especially where they have submitted to the court’s jurisdiction. As noted before, this is evidently not to the benefit of international commerce. According to one author, the use of courts by peregrines where there is no obvious link with that country “is a tribute to them and it encourages international trade and commerce to the general benefit”.272 The judicial policy should be to encourage peregrines to litigate in SADC countries instead of discouraging them to do so. Secondly, attachment, which is a ground of adjudicatory jurisdiction in the Roman-Dutch countries, has not been recognized as grounds of international jurisdiction in either the Common law countries or the Roman-Dutch countries. Consequently, where courts will exercise jurisdiction on this ground, those judgments will not be enforceable in other SADC countries. It is even more astonishing that enforcement will not even be possible in countries with similar grounds of adjudicatory jurisdiction.273 These deficiencies might necessitate the development 266 Pascoe v Botswana ASH Pty Ltd 2008 2 BLR 540 HC (Botswana); Lepota v Hyland (CIV/APN 280/87) at 7 (Lesotho); Grobler v Boshoff 1988 (2) ZLR (HC) (Zimbabwe). 267 See Ewing McDonald & Co. Ltd v M&M Products Co 1991(1) SA 452(AD) at 258. 268 Slabber v Blanco and others 1991 NR 404 (HC) (Namibia); Siemens Ltd v Offshore Marine Engineering Ltd 1993 (3) SA 913 (A) (South Africa); Voicevale Ltd v Freightlink (Malawi) Ltd 1987 (2) ZLR 22 (SC) (Zimbabwe). 269 C. SCHULZE (note 116), at 14. 270 Bigzy Holdings (Pty) Ltd T/A sua filling station v ESO management (Pty) Ltd and others 2002 (2) BLR; Mak (Pty) Ltd and another v St. Paul insurance co SA Ltd and another 2007 (1) BLR 210 (HC) (Botswana); American Flag plc v Great African T-Shirt Corporation 2000 (1) SA 356 (W); Hay Management Consultants Ltd v P3 Management Consultants (Pty) Ltd 2005 (2) SA 522 (SCA). 271 Slabber v Blanco and others 1991 NR 404 (HC) (Namibia); Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd 1987 (4) SA 883 (A) (South Africa); AG Thomas ‘Pty) Ltd v Grinaker Ltda Ltd, W.L.L (CKT) and government of Swaziland (civil case no 1453/2004) (Swaziland). 272 C.F. FORSYTH (note 32), at 231. 273 C.F. FORSYTH (note 30), at 11.

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Annelies Nachtergaele of harmonized rules of jurisdiction in the future. However, it appears from the existing judgments that as of yet enforcement has not been refused on the ground of these divergences. 3.

Facilitating Recognition and Enforcement in SADC

It is clear from the previous sections that the most important barrier to the recognition of foreign judgments in SADC is the limited scope of application of the statutory regimes. Indeed, the fact that only few SADC countries are designated countries under the different statutory regimes has caused most applications for registration of foreign judgments to be refused. Also the limited scope of application of those regimes has the consequence that the enforcement of most judgments needs to be sought through the common law. However, as explained before, this may entail serious delays and extra costs. It would therefore seem appropriate to look at possible solutions to this problem in the regional context.274 A rather ambitious solution would be the adoption of a multilateral convention between the SADC Member States, providing for uniform rules and a uniform procedure for the recognition and enforcement of foreign judgments. 275 This is indeed what the EU Member States achieved by adopting the Brussels Convention. However, it is particularly questionable whether this would be possible in the immediate future, due to the obstacles I have explained in the previous chapter (i.e. possible difficulties to reach an agreement with fifteen member states, the downsides of codification, and the lack of political will and of political interest in the subject). A more feasible solution would be designation of all the SADC countries as beneficiaries of the national Acts. Since most of these Acts are based on the principle of reciprocity, the different Member States would have to conclude bilateral agreements on recognition and enforcement, where they haven’t done so yet. Furthermore, the statutory procedure should be extended to all the courts of the Member States. The enforcement of all judgments of Member States would consequently be carried out through the expedited procedure of the statutory regime. The possibility exists that this solution will not remain sufficient in the future and that other parts of private international law will have to be harmonized. The divergences in rules of jurisdiction, as explained before, might, for example, necessitate the harmonization of those rules. However, for the time being, this cannot be deduced from the existing judgments dealing with enforcement.

C. ROODT, Recognition and enforcement of foreign judgments: still a Hobson’s choice among competing theories?, (2005) 38 CILSA, p. 27; R. OPPONG (note 89), at 386. 275 SOUTH AFRICAN LAW REFORM COMMISSION REPORT (note 135), at 117. 274

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IV. Conclusion The first chapter of this study has shown that divergent rules of private international law can cause legal uncertainty and consequently form an obstacle to international trade in an economic integration. Furthermore, rules of private international can also hamper international transaction where they are not adapted to the needs of international trade. Where these rules are adapted to these needs, on the other hand, they can be a direct source of investment in the Member States of the economic organisation. However, pursuant to the analysis of the benefits and disadvantages of harmonization, I have suggested that harmonization of private international law should be only carried out where specific problems arise from the divergences of these rules or form other problems related to them. Consequently, research needs to be carried out in order to determine where problems related to rules of private international law are located. This dissertation has attempted to be a starting point in this research by examining the existing regimes of recognition and enforcement of foreign judgments in the Common law Member States of SADC and the Roman-Dutch Member States. This analysis has revealed a number of rules which hamper the recognition of foreign judgments in these countries. The fact that foreign judgments might not be recognized as a consequence of these rules may be an obstacle to international trade and hence economic integration in SADC. The main problem in this regard is the limited scope of application of the statutory regimes of recognition, as a result of which most judgments need to be recognized through the rather unclear rules of the common law. It has, therefore, been my suggestion that a regional convention should be concluded among the Member States of SADC providing for uniform rules and a uniform procedure for the recognition and enforcement of foreign judgments. However, the limited possibility of achieving this anytime soon should be acknowledged and a number of measures should, therefore, be taken at the Member States level. Firstly, the Member States should extend the scope of application of their statutory regimes to all SADC Member States, by appointing them all as designated countries. Secondly, a number of national rules of private international law should be reformed and some legislative acts should be repealed, such as the Protection of Businesses Act 1978. Finally, the courts of the Member States should look at each other’s case law when deciding upon questions of private international law. This would lead to uniformity without the need of legislative intervention. However, it is very likely that these solutions will not remain sufficient in the future, as certain divergences in the rules of jurisdiction and/or applicable law of the Member States might become a hindrance to the recognition of foreign judgments. The analysis of these possible divergences has not been within the ambit of this study. It might, therefore, be recommendable to carry out further research on this topic.

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NEWS FROM BRUSSELS ________________

SOME REFLECTIONS ON THE SCOPE OF APPLICATION OF THE EU REGULATION NO 606/2013 ON MUTUAL RECOGNITION OF PROTECTION MEASURES IN CIVIL MATTERS Michael BOGDAN* It is, unfortunately, not unusual that an individual has reasons to believe that he or she runs a serious risk of becoming a victim of violence, threats, stalking or other kinds of harassment or intimidation by another individual. The most typical example of such risk are cases with a history of domestic or family violence, but there are many other situations of this kind, ranging from stalking of a movie star by a fanatic fan to violence or threats by a discontented former employee or a vengeful neighbour. Normally this kind of behaviour constitutes a punishable criminal offence, but it is not necessarily the case, as the behaviour, even though causing serious inconvenience to the victim, may not be sufficiently harmful to be punishable. The preventive effect of criminal sanctions is in any case often limited, as they do not work until the crime has in fact been committed. Many countries have therefore introduced special legislation making it possible to issue protection orders of preventive nature, for example forbidding the individual causing the risk to contact or approach the victim’ s person, home or workplace. Violations of the protection order may lead to imposition of various penal, civil or administrative sanctions. Protection measures of preventive nature may give rise to private international law problems, in particular whenever the protected person (the victim) or the person causing the risk moves to or visits another country. The main issue is the recognition and enforcement of foreign protection orders. This is, of course, a global problem, not limited to the EU. On 12–13 February 2014, at the Permanent Bureau of the Hague Conference, there was a meeting of the “Experts’ Group on the Recognition and Enforcement of Foreign Protection Orders”. The experts noted the legal and practical burdens faced, due to the lack of a global instrument, by victims seeking immediate protection when they move or travel abroad, such as delays to have an existing order recognized or difficulties to establish a new protection order due to the lack of jurisdiction. The experts agreed that traditional methods regarding the recognition and enforcement of foreign decisions were not

* Senior Professor of Comparative and Private International Law, University of Lund (Sweden).

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 405-410 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Michael Bogdan usually appropriate in this area, concluded that there is a need for further work and recommended that the feasibility of a binding instrument be explored further. The EU has made more progress, which is not surprising as the free movement of persons makes the issue more acute. The EU has enacted not one but two instruments dealing with the problem, one of criminal-law and one of civil-law nature. Directive 2011/99 of 13 December 2011 on the European Protection Order (hereinafter criminal-law Directive)1 has its legal basis in Art. 82 of the Treaty on the Functioning of the European Union (TFEU), dealing with judicial cooperation in criminal matters. Regulation No 606/2013 of 12 June 2013 on Mutual Recognition of Protection Measures in Civil Matters (hereinafter civil-law Regulation)2 is based on art. 81 TFEU. The criminal-law Directive is to be implemented by Member States by 11 January 2015, and the directly applicable civillaw Regulation will apply from the same day. As the two instruments are not yet applicable at the time of writing, there is so far no practical experience of their functioning. The two instruments are obviously supposed to be coordinated and have much in common. For example, pursuant to the almost identical provisions in Article 5 of the criminal-law Directive and Article 3(1) of the civil-law Regulation, they both deal with protection measures issued by a Member State in accordance with its national law and imposing on the person causing the risk a prohibition or regulation on entering certain places where the protected person resides, works or visits, a prohibition or regulation of contact, in any form, with the protected person (including by telephone, electronic or ordinary mail, fax or any other means) and/or a prohibition or regulation on approaching the protected person closer than a prescribed distance. Another similarity between the two instruments is that both of them make it clear that the criminal, administrative or civil nature of the authority adopting the measure in the Member State of origin is not determinative for the purpose of assessing the criminal or civil character of the protection measure and that the enforcement measures (i.e., sanctions imposed if the protection measure is infringed) taken by the executing Member State may, in accordance with its national law, be of criminal, administrative or civil nature (see Recital 10 and Article 9(1) of the criminal-law Directive and Recitals 10 and 18 of the civil-law Regulation). The protection measure itself, the nature of the authority adopting it and the nature of the measure enforcing it can thus be the same under both instruments. In spite of all this similarity, the two instruments are clearly not intended to overlap. Recital 10 of the criminal-law Directive explicitly excludes protection measures adopted in civil matters and Recital 9 of the civil-law Regulation does the same regarding protection measures adopted in criminal matters. The delimitation of the scopes of application of the two instruments is of great importance in view of the differences between them. For the purposes of this paper, it suffices to mention the most fundamental difference. Pursuant to Article 4 1

OJ 2011 L 338/2. The Directive does not apply in and in relation to Denmark and

2

OJ 2013 L 181/4. The Regulation does not apply in and in relation to Denmark.

Ireland.

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Reflections on the Scope of Application of the EU Regulation No 606/2013 of the civil-law Regulation, a protection measure ordered in a Member State shall be recognized in the other Member States “without any special procedure being required” and shall be enforceable there during a period of up to 12 months “without a declaration of enforceability being required”, provided that certain formalities have been complied with (such as the presentation of a special certificate issued by the Member State of origin3). Pursuant to Article 9 of the criminal-law Directive, the continuation of the protection in another Member State is not automatic but presupposes a decision by the executing Member State, which must, upon receipt of a properly transmitted European protection order, without undue delay recognize the order and adopt any measure that would be available under its national law in a similar case (note that not only enforcement but even mere recognition seems to require a decision by the executing Member State). This fundamental difference alone suffices to underline the importance of discussing which of the two instruments is applicable to a particular situation. At a superficial view, it might seem that the delimitation should depend on whether the harmful behaviour the protection measure aims to prevent constitutes a crime. Indeed, according to Article 1 of the criminal-law Directive, its objective is to allow a Member State in which a protection measure has been adopted with a view to protecting a person against a “criminal act” by another person which may endanger his life, liberty, integrity or dignity, to issue a European protection order enabling4 the authorities in another Member State to continue the protection in its territory in accordance with the national law of the issuing Member State. Thus, the Directive applies only if the harmful conduct is criminalized. This follows also from Recital 11 of the Directive, which declares explicitly that the Directive is intended to apply to protection measures adopted “in favour of victims, or possible victims, of crimes”, as well as from the Directive’s Recital 10 and Article 2(2), stating that the protection measure in the Member State of origin, whose application is to be extended to the other Member States by means of a European protection order, must be a decision adopted “in criminal matters”. It seems clear that the Directive applies only if the measure is taken to protect against acts that are criminal per se; it is not enough that violations of the protection order are subject to criminal sanctions (just like a copyright infringement may be made a crime, without turning the copyright itself into criminal law). It can be concluded that prevention measures against harmful – but not criminal – conduct do not fall within the scope of the criminal-law Directive. They can be encompassed by the civil-law Regulation, but does this also mean that the Regulation cannot be used in order to prevent criminal conduct? This is far from clear. In fact, Recital 6 of the civil-law Regulation states that the Regulation should apply to protection measures ordered with a view to protecting a person’s “life, physical or psychological integrity, personal liberty, security or sexual integrity, A multilingual standard form for such certificates has been established by the Commission, see Regulation No 939/2014 of 2 September 2014 establishing the Certificates Referred to in Articles 5 and 14 of Regulation No 606/3013. 4 Article 1 of the Directive speaks about “enabling” the other Member States to continue/execute the protection, but in fact the Directive not only enables but also obliges, subject to few exceptions, the other Member States to do so (see Article 9 of the Directive). 3

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Michael Bogdan for example so as to prevent any form of gender-based violence or violence in close relationships such as physical violence, harassment, sexual aggression, stalking, intimidation or other forms of indirect coercion”. This is an impressive list of conducts that normally constitute crimes under the national laws of the Member States and, consequently, seem to fall within the scope of the criminal-law Directive as well. It is also worth noticing that according to Recital 8 of the civillaw Regulation, the fact that a person is the object of a protection measure in civil matters does not “necessarily” preclude that person from being defined as a victim under the EU rules on minimum standards protecting “victims of crimes”.5 If the civil-law Regulation were applicable merely to non-criminal behaviour, its scope would be very narrow indeed. But how can such conduct be covered by both instruments, which explicitly state that they do not overlap (see above)? Neither the criminal-law Directive nor the civil-law Regulation defines what gives a protection measure a criminal or civil character. This does not mean, however, that the matter is left to national law, as this is an issue of EU law that will have to be clarified by the European Court of Justice (ECJ). Recital 10 of the civil-law Regulation confirms that the notion of civil matters should be interpreted autonomously, in accordance with the principles of Union law. The ECJ has in a different context made it clear that its autonomous opinion about what is civil law does not have to coincide with the view of the Member State(s) concerned.6 It deserves to be repeated that both the criminal-law Directive and the civil-law Regulation explicitly state that the civil, administrative or criminal nature of the authority ordering a protection measure should not be determinative for assessing the civil character of the measure, and the same applies to the sanctions that might be imposed if the protection measure is infringed. Can it be left to each individual Member State of origin to decide which (if any7) of the two instruments applies to its protection measures? And can the executing Member State review the civil nature of a protection measure issued by another Member State? It will normally be in the interest of the issuing Member State to present its measure as a civil-law one, so that it will apply automatically in the other Member States, without the need of any special procedure or of a declaration of enforceability. But does the issuing of a certificate under the Regulation rather than of a European Protection Order under the Directive bind the other Member States? The answer seems to be yes. Recital 14 of the civil-law Regulation says that based on the principle of mutual recognition, protection measures ordered in civil matters in the Member State of origin “should” be recognized (“sollten […] anerkannt werden”, “devraient être reconnues”) in the Member State addressed as 5 See Directive 2012/29 of 25 October 2012 establishing Minimum Standards on the Rights, Support and Protection of Victim of Crimes, OJ 2012 L 315/57. 6 See paras 40-52 of the ECJ judgment in the matter of C (case C-435/06) and paras 21-28 of the ECJ judgment in the matter of A (case C-523/07), both concerning the scope of Regulation No 2201/2003 of 27 November 2003 (note 11). 7 Both Recital 12 of the civil-law Regulation and Recital 8 of the criminal-law Directive make it clear that neither the Regulation nor the Directive obliges the Member States to modify their national systems or to introduce new protection measures so as to enable the Regulation or the Directive to be applied.

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Reflections on the Scope of Application of the EU Regulation No 606/2013 protection measures in civil matters in accordance with the Regulation. This might seem a rather weak language, but the last sentence of Recital 20 of the same Regulation provides that the necessary adjustments the executing Member State is allowed to make in the protection measure (such as the change of address of the protected person) may not affect “the civil nature” of the measure. Even though it would have been preferable to put that restriction into an Article rather than merely into a Recital (for example into Article 12, prohibiting review as to substance), it must be concluded that the executing Member State is bound, or almost bound, by the characterization of the measure by the Member State of origin. Of course, this does not mean that the Member State of origin has free hands, as the notion of civil matters is an autonomous EU concept (Recital 10 of the Regulation). The ECJ case law will hopefully in due course provide some guidance in that respect, even though I must confess I find it difficult to define or recommend an appropriate criterion. One may ask why it was necessary to adopt two parallel instruments. The fact that some Member States classify their measures as criminal while other Member States see theirs as measures of civil-law nature can hardly be the reason, in view of the ambition in the Regulation’s Recital 10 to give the notion of civil matters an autonomous interpretation. The reason is rather that the negotiators could not agree whether the legal base should be Article 81 or Article 82 of the TFEU and, in order to play it safe, opted for two separate instruments. A number of other private international law questions concerning the civillaw Regulation might deserve a closer look. For example, the Regulation contains relatively complicated and detailed provisions on the issuing, contents, notification, rectification and adjustment of the certificate to be issued by the Member State of origin and on the possibilities to refuse recognition and enforcement due to public policy or irreconcilability with a judgment given or recognized in the Member State addressed. A particularly important matter deserving attention is that the Regulation does not contain any direct or indirect rules on jurisdiction of a Member State to issue a protection measure (such jurisdiction must not be confused with the jurisdiction to impose sanctions on violations of that measure). It seems that the jurisdiction of the Member State of origin must not be reviewed by the executing Member State, with the possible exception of public policy according to Article 13(1)(a).8 An interesting question is whether the lack of direct jurisdictional rules in the Regulation means that jurisdiction to issue protection measures of civil-law nature is governed by the Brussels Ia Regulation,9 as such measures are not excluded from its scope by its Article 1.10 It is true that Article 67 of the Brussels Ia 8 There is no rule in the civil-law Regulation corresponding to second sentence in Article 45(3) of the Brussels Ia Regulation, forbidding the use of public policy with respect to jurisdiction. The jurisdictional relevance of Article 13(3) of the civil-law Regulation is unclear. 9 Regulation No 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (recast), OJ 2012 L 351/1. 10 Cf. para. 5 of the ECJ judgment in the matter of de Cavel v. de Cavel, case 120/79.

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Michael Bogdan Regulation gives priority to other EU provisions governing jurisdiction, recognition and enforcement “in specific matters”, but as the new Regulation on Mutual Recognition of Protection Measures in Civil Matters contains no rules on jurisdiction, the jurisdictional rules of Brussels Ia Regulation can be applicable. It is unclear though whether this was the intention of the EU legislator. Finally, I wish to mention another potential overlapping, which in fact is regulated in Article 2(3) and Recital 11 of the civil-law Regulation, excluding from its scope protection measures falling within the scope of the Brussels IIa Regulation.11 I suppose that this exclusion has in mind prohibitions of contacts or visits between spouses imposed in connection with proceedings relating to divorce, legal separation or marriage annulment, but I am not convinced that such prohibitions are covered by the Brussels IIa Regulation, whose Recital 8 states that it applies only to the dissolution of matrimonial ties and should not deal with “any other ancillary measures”. On the other hand, protection orders similar to those under the civil-law Regulation may be found in court decisions relating to parental responsibility, for example in a judgment forbidding the non-custodial parent to contact the child except at certain times or in the presence of a social worker. Such orders seem thus to be covered by the Brussels IIa Regulation and not by the Regulation on Protection Measures in Civil Matters.

11 Regulation No 2201/2003 of 27 November 2003 concerning Jurisdiction and the Recognition and Enforcement of Judgments in Matrimonial Matters and the Matters of Parental Responsibility, OJ 2003 L 338/1.

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NATIONAL REPORTS ________________

A NEW AUTONOMOUS DIMENSION FOR THE ARGENTINIAN PRIVATE INTERNATIONAL LAW SYSTEM Diego P. FERNANDEZ ARROYO*

I. II.

V.

General Overview Jurisdiction A. The Illusory “Multilateral” Formulation of the Jurisdiction Rules B. Defendant’s Domicile C. Forum necessitatis D. An Opening to Foreign Jurisdiction through the Acceptance of lis pendens E. Jurisdiction Based on Party Autonomy Applicable Law A. The General Flexibility Regarding the Determination of the Applicable Law by the Courts B. The Limited Role of Party Autonomy C. The Impact of Fundamental Principles and State Policies International Cooperation A. Cooperation in General B. Cooperation in Children Return Matters Epilogue

I.

General Overview

III.

IV.

After more than four decades of failed attempts, the Argentine Republic has finally achieved codification of its Private International Law,1 within the framework of the new Civil and Commercial Code.2 It is worth noting that what has in fact been *

Professor at Sciences Po Law School. The author thanks Ezequiel H. Vetulli’s precious help for the English edition of this article. 1 Hereinafter “PIL”. 2 Hereinafter, the “Code”. The Code was adopted by Act No. 26994 of 1 October 2014 and it will enter into force on 1 August 2015 (according to Act No. 27077 of 16 December 2014). PIL rules are contained in the Title IV (“PIL Provisions”) of the Book VI, which deals with the “Common Provisions to Personal Rights and Property Rights”. Yearbook of Private International Law, Volume 16 (2014/2015), pp. 411-428 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Diego P. Fernandez Arroyo codified is almost all the autonomous dimension of Argentinian PIL system. I say “almost all” because, on the one hand, the PIL rules of several special matters remain in the particular acts relative to those matters3 and, on the other hand, the new text has no rule on recognition and enforcement of foreign decisions.4 The reference to the “autonomous dimension” is even more important because, according to the Argentinian Constitution, domestic rules shall apply only when no international treaty is applicable to the same legal relationship. The pre-eminence of international treaties, besides being ordered by the Federal Constitution5 and having been reiterated many times by case law, is now established as a “general” rule in article 2594, which opens the Title devoted to PIL, and is specifically repeated in article 2601 (for international jurisdiction), in articles 2611 and 2612 (for general international cooperation), and in articles 2614 and 2642 (for specific cooperation regarding the international return of children). These articles serve as a simple guide for those who are not well versed in the Argentinian PIL system, given that it seems that their absence would not change the resolution that could otherwise be expected from an Argentinian court in a particular case. In fact, even if these provisions did not exist, the court could only apply the provisions of the internal dimension of the Argentinian PIL system in the absence of applicable provisions in international treaties, or when the particularities of the case require a “dialogued” solution between both dimensions of the legal system. The persistence of the legislator shall be considered, in any event, as a demonstration of the primary importance of the pre-eminence of treaties in the Argentinian PIL.6 Argentinian PIL scholars unanimously preferred a PIL codification by means of a special act. Nevertheless, they have generally accepted the only available option. 3 It is worth highlighting the ones related to commercial companies, insolvency proceedings, intellectual property, and checks. 4 The absence of provisions on the recognition and enforcement of foreign decisions in the new Code is technically regrettable, although in the end the quite reasonable trend expressed by the Argentinian courts in that regard will not change. The exclusion was absolutely deliberate since a previous version of the finally approved text did contain provisions on recognition and enforcement of foreign decisions. The reason invoked has to do with the constitutional provision that confers the federal State the legislative power over “substantial” matters and reserves to the provinces the one over procedural matters. In my opinion the question has a clearly federal nature since it refers to the “substantial” aspects of the recognition of foreign decisions and not to the merely procedural ones (such as the documents which must be presented or the competent authorities). 5 Article 75(22) of the Argentinian Federal Constitution. Except isolated cases, the Argentinian courts have been consistent with the respect to the priority of the application of the treaties in force in the country. See the recent decision of the Federal Court of Appeals on Social Security Matters, Chamber II, 12 March 2015, Cicconetti Alberto v. Poder Ejecutivo Nacional et. al., el Dial AA8DB5. What is more, the lack of their consideration not only authorizes the extraordinary recourse before the Federal Supreme Court of Justice but it is enough to characterize a judicial decision as arbitrary. See Federal Supreme Court of Justice, 9 November 2004, Banco de Italia y Río de la Plata S.A. v. Banco Pan de Azúcar S.A., Fallos 327-4785. 6 See M.S. NAJURIETA, La codification du droit international privé dans la République Argentine, in B. FAUVARQUE-COSSON/ D.P. FERNÁNDEZ ARROYO/ J. MONÉGER (eds), Codification du droit privé et évolution du droit de l’arbitrage, Paris 2014, p. 65-81.

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A New Autonomous Dimension for the Argentinian Private International Law Formally, the regulation of PIL in the Code is divided into two chapters of general provisions and a third, much more extensive, chapter of special provisions. Yet, there is no need to pay much attention to the names given to the first two chapters. In effect, Chapter 1, except for the mentioned article 2594, exclusively establishes the criteria to be taken into account for the application of the norms on applicable law. In turn, in Chapter 2 there are not only provisions on international jurisdiction. More important than these considerations, which although being relevant from a theoretical point of view do not have much practical significance, may be certain mandatory difficulties coming from the relationship between the general and special norms, on the one hand, and between the norms contained in this Title with all the rest of the Code, on the other hand. In both cases, we must trust that courts will know how to shape a clear and predictable case law, which in the end will justify the effort of having included the PIL in the new Code. As for all the other subjects, the Code Drafting Commission7 entrusted the first elaboration of the PIL norms to renowned specialists.8 The result of their job is the one that I will now comment on. Generally, it is undeniable that it represents significant progress for the Argentinian PIL, particularly for the effort made in order to make its internal dimension compatible with its enormous international dimension (including the international regulation on human rights), as well as to reflect many of the good solutions that were being offered by the Argentinian courts. In this way, not only the quality of the Argentinian PIL is improved, but it is also made more visible and comprehensible for all users, both nationals and foreigners. In this article I will only comment on some particular questions related to the three sectors of the PIL included in the Code: jurisdiction, applicable law and cooperation.9 The internationalist character coincides with the inclinations demonstrated by the prevailing case law and by the majority of scholars, which is particularly confirmed in the work of the most influential author in the history of the Argentinian PIL, Werner GOLDSCHMIDT, and notably in his advocacy towards tolerance as the distinctive feature of PIL and for the “respect to the foreign element”. See Derecho internacional privado. Derecho de la tolerancia, 10th edn (updated by A.M. PERUGINI ZANETTI), Buenos Aires 2009. See M.A. OYARZÁBAL, Das Internationale Privatrecht von Werner Goldschmidt: In Memoriam, RabelsZ 2008, p. 601-619. 7 Composed by Supreme Court Chief Justice Ricardo L. LORENZETTI, Supreme Court Deputy Chief Justice Elena HIGHTON DE NOLASCO, and Professor Aída KEMELMAJER DE CARLUCCI. 8 Namely María Susana NAJURIETA, María Elsa UZAL, Marcelo IÑIGUEZ, and Adriana DREYZIN DE KOLOR. 9 The space devoted to each sector will decrease in proportion to the importance of the respective solutions. A commentary of each article in particular can be consulted in J.C. RIVERA/ G. MEDINA (eds), Código Civil y Comercial Comentado, volume VI, Buenos Aires 2014. For a general discussion about the codification of PIL within the LatinAmerican context, see my work, in La codificación del derecho internacional privado en América Latina, Madrid, 1994. More in general, on the pertinence of the contemporary efforts towards legal codification, see C. JAMIN, Codifier au XXe siècle: éloge de la modestie, in B. FAUVARQUE-COSSON/ D.P. FERNÁNDEZ ARROYO/ J. MONÉGER (eds) (note 6), at 41-55.

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Diego P. Fernandez Arroyo Regarding comparative law, the new PIL norms seem particularly receptive, sometimes in a direct fashion and other times indirectly, through the adoption of the norms of the 2003 Draft Code (the most recent of the previous attempts to codify PIL rules in Argentina) based on foreign PIL texts. Two European legal systems have been particularly attractive for the authors of the codified PIL: that of Switzerland, whose Federal PIL Act adopted in 1987 has had an extraordinary influence in various jurisdictions around the world, and that of the European Union, which vertiginously develops on the basis of the legislative competence that was assigned by its member states in 1997.10 The most influential aspect of the Swiss codified PIL is the conversion of the Argentinian system on applicable law into a system with a flexible basis as a result of the general application of the socalled “exception clause”, which in a concrete case authorizes the court to correct the abstract localization made by the legislator.11 From the PIL of the European Union come some of the jurisdictional norms, such as the ones on exclusive jurisdiction12 and non-contractual obligations,13 as well as some on applicable law, such as the ones governing consumer contracts14 and noncontractual obligations.15

II.

Jurisdiction

A.

The Illusory “Multilateral” Formulation of the Jurisdiction Rules

For the provisions on special jurisdiction (except the one related to adoption in article 2635) and the general provisions in articles 2606 and 2608, the legislator deliberately opted for “multilateral” wording (also referred to as a “bilateral” approach), rather than a “unilateral” formulation, which would limit the cases and circumstances in which the Argentinian courts are competent. The approach taken must not mislead: although the Argentinian legal system of international jurisdiction establishes that in matters of civil union the competent court is that of the effective mutual domicile of the individuals who constitute the union, or the court of the defendant’s domicile or habitual residence,16 this rule binds only the Argentinian courts. Thus, if in a particular case the indicated places are, for instance, in Venezuela, the Venezuelan court would be competent or not, according See M.S. NAJURIETA (note 6), at 73-74. Article 15 of Swiss PIL Act. See infra section III.B. 12 Article 2609. 13 Article 2656. 14 Article 2655. Strictly speaking, in this case the influence is not exactly from the PIL of the EU – which in this subject is contained in the so-called Rome I Regulation – but, curiously, from the instrument replaced by it, the 1980 Rome Convention on the Law Applicable to Contractual Obligations. 15 Article 2657. 16 Article 2627. 10 11

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A New Autonomous Dimension for the Argentinian Private International Law to its own provisions on international jurisdiction and not because of the rule contained in the Argentinian provisions. This is the case because jurisdiction is a matter which involves one of the essential functions of the state and it is inconceivable that a court could be found competent by virtue of the provisions on international jurisdiction in force in another State and not by the provisions of its own state. This is quite distinct from the fact that a court may take foreign jurisdictional provisions into consideration in order to modulate its activity in certain circumstances, for instance, when a claim is filed before it and a foreign legal system provides the exclusive jurisdiction of its courts, or in situations of international lis pendens. Nevertheless, in any of these cases, it is the provisions of the court’s own legal system that allow it to accept or reject jurisdiction. What the legislator is really seeking with the formulation of multilateral provisions on jurisdiction is that they are – at the same time – provisions on direct jurisdiction and indirect jurisdiction (i.e. provisions that serve to determine whether the foreign court which has rendered a judgment which recognition is sought in Argentina was competent or not).17 However, as is well known, despite their name, these provisions are not jurisdictional, but are conditions for the recognition of foreign decisions, a sector that has been excluded from the Code. As a result, granting such a function to the jurisdictional provisions of the Code through the utilization of a multilateral formulation would be to undermine the deliberate exclusion made by the legislator.18 It follows that, despite the wording given, the jurisdictional provisions included in the Code admit only a unilateral reading, i.e. to justify the jurisdiction of the Argentinian courts. If the foreign court was competent pursuant to a reasonable criterion (provided or not in its legal system), the automatic denial of effects in Argentina of the decision rendered by that court due to the simple fact that the criterion applied does not strictly coincide with the one provided by the Argentinian law could lead to undesirable situations, or even situations directly at odds with the proper reading of the fundamental right of effective judicial protection.19 It is important that the jurisdiction accepted by the foreign court is compatible with the “principles” of Argentinian legislation20 and not that it strictly matches the Argentinian jurisdictional provisions. If the foreign decision does not violate those principles, no objection should be raised to the jurisdiction of the foreign court.

17 It is expressly recognized like this by M.E. UZAL, Breve panorama de la reforma de derecho internacional privado, in J.C. RIVERA (ed.), Comentarios al Proyecto de Código Civil y Comercial de la Nación, Buenos Aires 2012, p. 1239 and 1240. 18 See supra (note 4). 19 The same must be said about any other legal system which regulation on the recognition of foreign decisions is based in this absurd criterion. See the critique, regarding the provisions on the recognition of the autonomous dimension in the German PIL, made along with J. SCHMIDT, Das Spiegelbildprinzip und der internationale Gerichtsstand des Erfüllungsortes, IPRax 2009, p. 499-503. 20 As it is wisely mentioned in article 53(4) of the Venezuelan PIL Act, even if courts of that country have not interpreted the provision in this way.

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Diego P. Fernandez Arroyo Irrespective of the above, attention should be given to the jurisdictional criteria that are drafted in a unilateral way, for instance, the necessity forum.21 Does the legislator presume that such wording prevents the enforcement in Argentina of a foreign judgment rendered on the basis of such criteria? In this context, and in line with the logic that lead to the exclusion of provisions on the recognition and enforcement of foreign judgments in the Code, its jurisdictional provisions shall never be used to analyze the jurisdiction of foreign courts. The fact that in this opportunity it was decided not to regulate the recognition and enforcement of foreign decisions does not mean that it cannot be done in the near future, either through a federal law or through the modernization of the procedural codes. In any event, the indirect jurisdictional criterion should change22 and, in that case, the multilateral wording of the jurisdictional provisions and the resulting alleged indirect function would only cause problems for the uninformed user. B.

Defendant’s Domicile

The forum of the defendant’s domicile is an old friend of legal systems with Civilian roots. The Argentinian PIL system is not unique in this respect: this forum not only constitutes one of the general jurisdictional criteria provided in the Montevideo Treaties of Civil International Law,23 but also appears in the 1869 Civil Code for some subjects such as contracts.24 In addition, courts have properly applied this forum over time.25 The new Code expressly incorporates it in the Chapter generically devoted to international jurisdiction,26 which allows the conclusion that the defendant’s domicile plays the role of a general forum.27 Normally, in comparative law, when the defendant’s domicile is given the function of a general jurisdictional criterion, the result is that it serves to grant jurisdiction in all cases (unless an exception applies), without paying attention to Article 2602. In fact, in the provisions on recognition of a first draft of the Commission, the criterion of bilateralization of own provisions, currently present in the Federal Code on Civil and Commercial Procedure, had been abandoned. 23 In article 56 of both texts (that of 1989 and that of 1940). 24 Articles 1215 and 1216. 25 See Family Tribunal No. 5 of Rosario, 24 October 2002, N., B. v. B., G., La Ley 2003-D, p. 351. The decision points out that “the international jurisdiction of the courts of the defendant’s domicile constitutes «a universal rule» (W. GOLDSCHMIDT, Derecho Internacional privado, 8th edn, 1995, p. 480) which source are conventional provisions of international Argentinian jurisdiction that, although not being directly applicable to the case, receive such order”. 26 Article 2608: “Except a particular provision, the personal actions must be filed before the courts of the defendant’s domicile or habitual residence”. 27 M.E. UZAL characterizes it as one of the “general principles” on the topic along with the one of the exclusive forums in Lineamientos de la reforma del derecho internacional privado en el Código civil y comercial de la Nación, La Ley Online AR/DOC/3843/2014. 21 22

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A New Autonomous Dimension for the Argentinian Private International Law the subject matter involved in the case. In turn, for each or most of the subject matters there are specific jurisdictional criteria provided. This would also be, in principle, the function that the Code assigns to the defendant’s domicile, but two considerations seem to cast doubts on the proclaimed generalization. On the one hand, the criterion applies exclusively to personal actions; on the other hand, strangely, it is repeated in all subject matters for adversary cases (i.e. cases in which there is a defendant). Dismissing the possibility that this was overlooked by the legislator and in the absence of an official explanation, perhaps the objective was to set the defendant’s domicile, not as a general forum (applicable to all matters), but to play the role of a residual forum (applicable to personal actions to which there is no special criterion or in which the respective criterion is not present). Besides, it is worth mentioning, that article 2608 indistinctively considers the domicile and habitual residence to the effect of determining jurisdiction. At first sight, the provision would thus have a broader scope than the one traditionally given. However, once thoroughly observed in light of the definitions given to both notions in article 2613, the first impression disappears. Among the “special” jurisdictional provisions which use the defendant’s domicile, the one contained in article 2650 regarding contracts is particularly notable. It establishes that, if the action is directed against various defendants, it is enough to trigger local jurisdiction that one of them has his or her domicile or habitual residence in Argentina. Although article 2650 does not require the fulfilment of any condition to use this channel, it is evident that the court shall be very strict in the examination of the link between the different defendants and the case, in order to avoid the exorbitant use of the Argentinian jurisdiction to the detriment of defense rights. C.

Forum necessitatis

The Code sets a general regulation of the international jurisdiction of the Argentinian courts. However its article 2601 reminds that jurisdictional rules contained in treaties take precedence and that there are other autonomous rules on jurisdiction outside the Code. Apart from those cases, the Argentinian subsystem of international jurisdiction must be considered “complete”. This means that, other than in the stipulated cases, the Argentinian courts cannot assume jurisdiction.28 In any event, it must be taken into account that the general jurisdictional provisions contained in the Code also affect the excluded matters. Having said this, the Argentinian provisions on international jurisdiction are nothing but the concretion of the principles and values recognized in the Argentinian Constitution and in the international regulation on human rights.29 28 The translation of the provisions on internal jurisdiction into international cases is not an option now. If it ever was, it could only be applied as a last resort. See, in this sense, the decision of the National Court of Appeals in Federal Civil and Commercial Matters, Chamber I, 26 October 2004, Robinsa S.A. v. Rolando S.A., La Ley Online AR/JUR/3995/2004, p.16. 29 In fact, if one looks at article 1 of the Code it will be seeing that the same can be said about all the norms included therein.

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Diego P. Fernandez Arroyo Therefore, with the objective of guaranteeing an effective access to justice, the legislator leaves the door open to cover cases in which the exercise of jurisdiction is indispensable, despite not being stipulated in the provisions in force. It is clear that the fulfilment of the essential constitutional principles cannot find an insuperable barrier in the absence of a positive provision on international jurisdiction. Nevertheless, the legislator has preferred to include a forum necessitatis provision.30 The “necessity” refers, precisely, to the requirement of not depriving the claimant of an effective access to justice. The forum necessitatis can serve not only to create a jurisdictional forum, but also to interpret an existent forum in the most favourable way, in order to avoid the denial of justice. The provision in question does not authorize unfettered access to the “own jurisdiction”, for many reasons.31 The clearest and most evident is that the right to access justice does not – and cannot – exclusively benefit the claimant, but also the defendant. The difficult balance between both rights or – in other words – of the same right seen from opposite perspectives, is, as in many other fields of law, a real challenge for lawmakers and judges, as well as an area with great room for lawyer’s imagination. For this reason, the legislator is right to expressly restrict the scope of application of this exemption. In effect, being by definition the private relationships connected with different legal systems the subject matter of PIL, the fact of having to litigate abroad is perfectly foreseeable for someone who voluntarily participates in a relationship of this kind. Thus, the adverb “exceptionally” is of vital importance for the application of the provision, although curiously it did not exist in the original draft. Therefore, the forum necessitatis can only be applied when initiating an action abroad is “unreasonable”, a term that shall never be equated with “inconvenient” and that, to the contrary, is close enough (without being the same) as “impossible”. The requirement of sufficient contact with Argentina seeks to avoid the exorbitant exercise of jurisdiction by the Argentinian courts, rejecting some sort of universal jurisdiction in their favour. If, for an exceptional provision, the contact is required to be “sufficient”, it is inevitable that the standard will be even higher for the “normal” forums. That is why I insist in my criticism of the potentially exorbitant jurisdictional criterion regarding contracts, consisting of admitting Argentinian jurisdiction when the performance of any consideration of the contract is done in Argentina.32 This may be justified if it were useful to enhance the fulfilment of justice, which could 30 Article 2602: “Although the rules of the present Code do not grant international jurisdiction to the Argentinian courts, they can exceptionally intervene with the purpose of preventing the denial of justice, provided that it is not reasonable to require initiating the action abroad and as long as the private situation presents a sufficient connection with the country, the right to defence is guaranteed and it serves de convenience of achieving an effective decision”. 31 See D.P. FERNÁNDEZ ARROYO, Compétence exclusive et compétence exorbitante dans les relations privées internationales, 323 Recueil des Cours 2006, p. 55. 32 Included in article 2650 as one of the options for jurisdiction in contractual matters, the criterion is broadly used in Argentinian case law, especially since the decision of the Federal Supreme Court of Justice, 20 October 1998, Exportadora de Buenos Aires S.A. v. Holiday Inn’s Worldwide Inc., La Ley, 2000-A, p. 404, with commentary of IUD C.

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A New Autonomous Dimension for the Argentinian Private International Law happen when the claimant is the weaker party of the legal relationship.33 Conversely, when applied without distinction, the idea is less plausible. Without entering into a discussion of the merits of the question, it must be recalled that this criterion potentially applies when the defendant is neither domiciled in Argentina nor has in this country a subsidiary, agency or representation that has taken part in the case (which are the other two options provided in article 2650). Therefore, an obvious scenario is that the enforcement of a judgment rendered on such basis will take place abroad. There, the weakness of the founding jurisdictional criterion can drastically jeopardize the effectiveness of the decision. For this reason, I consider that the courts will be correct to restrict as much as possible the apparent generosity of this provision, which contradicts the general feature of reasonableness of the Argentinian jurisdiction, applying to that effect the principle of effectiveness, expressly stated in article 2602 in fine of the Code. D.

An Opening to Foreign Jurisdiction through the Acceptance of lis pendens

The institution of lis pendens essentially aims at safeguarding the proper administration of justice, avoiding the strategic utilization of jurisdictional provisions. The hypothesis is that the Argentinian court has jurisdiction to entertain the case, but at the time of initiating the action in Argentina, the case is already being heard abroad. Consequently, the acceptance of jurisdiction by the Argentinian court would potentially cause not only problems of procedural economy, but also a real damage to the justice of the case, given the likelihood of contradictory judgments and of inconveniences arising out of their effectiveness. The latter is precisely what is often sought when initiating a second action in a different jurisdiction. The Code incorporates the lis pendens in its article 2604.34 The article establishes the obligation of staying the Argentinian proceedings when the recognition of the prospective foreign decision in Argentina is “foreseeable”. If the goal of this provision is to prevent the abuse of jurisdictional forums, it is important to remember that the invocation of lis pendens can be abusive in itself. European case law (it is Europe where the commented norm originates) is full of cases in which a claim is cleverly filed in the country whose judicial system presents several functioning problems,35 even knowing about the lack of jurisdiction of its courts, with the sole It is, to some extent, what article 2654 does in a concrete way regarding consumer contracts, or what was done in some case related to a labour contract (National Labour Court of Appeals, Chamber IV, 17 September 2008, Verdaguer, Ricardo Aníbal v. IMPSAT Fiber Networks Inc. et. al., La Ley Online AR/JUR/10520/2008). 34 Article 2604: “When an action which has the same object and the same cause has been previously initiated and is pending abroad between the same parties, the Argentinian courts shall stay the judicial proceedings in this country if it is foreseeable that the foreign decision might be object of recognition. The stayed proceedings may continue in the Republic if the foreign court declines its own jurisdiction or if the foreign procedure terminates without a decision on the merits of the case or, in the event a decision was rendered abroad, it is not capable of being recognized in our country”. 35 For instance, ECJ, C-116/02, 9 December 2003, Gasser. 33

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Diego P. Fernandez Arroyo purpose of then invoking lis pendens before the competent courts of another state, artificially delaying the procedure. This problem would have been settled in the Code by regulating the lis pendens as a prerogative instead as an obligation of the courts, allowing a way out for cases of evident abuse.36 In absence of such tools, the problem can only be dealt with through sophisticated arguments about abuse or violation of fundamental rights in the procedure. For the lis pendens to proceed there must be a threefold identity: of object, cause and parties. Although the Code does not incorporate any nuance in that respect, at the time of verifying such identity, courts must take into consideration the goal pursued. Such a consideration might lead the court to act with certain flexibility, for instance, regarding the object expressed by the parties, when it is clear that, despite using different presentations, the object is the same. The standard to make this decision is that the actions essentially relate to the same case. This is because the legislator did not want to include a “connection” provision authorizing the Argentinian courts not to hear cases for which they have jurisdiction when, although the identity requirements of lis pendens are not met, the case is so intimately linked to another case being heard abroad that the intervention of the Argentinian courts would be absolutely unreasonable. The possibility of “connection” in its positive version (i.e. authorizing the Argentinian court to extend the jurisdiction to a case intimately linked to another one which it is already entertaining) has also been omitted.37 E.

Jurisdiction Based on Party Autonomy

Regarding the parties’ right to choose the competent court, the legislator preferred to maintain the status quo prevailing since 1976 and decided to continue limiting the scope of party autonomy to patrimonial matters.38 This is to say that such right does not indistinctively apply to all matters, but only to the ones that can be considered of such a character. This decision does not only contrast with the general evolution of party autonomy, but also with the considerable changes produced in non-patrimonial fields, some of which are broadly adopted by the Code. When the right to derogate the Argentinian jurisdiction was incorporated into the Argentinian positive legislation in 1976 (with a quite concrete purpose) the 36 The Peruvian Civil Code allegedly used as a source of this Title, uses a temporal criterion, perhaps too short, of three months in its article 2066. 37 See Belgium PIL Code, article 9. 38 Indeed, article 2605 of the new Code reproduces the almost identical terms of article 1 of the National Code of Civil and Commercial Procedure, with this wording: “In patrimonial and international matters, the parties are allowed to extend jurisdiction to courts or arbitrators outside the Republic, except that the Argentinian courts have exclusive jurisdiction or that the extension is prohibited by law”. The provision refers both to courts and arbitrators. However, the Code specifically defines the scope of the “arbitration contract” in article 1651 to which one must refer due to its special character. The provision does not require, correctly, any link between the case and the country of the chosen forum, acknowledging that what in many cases encourages the exercise of party autonomy (particularly in arbitration) is precisely the search for a “neutral” jurisdiction.

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A New Autonomous Dimension for the Argentinian Private International Law limitation perfectly fit in a context in which there was, among other things, great concern to safeguard the country from the alleged terrible consequences of divorce, which was prohibited until the arrival of democracy (to the country and the family). Nowadays, comparative law provides us innumerable examples of how the parties’ right to choose the competent court serves in many cases to resolve people’s real problems in non-patrimonial matters.39 Moreover, taking into account that, except in the case of adoption of children domiciled in Argentina, the jurisdictional forums provided by the Code for non-patrimonial matters are all concurrent, there is no reason to deny effect to the parties’ agreement to choose one of the concurrent forums and dismiss another or others. In any event, the strict wording of the provision along with the previously mentioned context, mandate respect for the parties’ choice in any patrimonial matter, even within the family field, which coincides with the right to choose the applicable law, expressly recognized in the Code regarding maintenance agreements40 and the matrimonial property regime.41 Like all international jurisdictional provisions included in the Code, article 2605 is essentially addressed to the Argentinian courts. In this sense, it plays as a sort of negative jurisdiction provision, preventing them from exercising jurisdiction when the parties have voluntarily excluded them, insofar as the conditions imposed by the Argentinian law are met. But what is most striking is not this, but that when opting to reproduce the biased wording of article 1 of the Argentinian Federal Code of Civil and Commercial Procedure, the provision only contemplates what is technically the derogation of the Argentinian jurisdiction, but it does not say anything regarding the jurisdiction of the Argentinian courts when the parties submit to it. A teleological construction allows the inference that party autonomy should also permit the choice of the Argentinian courts as competent.42 Actually, the contrary solution would make little sense. This is further confirmed, from a systematic standpoint, in the first paragraph of article 2650, which takes for granted this right of the parties with respect to contracts. It could be thought that the “choice of forum” made in favour of the Argentinian courts is regulated in article 2607, which explains that the choice of forum may be either express or tacit, but it does not include any of the formulas that appear in the other provisions conferring jurisdiction. Due to the wording, it seems like a development, a provision for the application of article 2605.43 In other words, despite the significance of the question, the jurisdiction of Argentinian courts on the basis of party autonomy is set out in the Code in only an implicit fashion.44 See for instance article 42(2) of the Venezuelan PIL Act, which authorizes the parties’ submission to the courts of that country in matters of civil status and family provided that there is an effective link between the case and Venezuela. 40 Article 2630. 41 Article 2625. 42 In this sense, Commercial National Court of Appeals, Chamber E, 26 September 1988, Welbers S.A., Enrique C. v. Extrarktions-Technik Gesellschaft Fur Anlagenbav M. B. M., La Ley 1989-E, p. 304, with commentary of A. BOGGIANo. 43 Like the one in article 2606 which points out the exclusive character of the choice of forum except that the parties agree otherwise. 44 Dismissing, by logic and by the tradition of Argentinian case law, the admission of 39

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III. Applicable Law A.

The General Flexibility Regarding the Determination of the Applicable Law by the Courts

Regarding the determination of the applicable law, the most important modification of the system in force is provoked by the norm embodied in article 2597, which recognizes what is known as the “exception clause”.45 This means that in the new national PIL, the localization of legal relationships in a certain legal system to the effect of the application of its law is no longer a matter exclusively concerned to the legislator. From now on, courts will have the power to correct, in view of the particular case, the localization a priori made by the legislator when it is incompatible with the reality of the case. Thus, the conflict rules of the internal dimension of the Argentinean PIL lose their traditional strictness and enter into the flexibility era, as occurred with its Swiss equivalent more than a quarter of a century ago.46 It is noteworthy that the legislator does not give a blank cheque to the court. To the contrary, the legislator reminds that this is an exceptional circumstance, which must comply with a series of patterns in order to be implemented. It is appropriate to insist: the authorization granted to the courts refers to the stage of localization of the legal relationship. In no case it allows modifying the substantial result of the localization, but only the localization itself. The legislator’s interest to provide the system with this flexible basis appears to be so great that it has inserted a similarly specific exception clause in the field of contracts,47 obviously unnecessary. In addition, even though the purpose of correcting the connection established by the legislators in a particular case is shared with the general provision of article 2597, the different wording between both provisions raises some doubts about its rationale, and maybe, some interpretative problems too. In this sense, it seems clear that although the purpose of the distinction is difficult to understand, that in contractual matters, the clause the voluntary submission to foreign courts and not to the own courts, it can be assumed that the intention of the legislator is that such submission is also subject to the criteria of patrimoniality and internationality. With much logic, the negative effect given to the derogation of the Argentinian jurisdiction is dismissed in those matters for which the Argentinian jurisdiction is provided. The same happens if the derogation of jurisdiction is prohibited by law or by the Code itself, as it happens with respect to consumer contracts (article 2654). Consequently, there would be no room to accept the parties’ submission to the Argentinian courts in reciprocal situations. When it comes to arbitration, I repeat the reference to the specific rules, in particular to article 1651. 45 Article 2597: “Exceptionally, the law designated by a conflict rule shall not be applied when, by virtue of the factual circumstances of the case, it is evident that the situation has little link with such law, and conversely, it presents very close links with the law of other state, which application is foreseeable and under which rules the relationship has been validly established. This provision is not applicable when the parties have chosen the applicable law to the case.” 46 See article 15 of the Swiss Federal PIL Act. 47 Article 2653.

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A New Autonomous Dimension for the Argentinian Private International Law does not set up an exclusive prerogative of the courts, but that it cannot exist without the concurrency of the parties intention (“upon party request”). In contrast, the consequences of not repeating in the contractual exception clause the terms of article 2597 such as “manifest” or “close links”, are not so clear.48 It goes without saying that none of the formulations of the exception clause are identified with the situation considered in article 2639 regarding parental responsibility. In this case, the power of replacing the localization provided by the legislator (who situates the relationship in question in the habitual residence of the child) is not given to the courts because the concrete case presents “very tight links” with other legal system, but it is authorized to “take into consideration” the law of the other state with which the situation has “relevant links” if this is required by the best interest of the child. The exception clause (like the one in articles 2597 and 2653) has to do with the geography of the case, with the place where its elements are located. Here, instead, it is about the material solution of the case, which must be modified or modulated in order to satisfy the cornerstone of the legal relationship in question.49 With this understanding, the clause of material correction for parental responsibility is much more similar to the provision governing the maintenance right, based on the protection of the maintenance creditor’s interests,50 and as the provision governing the determination and challenge of paternity, based on the protection of the fundamental rights of the child.51 B.

The Limited Role of Party Autonomy

Whereas the courts’ role in the determination of the applicable law is notably reinforced by the Code, the parties’ role is much less reinforced. As has already been pointed out, the exception clause applies to all matters. Conversely, the parties’ power to designate the applicable law is concentrated in contracts52, in a very

48 It is worth remarking that the use of the second paragraph of article 9 of the 1994 Mexico Convention on the Law Applicable to International Contracts, as a source in article 2653, presents some curious features. Among other things, it allows to verify the suggestion made by the wording of article 2652, in the sense that the legislator deliberately dismissed the possibility that the court applies or takes into account the “general principles of international commerce accepted by the international organisms”, which is what the following phrase of the second paragraph in article 9 of the inter-American text says. 49 The origin of this provision is in article 15 of the 1996 Hague Convention on the Protection of Children, which is not in force in Argentina. 50 Indeed, the first paragraph of article 2630 establishes as localization criteria the domiciles of both parties of the maintenance relationship, ordering the competent authority to apply the most beneficial law to the creditor. This solution is inspired in article 6 of the 1989 Inter-American Convention on Maintenance Obligations. 51 The options offered by article 2632 are: the law of the child’s domicile at the time of his or her birth, the law of the domicile of the parent or alleged parent at the time of the child’s birth, or the law of the place of celebration of the marriage. 52 Article 2651.

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Diego P. Fernandez Arroyo restricted fashion, in the matrimonial property regime53 and in maintenance agreements.54 The absence of a general rule of autonomy regarding applicable law contrasts with the meticulousness with which the legislator deals with the parties’ intention regarding the determination of the regime of international contracts.55 Article 2651 provides considerable formal flexibility for the choice of law in contracts. Firstly, the choice may affect the totality or parts of the contract. Secondly, the choice may be made and modified in any moment, but always safeguarding the validity of the contract and third-party rights. Within certain limits, the parties may design a regulation of their contracts à la carte. Within the frame of such right, they can, among other things, submit their obligations to certain standard clauses such as the well-known INCOTERMS published by ICC or directly submit to a non-state body of rules. This is consistent with the context provided by the legislator. Indeed, if the choice of the law of a state not connected with the case is valid, one can legitimately ask how the submission to a so known text as the UNIDROIT Principles of International Commercial Contracts cannot be admitted.56 However, it is noteworthy that if the article in question authorizes the parties to “remove” the (internal) mandatory provisions of the chosen law (which might be the Argentinian law), its wording seems to indicate that there will always be an applicable state law to fix the framework in which the non-state law designated by the parties must function.57 In any event, the chosen law will be subject to the limits established by the principles of public policy and the international mandatory provisions of the Argentinian law, as well as this kind of provisions of third-party states that have “prevailing economic links with the case”. It must be equally clear that the goal of the legislator was that the decision to submit to those material rules (usages, practices, customs or principles) must be expressly stated in the contract: it is not to be presumed. This raises a contradiction when the applicable law (chosen or not) is the law of a member state to the 1980 53 In reality, article 2625 only indicates in its paragraph 3 that spouses, who change their domicile to Argentina “can record in a public instrument their option for the application of Argentinian law” without affecting third party rights’. 54 Here, the choice is limited to the law of the domicile or habitual residence of the parties to the agreement (article 2630, paragraph 2). 55 Article 2651. So much detail actually shows what it does not say. On the one hand, the choice is not subject to any connection requirement between the chosen law and the contract. On the other hand, the internationality requirement, which is present with respect to jurisdiction, is not required. Whereas, given the subjection to the limits imperatively applicable, the consequences of the first silence do not turn problematic, the second silence leaves certain questions open (on which case law has already elaborated; see National Court of Appeals in Civil an Commercial Matters, Chamber III, 27 October 2006, Banco Europeo para América Latina v. Banco de Galicia y Buenos Aires S.A., La Ley 2007-E, p. 616). What is clear, instead, is that there is a contract in which party autonomy does not proceed: the consumer contract. More specifically, the consumer contract as defined in article 2655 of the Code. 56 It is in this sense that the 2015 Hague Principles on choice of law in international commercial contracts are pronounced. 57 Commercial National Court of Appeals, Chamber A, 8 November 2007, Prensiplast S.A. v. Petri S.A., La Ley 2008-B, p. 674.

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A New Autonomous Dimension for the Argentinian Private International Law Vienna Convention on Contracts for the International Sale of Goods (which in that case operates as “internal” law), which in article 9.2 establishes the presumption of applicability of usages. This is “the” Argentinian material PIL provision, at least with respect to the international sale contracts. C.

The Impact of Fundamental Principles and State Policies

The flexible elements included in the system find their counterweight in the reinforced protection included by the legislator to the fundamental principles of the Argentinian legal system – whether they are dispersed as “public policy principles” or have a concrete and tangible expression in an “international mandatory material provision” –, and in the translation of public policies into the PIL provisions (or in both at the same time). Regarding the former, in addition to the general provisions contained in articles 2559 and 2600, the Code contemplates various particular expressions. Thus, in matters of natural filiation, filiation by adoption and children protection, the Code provides the application of a special public policy, which lies on the fundamental rights or in the best interest of the child, as the standard to allow in Argentina the recognition of situations constituted abroad.58 In contractual matters there are also special references introduced to the international mandatory provisions and the public policy.59 In this case, it is worth adding that the different wording of both provisions might have some impact on the respective construction and application. For instance, whereas in the general provision of article 2599 it is provided that, under certain circumstances, “the effects” of the international mandatory provisions of third-party states “may be recognized”, in contractual matters (with less requirements) it is stated that such provisions “are in principle imposed to the contract”. Given the specialty of the latter, it can be assumed that the intention was that, in general, those peculiar foreign provisions remain at the court’s discretion which will take them “with a grain of salt”, but that particularly in contractual matters the court is bound to apply them except in justified cases (what would be meant by “in principle”). The court would do well to carefully analyse the consequences of such an imposition before deciding. With regard to the reflection of public policies in the concrete field of PIL, it is important to note the decision to give specific protection to those who are considered as the weaker parties of the legal relationships in which they participate, either in a contractual or personal aspect. In the first case, I specifically refer to passive consumers whose contracts are, in principle, governed by the law of their domicile.60 In the second case, among various possible examples, two situations stand out: the already commented principle in favour of the maintenance creditor61 and the regulation of the international adoption, which combines different methodologies in order to guarantee the functioning of the adoption without See articles 2634, 2637 and 2640. Article 2651(e). 60 Article 2655. 61 Article 2630. 58 59

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Diego P. Fernandez Arroyo putting aside the basic criterion of the prohibition to adopters domiciled abroad of adopting children domiciled in Argentina.62

IV. International Cooperation A.

Cooperation in General

In the new Code, the general provisions on cooperation are included – for some reason that I ignore – in the chapter devoted to the jurisdiction: mixed as usual, with a provision related to the rights of the “alien” in the judicial procedure conducted in Argentina. In particular, the right of access to justice is deemed fundamental, extending universally a criterion that was already established in the Argentinian PIL at a regional level, through the 1992 Las Leñas Mercosouthern Protocol.63 Indeed, article 2610 states that the access to justice is a right, exercise of which must be guaranteed to human beings without distinction on the basis of nationality or residence, as well as to legal entities, regardless of their state of incorporation, authorization or registry. In other words, the litigant who has no local link can never be placed in an unfavourable condition compared to the litigant who does have such a link. The concrete expression of this principle is the total elimination of the security for costs in judicial proceedings, which already existed in international conventions in force in Argentina.64 The character of the provision makes the prohibition affect any kind of pecuniary requirement to a litigant who does not have a local link, that involves a discrimination against him, not only irrespective of the designation (as it is expressly said in the article) but also of the amount, the form of receiving it or the purpose of the sum collected. It is not an altruist or naive attitude of the legislator. In reality, it is nothing but a correct understanding of what is a “fundamental” right that exercise as such, cannot depend on the origin or the condition of the right-holder. Probably even more interesting than this is the recognition of the mandatory nature of the international jurisdictional cooperation of the Argentinian courts.65 Like the previous provision, this universalizes an obligation already assumed by Argentina with respect to its courts through international instruments, both bilateral and regional (and of universal potential).66 This is a logical and inevitable 62 Articles 2636 to 2638, which are combined with the provision on exclusive jurisdiction on the topic referred in the first paragraph of article 2635. See M.S. NAJURIETA (note 6), at 78-81. 63 Articles 3 and 4. 64 G. ARGERICH, El arraigo y su supresión por los tratados internacionales, in II Doctrina Jurídica 1996, p. 633. See also Federal Supreme Court of Justice, 3 April 2001, Plenkovich, Liliana E. v. Salvia, Mercedes et. al., La Ley Online AR/JUR/5170/2001. 65 Article 2611. 66 I specially refer to the Inter-American Conventions (and their respective Protocols) on Letters Rogatory (CIDIP I, 1975), on the Taking of Evidence Abroad (CIDIP II, 1979), on the Execution of Preventive Measures (CIDIP II, 1979), on Proof and

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A New Autonomous Dimension for the Argentinian Private International Law consequence of the generalization of the right of access to justice. Indeed, the unjustified lack of cooperation by the authorities of a state may represent an insuperable and terrible obstacle to the exercise of the right of access to justice. The provision, however, while it makes the principle quite clear, does not mention the concrete channels through which it develops. A different subject is the one of the scope of the cooperation obligation, which should have been somehow specified. At the Mercosouthern level, the lack of specification is because it is understood that the obligation reaches all the subjects treated by the Protocol. Translating the principle into the Code, isolated from any specific development (besides the one which appears in the following article on cooperation for the taking of evidence and procedural acts of a merely formal nature), the provision in question is susceptible of being invoked for the most varied questions. For instance it could be invoked on occasion of a direct communication from a foreign court to an Argentine court, so that the latter helps the former to determine the validity and content of the Argentinian law applicable to a case that is being heard in the country of the requesting court. The adjective “broad” accompanying the obligation of cooperation can be applied either to the subject matter or to the extension of the activity requested to the court.67 B.

Cooperation in Children Return Matters

The so repeated and generally correct application of the Hague Convention on the Civil Aspects of International Child Abduction clearly indicates that in Argentina the return of the minor to the state of his or her habitual residence is considered a principle.68 Therefore, the generalization of the applicability of the principles contained in the international conventions on the topic to cases in which they are

Information on Foreign Law (CIDIP II, 1979), and on the International Return of Children (CIDIP IV, 1989), to the Mercosouthern Protocols on Cooperation and Judicial Aid on Civil, Commercial and Administrative Matters (1992) and on Preventive Measures (1994), and to the Hague Conventions on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965), on the Taking of Evidence Abroad in Civil or Commercial Matters (1970) and on the Civil Aspects of International Child Abduction (1980). Specifically, the commented provision universalize the obligation assumed by Argentina with respect to its fellow member states of the MERCOSUR in article 1 of the mentioned 1992 Mercosouthern Protocol, without including the references made therein to administrative matters and procedures. 67 It must be taken into account that regarding cooperation in the field of international children return, article 2642 contains a specific modulation of such an obligation. 68 See, among many others, the reasoning applied by the Federal Supreme Court of Justice, 14 June 1995, W., E.M. v. O., M.G., La Ley 1996-A, p. 260; and by the National Civil Court of Appeals, Chamber H, 18 November 2003, M.V., M.L. v. C., C.A.S., El Derecho 206-215, to order the return of minors in compliance with the 1980 Hague Convention.

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Diego P. Fernandez Arroyo not strictly applicable69 should not be surprising. It is also worth mentioning the provision related to the manner in which the return of the child or adolescent must be done, stating that the competent court to decide the return not only shall supervise the safe return after a judicial restitution order, but shall also foster solutions leading to the voluntary fulfilment of such decision.70 In practice, the application of these criteria is often made on the basis or with the help of direct communications between the authorities of the different states involved. It can be expected that, although the Code does not expressly mention them, the promptness usually required in the return proceedings will often lead to prefer those fast mechanisms to the obligation of using letters rogatory.

V.

Epilogue

Many of the solutions provided by the new Code are already known by Argentinian courts, so no great changes are to be expected from them. Regarding the more novel ones and the ones with a somehow cryptic wording, certainly the courts – with the humble contribution of scholars – will find the adequate interpretations. If this was the general feature regarding a domestic PIL fragmentary and dispersed, everything should work even better in relation to the new system. As to the “venue” selected for the internal codification of the Argentinian PIL, it may be worth remembering that frequently, the perfect is the enemy of good. It goes without saying that the conception that keeps the PIL in the privatistic prison71 should have long since been abandoned. However, it is true that the real possibility of carrying out this codification was no other than taking the train of the drafting of the Civil and Commercial Code. I understand that, in this opportunity, this option was much more attractive than simply staying in the platform waiting for the ideal train, which has already derailed several times.

Article 2642. The Argentinian courts have already been doing this for a long time. See, in this vein, National Civil Court of Appeals, Chamber B, 26 September 1989, P.H.M.C. v. N.L.E.A., La Ley 1991-A, p. 325. 70 See recently Supreme Court of Justice of Buenos Aires, 16 April 2014, P.C. v. S. B. d. P. M., el Dial AA8715; High Tribunal of Justice of Jujuy, 12 August 2014, El Derecho 19/1/2015 No. 13.651; Family Tribunal of Rosario No. 7, 18 July 2014, El Derecho 9/1/2015 No. 13.645. 71 This constitutes one of the “psychological” disorders of PIL. See my work: El derecho internacional privado en el diván – Tribulaciones de un ser complejo, in Derecho internacional privado y derecho de la integración. Libro homenaje a Roberto Ruiz Díaz Labrano, Asunción 2013, p. 17-35. Argentinian PIL scholars and case law are actually much more “internationalist” than “privatistic”. 69

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THE NEW PRIVATE INTERNATIONAL LAW ACT OF MONTENEGRO Maja KOSTIĆ-MANDIĆ*

I. II. III.

V. VI. VII.

Historical Background Impact of EU and Comparative Private International Law General Provisions A. Escape Clause B. Overriding Mandatory Provisions C. Renvoi Applicable Law A. Citizenship B. Habitual Residence C. Choice of Law D. The Closest Connection Principle Jurisdiction Recognition and Enforcement of Judgments Conclusion

I.

Historical Background

IV.

Montenegro has a surprisingly long history of codifying rules on private international law (PIL). What is perhaps even more surprising is that Montenegro’s codified provisions have always been ahead their time and significantly more progressive than the provisions made by jurisdictions with a comparable social and legal situation. This tradition started with The General Property Code (1888).1 The Code addressed not only the actual needs of Montenegro, which was a poor and underdeveloped country with very few educated lawyers and scarce written laws, but also provided a framework for the future of its civil law in general and PIL in particular. The General Property Code formulated the general rules of PIL in a

* Professor at Pravni fakultet Univerziteta Crne Gore, the Faculty of Law of the University of Montenegro. 1 The Code was drafted by Valtazar Bogišić prominent South Slav professor with Russian University in Odessa. For the purpose of writing a Code he prepared a questionnaire, which had 2000 questions, in order to collect legal customs. Moreover, the Code included the great legal achievements of that time and in the field of PIL provides for twenty articles inspired by work of Savigny and Mancini.

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 429-439 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Maja Kostić-Mandić fairly comprehensive way.2 In determining applicable law, the Code began from the center of gravity rule according to Savigny's theory and introduced rules that would remain relevant for most of the twentieth century.3 The tradition continued with the Yugoslav Conflict of Laws Act of 1982, as amended in 1996.4 At the time of its adoption, the wording of this Act was internationally acknowledged to be of exceptional quality. The Act remained unchanged and in force in Montenegro, until adoption of the new law. The new Private International Law Act (Zakon o međunarodnom privatnom pravu) was adopted by the Parliament of Montenegro in December 2013 and its application started on 9 July 2014, six months after the date of its publication in the Official Journal of Montenegro.5

II.

Impact of EU and Comparative Private International Law

The European integration process gave Montenegro an impetus to innovate in the field of its national private international law. As a candidate country for accession to the European Union,6 it is unsurprising that the new PIL Act is generally harmonized with EU law. Recent developments in the work of Hague Conference on PIL and in comparative PIL also influenced the new Act. One of the main dilemmas the codification process had to solve was the extent to which Montenegrin law should adjust to EU PIL: whether to incorporate the “ready-made” provisions of the EU regulations into national law with only minimum adjustments, or alternatively to opt for only the transposition of the basic concepts of the regulations and to formulate unique rules within that framework. In contrast, the instruments of the secondary EU legislation in the field of PIL have largely been adopted in the form of regulations, which are directly applicable in EU Member States. Bearing in mind that Montenegro will become a member of the EU by the end of this decade at the earliest, at which point all the regulations will 2 Thus, the Code determines the applicable law for in rem relations, legal entities, legal capacity of natural persons, contracts, torts, and forms of legal transactions. With regard to civil procedure relations with international aspect, the Code only covers issues of recognition and enforcement of foreign judgments. 3 M. KOSTIĆ-MANDIĆ, Applicable Law in the General Property Code for the Principality of Montenegro, in the Proceedings from the Symposium: 120 years of the Explanations, Definitions and Additions in Montenegro, Law School of the University of Montenegro, Lawyers’ Association of Montenegro, Podgorica 2009, p. 95-106. 4 Act Concerning the Resolution of Conflicts of Laws with Provisions of Other States (Zakon o rješavanju sukoba zakona sa propisima drugih zemalja, Sl. list SFRJ, br. 43/82 i 72/82 - ispr., Sl. list SRJ, br. 46/96. 5 “Službeni list Crne Gore” br. 1/2014. 6 Stabilization and Association Agreement between EU and Montenegro was signed in October 2007 and has been in force since 1 May 2010.

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The New Private International Law Act of Montenegro be directly applicable in the country, a differentiated approach seemed reasonable and appropriate to the prevailing national interest. It was ultimately concluded that with respect to the law applicable to contractual and non-contractual obligations, it could only be in the interest of Montenegro to accept the rules of Rome I and Rome II Regulations, with the necessary adjustments. This is particularly the case given that these regulations are intended to have universal applicability and that the law of the countries who are not members of the EU is also used as applicable law in the EU Member States.7 The judiciary in Montenegro will have plenty of time to master the application of these regulations since the PIL Act even states that the interpretation and application of the provisions relating to contractual/noncontractual obligations are to be carried out in accordance with the Rome I and Rome II Regulations (arts 49 and 67 respectively). Unlike the above, in terms of rules determining the applicable law relating to the other fields, any relevant new developments in the European Union and internationally are taken into account, but national interests and the needs of the national legal tradition and legal certainty will take precedence. In the course of drafting of the new PIL Act, Montenegro became a party to several Hague conventions8 and in some cases the Act embraced provisions of those conventions,9 while in other cases incorporated the provisions of instruments that are yet to be ratified by Montenegro.10 The PIL Act also refers to application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.11 Finally, consideration was also given to some fairly recent comparative national codifications of private international law, particularly those of Bulgaria, Belgium and Switzerland.

III. General Provisions The most important new concepts introduced by PIL Act are the escape clause (art 8) and the overriding mandatory provisions (art 9), while renvoi (art 4) is now drafted in a different manner and PIL Act makes no provision for the doctrine of fraus legis. See art 3 of the Rome II Regulation, and art 2 of the Rome I Regulation. Montenegro, by way of state succession, is bound by international conventions and agreements which were in force before its independence in 2006. The new accessions to the Hague Conventions by Montenegro include: Hague Service Convention 1965; Hague Evidence Convention 1970; Hague Adoption Convention 1993 and Hague Child Protection Convention 1993. M. KOSTIĆ-MANDIĆ/ M. STANIVUKOVIĆ/ M. ŽIVKOVIĆ, Private International Law of Montenegro, International Encyclopedia of Laws, Kluwer Law International, 2013, paras 45-50. 9 See art 73 on validity of the form of will of PIL Act. 10 See arts 90-98 on maintenance of PIL Act copied from Hague Maintenance Protocol. 11 See art 151 of PIL Act. 7 8

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Maja Kostić-Mandić A.

Escape Clause

The escape clause is literally copied from the Swiss PIL Act.12 The special escape clauses are drafted in accordance with Rome I and, to some extent, Rome II Regulations. When deciding whether to introduce the general escape clause into the new Montenegrin PIL Act, regard was given to the fact that extension of the area of applicability of choice of law in relationships (where such possibility was traditionally excluded) would reduce the potential for abuse of this legal concept.13 B.

Overriding Mandatory Provisions

The concept of overriding mandatory provisions in the PIL Act was largely inspired by the approach of certain national legislations, but also by EU law and, in particular, the wording of the Rome I Regulation. Article 10 of the PIL Act provides for definition of this concept stipulating that the provisions of Montenegrin law whose application is deemed particularly significant for safeguarding its public interest, for example, political, social or economic organization, shall apply to all the cases that the provisions refer to, irrespective of the applicable law. It also provides for a possibility, in exceptional cases, of taking into account the overriding mandatory provisions of another state that the legal relationship is closely connected to. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and the consequences of their application or non-application. C.

Renvoi

Montenegro PIL Act significantly reduced the possibility of application of renvoi, by specifying the type of relations where it is impermissible (i.e. legal status of legal persons and forms of organization without legal personality, form of legal transactions, choice of applicable law, maintenance, contractual relations, and noncontractual relations – art 4).

12 “As an exception, any law referred to by this Act is not applicable if, considering all the circumstances, it is apparent that the case has only a very loose connection with such law and that the case has a much closer connection with another law. This provision does not apply where a choice of law has been made.” See . 13 For escape clauses in Montenegrin PIL, see M. KOSTIĆ-MANDIĆ, The General Escape Clause in Contemporary Private International Law, University of Montenegro Faculty of Law, Podgorica 2012, p. 201-223.

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IV. Applicable Law The PIL Act provides for very detailed provisions in the field of applicable law. In some fields (for example, the status of natural and legal persons and property) traditional solutions remain (lex nationalis, lex situs, respectively) while two important concepts, deeply rooted in European Union law and comparative national codifications, have become underlying principles of the new Act on Private International Law of Montenegro: namely,the concept of habitual residence and a significant expansion in scope of choice of law principles. A.

Citizenship

The new private international law of Montenegro has a foundation built of traditional concepts, overlaid with the new solutions from EU law, international conventions and comparative legislation. This preserves citizenship14 as a primary connecting factor for personal status relations while habitual residence is of increasing importance in other matters. The PIL Act stipulates citizenship as a primary connecting factor for: - legal capacity (art 13), - business capacity (art 14 (1)), - guardianship (art 16), - name (art 17(1)), - declaring a missing person dead (art 18), - terms of conclusion of marriage (art 77), - annulment of marriage (art 79), - relations between spouses (art 80 (1)), - law applied to property relations between spouses (art 81 (1)), - divorce (art 85 (1)), - family status of child (art (1)), - relations between parents and child (art 88) and - adoption (art 89). Some of the peculiarities include: for substantive conditions for conclusion of marriage the law of the country of the persons’ citizenship shall apply to each of the spouses (art 77); where the change of nationality (or habitual residence) of one or both spouses results in a change of applicable law, that new law shall apply to the property of the spouses irrespective of the time it is acquired (art 81 (2)); divorce is governed by common nationality of the spouses at the time of filing for divorce (art 85 (1)); for relations between parents and children, the child’s citizenship instead of its habitual residence may apply if it is more favourable to the child

See in more details: M. KOSTIĆ-MANDIĆ, Citizenship – a measure or an obstacle for achievment of rights of citizens in the territory of former Yugoslavia, in Regulating open issues between succesor states of Former Yugoslavia, Institute of International Politics and Economics, Belgrade 2013, p. 518-545. 14

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Maja Kostić-Mandić (art 88); adoption is generally governed by the adoptive parent’s law of nationality (art 89 (1)) etc. B.

Habitual Residence

Habitual residence is a concept unknown to the former Yugoslav Conflict of Laws Act, which uses concepts of domicile and residence. However, this concept existed in private international law through the Hague Conventions binding on Montenegro. The PIL Act contains three articles that define habitual residence (the general definition and the definition of habitual residence for contractual and noncontractual obligations), as well as a significant number of articles where it appears as the primary or subsidiary connecting factor. A decisive factor for determining a person’s habitual residence is whether that person makes a certain place the center of their life, that is, the center of their economic existence and social contacts, independent of registration with the competent body or residence permit. The length of residence necessary to create habitual residence should be determined according to the particular circumstances of the case. There is no minimum length of residence required, and shorter temporary absences will not lead to cessation of habitual residence. Companies and other business establishments have their habitual residence at the place of their central administration; for branches that is the place of their location and for a natural person pursuing a business activity, the principal place of business is the location at the time of concluding a contract.15 A similar rule is provided for non-contractual obligations.16 Habitual residence is now a connecting factor for almost all types of relations, in some cases as a primary, and in some cases as a subsidiary, rule. In the fields of succession17 and maintenance,18 habitual residence prevails over citizenship while it became the primary connecting factor for personal language of passengers.19 In contractual relations,20 habitual residence is now the most important connecting factor, to the extent that the law applicable to the contract has not been chosen by the parties. The role of habitual residence as a subsidiary connecting factor is also important for family21 and non-contractual relations22, as

Art 40 of PIL Act. Art 51 of PIL Act. 17 Arts 71-73 of PIL Act. 18 Arts 90-93, art 95 of PIL Act. 19 Art 30 (2) of PIL Act. 20 Arts 40-41, arts 44-45 of PIL Act. 21 Arts 80-82, arts 84-88 of PIL Act. 22 Art 52 (2), art 55, art 62 of PIL Act. 15 16

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The New Private International Law Act of Montenegro well as for some legal status relations of natural persons (for name23 and declaring a missing person dead).24 C.

Choice of Law

One of the main features of the PIL Act is a significant expansion in scope of choice of law. Beyond contractual obligations, a limited choice of law is provided for matters concerning non-contractual obligations, maintenance, divorce, matrimonial property regimes, name, succession, etc. In the new Montenegrin Act on Private International Law, the concept of choice of law as being the basic principle for contracts retains its priority, and, following the provisions of Article 3 of the Rome I Regulation is regulated in more detail. Apart from this general rule, the PIL Act contains special rules for certain types of contracts (contracts on carriage of goods and passengers, consumer contracts, and employment contracts) along with certain specific conditions. The new solutions of Montenegrin private international law in the area of the law applicable to non-contractual obligations follow the solutions of the Rome II Regulation with some minor adjustments. For non-contractual relations not covered by Rome II Regulation, the PIL Act provides for choice of law for the obligations arising from infringements of personal rights by media. The injured party may choose as applicable law the law of the state: of his habitual residence; where damage occurred, or of wrongdoer’s habitual residence.25 In the field of applicable law for succession, the PIL Act adopts the main ideas of the Succession Regulation, with certain adjustments, thereby radically altering Montenegrin legal tradition by introducing habitual residence as a primary connecting factor and a possibility of limited choice of law. A person may choose either the law of their nationality or the law of the state in which they are habitually resident at the time of choice or of death as the applicable law of succession, while for immovable property they may choose the law of the state where the property is located (art 72 of PIL Act).26 The new Montenegrin Act on Private International Law fully incorporates choice of law provisions of the Hague Protocol on the Law Applicable to Maintenance Obligations.27 The PIL Act allows for choice of law in the event of divorce, however the spouses may only select the law to which there is a specific close, personal connection. This would include the law of joint citizenship, or where the spouses have Art 17 (2), art 17 (4, 5) of PIL Act. Art 18 of PIL Act. 25 Art 55 of PIL Act. 26 Other provisions on succession of the PIL Act include the validity of the form of will, also the existence, material validity, effects and interpretation of a disposition of the estate in the event of death an estate without a claimant, as well as the scope of the applicable law (arts 73-76). 27 Art 90-98 of PIL Act literally impersonate arts 3-8, 10-11 and 14 of the Hague Protocol. 23 24

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Maja Kostić-Mandić different citizenship, the law of the country of joint habitual residence at the time of filing for divorce, or the law of the country of their last joint habitual residence. The PIL Act also provides for the possibility of choice of law of the country of citizenship of either spouse at the time of filing for divorce. In any of the above cases, the agreement on choice of law should be in writing and certified by competent authorities no later than at the time of filing for divorce. The PIL Act also provides for a choice of the applicable law to the contractual property relations of spouses. This would include the law of nationality or the law of habitual residence of either spouse, the law of the intended common habitual residence, and for immovable property – the lex situs. Unless otherwise provided by the parties, the choice of law made after the marriage is entered into starts to take effect from the moment of entering into marriage. Article 83 of the PIL Act provides for the protection of third parties. D.

The Closest Connection Principle

The closest connection principle can be regarded as a synthesis of all relevant choice of law principles, other principles being dependent on their validation by either the legislator in the course of codification or a judge who is applying framework conflict of law rules28 or an escape clause. Contrary to the role played by the closest connection principle in the field of contracts and non-contractual relations, where the relevant Rome I and Rome II Regulations’ provisions, as well as Hague Maintenance Protocol provision were almost literally copied,29 the principle has a somewhat different function in other provisions of PIL Act containing this principle. Both provisions are dealt with in the frame of generally applicable provisions. In the first case, the closest connection principle is applicable only if it is not possible to ascertain the governing law under the PIL Act provisions or a country’s legal provisions, for example in the case of a federal state with multiple legal systems (art 10). In this situation, the closest connection principle acts as ultimum remedium in order to ascertain applicable law. The other case addresses the problem of multiple citizenship. If neither of them is Montenegrin then, according to the PIL Act, the person will have citizenship of the country of one of his/her citizenship to which is the most closely connected (art 11). Here, the closest connection principle serves in finding effective citizenship and is likely to be applied more often, especially in family law and succession matters. In addition, for all cases where habitual residence is 28 See: G. VAN HECKE, Principes et méthodes de solution des conflits de lois, Recueil des Cours 1969, vol. I, p. 444-445. Other authors, such as LAGARDE and VON OVERBECK the closest connection principle see as one of the basic principles of conflicts of law rules, replacing more and more other principles of private international law, especially the principle of territoriality. See, P. LAGARDE, Le principe de proximité dans le droit privé contemporain, Recueil des Cours 1982, vol. III; A. VON OVERBECK, Les questions générales du droit international privé à la lumière des codifications et projets récents, Recueil des Cours 1982, vol. III, p. 13. 29 See arts 39 (3, 4), 52(3) and 92 of PIL Act.

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The New Private International Law Act of Montenegro stipulated as a subsidiary connecting factor to citizenship but cannot be ascertained, the closest connection principle will prevail.

V.

Jurisdiction

The PIL Act introduced significant changes in the area of international jurisdiction, the most important being those embracing some of the solutions in accordance with the Lugano Convention. Exclusive jurisdiction is regulated in a completely new way. The most significant innovation concerning exclusive jurisdiction is the introduction of the Lugano Convention’s basis for exclusive jurisdiction and the abandonment of exclusive jurisdiction for the status of natural persons, family and succession matters. Moreover, the new provisions on prorogation of jurisdiction in arts 104-105 of PIL Act are compliant with art 23 (1, 2) of Lugano Convention. The main ground for general jurisdiction remains the defendant’s domicile or seat or, as a subsidiary ground, the residence of a natural person in Montenegro. The rules on special jurisdiction contained in arts 115-135 of PIL Act are comprehensive. The Private International Law of Montenegro provides, in principle, for a generally accepted basis for international jurisdiction, deeming the compliance of these rules and the facts that occur as critical in determining the applicable law for certain types of relationships. The Private International Law Act introduces for the first time habitual residence as a basis of jurisdiction for certain matters. The habitual residence is introduced as a key determinant of jurisdiction for the status of persons, for consumer contracts, for succession and family matters. Following contemporary trends in comparative law, jurisdiction of the court of Montenegro in status, family and related disputes is regulated in a way that reduces the previous overemphasis on Montenegrin citizenship as a basis for the jurisdiction of the court of Montenegro and due attention is paid to habitual residence in Montenegro. This also applies to disputes on determination or denial of paternity and maternity, in the matter of parental care, adoption and maintenance.30 The rules on jurisdiction in matters of succession are founded on a combination of several grounds when the general rule (namely, the deceased person’s habitual residence in Montenegro at the time of death) is not applicable.31

30 In matters relating to maintenance habitual residence is the sole basis for special jurisdiction (art 134 of PIL Act). 31 When the deceased person did not have his habitual residence in Montenegro at the time of death, a Montenegrin court will have jurisdiction on the grounds that the inheritance assets are located in Montenegro, and that one of the listed conditions are met (the law of Montenegro was designated as applicable pursuant to art 72 of PIL Act, or the deceased person was a Montenegrin national at the time of his death; or that this article applies only to such assets (art 128 of PIL Act)).

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Maja Kostić-Mandić For other relationships, the grounds of special jurisdiction are traditional: the jurisdiction to hear disputes on rights in rem in movable property will be conferred on a Montenegrin court if the movable property is located in the territory of Montenegro; for disputes arising from contractual relations – if the place of performance of the obligation in question is in Montenegro; in matters relating to non-contractual relations – if the place where the harmful event occurred or may occur is in Montenegro. For the first time, the new PIL Act regulates some particular situations (exceptional jurisdiction;32 jurisdiction for: name33, intellectual property rights34, consumer contracts35, individual employment contracts36 etc). The PIL Act introduces the concept of exceptional jurisdiction, providing that if the present Act does not attribute jurisdiction to a judicial or other authority in Montenegro, and the proceedings cannot be initiated abroad or when it would be unreasonable to demand that the action be brought abroad, jurisdiction shall be conferred on a judicial or other authority in Montenegro, in a place with which the case has a sufficient connection.37

VI. Recognition and Enforcement of Judgments The conditions for recognition and enforcement of foreign judgments are laid down in the PIL Act and are mostly of a procedural nature. In comparison to the former Yugoslav codification of PIL, the new PIL Act does not require that reciprocity is ensured. Recognition and enforcement are denied where the foreign court took excessive jurisdiction, i.e. where it based its jurisdiction on grounds not recognized by the law of Montenegro for the jurisdiction of Montenegrin courts (art 145 of PIL Act). The other conditions designated include the confirmation of finality of the judgment (art 142); or the absence of procedural violation that prevented the party from participating in the proceedings (art 143) – here the court will not review the fulfilment of this condition on its own motion, but only at the parties’ request; absent violation of the exclusive jurisdiction of a Montenegrin court (art 144); absent a final domestic judgment and of a foreign judgment that was already recognized in the same matter (art 146); or absent violation of public policy (art 147).

Art 113 of PIL Act. Art 116 of PIL Act. 34 Art of PIL Act. 35 Art 124 of PIL Act. 36 Art 125 of PIL Act. 37 Art 133 of PIL Act. 32 33

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The New Private International Law Act of Montenegro

VII. Conclusion Among the main features of the PIL Act in the field of conflict of laws are a significantly increased number of articles and a substantial change in the content of many provisions. The most important new institutes introduced by the PIL Act are the escape clause, overriding mandatory provisions and habitual residence. The PIL Act significantly reduced the possibility of application of renvoi. One of the main features of the PIL Act is a significant extension of the area of applicability of choice of law. Beyond contractual obligations, a limited choice of law is permitted for matters concerning non-contractual obligations, divorce, matrimonial property regimes, name, succession, etc. The PIL Act introduced significant changes in the area of international jurisdiction, the most important embracing some of the solutions in accordance with the Lugano Convention and the Brussels I Regulation. Habitual residence is introduced as a key determiner of jurisdiction for the status of persons, for consumer contracts, for succession and family matters. The European integration process in Montenegro has had a significant impact on the national PIL. The new PIL Act either incorporates several provisions of the EU regulations into national law with only minimum adjustments, or transposes the basic concepts of the regulations depending on two facts – the prevailing national interest to be protected by the provisions of the new codification, and the different approach to be applied to certain fields and types of relations. In the field of conflict of laws, EU law has had the most significant impact on those provisions of the PIL Act which effectively adopted the rules of the Rome I and Rome II Regulations with the necessary adjustments. The same can be said for the conflict of laws provisions of the Hague Maintenance Protocol. The PIL Act conflict of laws provisions for succession were inspired by the Succession Regulation provisions. In the area of international jurisdiction, the new solutions are harmonized with solutions of the Brussels I Regulation and the Lugano Convention, while in other matters, regard has been had to the relevant regulations. The new PIL Act of Montenegro is a genuinely European piece of legislation bringing EU law to Montenegro even ahead of the regular integration process.

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DIVORCE IN THE VENEZUELAN SYSTEM OF PRIVATE INTERNATIONAL LAW Claudia LUGO HOLMQUIST* / Mirian RODRÍGUEZ REYES**

I. II.

IV. V.

Introduction The Determination of Venezuelan Jurisdiction in Matters Relating to Divorce A. Bustamante Code B. Private International Law Act The Determination of the Applicable Law to a Dispute Relating to Matters of Divorce A. Contentious Divorce B. Non-Contentious Divorce Enforcement of Foreign Divorce Judgments Conclusions

I.

Introduction

III.

A survey of Venezuelan judgments issued from January 2000 to July 2014, has shown the existence of a series of mistakes, more or less generalized, when dealing with divorce cases comprising PIL elements. This statement is particularly exemplified by the decisions rendered by our trial courts. On the one hand, the lack of legal support in reviewing the criteria that determine our jurisdiction before foreign judges creates a situation whereby Venezuelan jurisdiction is automatically conferred upon our judges, without considering whether they effectively have it or not.1 On the other, lies the recurrent confusion between the choice of the applicable Lawyer (Universidad Central de Venezuela-UCV). Thesis candidate for the Master of International and Comparative Law (UCV). Professor of undergraduate (UCV and Universidad Metropolitana-UNIMET) Private International Law. ** Lawyer (Universidad Católica Andrés Bello-UCAB). Magister Scientiarum in International and Comparative Law (UCV). Graduate Teacher (UCV) and undergraduate (UNIMET) Private International Law. 1 See, for example, judgment issued by the Civil, Commercial, Agrarian, Transit, Maritime and Banking First Instance Tribunal (3rd), of the First Judicial Circuit of the State of Sucre, file No. 6262.05, of 11/15/05; judgment issued by the Civil, Commercial, Agrarian, Transit, Maritime and Banking First Instance Tribunal (3rd), of the First Judicial Circuit of the State of Sucre, file No. 6126.05, 01/27/06; judgment issued by the Civil, Commercial, Agrarian, Transit First Instance Tribunal of the Judicial Circuit of the State of Amazonas, file No. 6302.05, of 12/19/05; and the Tribunal for the Protection Children and Adolescents of the Judicial Circuit of the State of Zulia, file No. 10871, of 11/27/08. *

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes law to the dispute and the determination of Venezuelan jurisdiction.2 We will therefore try to contribute and update the already existing doctrine3 on PIL issues surrounding divorce under Venezuelan law.

II.

The Determination of Venezuelan Jurisdiction in Matters Relating to Divorce

The review of facultas iurisdictionis or the power to adjudicate, which is understood as the power of the State, before other States in the international legal community, to hear and decide a case with foreign elements,4 takes an important precedence over the consideration of the law applicable to the merits of the issue at hand.5 Venezuelan scholarship has recognised our country's adherence to the

2 See judgment of the Political and Administrative Chamber of the Supreme Court of Justice (PAC-SCJ), No. 391 of 05/252000; see also, judgment issued by the Civil, Commercial, Transit, Protection and Banking First Instance Tribunal of the Judicial Circuit of the State of Aragua, file No. 21013, of 07/13/09; judgment issued by the Civil, Commercial, Banking, Transit, and Transitory Competence over matters of Protection of Children and Adolescents Superior Tribunal, of the First Judicial Circuit of the State of Portuguesa, file No. 5088, of 04/09/2007; judgment issued by the Civil, Commercial, Banking, Agrarian and Transit First Instance Tribunal of the First Judicial Circuit of the State of Bolivar, file No. 0132-07, of 11/09/2009; judgment of the Seventh Municipal Tribunal of the Caracas Metropolitan Area Judicial Circuit, of 05/27/2010. 3 E. HERNÁNDEZ-BRETÓN, Jurisdicción en materia de divorcio en la Ley de Derecho Internacional Privado, Revista de Derecho 1, Tribunal Supremo de Justicia, Caracas 2000, p. 249-258. 4 Venezuelan scholars such as Madrid consider that the relevance of foreign elements should not be evaluated a priori, but that PIL methodology should necessarily be taken into consideration in all cases in order to avoid dealing with PIL issues in the first stages of analysis of the case. C. MADRID MARTÍNEZ, Relaciones de las empresas con sus pares. Los contratos internacionales, in La empresa y sus negocios de carácter internacional, Academia de Ciencias Políticas y Sociales, Serie Cuadernos 1, Caracas 2011, p. 101. However, there was a case involving the Colombian nationality of one spouse in a divorce petition under Article 185-A of the Venezuelan Civil Code. Both parties were domiciled in Venezuela. The Colombian nationality, an obvious foreign element, was erroneously deemed relevant, notwithstanding the fact that nationality ceased to be, under the VPILA of 1998, a personal connecting factor regulating divorce. See judgment of the Tribunal for the Protection of Children and Adolescents of the Judicial Circuit of the State of Nueva Esparta, file No. 8623-07, of 04/11/2007. See similar judgment issued by the Civil, Commercial, Agrarian First Instance Tribunal of the Judicial Circuit of the State of Táchira, file No. 5948-2005, of 02/25/2008, where the Colombian nationality of one spouse in a divorce petition under Article 185 of the Civil Code was sufficient to consider the case subject to PIL. 5 Y. PÉREZ PACHECO, La jurisdicción en el Derecho Internacional Privado, in Serie Trabajos de Grado, No. 18, FCJP/UCV, Caracas 2008, p. 45.

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Divorce in the Venezuelan System of Private International Law principle of autonomous and express auto-limitation of national jurisdiction.6 Under it, the Venezuelan legislature directly determines the limits of its own jurisdiction through explicit and special rules. Therefore, our courts will have such sovereign power only to the extent that it is conferred by a rule. They will be excluded from adjudicating such cases in which a particular rule is not expressly established,7 thus excluding analogy and generally accepted PIL principles as sources of jurisdiction-attributing criteria. Due to the material limitations of this paper, we will now introduce the jurisdiction-attributing criteria related to the status of natural persons and actions or proceedings that relate to divorce. Priority will be given to the Treaty of Private International Law – popularly known as the Bustamante Code (BC),8 and we will then introduce the provisions set forth in the Venezuelan Private International Law Act (VPILA).9 A.

Bustamante Code

The BC sets in Articles 318 through 332 a comprehensive system of jurisdictionattributing criteria. It provides express or tacit submission as a general rule, conferring jurisdiction for civil and commercial actions of any kind. It also requires that at least one of the litigants be a national or is domiciled in a Contracting State to which the judge belongs, unless local law sets otherwise.10 E. HERNÁNDEZ-BRETÓN, Domicilio del demandado, in Ley de Derecho Internacional Privado Comentada, T. II., Caracas, 2005, p. 978. 7 E. HERNÁNDEZ-BRETÓN (note 6), at 982. See however, recent case-law dealing with situations comprising minor’s rights. Venezuelan judges have claimed authority to adjudicate in cases in which they did not expressly have it by statute, arguing considerations related to the best interest of the child. See, PAC-SCJ file No. 2009-1005 of 01/13/2010; PAC-SCJ file No. 2010-0917 of 11/11/2010. Also, see dissenting opinion of 05/04/2011 to the judgment issued by the PAC-SCJ, file No. 2011-0071 of 04/28/2011, in which the dissenting judge objected to the majority ruling expressing the lack of Venezuelan jurisdiction due to the enforcement of the criterion of the domicile of a minor, as a connecting factor to determine the applicable law (analysis needed under the parallelism jurisdiction-attributing criteria provided in Article 42 paragraph 1 of the VPILA). The minors domicile was in Germany. According to the criterion held in the dissenting opinion, the judgment violated Venezuelan constitutional and legal principles and the Convention on the Rights of the Child, in particular its provisions protecting the interests of the child. The dissenting opinion is, in our view, unfair to the criteria set out in the VPILA, since the latter entered into force in 1998, before the approval of the new Venezuelan Constitution and also considering that it follows the contemporary PIL purpose of pursuing the right balance between formal and material justice. 8 Signed in Havana, Cuba in 1928. Ratified by Venezuela, enacting it in 12/23/1931. It deposited its instrument of ratification on 03/12/1931, and published it in the Official Gazette s/n. of 04/09/1932. 9 Official Gazette No. 36.511, of 08/06/1998. 10 The mentioned article includes the phrase “except the contrary local law,” a phrase that has sparked dissent within Venezuelan scholarship. Prof. Javier OCHOA believes that the term “suggests an exception to the enforcement of jurisdictional rules laid down in the 6

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes Under Article 321, the “express submission” needs a consensus between the parties and two further conditions, namely: 1) the “clear and unequivocal waiver of their own jurisdiction”, and 2) the selection of the judge to whom they wish to submit the claim. It is also important to remember that such selection is also conditioned on the existence of a link between the litigants and the territory of a State Party (through the nationality or domicile of at least one of the litigants). On the other hand, tacit submission referred to in Article 322 of the BC, is studied in two separate analyses involving the claimant and the defendant. The claimant’s tacit submission occurs he introduces the claim before a particular court. The defendant’s tacit submission occurs when, being notified of a claim filed against him, the defendant takes any step other than to propose the waiver of jurisdiction. If the defendant enters into default, no tacit submission occurs. In the absence of express or tacit submission, or, where such submission proved to be ineffective, the Code provides at Article 323 for the exercise of personal claims, alternatively the jurisdiction of the judge of the place of performance of the obligation or the defendant’s domicile and, as a subsidiary criterion, the defendant’s place of residence. By contrast, when enforcing the BC or the VPILA, the defendant’s domicile is interpreted as its habitual residence.11 In this regard, Prof. MADRID argues that in matters relating to status and family relationships, the BC contains a gap as far as jurisdiction is concerned since it does not contain special criteria on jurisdiction.12 Although we agree with Prof. MADRID regarding the discarding of Article 323 as a jurisdiction-attributing criteria for the subject matter, we do not agree that the BC contains a gap in the matter. Article 318, by having a general character, covers such case. However, the interpretation of the matters covered by Article 318 may need further examination, particularly in order to determine whether it covers non-contentious divorces, – a subject which will be developed further. Articles 185 and 185-A of the Venezuelan Civil Code (CC)13 provide the material regulation of the institution of divorce. The latter sets one of the two grounds for the dissolution of marriages. However, such articles do not use terms such as “non-contentious divorce” or “contested divorce”. Such characterisation was left to scholar development, which extended to divorce the terms usually

Bustamante Code and that the exception applies where the judge’s law provides a standard for the same aspect of international jurisdiction, different from the Treaty”, while Prof. MADRID argues that the term “should not exclude the criteria conferring jurisdiction, but the limitations that international law can impose”. In the specific case, these limitations are the three cases of non-derogation of jurisdiction contained in Article 47 of the VPILA. See J. OCHOA MUÑOZ, La expresión “salvo el derecho local contrario” en las normas sobre competencia procesal internacional del Código Bustamante, in DeCITA, Zavalia, Buenos Aires 04.2005, p. 79; and C. MADRID MARTÍNEZ, Criterios atributivos de jurisdicción en el sistema venezolano de Derecho Internacional Privado, in Serie Estudios, No. 88, ACPS/CDCH-UCV, Derecho Procesal Civil Internacional, In Memoriam Tatiana B. de Maekelt, Caracas 2010, p. 108. 11 See details, in C. MADRID MARTÍNEZ (note 4), at 113-114. 12 C. MADRID MARTÍNEZ (note 10), at 111-112. 13 Official Gazette No. 2.990 of 07/26/1982.

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Divorce in the Venezuelan System of Private International Law presented in cases concerning the separation of bodies, “by mutual consent or without it”. Nevertheless, contested divorces are the product of a trial that ends with a judicial decision based on specific and prescriptive grounds set at Article 185 of the CC. The first addition to this Article (Art. 185A), provides a new ground of divorce where there has been a physical separation of the spouses for more than five year. The latter has also been interpreted as contentious in nature. In contrast, under the same article, non-adversarial divorce means that the physical separation was not contentious but deriving from a judicial decree of legal separation. Article 185-A provides for another case of non-contentious divorce where there is a de facto separation of bodies for more than five years, known as prolonged rupture of the common life, and whose procedure is initiated by a joint request. In this last case, we must emphasise the criterion repeatedly affirmed by our highest court, to which we agree in essence, about what are to be understood as non-contentious issues. In this regard the court stated that “[...] it is not the mere absence of dispute, but derives from procedures which by their nature, cause of action and aim display that the «parties» in them have a common interest and end not with a verdict of «guilty» or «acquittal» of one of them [...] when there is no conflict of interest, the initiative of one party does not have the character of a real lawsuit, but more of a request”.14 However, since the introduction of Article 185-A in the 1985 reform to the CC, the legislative documentation shows the divergence and confusion caused with reference to the nature of the procedure for obtaining this type of divorce. Some consider it a non-contentious procedure, belonging to non-contentious jurisdiction. Others consider it a case of voluntary jurisdiction.15 Recent legislation has not clarified any existing confusion. The Organic Law for the Protection of Children and Adolescents16 (OLPCA) classifies the separation of bodies and divorce within the categories of voluntary jurisdiction. Recent jurisprudence echoes this idea by equating the notions of non-contentious jurisdiction and voluntary jurisdiction.17 Bearing in mind that Article 318 of the BC applies equally to contentious and non-contentious divorces, it is also important to note that such treaty provides, at Article 330 for the criterion of voluntary jurisdiction in matters relating to civil issues. Nonetheless, we have seen in practice how the concepts of non-contentious jurisdiction and voluntary jurisdiction are unduly equated. Consequently, we argue the inapplicability, to all types of divorce, of the rule as set out in Article 330 of the BC. We believe that divorce provisions set out at Article 185-A of the CC do not 14 See PAC/SCJ, No. 127 of 04/08/1997; PAC/SCJ, No. 1214 of 10/14/1999; Civil Cassation Chamber (CCC) of the SCJ, file No. 2005-0152, Exeq. No. 256 of 05/11/2005. 15 See, Various Authors, Código Civil de Venezuela. Artículos 184 al 185-A. Antecedentes, comisiones codificadoras, debates parlamentarios, jurisprudencia, doctrina, concordancias, in Colección Ciencias Jurídicas y Políticas XXII, Ediciones de la Biblioteca, FCJP/UCV, Caracas 1998, p. 375-377. 16 Extraordinary Official Gazette No. 5.859 of 12/10/2007. 17 See for example, CCC/SCJ, file No. 2010-0653, Exeq. No. 068 of 02/18/2011; CCC/SCJ, file No. 2009-0349, Exeq. No. 248 of 06/16/2011; CCC/SCJ, file No. 2011-0109, Exeq. No. 271 of 06/ 22/2011.

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes belong within the scope of voluntary jurisdiction; rather, they are considered noncontentious.18 Voluntary jurisdiction, according to CALAMANDREI, includes acts of mere administration, attributable to the State’s administrative function, exercised by judicial or administrative organs, where there are no parties or a guaranteed right against another, or even a rule which acts against another.19 Also known as the “public administration of private law”, voluntary jurisdiction consists of a sort of intersecting point where the will of the interested petitioners is coupled with some administrative intervention in order to produce the legal effect desired.20 In it, petitioners do not exercise personal actions or actions in rem, but rather administrative rights such as the appointment of guardians and tutors, the registration of wills, the recognition of a child, etc.21 These acts differ greatly from the nature of situations regulated under Article 185A of the CC. B.

Private International Law Act

In the absence of an enforceable treaty, Article 39 of the VPILA provides for the defendant’s domicile as a general criterion conferring jurisdiction. Therefore, in a contentious divorce,22 if the respondent spouse has his/her habitual residence in Venezuela, then Venezuelan courts have jurisdiction. It is worthwhile to note that the determination of the defendant's domicile must be interpreted in accordance with the autonomous qualification provided by the VPILA. Under it, there is a 18 During the preparation of this work, a new law came into force, the Law for the Special Community Peace and Justice Court. Article 8(8) of this instrument grants jurisdiction to these special courts to declare peacefully, without prior proceedings and in the presence of the partner, divorce or dissolution of stable de facto unions by mutual consent, provided that applicants reside in the territorial locality of the peace community, and have not fathered children. If they have children but the latter are older than 18 years of age at the time of the filing of the claim, such requirement is also met. See Official Gazette, No. 39.913, of 05/ 02/2012. 19 P. CALAMANDREI, Derecho Procesal Civil (Traducción Enrique Figueroa Alfonzo), Editorial Pedagógica Iberoamericana, Colección Clásicos del Derecho, V. 2, México 1997, p. 28. 20 G. CHIOVENDA, Curso de Derecho Procesal Civil (Traducción Enrique Figueroa Alfonzo), Editorial Pedagógica Iberoamericana, Colección Clásicos del Derecho, V. 6, México 1997, p. 204. 21 See H. BARRIOS, La jurisdicción voluntaria, in Cursos de Derecho internacional, Serie Temática, Secretaría General de la OEA, V. I, Parte I, El Derecho internacional privado en las Américas (1974-2000), Washington 2002, p. 829-830. 22 Article 39 is not enforceable in cases of divorce in which there has been no contention. Prof. HERNÁNDEZ-BRETÓN notes that although Articles 40, 41 and 42 become operative only when the judgment is sought “against persons domiciled abroad”, these articles seem to be applicable to both contentious and non-contentious cases. These articles use the terms “jurisdiction over trials resulting from the exercise of causes of action in […] matters”. By “cause of action” one should interpret the subjective and abstract right of action. By “trial”, one should interpret a procedure. See: E. HERNÁNDEZ-BRETÓN (note 6), at 994. About Article 42, see our comments below.

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Divorce in the Venezuelan System of Private International Law general qualification of the term “domicile” when it concerns natural persons (Article 11), married women (Article 12), minors and disabled persons (Article 13) and officials from a national or foreign public body (Article 14), all referring to the habitual residence. In addition, the VPILA provides at Article 42, two paragraphs that establish special jurisdiction-attributing criteria for claims concerning status and family relationships, including divorce, provided that, in accordance with the general character of Article 39, the defendant’s habitual residence is located outside the Venezuelan territory. Article 42, paragraph 1 of the VPILA provides the parallelism jurisdictionattributing criterion, better known as the Asser criterion. Under it, the jurisdiction of Venezuelan courts is affirmed if and only if the law applicable to the merits of the underlining legal relationship is that of the forum. Parallelism reverses the natural order or logical sequence needed to solve PIL cases by first ascertaining the applicable law to a given case in order to affirm jurisdiction. Parallelism therefore requires our courts to consider the conflict-of-law rules governing the grounds for divorce. Article 23 of the VPILA contains, in its first paragraph, such conflict-oflaw rules, ordering the enforcement of the legal system of the domicile of the applicant spouse. Consequently, if the applicant spouse were to have its domicile inside the Venezuelan territory, then Venezuelan law would be applied to the merits of the divorce, thus granting jurisdiction to our courts. Paragraph 2 of the aforementioned provision requires at least a year of habitual residence with the animus of establishing the latter in Venezuela, in order to for the change of domicile to be recognised. The central problem generated by such provisions remains, like in the case provided by the Bustamante Code, to distinguish and therefore to qualify a particular divorce as contentious or non-contentious. Article 23 of the VPLA, enforceable through the parallelism jurisdiction-attributing criteria, refers specifically to the domicile of the “spouse who files the claim” as the connecting factor to regulate the law applicable to the divorce. Such terms clearly encompass contentious divorces. However, the question of whether they also regulate noncontentious divorce, remains. In this regard, we believe that there are three possible interpretations: (a)

(b)

The criterion of parallelism is inapplicable because there is no “plaintiff” within the meaning of the expression used in Article 23 of the VPILA, which literally provides for the domicile of the spouse who files the claim. If so, Article 42, paragraph 1 would be discarded as a criterion conferring jurisdiction in non-contentious divorces. Theoretically, one can assume that the petitioning spouse “files” for divorce, in which case Article 23 would be enforced in a distributive manner, requiring verification of the habitual residence of both spouses for the purposes of determining the applicable law, and thus a declaration regarding Venezuelan jurisdiction if the law were to be Venezuelan. The distributive enforcement would imply an assignment of a legal order to each spouse, which would correspond to their respective places of domicile. Such

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(i) (ii)

(iii) (c)

interpretation would create a legal fiction encompassing a lawsuit from both spouses. This fiction would raise doubts about whether Article 23 would be enforced by analogy to a situation which is not expressly regulated by the provision, such as in cases of non-adversarial divorces. Under such a premise, the judge would be indirectly applying analogy as a source for determining jurisdiction when dealing with applicable law issues under the parallelism criterion. Such conduct would undermine the generally accepted prohibition of using analogy a as source for conferring jurisdiction. If accepted, a divorce claim brought by both spouses would create three particular situations, which must be studied separately. If both spouses are domiciled in Venezuela, then the terms would be interpreted in a distributive manner. Thus, the law applicable to the merits would be that of Venezuela, therefore conferring jurisdiction to our judges. If both spouses are domiciled abroad, the same reasoning mentioned in point b.1. would be enforced. Given the fact that Venezuelan law would not be applicable to the case, our judges would have no jurisdiction to adjudicate. If the spouses are domiciled in different places and one of them is located in the Venezuelan territory, our judges would always have jurisdiction with respect to the spouse domiciled in the country. Finally if Article 23 is not to be enforced distributively, the consideration would limit itself to the person whose place of domicile is in the Venezuelan territory. Our judges would characterise such an individual as the “plaintiff spouse”, granting jurisdiction to the court through parallelism.

This latter interpretation of Article 42, paragraph 1, is supported by Venezuelan Professor HAYDÉE BARRIOS,23 who is in favour of applying the criterion of parallelism for non-contentious divorce cases in which at least one of the spouses is domiciled in the Republic. However, we are inclined to favour the first of the above-mentioned interpretations, by which Article 23 of the VPILA is not a provision aimed at all types of divorce, but only to contested divorces. Such position is by no means to be considered an irreducibly positivist one. It rather purports to find a solution more in line with the ratio of the rule in question. In this regard, we believe the criterion of parallelism should not apply to non-contentious divorce cases in order to determine the jurisdiction of Venezuelan judges. We turn now to paragraph 2 of Article 42 of the VPILA. It provides for court selection (active choice of court) as a criterion conferring jurisdiction, provided there is an effective connection with the territory of the Republic. In this regard, the VPILA coincides with the BC, establishing a criterion of jurisdiction based on the will of the parties and the requirement to have a connection with the territory of the judge in whose jurisdiction litigation is intended. It is important to note, however, that the BC precisely identifies the possible factors that may constitute such connection, requiring the Venezuelan domicile or 23

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Divorce in the Venezuelan System of Private International Law nationality of either party. Article 318 of the BC is therefore subject to the verification of strictly subjective and provided elements. By contrast, the VPILA allows for a broader approach, with an open list of subjective and objective connecting factors. Such factors can be adapted to cases of divorce, by considering, e.g., the place of celebration of the marriage; the place of contracting prenuptial agreements, if applicable; or even the location marital property.24 Articles 44 and 45 of the VPILA provide for two different ways in which choice of court agreements may be reached, through express and tacit court selection. Differing from the provision set forth in Article 321 of the BC, the VPILA does not require an express exclusion of the fora that would otherwise have jurisdiction. Express choice only requires that the choice be made in writing, whereas tacit choice is subject to the procedural conduct of the parties. Plaintiffs make a tacit choice when they file a claim. Defendants make a tacit choice when they take, in a particular trial, any procedural step other than objecting to the jurisdiction of the Venezuelan court or opposing a preventive measure. Like paragraph 1 of Article 42, paragraph 2 of the same article is unclear in terms of how it applies to cases of non-contentious, as opposed to contentious divorces. In a contested divorce, a tacit choice of court may be enforceable since it only requires that the plaintiff file a claim and the respondent to take any procedural step other than the two above-mentioned. Express choice of court is also possible in this type of divorces, if we consider the possibility that a prenuptial agreement, concluded in Venezuela or abroad, provided a choice of court clause and under the express condition that there is a connection with Venezuela. Although these kind of agreements are not regularly seen in Venezuela, a court decision involving them may very well be issued in the future. Joint or individually-filed (but mutual) divorce claims may generate, by their very nature, a tacit choice of court, by the joint or separate filing of the claim.25 Although not overtly dealt with by the studied provisions, such conduct evidences a clear will to tacitly choose Venezuelan courts. Venezuelan prof. HERNÁNDEZ-BRETÓN26 believes that Article 45 of the VPILA constitutes a rule with no independent existence, since it develops a complementary function to Articles 40(4)27 and 42(2) of the same legislation. Consequently, Article 45 exclusively regulates cases of contentious jurisdiction, and does not extend to voluntary jurisdiction. We agree with such an approach, 24 As pointed out by Professor PÉREZ PACHECO, for the purposes of Article 42(2), the domicile of the defendant is excluded as an effective link, because it constitutes a general criterion conferring jurisdiction under Article 39 of the VPILA. See: Y. PÉREZ PACHECO (note 5), at 152-154, particularly at 153. 25 In these types of divorces, some courts require the presence of both spouses at the time of filing the case. Such rulings undermine the provisions set out at Article 185-A of the Venezuelan Civil Code, which allows either claimant to file for divorce. In practice, such rulings generate a situation in which joint claims are not admitted due to the lack of the above-mentioned required dual presence. 26 E. HERNÁNDEZ-BRETÓN, Sumisión tácita, in Ley de Derecho Internacional Privado, T. II., FCJP/UCV, Caracas 2005, p. 1035-1036. 27 The rule affirms Venezuelan jurisdiction when the parties expressly or tacitly agree to select it. It does not cover property claims (actio in rem).

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes reaffirming what we referred to above in terms of separating the concept of voluntary jurisdiction and issues of contentious and non-contentious divorce. Therefore, paragraph 2 of Article 42 of the VPILA covers only the two last mentioned divorces. In practice, the Venezuelan Supreme Court of Justice has held in noncontentious divorce cases, in accordance with Article 185-A of the CC, that Venezuelan courts have jurisdiction based on Article 42(2) of the VPILA. The joint filing of the claim has been considered a valid express choice of court agreement. Such approach has also been repeated in separation and property claims.28 We do not agree with this jurisprudential criterion. If Venezuelan judges have jurisdiction by virtue of Article 42(2), it will not be under a supposed express choice of court agreement but rather under a tacit one. However, in the latter case, the provisions characterising such conduct will not be those referred to in the VPILA. Notwithstanding, we agree that a jointly and voluntarily-filed divorce claim would generate a tacit choice of court agreement.29 We believe that if the claim is filed by one of the parties, it must be understood that the other one has tacitly agreed to the jurisdiction of the court, provided that it performed any other procedural activity not covered in Article 45 of the VPILA or Article 322 of the BC).

III. The Determination of the Applicable Law to a Dispute Relating to Matters of Divorce In determining the law applicable to divorce, it is worthwhile to note again the importance of the distinction between contentious and non-contentious divorce within the BC and the VPILA at an international and state level, as well as the possibility to resort to scholarly opinion and jurisprudence as additional sources of law.30 Thus, in the presence of relationships connected to the legal systems of States parties to the BC, such treaty becomes enforceable in order to determine the applicable law to the divorce, failing which the VPILA becomes operational. We will introduce the Venezuelan provisions in such order.

In this regard, see judgment of the PAC/SCJ, file No. 2010-0989 of 12/08/2010. As illustrated in the following judgments: PAC/SCJ, file No. 2010-0559 of 07/22/2000 and PAC/SCJ, file No. 2008-0750, of 10/08/2008. 30 Before the entry in force of the VPILA, the law applicable to matters of divorce was determined by conventional sources such as Articles 52 to 56 of the BC and, at the domestic level, by rules of a substantive character provided in Articles 755 of the CPC, 185 and 185-A of the CC. Under the principle of retroactivity of the law provided by Article 24 of the Constitution, applicable to the subject of divorce, we must consider that the aforementioned rules remain in force with the entry into force of the VPILA, which incorporates in its Article 23, a new provision on the matter. 28 29

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Divorce in the Venezuelan System of Private International Law A.

Contentious Divorce

With respect to the BC, Articles 52, 53, 54, 55 and 56 govern all issues relating to divorce and legal separation. Only the provisions set forth in Articles 52, 54 and 55 constitute conflict-of-law rules that provide the applicable law to such issues. Article 52 determines the legal system which governs divorce and the separation of bodies, using the conjugal domicile of the spouses as a connecting factor. Article 54 provides the law applicable to the legal grounds for divorce and the separation of bodies, subjecting it to the law of the place of the filing of the claim. Article 55 merely reiterates the regime applicable to the procedure, the universally-recognised principle of lex fori regit procesum, by which the law of the judge governs the process. The substantive norms set forth at Articles 53 and 56 perform an auxiliary function, complementing the aforementioned conflict-of-law rules. It is important to note that while we will limit ourselves to examine, in this section, contentious divorces, BC regulation provided in these articles extend to all types of divorce. The interpretation of Article 23 of the VPILA is not problematic in terms of the law applicable to contested divorces. The article provides a clear procedural distinction between the parties – plaintiff and defendant – conferring legislative competence on divorce and separation of bodies issues to the law of the domicile of the spouse who files the claim. The mandate to implement the law of the domicile of the spouse who files the claim is subject to two conditions laid down in the second part of the rule and destined to prevent possible fraudulent evasions of the law through manoeuvres seeking a change of domicile in order to gain undue benefits. One of these conditions is objective in nature, requiring domicile for a period of at least one year. The other has a subjective character, requiring that the new domicile be coupled with the animus to establish regular residency. The law applicable to divorce is different in both the BC and the VPILA, but not in the choice of the connecting factor destined to regulate the personal law. In both cases the law provides for the domicile. The difference lies in the singularity or duality of the person whose habitual residence is to be considered. Under the BC, the marital domicile is considered, whereas under the VPILA, the plaintiff’s domicile is considered. In such circumstances, the determination of the applicable law depends on the elements of the case and the link that the latter has with the Contracting States of the BC. B.

Non-Contentious Divorce

The first paragraph of Article 185 of the CC, provides for the “conversion to divorce” rule. Under it, in such cases where 1) more than a year has lapsed after a judicial decree of legal separation was issued, and 2) there been no reconciliation between the spouses in that period, the court may turn the separation decree into a divorce. If the case contains foreign elements, then a study of the enforceability of the BC is required. If so, then the court will enforce Articles 52 through 56 of such treaty in the same manner as that provided for contested divorces. If not, then the Yearbook of Private International Law, Volume 16 (2014/2015)

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes court will enforce Article 23 of the VPILA, which governs divorce and separation of bodies. In the latter case, an issue of interpretation will consequently arise in the same manner in which we have previously mentioned above, and to which we have proposed three possible interpretations to the term “spouse filing lawsuit” (see section 2.2). We have also introduced a subsequent position on whether or not to proceed with parallelism as a criterion conferring jurisdiction. In this context, there are three possible hypotheses: 1) Article 23 is inapplicable, because there is no plaintiff spouse, 2) both spouses file for divorce, in which case this article would apply in a distributive manner31 and, 3) Article 23 applies to the person whose domicile is in the Venezuelan territory (rather than in a distributive manner), characterising him or her as the “plaintiff spouse” in order to make the situation correspond to the factual circumstances provided in the rule. We are inclined to be more flexible in the case of determining the applicable law than when dealing with jurisdictional aspects previously mentioned. We are inclined toward accepting the third alternative mentioned above, which purports to enforce Venezuelan law on the merits of the case if either spouse is domiciled in Venezuela. Article 185-A of the C.C. also provides for another case of non-contentious divorce. In it, if the spouses have been de facto separated for over a period of 5 years, paragraph 3 of this Article comes into play. It requires proof of residency for ten years in the country if the plaintiff has a foreign nationality and married in a This is the interpretation followed by a First Instance Court in a case where it had to determine the law applicable to a divorce in which the Venezuelan spouses, domiciled in Spain and in Venezuela, respectively, requested such judgment by mutual agreement, based on Article 185-A of the CC. After declaring it to contain PIL elements, the judge enforced Article 1 of the VPILA. He further declared that there were no enforceable treaties between the two connected States, Spain and Venezuela. In order to ascertain adjudicative authority (jurisdiction), he analysed the parallelism criterion (Asser principle) set forth at Article 42(1) of the VPILA, finally landing on Article 23 of the same Act, which regulates the law applicable to divorce through the domicile of the plaintiff. Under Article 12 of the same Act, the domicile of the female spouse must be analysed independently from that of the male spouse. Since both spouses were domiciled in different countries (see above), Article 23 was to be enforced distributively. Under it, the law applicable to the spouse domiciled in Spain was that of Spain. The law applicable to the spouse domiciled in Venezuela was that of Venezuela. Upon examining Article 107 of the Spanish Civil Code, the judge concluded that Spanish conflict-of-law rules regulated divorce through the law of the common nationality of the spouses. Since both spouses were Venezuelan, there was a renvoi (1st degree) to Venezuelan law, thus granting jurisdiction to its courts by way of parallelism. Once adjudicative authority affirmed, then the judge used the same reasoning in order to determine the law applicable to the merits of the divorce. As a consequence of renvoi, Venezuelan law was enforced to the case. We believe that the reasoning of the court is somewhat questionable as to the issue of determining jurisdiction. This is in contrast to the more acceptable treatment of the applicable law. We believe that renvoi occurs as a result of the enforcement of foreign laws, limiting itself to determine the law applicable to the issue at hand. It does not grant adjudicative authority to a particular judge if we consider that jurisdiction consists of an authority derived from sovereign State power, which must be expressly attributed in order to be enforced. See details in: judgment issued by the Civil, Commercial, Transit and Banking First Instance Tribunal (4th) of the Judicial Circuit of the Metropolitan Area of Caracas, file No. AH14-F-2008-000358 of 08/07/09. 31

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Divorce in the Venezuelan System of Private International Law foreign country. If the case involves Contracting States to the BC, Article 185-A will take precedence. The previous assertion is supported by practice.32 The imperative character of this provision turns it into an internal peremptory rule (norme d’application nécessaire), which purports as its main objective, not to consider conflict-of-law rules and to deny the possibility of considering a foreign law to govern such a case. This institution is embedded in the acceptance of a plural methodology destined to deal with PIL cases. The exceptional character of the internal peremptory rules demands a strict interpretation of the factual circumstances regulated by them. Only a restrictive interpretation and enforcement of this rule ensures that its use does not turn discriminatory in nature.33

IV. Enforcement of Foreign Divorce Judgments In the case of foreign divorce judgments and, after determining the international or national character of the enforceable source, depending on whether or not such judgment is issued by the authorities of States Parties to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (IACEVFJAA),34 our courts must verify if the decision is the result of a contentious or non-contentious divorce. This is needed in order to ascertain the internal competence of the judicial organ which is to decide the exequatur procedure.35 32 See judgments issued by the Civil, Commercial, Agrarian, Transit, Maritime and Banking First Instance Tribunal (3rd) of the Judicial Circuit of the State of Sucre, file N° 6126-05 of 01/ 27/06 and file No. 6262-05 of 11/15/05; and by the Civil, Commercial Agrarian and Transit First Instant Court of the Judicial Circuit of the State of Amazonas, file No. 05-6302, 12/19/05 and the Tribunal for the Protection of Children and Adolescents of the Judicial Circuit of the State of Zulia, file No. 10871 of 11/ 27/08. 33 However, the newly enacted Organic Law of the Special Jurisdiction for Community Peace and Justice gives competence to peace judges to declare, without previous procedures and in the couple’s presence, divorce or the dissolution of stable partnerships as long as such separation is agreed to mutually (Art. 8(8)). This provision also requires the petitioners to be domiciled in the local territorial circuit in which the peace and community judge is competent, and that the couple does not have any children, or, in case they do, that the latter be 18 years of age or more at the time of the petition. Official Gazette No. 39.913 of 05/02/2012. 34 Official Gazette No. 33.144 of 01/151985. CIDIP II, Montevideo Uruguay, 1979. Notably, although the Agreement on Implementation of Aliens Acts, known as the “Bolivian Agreement” (signed in Caracas on 07/18/1911. Approved by Congress on 06/11/1912, and ratified by the Executive branch on 12/19/1914) is also in force in Venezuela, its applicability has been virtually inexistent by virtue of the ratification by the same countries (Bolivia, Colombia, Ecuador, Peru and Venezuela) of the later IACEVFJAA. There are also various provisions in the Bustamante Code that deal with the enforcement of foreign judgments. However, Venezuela made reservations to such articles, precluding their consideration in a particular case (Articles 323 et seq.). 35 The internal competence (ratione materiae) of the courts to hear claims for enforcement is determined by the contentious or non-contentious nature of the case decided by a foreign court. Thus, it could fall upon the Supreme Court of Justice or the Superior

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes This generates some difficulties when dealing with initially contentious cases which then end up with a mutual agreement. In such cases, the court issues a judgment homologating such agreements. In this regard, the Supreme Tribunal of Justice has upheld a criterion under which seized courts are to consider such cases non-contentious and are to decline jurisdiction in favour of other courts where necessary.36 The requirements to grant exequatur, provided in both the IACEVFJAA and the VPILA, demonstrate that there are coinciding opinions on the elements that must be met. There are, however, some notable differing provisions. One of them includes the requirement of public policy since the first of the above-mentioned sources demands that foreign judgments not be manifestly contrary to the public policy principles and laws of the receiving State, while such requirement was excluded from the VPILA. The latter repealed Article 851 of CPC, which did require it. However, in practice, public policy is duly investigated when enforcing Venezuelan internal law.37 Both sources coincide in terms of the possibility of allowing enforceability to a severable part of the foreign judgment. Although the IACEVFJAA requires the parties to request such conduct, the VPILA does not. Such provisions are especially useful in cases enforcing divorce judgments which include agreements on ownership of real property located in Venezuela. This is so because the severability rule allows for enforceability of the marriage dissolution without encroaching on the legislative competence (Article 27 of the LDIP) and jurisdictional (Articles 39, 40(2) and 47 of the LDIP) considerations under which Venezuela might have to settle controversies concerning rights in rem of assets situated in the country.38 Courts of the place where the judgment will be enforced, as provided at Article 856 of the CPC. With regard to minors, according to Article 177 of the Law for the Protection of Children and Adolescents, such competence is granted to the High Courts for the Protection of Children and Adolescents. If the case is contentious in nature, our most recent law provision governing the functions of the Supreme Court of Justice (Official Gazette No. 39.522 of 10/01/2010) presents a unique regulation by providing a duplication of internal competences for enforcing foreign judgments, attributing the latter both to the Political and Administrative Chamber (Article 26(23)) and to the Civil Cassation Chamber (Article 28(2)) of the Supreme Court of Justice. This changes the previous regime which gave such competence exclusivity to the latter Chamber. Moreover, in a recent judgment (CC/SCJ, No. 51 of 02/20/2014), the Constitutional Chamber of the Supreme Court further provided that contentious matters which involve the rights of children and adolescents are to be litigated before the Social Cassation Chamber of the same Court. 36 See judgment of the Civil Cassation Chamber of the SCJ, file No. 2010-000653 of 02/18/2011. See, however, the dissenting opinion of a Magistrate, leaning towards the opposite argument. 37 See further studies on the developments of such control by our courts in: Y. PÉREZ PACHECO, La sentencia extranjera en Venezuela. Requisitos-procedimiento-efectos, in Serie Trabajos de Ascenso, No. 17, FCJP/UCV, Caracas 2011, p. 149-162. 38 For example: judgments issued by the Superior Court (2nd) for the Protection of Children and Adolescents for the Judicial Circuit of the Metropolitan Area of Caracas and National Circuit for Matters of International Adoption, file No. AP51-S-2007-007877 of 10/25/2007; by the Civil, Commercial, Transit and Banking Superior Court of the Judicial Circuit of the State of Aragua, file No. C-16.844-11, 3/2/2012; by the Civil, Commercial

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Divorce in the Venezuelan System of Private International Law Finally, it is important to remember that the grounds for granting divorce are the ones provided at Articles 185 and 185-A of the CC and Article 755 of the CPC. Such grounds must be functionally interpreted as to allow similar, yet not exact, grounds for divorce, as provided for by foreign laws in the context of exequatur procedures.39

V.

Conclusions

Under Venezuelan law, every divorce case comprising foreign elements must take into account the exclusive grounds for granting divorce claims, as provided at Article 755 of the CPC and Article 185 of the CC. Article 185-A of the CC also comes into play when dealing with non-contentious divorce cases, in particular the third paragraph, which is imperative in nature and refers to foreigners who married outside of Venezuela. The jurisdiction of Venezuelan judges, in terms of conventional sources, is determined by Article 318 of the BC in such cases of contentious or noncontentious divorces, linking Venezuela to another State Party to such treaty. In the absence of such a connection, the VPILA will be enforced. For contested divorces, under Article 39 of the same Act, Venezuelan courts will have jurisdiction when the defendant spouse is domiciled in Venezuela. If the domicile is abroad, then Article 42 comes into play. We believe that for non-contentious divorces, only paragraph 2 of Article 42 is enforceable, requiring a choice of court agreement selecting Venezuelan courts, provided there is a connection to our country. The applicable law to divorce depends largely on the source enforced. Under the BC, Articles 52 through 56 are enforceable to both contentious and noncontentious divorces. When considering internal sources, Article 23 of the VPILA may be used in contested divorces. In non-contentious divorces, the problem of interpretation of the aforementioned provision remains. Until an express provision is added to the VPILA, we believe in the need to have a flexible interpretation of this provision, requiring only one of the spouses to have its domicile in Venezuela. and Transit Superior Court (5th) of the Judicial Circuit of the Metropolitan Area of Caracas, file No. AP51-S-2010-009644 of 05/03/2011; by the Civil, Commercial, Transit, Banking and for the Protection of Children and Adolescents Superior Court (1st) of the Judicial Circuit of the State of Carabobo, file No. 10983 of 04/08/2011; by the Civil Cassation Chamber of the SCJ, file No. AA20-C-2009-000358 of 06/18/2010 and the PAC/SCJ, file No. 16511 of 12/12/2001. It is common to observe the severability of judgments of divorce when they also include decisions relating to children, e.g., dealing with patria potestas, custody, and maintenance obligations. 39 See judgments issued by the CCC/SCJ dated 01/24/2012, 03/01/2012, 03/14/2012 and 05/31/2012, files No. AA20-C-2011-000093, No. 2011-000250, No. AA20-C-2010000290 and No. 2010-000570, respectively. Contrast judgments of the Superior Court (4th) for the Protection of Children and Adolescents of the Judicial Circuit for the Metropolitan Area of Caracas, and the National Circuit of International Adoption, dated 03/28/2012, 04/16/2012 and 06/14/2012, files No. AP51-S-2012-005613, No. AP51-S-2007-019327 and No. AP51-S-2012-011242, respectively.

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Claudia Lugo Holmquist / Mirian Rodríguez Reyes Finally, regarding the recognition of foreign divorce judgments, consideration of the contentious or non-contentious nature of the issue that gave rise to the foreign judgment constitutes the determining element of the internal competence of our courts. If the judgment comes from a State Party to the IACEVFJAA, then Article 2 comes into play. If not, then Article 53 of the VPILA is the enforceable source. It is also important to remember that the grounds on which such foreign divorce is granted must be compatible with those set forth in our domestic legislation. Under the principle of severability, Venezuelan legislation may grant partial exequatur to foreign divorce claims.

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INTERNATIONAL JURISDICTION UNDER THE 2013 PORTUGUESE CIVIL PROCEDURE CODE Maria João MATIAS FERNANDES*

I. II.

VI. VII.

Introduction A Preliminary Topic: The Portuguese Domestic Rules on International Jurisdiction in Context The General Grounds for International Jurisdiction (Article 62) A. General Aspects B. Contents 1. The “Coincidence Criterion” 2. The “Causality Criterion” 3. The “Necessity Criterion” Heads of Exclusive Jurisdiction (Article 63) A. General Aspects B. Contents 1. Rights in Immovable Property 2. Companies and Other Legal Persons 3. Validity of Entries in Public Registers 4. Enforcement over Immovable Property 5. Insolvency and Revitalisation Prorogation of Jurisdiction A. Choice of Court Agreements (Article 94) B. Submission Parallel Proceedings (Article 580/3) Concluding Remarks

I.

Introduction

III.

IV.

V.

Enacted in June 2013,1 a new Civil Procedure Code is in force in the Portuguese legal order since 1 September 2013.2 Like the former code, expressly repealed,3 the new code (hereinafter, the Code) deals with questions of international procedural Teaching Assistant in Private International Law at the Law School of Universidade Católica Portuguesa (Lisbon, Portugal). 1 See Lei n.º 41/2013, of 26 June (Diário da República, 1ª Série, N.º 121, 26 de Junho de 2013, 3518). 2 See Article 8 of Lei n.º 41/2013 (note 1). 3 See Article 4/a), of Lei n.º 41/2013 (note 1). *

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Maria João Matias Fernandes law, namely with matters of international jurisdiction4 and the recognition of judgements.5 The purpose of this note is to review the Code’s provisions in the field of international jurisdiction, and in particular to scrutinise and critically assess the aspects of innovation brought about by the reform in that area. Rather than a full scale article-by-article commentary, this piece is intended to provide an overview of the current Portuguese rules.6 After a concise preliminary evaluation of the relevance of Portuguese domestic rules on international jurisdiction within the wider setting of international, in particular European, law making (section II.), the analysis will tackle the provision in the Code that deals with the general grounds for international jurisdiction of the Portuguese courts (section III.). It will then consider the cases that only Portuguese courts, to the exclusion of all others, are deemed competent to hear (section IV.), peruse the terms under which the parties’ choice of venue is respected (section V.), and then examine the provision on lis pendens (section VI.).

II. A Preliminary Topic: The Portuguese Domestic Rules on International Jurisdiction in Context The evolving Europeanisation of Private International Law, a reality since the Amsterdam Treaty of 1997, hardly needs emphasising. A significant number of the rules brought about by one such process concern the field of international jurisdiction. In view of their supranational origin, such rules prevail over the Portuguese domestic provisions on jurisdiction.7 The same is true with regard to the rules enshrined in international conventions to which Portugal is a party.8 The obvious outcome of this is the subsidiary or residual scope of application of Portuguese internal law.9 This notwithstanding, the failure of the original proposal to make the Brussels I-bis jurisdictional provisions universal gives renewed interest to the consideration of domestic rules.

See Articles 59, 62, 63 and 94. See Articles 978-85. 6 For a detailed analysis of the discipline set out by the new Code in the field of international jurisdiction as well as the recognition and enforcement of judgements, see R. MOURA RAMOS, O Direito Processual Civil Internacional no Novo Código de Processo Civil, Revista de legislação e de jurisprudência 2013, p. 82. 7 See Article 8/4 of the Constitution of the Portuguese Republic. 8 See Article 8/2 of the Constitution of the Portuguese Republic. 9 One such superfluous consideration is the object of Article 59 of the Code. 4 5

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III. The General Grounds for International Jurisdiction (Article 62) A.

General Aspects

Under the heading “Grounds for international jurisdiction” (Factores de atribuição da competência internacional), Article 62 lays out the criteria pursuant to which the competence of Portuguese courts to hear an international case is to be assessed. Despite the general scope of Article 62, Portuguese courts will in fact also be competent to entertain an international case under the terms set out by Articles 63 (Exclusive Jurisdiction of the Portuguese Courts – Competência exclusiva dos tribunais portugueses)10 and 94 (Choice of Court Agreements – Pactos privativo e atributivo de jurisdição).11 Additionally, it is worth noting that while the Code covers the generic Portuguese rules on civil and commercial matters, there are other domestic rules also dealing with international jurisdiction.12 B.

Contents

1.

The “Coincidence Criterion”

Portuguese courts will be deemed competent to entertain an international case where the connecting factor of the pertinent rule dealing with internal territorial jurisdiction points to a Portuguese court: such is the determination of Article 62/a).13 This solution, long-standing in the Portuguese legal system,14 essentially boils down to drawing out criteria on international jurisdiction from domestic rules on venue.15 It demonstrates that the connecting factors retained by the domestic rules on venue constitute, in relation to each of the matters they respectively address, a significant enough connection from the point of view of jurisdiction.16 The domestic rules on venue are set out in Articles 70-81 of the Code. See, infra, section IV. See, infra, section V. 12 Consider, illustratively, Articles 10 and 11 of Decreto-Lei n.º 480/99, of 9 November (Diário da República, 1ª Série-A, N.º 261, 9 de Novembro de 1999, 7842), as amended, which deal with international employment contracts. For an analysis thereof, see L. LIMA PINHEIRO, Direito Internacional Privado, vol III. Competência Internacional e Reconhecimento de Decisões Estrangeiras, 2nd edn, Almedina 2012, p. 296-298. 13 “Os tribunais portugueses são internacionalmente competentes: a) Quando a acção possa ser proposta em tribunal português segundo as regras de competência territorial estabelecidas na lei portuguesa”. 14 For detailed references, see R. MOURA RAMOS (note 6), at fn. 35. 15 Hence the widely divulged reference, both in the legal literature and in case law, to a “coincidence criterion” (critério da coincidência). 16 See, illustratively, L. LIMA PINHEIRO (note 12), at 288; R. MOURA RAMOS (note 6), at 89. 10 11

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Maria João Matias Fernandes 2.

The “Causality Criterion”

Pursuant to Article 62/b), Portuguese courts are found to have jurisdiction where the fact which stands as the cause of action – or, in the case of complex causes of action, an element thereof – took place in the Portuguese territory.17 In matters relating to tort liability, for instance, Portuguese courts will have jurisdiction when part of the damage occurred in the Portuguese territory even where the event giving rise to it, as well as the remainder of the damage, happened elsewhere. Commonly addressed under the denomination of the “causality criterion” (critério da causalidade), the rule was reintroduced in the Portuguese legal system after a 2008 legal reform18 had removed it therefrom.19 Despite doctrinal suggestions to the contrary,20 the Portuguese legislator did not take the opportunity for innovation. Rather, the legislator stuck to a broad formulation of the rule. In line with some viewpoints already expressed in the literature,21 it is submitted that the criterion in Article 62/b) may lead to the exorbitant jurisdiction of the Portuguese courts, namely where, in the case of a complex cause of action, only one of the elements thereof took place in the Portuguese territory. One plausible solution would have been for the rule in Article 62/b) to be supplemented by a proviso incorporating the equitable doctrine of forum non conveniens. Conspicuously, however, this was not the path followed by the legislator.22

“Os tribunais portugueses são internacionalmente competentes: (…) b) Ter sido praticado em território português o facto que serve de causa de pedir na acção, ou algum dos factos que a integram”. 18 See Article 160 of Lei n.º 52/2008, of 28 August (Diário da República, Série I, N.º 166, 28 de Agosto de 2008, 6088). With regard to this and other controversial aspects of Lei n.º 52/2008 on issues of international jurisdiction, see M.J. MATIAS FERNANDES, Uma Questão de Competência (Jurisdicional Internacional). A Lei n.º 52/2008, de 28 de Agosto, e os Artigos 65.º e 65.º-A do Código de Processo Civil, in P. OTERO/ F. ARAÚJO/ J. GAMA (eds), Estudos em Memória do Prof. Doutor J.L. Saldanha Sanches, vol II, 2012, p. 603. 19 Or nearly, as, quite inconsistently, Article 10 of Decreto-Lei n.º 480/99, of 9 November (note 12) was not changed accordingly. 20 See A. FERRER CORREIA/ F. FERREIRA PINTO, Breve apreciação das disposições do anteprojecto de código de processo civil que regulam a competência internacional dos tribunais portugueses e o reconhecimento de sentenças estrangeiras, Revista de Direito e Economia 1987, p. 25, at 33-34; A. FERRER CORREIA, Le système portugais sur la compétence internationale (directe), in Ch. DOMINICÉ, et al., Études de droit international prive en l’honneur de Pierre Lalive, 1993, p. 49, at 52; R. MOURA RAMOS, Les clauses d’exception en matière de conflits de lois et de conflits de juridictions – Portugal, in Das Relações Privadas Internacionais. Estudos de Direito Internacional Privado, 1995, p. 295, at 317. 21 Consider the authors and works referred to in n 20. See also L. LIMA PINHEIRO (note 12), at 279. 22 If one understands correctly, L. LIMA PINHEIRO is of the opinion that the rationale behind the causality criterion requires that the latter be interpreted restrictively. See (note 12), at 279-280. 17

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International Jurisdiction under the 2013 Portuguese Civil Procedure Code 3.

The “Necessity Criterion”

Article 62/c) embodies the so-called “necessity criterion” (critério da necessidade) and grants Portuguese courts jurisdiction whenever the plaintiff’s alleged right can only be rendered effective through proceedings brought before Portuguese tribunals, provided the dispute has a significant connection with the Portuguese legal system.23 The possibility that Portuguese courts intervene as a forum necessitatis does not require that absolutely no other court is available. As made explicit by the wording of the provision, in order for the jurisdiction of Portuguese courts to be grounded, it is enough that the commencement of proceedings before foreign (competent) courts causes the plaintiff meaningful hardship.24 While this is (now) clear, the literature and case law are divided as to whether one can resort to the criterion in Article 62/c) once the impossibility to render effective the plaintiff’s alleged right stems from the solutions of the lex causae as determined by an existing foreign court. Needless to say, the doubt presupposes, as a logical requirement, that the plaintiff’s alleged right exists and may be rendered effective under the lex causae as determined by the Portuguese choice of law rules. From the point of view of some, the “necessity criterion” allows for the jurisdiction of Portuguese courts to be established only where a foreign competent court is unavailable (alternatively, where the commencement of proceedings before a foreign competent court causes the plaintiff meaningful hardship).25 Disagreeing, others embrace the notion that identifying the lex causae (as such determined both under Portuguese choice of law rules and foreign choice of law provisions) is a wholly germane exercise to the functioning of the “necessity criterion”.26 Finally, steering a middle course between the two extremes, LIMA PINHEIRO sustains that the Portuguese courts should be held to have jurisdiction on the basis of the “necessity criterion” where a decision on the merits by an existent foreign court

23 “Os tribunais portugueses são internacionalmente competentes: (…) c) Quando o direito invocado não possa tornar-se efectivo senão por meio de acção proposta em território português ou se verifique para o autor dificuldade apreciável na propositura da acção no estrangeiro, desde que entre o objecto do litígio e a ordem jurídica portuguesa haja um elemento ponderoso de conexão, pessoal ou real.” For references concerning the deeper roots of this rule in the Portuguese legal system, see R. MOURA RAMOS (note 6), at 90 and fn. 45. 24 The case where a foreign State, the courts of which have jurisdiction, is at war, adequately illustrates the envisaged legal hypothesis. In this sense, and setting out further examples, see L. LIMA PINHEIRO (note 12), at 290. 25 Consider J. BARBOSA DE MAGALHÃES, Estudos sobre o novo Código de Processo Civil, 2.º vol. Da competência internacional, 1947, p. 404-405; A. DOS REIS, Comentário ao Código de Processo Civil, vol. I, 2nd edn 1960, p. 142; J. ANTUNES VARELA/ J.M. BEZERRA/ J.J. SAMPAIO E NORA, Manual de processo civil, 2nd edn 1985, p. 205-206. 26 See A. ANSELMO DE CASTRO, Direito processual civil declaratório, 1982, p. 32, at fn. 1; A. FERRER CORREIA/ F. FERREIRA PINTO (note 20), at 38; A. FERRER CORREIA (note 20), at 55; M. TEIXEIRA DE SOUSA, A Competência Declarativa dos Tribunais Comuns, 1994, p. 54.

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Maria João Matias Fernandes assisted with jurisdiction contravenes the Portuguese international ordre public.27 While the position advocated by LIMA PINHEIRO is not an unquestionable one, it is well supported.

IV. Heads of Exclusive Jurisdiction (Article 63) A.

General Aspects

Under the heading “Exclusive Jurisdiction of the Portuguese Tribunals”, Article 63 sets out, by way of an exhaustive list, a number of cases that only Portuguese courts, to the exclusion of all others, are deemed competent to hear. The exclusive nature of the grounds for jurisdiction set out in Article 63 is further evinced by Article 94/3/d), which provides that choice of court agreements purporting to exclude the exclusive jurisdiction of Portuguese courts as grounded in Article 63 shall have no legal effect.28 Along the same lines, Article 980/c) of the Code makes clear that a foreign judgement resulting from jurisdiction exercised on the basis of a provision conflicting with any of the grounds listed in Article 63 shall not be recognised or enforced in Portugal.29 As will be readily apparent, some of the rules set out therein purely and simply lack room for application, an obvious derivation from the discipline enshrined in well-known European instruments in force in the Portuguese legal order. B.

Contents

1.

Rights in Immovable Property

Pursuant to Article 63/a),30 Portuguese courts have exclusive jurisdiction to entertain proceedings having as their object rights in rem in immovable property situated in Portugal. Likewise, they will be deemed to have exclusive jurisdiction 27 See L. LIMA PINHEIRO, A Triangularidade do Direito Internacional Privado – Ensaio sobre a Articulação entre o Direito de Conflitos, o Direito da Competência Internacional e o Direito do reconhecimento, in Estudos em Homenagem à Professora Doutora Isabel de Magalhães Collaço, vol. I, 2002, p. 311, at 325-329; L. LIMA PINHEIRO, (note 12), at 294-296. 28 See, infra, section V. 29 Article 980: “Para que a sentença seja confirmada é necessário: (…) c) Que (…) não verse sobre matéria da exclusiva competência dos tribunais portugueses”. 30 Which reads: “Os tribunais portugueses são exclusivamente competentes: a) Em matéria de direitos reais sobre imóveis e de arrendamento de imóveis situados em território português; todavia, em matéria de contratos de arrendamento de imóveis celebrados para uso pessoal temporário por um período máximo de seis meses consecutivos, são igualmente competentes os tribunais do Estado membro da União Europeia onde o requerido tiver domicílio, desde que o arrendatário seja uma pessoa singular e o proprietário e o arrendatário tenham domicílio no mesmo Estado membro”.

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International Jurisdiction under the 2013 Portuguese Civil Procedure Code to hear disputes, the object of which are tenancies of immovable property located in the Portuguese territory. If it were only as so far reported, Article 63/a) would fundamentally amount to a restatement of the rules already enshrined in Article 65A/a) of the repealed Code.31 Eagerness for full parallelism with the Brussels and Lugano instruments,32 however, prompted the Portuguese legislator to innovate. According to the rule set out in the second sentence of Article 63/a), an addition of the 2013 Code, in proceedings that have as their object tenancies of immovable property, concluded for temporary private use for a maximum period of six consecutive months, the courts of the European Union State in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same European Union State. It should not be considered extraordinary or even surprising that Portuguese legislation is attuned to that set forth in the context of supranational organisations to which Portugal is a party.33 What is surprising and indeed extraordinary is that the Portuguese legislator failed to appreciate that the multilateral character of the rules contained in a supranational instrument cannot be exported to the realm of a purely domestic one. The result of this gross oversight is that, as it stands, the domestic rule enshrined at Article 63/a) of the domestic Portuguese Civil Procedure Code unavailingly purports to rule on the jurisdiction of potentially all European Union courts.34 All that could have been logically and technically possible, of course, would have been for the legislator to introduce a carve-out to the rule in the first sentence of Article 63/a).35 2.

Companies and Other Legal Persons

Laying out a solution which was already adopted by the previous Code36 – and one that is also made available by Articles 16(2) of the Brussels Convention, 22(2) of the Brussels I Regulation, 22(2) of the 2007 Lugano Convention and 24(2) of Brussels I-bis Regulation –, Article 63/b) provides to the effect that Portuguese courts are exclusively competent to hear proceedings which have as their object the Fundamentally. While the former version envisaged, in broader terms, both rights in rem and personal rights in immovables located in Portugal, the 2013 version confines itself to rights in rem and tenancies in immovable property. 32 Consider Article 22(1) of the Brussels I Regulation, Article 22(1) of the 2007 Lugano Convention, and Article 24(1) of Brussels I-bis Regulation. 33 One such ambition had been, confessedly, the motivation behind previous legal reforms affecting the provisions on international jurisdiction. See, by way of illustration, the preamble to Decreto-Lei 38/2003, 8 March (Diário da República, ISérie-A, N.º 57, 8 de Março de 2013 1588, 1589). 34 Surprisingly, an analogous mistake lies at the base of Article 60/a) of the Spanish Anteproyecto de Ley Orgánica del Poder Judicial, approved by the Government on 4 April 2014. 35 Signaling the point, see R. MOURA RAMOS (note 6), at 92-93. 36 See Article 65-A/e) of Decreto-Lei n.º 44 129, of 28th December 1961, as amended. 31

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Maria João Matias Fernandes validity of the constitution or the dissolution of companies or other legal persons having their seat in Portugal, as well as proceedings the object of which is the validity of the decisions taken by the organs of the said companies and legal persons. While, as remarked, this solution had a precedent in the former Code,37 the new statute introduces one innovation. According to a (new) second provision, the court is to apply the Portuguese rules of Private International Law when determining the seat of a company or legal person. The mimetism with the Brussels and Lugano instruments is, here again, readily apparent. The merits of the solution introduced are, however, much debatable. Indeed, while there may be reasons that uphold it within the framework of supra-national instruments which rely on an autonomous concept of domicile anchored in the use of alternative, independent criteria – the convenience of assigning exclusive jurisdiction to the courts of just one State comes to mind –, the import of the solution to the sphere of internal legislation introduces avoidable complexity. Thwarting the direct use of, inter alia, Article 159 of the Portuguese Civil Code38 is particularly baffling when the core question at stake concerns the assessment of the exclusive jurisdiction of Portuguese courts based, what is more, on the location, in Portugal, of the seat of a company or other legal.39 3.

Validity of Entries in Public Registers

A third head of exclusive jurisdiction of the Portuguese courts relates to proceedings concerning the validity of entries in public registers kept in Portugal.40 While essentially retaining a rule with which the Portuguese domestic legal order was already familiar,41 the legislator took the opportunity to introduce improvements in the wording of the provision,42 concomitantly to further aligning it with the pertinent criteria of the Brussels and Lugano instruments.43 See (note 37). Pursuant to it, the seat of a legal person shall be determined by the legal person’s Articles of Association; absent such determination, a legal person is considered to have its seat at the place where it has its central administration (“A sede da pessoa colectiva é a que os respectivos estatutos fixarem ou, na falta de designação estatutária, o lugar em que funciona normalmente a administração central”). 39 Fundamentally the same line of reasoning is to be found in R. MOURA RAMOS (note 6), at 93-94. 40 “Os tribunais portugueses são exclusivamente competentes: (…) c) Em matéria de validade de inscrições em registos públicos conservados em Portugal”. 41 Since the legal reform enacted by Decreto-Lei n.º 329-A/95, of 12 December (Diário da República, I Série-A, N.º 285, 12 de Dezembro de 1995, 7780). 42 Disapproving of the former wording of the rule, see L. LIMA PINHEIRO, A competência internacional exclusiva dos tribunais portugueses, in Ruy DE ALBUQUERQUE/ A. MENEZES CORDEIRO (eds), Estudos em Memória do Professor Doutor José Dias Marques, 2007, p. 593, at 618; L. LIMA PINHEIRO (note 12), at 302. 43 See Articles 16(3) of the Brussels Convention, 22(3) of the Brussels I Regulation, 22(3) of the 2007 Lugano Convention and 24/3 of the Brussels I-bis Regulation. 37 38

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Enforcement over Immovable Property

According to Article 63/d), proceedings which have as their object the enforcement over immovable property located in Portugal fall under the exclusive jurisdiction of Portuguese courts.44 The criterion enshrined in Article 63/d) is hardly objectionable and reflects the general principle of Public International Law pursuant to which the ability to carry out acts of enforcement in the territory of a State assists the courts of such State and no others. If anything, the legislator should have extended it to enforcement proceedings over movable property located in Portugal.45 This said, the practical consequences attached to the omission will be negligible – given the referred principle of Public International Law, on the one hand, and the solutions formulated in several European and international instruments in force in Portugal, on the other.46 5.

Insolvency and Revitalisation

Proceedings having as their object the insolvency or revitalisation of individuals domiciled in Portugal, or of legal persons or companies with their corporate seat in the Portuguese territory, fall under the exclusive jurisdiction of Portuguese courts – such is the determination of Article 63/e).47 Except for a revised reference to revitalisation procedures, the rule in Article 63/e) keeps the criterion enshrined in Article 65-A/d) of the repealed Code. It is unambiguous that its application is confined to cases excluded from the scope of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings.

V.

Prorogation of Jurisdiction

A.

Choice of Court Agreements (Article 94)

The parties’ autonomous choice of court is accorded significant respect within the Code’s system of jurisdictional rules. Indeed, Article 94 enables parties to agree on the courts that are to have jurisdiction to settle any disputes which have arisen or 44 “Os tribunais portugueses são exclusivamente competentes: (…) d) Em matéria de execução sobre imóveis situados em territorio português”. 45 R. MOURA RAMOS (note 6), at 95-96. Reasoning along the same lines with reference to Article 65-A/b) of the former Code, see L. LIMA PINHEIRO (note 12), at 299300. 46 Consider Articles 16(5) of the Brussels Convention, 22(5) of the Brussels I Regulation, 22(5) of the 2007 Lugano Convention and 24(5) of the Brussels I-bis Regulation. 47 “Os tribunais portugueses são exclusivamente competentes: (…) e) Em matéria de insolvência ou de revitalização de pessoas domiciliadas em Portugal ou de pessoas colectivas ou sociedades cuja sede esteja situada em território português”.

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Maria João Matias Fernandes may arise in connection with a particular legal relationship, provided such relationship bears connections with more than one legal system.48 Under Article 94, a choice of court agreement will be deemed valid where it meets the following cumulative conditions: i)

it concerns disposable rights;

ii) it is accepted by the law of the State whose court or courts have been chosen; iii) it is grounded on a meaningful interest of at least one of the parties, provided it does not entail severe inconvenience for the other; iv) it does not conflict with the list of grounds for exclusive jurisdiction as set out in Article 63; v) it is in writing or confirmed in writing, and that explicit mention is made in it to the competent jurisdiction.49 While the discipline so far described was already enshrined in the former Code, there is one innovative aspect of importance. Indeed, while consenting in both exclusive and non-exclusive choice of court agreements, Article 94/2 deems the choice of court agreement to be exclusive in case of doubt. The solution, fine-tuned with what will be the effect normally intended by the parties50 and essentially aligned with Article 23(1) second sentence of the Brussels I Regulation, Article 25(1) second sentence of the Brussels I-bis Regulation, and Article 3(b) of the

48 Article 94/1 reads as follows: “As partes podem convencionar qual a jurisdição competente para dirimir um litígio determinado, ou os litígios eventualmente decorrentes de certa relação jurídica, contanto que a relação controvertida tenha conexão com mais de uma ordem jurídica”. 49 Pursuant to paragraph 4, an agreement is deemed to be in writing if it is contained in a document signed by the parties, or if it arises from the exchange of letters, telex, wire or other means of communication allowing for a durable record in writing of it, whether the agreement is directly contained in such instruments or follows from a reference to any other document where it is contained. Article 94/3 and 4 read as follows: “3- A eleição do foro só é válida quando se verifiquem cumulativamente os seguintes requisitos: a) Dizer respeito a um litígio sobre direitos disponíveis; b) Ser aceite pela lei do tribunal designado; c) Ser justificada por um interesse sério de ambas as partes ou de uma delas, desde que não envolva inconveniente grave para a outra; Não recair sobre matéria da competência exclusiva dos tribunais portugueses; e) Resultar de acordo escrito ou confirmado por escrito, devendo nele fazer-se menção expressa da jurisdição competente. 4 – Para efeitos do disposto no número anterior, considera-se reduzido a escrito o acordo constante de documento assinado pelas partes, ou o emergente de troca de cartas, telex, telegramas ou outros meios de comunicação de que fique prova escrita, quer tais instrumentos contenham directamente o acordo quer deles conste cláusula de remissão para algum documento em que ele esteja contido”. 50 Highlighting the point, see M. TEIXEIRA DE SOUSA, Apreciação de alguns aspectos da “Revisão do Processo Civil – Projecto”, Revista da Ordem dos Advogados 1955, p. 353, at 372; D. MOURA VICENTE, A competência internacional no Código de Processo Civil revisto: aspectos gerais, in A. MARQUES DOS SANTOS, et al., Aspectos do Novo Processo Civil, 1997, p. 71, at 89; L. LIMA PINHEIRO (note 12), at 304.

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International Jurisdiction under the 2013 Portuguese Civil Procedure Code Hague Convention on Choice of Court Agreements, departs – and fortunately so – from the one enshrined in Article 99 of the former Code. B.

Submission

Tacit or implied prorogation of jurisdiction, i.e. the legal construction whereby a court before which a defendant enters an appearance has jurisdiction even where this would otherwise be lacking in the circumstances,51 is a solution that is not endorsed by the Portuguese domestic rules on jurisdiction, at least not in general terms. Also in this regard, the Code enacted in 2013 has left things substantially unchanged. Under the joint terms of Articles 96/a) and 97/1), where a court is seized of a claim connected with a matter over which it has no international jurisdiction, it shall declare of its own motion that is has no jurisdiction. It follows that an entry of appearance by the defendant is deprived of relevance in establishing the international jurisdiction of Portuguese courts. The situation will be different, however, where the lack of jurisdiction by the Portuguese courts stems from a breach of a choice of court agreement. In the case where Portuguese courts would be deemed to have jurisdiction but for a choice of court agreement effectively concluded, it is up to the defendant to raise the issue of jurisdiction.52

VI. Parallel Proceedings (Article 580/3) Without detriment to international conventions Portugal is a party to, the circumstance that proceedings involving the same cause of action, the same parties and the same request are pending in a foreign court is of no relevance; such is the determination of Article 580/3 of the Code.53 It follows that a Portuguese court is not bound to stay the proceedings even where a foreign tribunal was the court first seized. The solution, which is “philosophically” or intrinsically coherent with the non-automatic recognition system set out at Articles 978 ff. of the Code as far as foreign judgements are concerned54 is evidently not aligned with some well-known solutions retained in prominent European instruments in force – or nearly in force – in Portugal. Adequate illustrations are provided by Articles 27 and 28 of the Brussels I Regulation, Articles 29 ff. of the Brussels I-bis Regulation, Article 19 of 51 To illustrate: see Articles 18 of the Brussels Convention, 24 of the Brussels I Regulation, 24 of the 2007 Lugano Convention and 26 of Brussels I-bis Regulation. 52 The solution also follows from Article 97/1, which reads as follows: “A incompetência absoluta pode ser arguida pelas partes e, excepto se decorrer da violação de pacto privativo de jurisdição ou de preterição de tribunal arbitral voluntário, deve ser suscitada oficiosamente pelo tribunal enquanto não houver sentença com trânsito em julgado proferida sobre o fundo da causa”. 53 “É irrelevante a pendência da causa perante jurisdição estrangeira, salvo se outra for a solução estabelecida em convenções internacionais”. 54 See L. LIMA PINHEIRO (note 12), at 317-318.

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Maria João Matias Fernandes the Brussels II-bis Regulation, Articles 12 and 13 of the EU Maintenance Regulation and Articles 17 and 18 of the EU Regulation on Successions and Wills. It defies understanding, therefore, that the wording of Article 580/3 of the Code should only safeguard international conventions by which Portugal is bound – not, of course, that there are practical consequences associated with that. More importantly, it will be acknowledged that, given the prevalent character of supranational provisions, Article 580/3 of the Code may obviously only be applied whenever the international lis pendens scenario falls outside the scope of application of the former. Particularly noteworthy in this respect is the well-known fact that Articles 33 and 34 of the Brussels I-bis Regulation give relevance to lis pendens and related actions involving proceedings pending before the courts of a third State.55

VII. Concluding Remarks The enactment of a new Code has resulted, as far as the rules on international jurisdiction are concerned, in a limited number of amendments. It might be said, thus, that a fundamental line of continuity bridges the “old” and the “new” regimes.56 While a few of those modifications stand out as unequivocal improvements – particularly noticeable is the reversal of the presumption set out by Article 94/2 with regard to choice of court agreements – others, disappointingly, are a source of perplexity. The mimicry blindly endorsed by the second sentence of both Article 63/a) and 63/b) is particularly flagrant. Accrued consideration that the legislator might dispense with the topic, already in a near future, would very much be welcomed.

While Article 580(3) declares the irrelevance of foreign lis pendens, indirect pertinence is bestowed on it by Article 980(d) of the Code. According to this provision, a foreign judgement shall not be recognised where it was given in a proceeding involving the same cause of action, the same parties and the same request relating to a dispute brought before Portuguese courts, except if the foreign court was the court first seized. 56 See R. MOURA RAMOS (note 6), at 104. 55

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NEW PRIVATE INTERNATIONAL LAW IN THE CZECH REPUBLIC Petra UHLÍŘOVÁ*

I. II.

III.

IV.

Introduction The New Act on Private International Law A. Introduction 1. The Connection between the PIL Act, International and EU Law B. Main Differences and Similarities between the New and Old PIL Acts 1. Structure of and Changes in the New PIL Act 2. Structural Changes 3. Substantive Changes: Generally 4. Substantive Changes and Novelties: Selected Articles Jurisdiction, Recognition, Enforcement, Provisions on Proceedings A. Jurisdiction, Provisions on Proceedings, Legal Status of Foreigners, Multiple Nationality 1. General Provision on Jurisdiction of Czech Courts (Article 6) 2. Provisions on Proceedings (Articles 8-13) 3. Legal Status of Foreigners (Article 26), Multiple Nationality (Article 28) B. Recognition and Enforcement of Judgments in Relation to EU Member States and Third States 1. Grounds for Non-Recognition – Major Features and Novelties (Article 15) 2. General Provision on Recognition in Property and Other Matters, Enforcement (Articles 16-18) Provisions on Different Types of Private-Law Relationships A. Certain Types of Private-Law Relationships 1. Legal Capacity – Natural and Legal Persons (Articles 29-30) 2. Bills of Exchange and Cheques – Capacity, Law Regimes, Declaration and Protests 3. Limitation of Legal Capacity and Guardian Matters (Articles 33-38) 4. Declaration of Absence and Death (Articles 39-40) 5. Legal Acts (Articles 41-42) 6. Agency – Certain Aspects (Articles 44-45) B. Family Law (Articles 47-67)

LL.M., Professional in the field private international law, former legal counsel at the Ministry of Justice of the Czech Republic. The author ([email protected]) would like to thank Professor Andrea BONOMI, Azadi ÖZTÜRK, Jiří GAŇO, the colleagues at the International Department for Civil Matters of the Ministry of Justice and Dominik FÄSSLER for their input. *

Yearbook of Private International Law, Volume 16 (2014/2015), pp. 469-510 © Verlag Dr. Otto Schmidt & Swiss Institute of Comparative Law

Printed in Germany

Petra Uhlířová 1.

V. VI.

Marriage, Relations between Spouses, Personal and Property Regime – Applicable Law (Articles 48-50) 2. Jurisdiction, Recognition and Enforcement – Property and Personal Relations between Spouses 3. Maintenance Obligations between (Ex-) Spouses – Applicable Law, Jurisdiction, Recognition 4. Divorce – Applicable Law, Jurisdiction, Recognition (Article 47, Articles 50-53) 5. Determination and Denial of Parentage (Articles 53-55) 6. Maintenance, Custody, Care of Minors and Other Matters (Articles 56-58) 7. Adoption (Articles 60-63) 8. Registered Partnership and Similar Relationships (Article 67) C. Succession Law (Articles 74-79) 1. Applicable Law 2. Jurisdiction 3. Recognition and Enforcement 4. Bona Vacantia, Escheat (Article 78) D. Law of Obligations E. Other Types of Private-Law Relationships 1. Rights in rem (Articles 68-72) 2. Trust Funds or Similar Institutions (Article 73) 3. Cross-Border Bankruptcy/Insolvency (Articles 111-116) 4. Rules on Arbitration and Recognition of Foreign Arbitration Awards (Articles 117-122) F. Role of the Ministry of Justice of the Czech Republic Brief Note about Slovak Private International Law Conclusion

I.

Introduction

As many other States, the Czech Republic is undertaking a number of changes in its legal order that broadly reflect international developments. Notwithstanding its clamoured stability within the Czech legal system, even private international law is affected by these changes. For more than 50 years, Czech private international law was codified in an Act on Private International and Procedural Law – Act Nr. 97/1963 of the Collection of Laws. The new act has entered into force more than one year ago. However, this Act was not presented in isolation; it was the recodification of Czech private law that prompted the adoption of a series of laws in this area, including the Act on Private International Law. Thus, on 1 January 2014, the Czech legal order witnessed one of the most significant changes in the past 50 years. Three new Acts entered into force: the new Civil Code, Act Nr. 89/2012 of the Collection of Laws; the new Act on Business Corporations, Act No. 90/2012 Collection of Laws; and finally, Act 91/2012 of the Collection of

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New Private International Law in the Czech Republic Laws, on Private International Law. A significant number of changes and innovative clauses have thus been introduced in Czech private international law. Given the above, this article will focus on the changes brought by the new Act on Private International Law (the new PIL Act) as compared to the previous law, the Act on Private International and Procedural Law of 1963 (the previous PIL Act). This article aims to provide an insight into general private international law concerns, such as family and inheritance matters and to describe the international jurisdiction of Czech courts in civil matters with a cross-border spillover. In so doing, the role of the Ministry of Justice of the Czech Republic is addressed as well. This article, does not aim to provide the reader with a complex analysis of Czech private international law after re-codification. For this, we refer to the more comprehensive work on the PIL Act or the commented edition thereof.123

II.

The New Act on Private International Law

A.

Introduction

The Czech Republic adheres to the continental model of law, i.e., civil law: written acts are at the foundation of the rule of law. Private international law in the Czech Republic is traditionally regulated in an autonomous manner, in a special law – the Act on Private International Law. Like the previous PIL Act, the new Act encompasses both substantive and procedural rules.4 Both types of rules are found in one single piece of legislation as opposed to in some other countries where this is not the case.5 This stance corresponds to the Czech doctrine on private international law that considers rules on international jurisdiction as an integral part of general private international law.6 Courts have however, had an influence both on the interpretation of codified law and the development of the doctrine on private international law. The new PIL Act is part of an ambitious legal project, aiming to perform a complete re-codification of private law in the Czech Republic. Hence, one can legitimately wonder whether the PIL Act would have seen the light of day irrespective of the re-codification process. The Czech lawmaker took a rather 1 Z. KUČERA/ J. GAŇO, Zákon o mezinárodním právu soukromém. Komentované vydání s důvodovou zprávou a souvisejícími předpisy. 1. vydání, Doplněk 2014. 2 P. BŘÍZA/ T. BŘICHÁČEK/ Z. FIŠEROVÁ/ P. HORÁK/ L. PTÁČEK/ J. SVOBODA, Zákon o mezinárodním právu soukromém. Komentář. 1. vydání, Praha 2014. 3 M. PAUKNEROVÁ/ N. ROZEHNALOVÁ/ M. ZAVADILOVÁ a kol., Zákon o mezinárodním právu soukromém. Komentář. 1. vydání, Praha 2013. 4 The same solution exists for instance in Hungary, Slovakia and Switzerland. 5 Germany, Austria. 6 Explanatory report of the new PIL Act, see .

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Petra Uhlířová complex approach on the issue. The main idea of the legislator was to recodify private law in its entirety, including private international law. Consequently, the relating legislative acts (old PIL Act, previous Civil Code, previous Commercial Code and other Acts) were supposed to share the same fate and be replaced with new legislation reflecting social, legal and global developments. One could also argue that the necessity of adopting a new Act is moot, particularly because European Private International Law is a work in progress and new rules and regulations are constantly and rapidly adopted. Within the European Union private international law is a patchwork of rules that may or may not apply. Additionally, several international treaties were concluded and apply between the Czech Republic and a certain number of States.7 There seems to be very little space left for domestic private international law. On the other hand, local developments perfectly correspond to ongoing advancements made internationally. The Czech Republic is one of several States, including the Netherlands, Poland, Bulgaria, Turkey, Albania and China where new rules on private international law were adopted. 1.

The Connection between the PIL Act, International and EU Law

In a manner that does not depart from the previous PIL Act, Article 2 of the new act stipulates that it shall apply only insofar as no existing international treaty (bilateral or multilateral) or directly applicable law of the European Union (EU) prevails. The Act emphasises the requirement introduced at Article 10 of the Czech Constitution. The Czech legislator is well aware of the fact that international treaties and supranational rules play an increasingly important role in the area of private international law. Although the rule on precedence of EU and international law over national law might seem self-evident, a problem may arise when international treaties conflict with EU legislation. The PIL Act does not deal with this topic. However, EU regulations try to resolve this issue and expressly address it by distinguishing treaties concluded between EU Member States and treaties involving a non-EU State. The most common solution is that relationships between the EU Member States (Member States) should be regulated exclusively by EU law while the application and functioning of bilateral treaties shall not be precluded. Since the conflict can occur between international treaties8 or acts of EU law,9 it is necessary to cautiously consider the scope of application of every legal act; this is

The Czech Republic, Czechoslovakia respectively, concluded several bilateral treaties with former socialist States. A list of bilateral treaties in civil matters: . 8 Classical rules to treat the concurrence of international treaties are: pacta tertii non nocent, lex posterior derogat legi priori and lex specialis derogat legi generali; they partially originate from the Vienna Convention on Law of the Treaties, Article 30. 9 Certain EU acts can be used alternatively: Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure or Regulation (EC) No 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European small claims procedure. 7

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New Private International Law in the Czech Republic inevitable where different legal instruments overlap as frequently as one witnesses nowadays. Consequently, within the EU legal realm ascertaining the applicability of a law or even the jurisdiction of a court whether done by a judge, notary, or a legal advisor implies the careful weighing of EU law, bilateral or multilateral international treaties, or domestic private international law acts, that culminates with a decision as to what should prevail in each particular case. This is a prudent exercise.10 B.

Main Differences and Similarities between the New and Old PIL Acts11

1.

Structure of and Changes in the New PIL Act

The new PIL Act is structured as follows: the first part introduces general provisions that are common to the whole Act, whilst the second and third parts detail general procedural rules and general rules of private international law. The fourth part, the core of the law, contains special rules, exceptions to general rules and brings together conflict-of-laws and procedural rules for specific legal areas. The fifth part covers questions of international judicial assistance. Parts six and seven regulate issues relating to international insolvency and arbitration. The last parts contain transitional and final provisions and rules on repeal. Changes brought by the new PIL Act are not superficial. They are both of a structural and conceptual (substantive) nature, and they go hand in hand with the process of condensing Czech private international law in an almost single legal act. Progress is also shown by the PIL Act’s attempts to reflect global developments in the field of private international law12 as well as advancements in local scholarly work. The progress in the local doctrine prompted the adoption of the PIL Act and influenced the latter’s content. The established doctrine therefore remains essentially unchanged and has materialised into the PIL Act.13 Inspite of all the differences between the two acts (old and new), the latter does attempt to carry on the legacy of the former.14 This means that present day textbooks on private international law remain relevant. For details on concurrence of EU and Czech law see P. BŘÍZA, Nový český zákon o mezinárodním právu soukromém v kontextu práva EU a mezinárodních smluv, Právní rozhledy, 2013, No. 17, p. 580 et seq. 11 For an elaboration on the extent of these changes see: M. PAUKNEROVÁ/ M. PFEIFFER, The New Act on Private International Law in the Czech Republic: Starting Points and Perspectives within the European Union, Journal of Private International Law2014, Vol. 10, No.2, p. 205. 12 The PIL Act is inspired by the Swiss Code on Private International Law; the Explanatory Report mentions it several times. 13 M. PAUKNEROVÁ/ K. RŮŽIČKA a kol., Rekodifikované mezinárodní právo soukromé, Univerzita Karlova v Praze, Právnická fakulta, 2014, p. 15 and 27. M. PAUKNEROVÁ (note 3), at LIII. 14 Tribute for this continuity should be accounted to the major contributor to the doctrine of private international law of last decades - Professor Zdeněk KUČERA. 10

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Petra Uhlířová Nevertheless, the degree of novelty cannot be underplayed; several changes are incorporated in the new Act – for instance the provisions on qualification (Article 20), preliminary questions (Article 22), overriding mandatory rules (Article 3 and 25) and exceptional and subsidiary determination of the applicable law in Article 24. Some topics are not entirely novel, but were considerably extended and elaborated in certain provisions (e.g. determination and application of foreign law in Article 23). 2.

Structural Changes

The first change that is apparent to the reader is the breadth of the new law. It currently comprises 125 Articles – twice as many as the preceding law. This corresponds to the increased and comprehensive material scope of the PIL Act15 as well as the expanded material scope of the new Civil Code.16 Practitioners who are familiar with the old PIL Act may be satisfied with the fact that the conflict-of-laws portion and procedural rules are now to be found under one title dealing with each particular topic. For example the headline “Succession” encompasses both the jurisdiction of the Czech courts and the provisions on the conflict-of-laws. One of the main goals of the Czech legislator was to concentrate private international law rules in a single act and to overcome the partial fragmentation thereof.17 Consequently, the new PIL Act was thickened by rules (conflict-of-laws as well as procedural) that used to be regulated in different laws.18 Previously, legal practitioners had to search throughout the old PIL Act and other legislative acts in order to grasp the applicable legislation in its entirety; now they can refer directly to the wording of the Act. The new PIL Act also attempts to simplify the task of the judge; it primarily assists judges in establishing the international jurisdiction of the domestic court. Only after the court’s jurisdiction is granted, does the court proceed with the determination of applicable law or application of a direct norm, if any.

Generations of lawyers have been influenced by his textbooks and commentaries. The acknowledgment of his skills is considered to be his participation in the preparation of the new PIL Act. 15 The insertion of questions or matters previously included in other legal acts. 16 For instance trusts are newly incorporated into the Czech law – both private law and private international law. 17 For exceptions see Article 27 of the new PIL Act that in certain matters refers to other legislative acts. 18 I.e. collision rules on bills of exchange and cheques, legal persons, certain matters of insolvency.

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New Private International Law in the Czech Republic 3.

Substantive Changes: Generally

It is a widely known fact that Czech private international law, the previous PIL Act in particular, left certain questions unregulated or only partially regulated. This amplified the risk of a non-harmonious interpretation of private international law by courts at different levels when a question under the old PIL Act was brought before them. However, it cannot be denied that jurisprudence played an important role in guiding the interpretation of the law. Equally, the doctrine on private international law developed in an academic environment,19 and together with case law, contributed to advancing the discipline in the Czech Republic. Hence, certain newly introduced Articles can be seen as an attempt to incorporate the prevailing existing doctrine into the codified law. Leading illustrations of provisions that were initially developed in the doctrine but currently are regulated directly in the PIL Act are Articles 3 and 25, dealing with overriding mandatory rules. The incorporation of new Articles or the detailed re-drafting of existing ones can also be attributed to the developments on the international and EU scenes, for example the inclusion of the connecting factor of habitual residence or the example of trusts that had been unknown to the Czech law until very recently.20 4.

Substantive Changes and Novelties: Selected Articles

a)

Overriding Mandatory Rules (Articles 3 and 25)

In contrast with the previous state, the provisions concerning overriding mandatory rules are regulated directly by the law. Prior to that, the existence of these rules was implied by the doctrine and jurisprudence. However, the demand to incorporate this notion was prompted by the influence of international and EU law.21 Articles on overriding mandatory rules apply only insofar as EU law does not state otherwise in a particular legal area.22 Overriding mandatory rules are included in two provisions: Article 3 regulates Czech overriding mandatory rules, whereas Article 25 deals with the situation where the overriding mandatory rules of a foreign State could apply.23 The PIL Act does not indicate which overriding rules are considered mandatory. They are, by designation, the rules that shall always be applied, regardless of the applicable law. The Explanatory Report indicates that certain rules of a financial or administrative 19 As mentioned, Professor Zdeněk KUČERA is the main contributor to the development and continuity of the doctrine. 20 As a result, both the new Civil Code and the PIL Act encompass provisions on trust funds. 21 Rome I Regulation, Rome II Regulation. M. PAUKNEROVÁ (note 3), at 33. 22 Rome I Regulation., Rome II Regulation, Regulation (EU) 650/2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (Succession Regulation). 23 There is no duty to apply overriding mandatory rules of a foreign State.

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Petra Uhlířová nature fall under this category.24 One can thus state that the overriding mandatory rules will often be found within the public law domain and that their breach can often results in criminal liability. Overriding mandatory rules cannot be avoided through the choice of law. b)

Public Policy, Ordre Public (Article 4)

Article 4, dealing with public policy, is closely connected to Article 3. The new PIL Act does not provide a definition of “public order”. However, nothing indicates that this Article should be interpreted differently from Article 36 of the old PIL Act.25 As a result, defining public order should be approached as follows: the applicable law shall not be used if the effects of its application would manifestly contravene public policy. The term public policy is part of the public and social fabric of the Czech Republic and local legislation, which must be insisted on without reservation. The public order exception should be used as ultima ratio (as term manifestly indicates); it should apply in exceptional situations as a defence against the effects that the application of foreign law could have within the local legal system. Thus, the Czech court is not entitled to judge the content of foreign law but rather to prevent certain effects flowing from its application. The public order exception is traditionally used in relation to the applicable law. However, the PIL Act also enables one to invoke this exception in order to refuse the recognition of a foreign judgment (Articles 15 and 16). c)

Law Evasion (Fraude à la loi, Article 5)

Article 5 is novel and it deals with law evasion. It prevents the abuse or circumvention of the law and its mandatory provisions by the means of simulated or created circumstances. Prior to inserting this Article into the PIL Act, the doctrine referred to general provisions of the old Civil Code that partly addressed this issue. Integrating fraude à la loi within the general section of the PIL Act implies that it shall apply generally, in relation both to conflict-of-law and procedural rules. Although modern codes on private international law allow the choice of applicable law (professio juris) or the choice of court (prorogatio fori) in several instances, and notwithstanding the fact that rules on fraude à la loi might appear obsolete or superfluous, in certain matters (particularly when choice of applicable law or choice of court cannot be made),they remain significant. Evading the law may be more difficult when the determination of the applicable law is based on a lex patriae reasoning. However, it is not difficult to imagine that someone might dissimulate a particular set of circumstances that are favourable to the determination of habitual residence and thereby induce the 24 As rules on import or export of goods, protection of cultural heritage, protection of the environment, etc. 25 That is also suggested in the Explanatory Report to the PIL Act. A definition is not included because it is difficult to determine the public policy - it might change over the time.

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New Private International Law in the Czech Republic application of a different law (for instance in matrimonial property matters). In such cases, evading the law will certainly have a bad faith component.26 The insertion of a provision on fraude à la loi can also be perceived as a reflection of an existing doctrine within private international law.27 d)

Abandoning the Concept of Absolute Immunity (Article 7)

Article 7 incorporates a new rule while abandoning the previous concept of absolute immunity of a State in favour of so-called functional immunity. Hence, a foreign State can be sued in matters that are not carried out within State, governmental or other public power, i.e. they are not connected with the exercise of public power. It indicates that a foreign State cannot invoke immunity from a court proceeding when it exercises, as a subject of private-law relationship, activities of either commercial or private nature (acta iure gestionis). The old PIL Act granted jurisdictional immunity to a State regardless of the private or public nature of its activity. The insertion of this altered provision into the PIL Act is not surprising and can be welcomed. The Czech Supreme Court had created, in line with international developments, a path for this change when it diverged from the concept of absolute immunity when the old PIL Act was still in force.28 e)

Change in Connecting Factors – Introduction of Habitual Residence in Certain Cases

One of the leading advances in the PIL Act is the modernisation of connecting factors. The internationally accepted concept of habitual residence is introduced for certain matters, replacing the traditional connecting factor of nationality. The legislator reflected upon developments in private international law globally29 as well as in different States.30 This improvement is not surprising when the growing mobility of the population is taken into account.31 Habitual residence is now the primary connecting factor in the following areas: matters of legal capacity of a natural person, in matrimonial property regimes between spouses, or in the field of succession. It applies both to conflictof-laws rules and to provisions dealing with the (international) jurisdiction of Czech courts; what this entails is that lex and forum are often brought together.

M. PAUKNEROVÁ (note 3), at 50. Equally, the Succession Regulation does not leave this question unresolved. Recital 26 mentions “nothing should prevent a court from applying mechanisms designed to tackle the evasion of the law”. Recital 52 also operates with the circumvention of law. 28 Decision of the Supreme Court, Nr. 21 Cdo 2215/2007. 29 Explanatory Report to Article 29. 30 Estonia, Switzerland, Albania and Sweden have already incorporated the habitual residence into their private international law. 31 P. BŘÍZA (note 2), at 180. 26 27

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Petra Uhlířová Given the insertion of habitual residence into the PIL Act, it is relevant to assess how the Czech courts32 will interpret and approach this concept. The Czech Act, in line with other States’ private international laws, does not provide for a legal definition of this concept. An autonomous status of this notion is favoured: an entity considering the habitual residence of an individual shall evaluate all the factors that are relevant in a given case, taking into account the particularities of the situation, the legal area as well as the person themselves. Consequently, the perception of habitual residence may vary in different legal areas – for instance in family or succession law – or in relation to the individual’s characteristics – for instance a minor as opposed to an adult person.33 Nevertheless, the Czech authorities have been provided with strong guidance in the Explanatory Report to the PIL Act. This Report refers directly to the relevant case law of the Court of Justice of the European Union (CJEU) and clarifies that not every residence (registered, formal or temporary) will amount to the habitual residence as understood in private international law terms.34 The concept of habitual residence should represent the centre of life of the person in question. Thus, theoretically, one may deem the interpretation of habitual residence by Czech courts not to depart significantly from the established case law of the CJEU. Czech courts are already familiar with the notion of habitual residence by virtue of application of EU law. Yet, under the new PIL Act, they are more frequently confronted with this concept. In spite of this shift in considering connecting factors, one cannot state that Czech private international law has completely shifted towards the notion of habitual residence. Habitual residence is the main, but not the exclusive, connecting factor in the new PIL Act. Hence, the Czech legislator did not effect a complete departure from the connecting factor lex patriae; this remains pivotal in certain legal areas. Thus, the connecting factor of nationality still persists for example in the case of bills of exchange and cheque capacity (Article 31), the capacity of a person to celebrate a marriage and the conditions for the validity thereof (Article 48 paragraph 1), and the personal relations between spouses (Article 49 paragraph 2). Sometimes lex patriae is used in a subsidiary manner when the habitual residence does not exist, as in Article 49 paragraph 3 on matrimonial property regimes. As a consequence, the judge as well as the lawyer advising the client must carefully consider each single relationship and each connecting factor on a caseby-case basis(habitual residence, lex patriae or other) f)

Strengthening the Possibility for Choice of Law

The “will of the parties” concept gains a new dimension thanks to the new PIL Act. Traditionally, the choice of law was reserved for contractual obligations (now Article 87). According to the PIL Act, the choice of law is currently allowed as Including the notaries as court commissioners in succession matters. P. BŘÍZA (note 2), at 180 and 391. 34 Explanatory Report to Article 29; certain definitions of “residence” are used predominantly in the area of administrative law. 32 33

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New Private International Law in the Czech Republic well in cases of rights of lien to securities (Article 83 paragraph 2), unilateral acts (Article 90), set-off (Article 92) and more extensively in relation to matrimonial property regimes (Article 49) and in succession matters (Article 77). g)

Renvoi (Article 21)35

The fact that there is an article addressing the issue of renvoi is not novel; it was, however, redrafted with respect to the old PIL Act. Paragraph 1 states that if the foreign law refers back to Czech law (German: Rückverweisung), only the Czech substantive law shall apply. When the provisions of foreign law refer to the law of another State (German: Weiterverweisung), the substantive law shall apply in the event that such law is applicable under its conflict-of-law rules. Referring to substantive rules, the PIL Act tries to prevent a so-called circle of referrals. Renvoi cannot be used, however, in matters of labour law and with regards to contractual obligations. Paragraph 2 speaks of the exception from accepting renvoi in the event that the parties chose the applicable law. In that case, renvoi can be accepted only if the choice-of-law agreement allows for it. Special provisions on renvoi are included in Articles 31 (bills of exchange and cheques) and 119 (arbitration). EU law usually does not allow for renvoi, except for the Succession Regulation inasmuch asreferral is traditionally accepted in inheritance matters. h)

Qualification and Preliminary Questions (Articles 20 and 22)

As described above, one of the driving forces for adopting the new PIL Act was the doctrine that addressed certain issues that had not been regulated by the law. Thus, the new PIL Act can be perceived as a confirmation of the doctrine that was established in previous decades. Practitioners will currently find important topics of private international law directly in the PIL Act, including topics such as qualification and preliminary questions. Under the PIL Act, qualification according to lex fori is a starting point (Article 20 paragraph 1).36 Thus, the Czech court will qualify according to the local law concepts such as rights in rem and relationships arising there from.37 However, this provision is complemented by the so-called functional qualification in which a court can engage. Functional qualification can take place for instance when laws of different States apply for separate components of a legal relation. This supplementary rule was added to prevent a mechanical use of lex fori for the qualification.38 Nevertheless, when applying the EU law, the use of Article 20 can be limited by the principle of autonomous interpretation of the terms contained therein. 35 For a discussion ofrenvoi see R. SFEIR, Aspects contemporains du renvoi en droit international comparé: conflits de lois et conflits de systèmes, 2009. 36 For the special provision see Article 69 which distinguishes between movable and immovable property. 37 Some States consider certain rights in rem to be the right of ownership whilst others consider it as a mere possession. 38 Explanatory Report on Article 20.

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Petra Uhlířová Article 22, relating to preliminary question, is also novel. The Czech court shall respect a decision on a preliminary question rendered by a foreign authority if that decision fulfils the conditions that are necessary for its recognition (paragraph 2). In case the preliminary question was not decided yet by a foreign authority, the basic principle is that the conflict rules of the lex fori (Czech PIL Act) should determine which law applies to the preliminary question. This is a reasonable approach. There is a strong interest for local courts to decide the same matter in a consistent manner, whether or not it is considered a preliminary or a main question. An approach lege causae, on the contrary, can only be used if the Czech court is not granted jurisdiction over the preliminary question (if it is considered a separate question) and foreign law applies to the principal question. The preliminary question in this case is assessed according to the law that applies to the principal question. i)

Application and Determination of Foreign Law (Article 23)39

The Czech legal order is based on the principle iura novit curia. This standard, however, only relates to national law. The local court is under no obligation to know the foreign law; it shall, nonetheless, ascertain and determine its contents proprio motu. The Czech PIL Act also enshrines the principle of equality of all legal systems. As a result, the court must apply the foreign law ex officio in exactly the same manner as would the original national courts. The Article dealing with the application of foreign law is novel; it is comprehensive and expressly states that the foreign law shall be used in the same manner as it would be in the State of origin. As a consequence, the Czech courts shall use foreign law regardless of its systematic ordering or public nature as long as the rules do not contravene the local public order. The court should not only consider the exact wording of foreign law; it should also refer to the case law or to the doctrine that the foreign court itself would use in interpreting the law.40 The foreign law is determined by the courts proprio motu. Czech law does not provide a direct possibility for the court to call upon the parties to submit the content of law that is to be applied in the proceedings.41Under Czech law, in a manner that is dissimilar to common law practice,42parties are not required to plead and prove the foreign law. The Czech court treats the foreign law as a question of law and not of fact. In order to establish the content of the foreign law, the court itself must undertake any and all measures that are necessary to determine the wording of that law as well as its method of application. In practice, the Czech court can take any step, including assigning an expert for a given question or For details about the application and determination of foreign law under the old PIL Act see: C. ESPLUGUES/ J.L. IGLESIAS/ G. PALAO, Application of Foreign Law, Munich 2011, p. 173 et seq. 40 Z. KUČERA, Mezinárodní právo soukromé. 7. opravené a doplněné vydání, Doplněk 2009, p. 188. 41 A different approach is illustrated in Article 16 paragraph 1 IPRG (Switzerland). 42 C.M.V. CLARKSON/ J. HILL, The Conflict of Laws, 4th edn 2011, p. 46. 39

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New Private International Law in the Czech Republic asking an institution to provide an assessment (Max Planck Institute for Comparative and International Private Law or Swiss Institute of Comparative Law). If the court does not succeed, it can ask the Ministry of Justice of the Czech Republic (Ministry) to provide information about the manner in which the law is to be applied. This information is not binding43 and it shall be treated as any other piece of evidence in a proceeding. If it becomes impossible for the local court to determine the content of the foreign law within a reasonable amount of time, the Act tries to prevent denegatio iustitiate by giving the Czech court the possibility to exceptionally apply lex fori (paragraph 5). Case law has established that the parties shall cooperate with the court in the ascertainment of foreign when requested. This means that the judge may invite a party invoking the foreign law to present it to the court. The fact that the law must be determined ex officio by the court does not mean, nevertheless, that parties themselves cannot submit the content of foreign applicable law; parties are free to suggest this to the court. The court will, however, ascertain whether the law submitted by the parties is the actual applicable law in the given proceedings. The court, therefore, has the final responsibility over the manner in which the contents of the foreign law are ascertained and applied. The submission of the text of foreign law by the parties has usually been effected in proceedings where the parties have a strong interest in resolving the case in an expeditious manner (i.e. the parties do not have to wait until the court ascertains the content of applicable law) or when the relationships are rather complex (commercial matters or IP rights). j)

Exceptional and Subsidiary Determination of Applicable Law (Article 24)

This new provision contains an escape clause and, in exceptional cases, allows for the non-application of what would otherwise be the applicable law determined in accordance with the conflict-of-law provisions of the PIL Act. Instead of the otherwise applicable law, the court may use the law of another State, if application of the former, inter alia, seems inappropriate and too far removed from the setting of the parties’ relationship (paragraph 1). Potential gaps in the law should be avoided or eliminated by means of paragraph 2; in those cases where it is not possible to determine the applicable law for a certain relationship, the PIL Act allows the use of the law with which this relationship is most closely connected.

43 Article 23 allows Czech courts and public authorities to ask the Ministry for a statement in matters regulated by the PIL Act.

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III. Jurisdiction, Recognition, Enforcement, Provisions on Proceedings Clauses dealing with the jurisdiction of Czech courts and the enforcement of foreign judgments in the PIL Act come into play as long as neither EU law nor an international treaty prevail. There are a significant number of instruments to be taken into account - predominantly the Brussels I-bis Regulation, applicable as of 10.1.2015,44 Regulation (EC) No 2201/2003 on jurisdiction, recognition and the enforcement of judgments in matrimonial matters (Brussels II-bis Regulation), Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (Maintenance Regulation), the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Lugano 2007 (Lugano Convention), and several bilateral treaties that the Czech Republic has concluded as well as certain multilateral treaties. A.

Jurisdiction, Provisions on Proceedings,45 Legal Status of Foreigners, Multiple Nationality

1.

General Provision on Jurisdiction of Czech Courts (Article 6)

The PIL Act now contains a general provision on the jurisdiction of Czech courts. The previous Act contained a similar clause that only applied to property rights. According to this new Article, Czech courts shall have (international) jurisdiction in proceedings when they have local jurisdiction (venue). The local jurisdiction of Czech courts is determined in accordance with the provisions of two Codes regulating civil procedure: The Code of Civil Procedure and the Code of Civil Procedure in Special Cases.46 Article 6 is of a general nature and only applies where the more specific articles do not. Thus, the application of this Article will in practice be limited both by its general placement as well as by EU and international law. It must be reiterated that EU law covers a significant percentage of potential cases falling under Article 6. For instance the new Brussels I-bis Regulation and its altered rules on jurisdiction further limit the applicability of domestic rules on courts’ international jurisdiction because this Regulation provides for certain cases in which the EU Member States’ courts can exercise jurisdiction even if the defendant is not an EU resident. 44 Previously Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Regulation). 45 For a discussion of Article 7 (immunity from jurisdiction of the Czech court) see the respective section of this article. 46 Act Nr. 99/1963 of the Collection of Laws and Act Nr. 292/2013 of the Collection of Laws.

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New Private International Law in the Czech Republic As a result, a court must determine carefully whether, in any specific case, EU law, an international agreement or a special provision of the PIL Act47 should be used; if neither EU law nor an international agreement applies, Article 6 can apply. Given these limitations, proceedings in which Czech courts will avail themselves of jurisdiction on the basis of Article 6 will be rather rare.48 2.

Provisions on Proceedings (Articles 8-13)

Article 8 paragraph 1 states that Czech courts are to apply the Czech rules of the civil procedure49 and that parties are equal in the exercise of their rights. Paragraph 2 further states that having initiated proceedings before a foreign court does not prevent the opening of a proceeding before a Czech court between the same parties on the same matter. However, when the Czech proceedings are not the first initiated, the Czech court can suspend them in cases in which this is justified. This paragraph will apply as long as EU or international law does not state otherwise. Article 9 relates to the capacity of a foreigner to become a party to proceedings as well as to his procedural capacity. The applicable law is the law of the State where the person concerned has his/her habitual residence. It is sufficient, however, that the natural person has capacity under lex fori (Czech law). In the case of legal persons, the applicable law is determined in accordance with the law of incorporation of that entity; it is sufficient, however, that the legal person has capacity under lex fori. Article 10 regulates an exemption from paying the court fees. Foreigners and foreign legal entities shall be exempt from paying the court fees and deposits under the same conditions as Czech citizens if reciprocity with a given State exists. A guarantee of reciprocity shall not apply to EU citizens and citizens of the European Economic Area. Article 11 addresses the issue of security deposits for costs of proceedings in cases involving property rights. Upon the defendant’s request, the court may order the person habitually residing or incorporated abroad to provide a security deposit for the costs of proceeding (paragraph 1). Paragraphs 2 and 3 indicate the cases in which the security deposit must not be ordered. Article 12 governs the question of foreign public documents and their evidentiary value within the Czech Republic. A foreign document, defined in paragraph 1, shall be considered a public document bearing an appropriate public evidentiary value, provided that it is accompanied with the prescribed certifications (legalisation). In accordance with Article 13, the Czech court (including the notary as a court commissioner in matters related to inheritance) can ask the Ministry for a statement as to the reciprocity granted by and to a particular State. This statement Special provisions on jurisdiction exist in the following cases: declaration of death or absence, divorce proceedings, marriage annulment, rights to immovable property or succession matters. 48 P. BŘÍZA (note 2), at 43; M. PAUKNEROVÁ (note 3), at 61. 49 The above-mentioned Act Nr. 99/1963 of the Collection of Laws and Act Nr. 292/2013 of the Collection of Laws. 47

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Petra Uhlířová is not binding. In contrast to the previous Act, the court will consider it as any other evidence in the proceeding; no higher evidentiary value is accorded to that statement. 3.

Legal Status of Foreigners (Article 26), Multiple Nationality (Article 28)

The legal status of foreigners (legal and natural persons) is addressed in Article 26. According to the PIL Act, a foreigner is a natural person without the Czech citizenship and a foreign legal entity seated abroad. In matters concerning either personal or property rights the foreigner has the same rights and obligations as would a Czech citizen, unless otherwise stated. If a foreign State does not guarantee reciprocity, that is, if its citizens benefit from a certain treatment afforded by the Czech Republic, but this foreign State refuses to grant equal benefits to Czech nationals, reciprocal treatment may be refused according to paragraph 3. Article 28 deals with the issue of multiple or unspecified nationalities. The basic rule states the following: when a particular person possesses both Czech and foreign nationality, the Czech nationality prevails. Paragraph 2 addresses the issue of multiple nationalities if none of them is the Czech nationality; the last one to have been obtained is then decisive. Where it is impossible to determine which one is the one acquired most recently (for instance a child at birth obtains more than one nationality), the citizenship of the State of habitual residence or residence is decisive. Czech law may apply for the purposes of the PIL Act only where previous provisions were insufficient to determine the nationality. Paragraph 4inter alia applies to asylum seekers and homeless persons. B.

Recognition and Enforcement of Judgments in Relation to EU Member States and Third States

The core of Part II contains provisions dealing with the recognition and enforcement of foreign judgments (Article 14 – 19). The recognition and enforcement of foreign judgments in civil and commercial matters between the EU Member States is, to a large extent, regulated by EU law, that takes precedence over the PIL Act (i.e. Brussels I-bis Regulation, Brussels II-bis Regulation, Insolvency Regulation,50 Maintenance Regulation, and Succession Regulation). Status matters, capacity of natural persons to exercise rights and perform legal acts or determination of parentage represent the most important areas excluded from EU law. However, a bilateral or multilateral international treaty may apply to these matters. The introductory Article 14 states that the foreign judgments51 are effective in the Czech Republic, provided that the foreign authority certified the respective judgment to be final and that it was recognised by the Czech public authority. This Council Regulation No. 1346/2000 of 29 May 2000 on insolvency proceedings. Under the Act, the notion of a foreign judgment is broad – besides the foreign courts’ decisions (judgment stricto sensu, court order, resolution) it includes foreign court settlements, notarial and other public documents. 50 51

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New Private International Law in the Czech Republic general provision applies in the absence of an applicable special provision in the Act.52 Although EU law regulates the recognition and enforcement of a majority of decisions originating from the EU Member States, and international treaties53 may apply as well, these instruments do not cover all areas of private international law or are not applicable with regard to all States. Therefore, the provisions of the PIL Act will apply to recognition and enforcement of decisions in relation to certain third countries. Strong business partners of Czech companies are often located in USA, China, and Japan as well as in Latin American States. As relevant international instruments do not cover relationships between these countries and the Czech Republic, Articles 14 – 16 will continue to play a significant role. 1.

Grounds for Non-Recognition – Major Features and Novelties (Article 15)

The new Act was, in this matter, largely modelled on the previous regulation. It nevertheless developed certain issues that required modification. Article 15 bars the enforcement of a foreign judgment if: a) the matter falls within the exclusive jurisdiction of the Czech courts, b) the proceedings involve the same legal relationship that is dealt with before the Czech court provided that the Czech court was seized prior to the foreign court, c) the Czech court has already rendered a final judgment on the same legal relationship (res iudicata) or a foreign final judgment has already been recognised in the Czech Republic. Recognition may also be refused in those cases where the party against which the judgment is to be enforced was prevented from participating to the proceedings as a result of a step taken by a foreign authority (lit. d), where recognition would manifestly be contrary to the Czech public order (lit. e) or where the reciprocity54 between the Czech Republic and the State in question is not guaranteed, unless recognition is sought against a foreign national or entity (lit. f). Major changes occur under lit. a) and lit b). Lit. a) provides for an exception in those cases where the party has voluntarily submitted to the jurisdiction of a foreign court. Lit. b) addresses the situation where the domestic court was seized prior to the foreign court that rendered a judgment and one is seeking recognition of that judgment in the Czech Republic (lis pendens rule). Consequently, such foreign judgment shall not be recognised in the Czech Republic as long as the proceedings before the local court, involving the same legal relationship, are still pending.

52 Special provisions on recognition and enforcement of foreign judgments apply i.e. in succession law and certain family matters. 53 I.e. Lugano Convention; Czechoslovakia also concluded several international treaties with former socialist States. 54 The reciprocity can be formal as well as material. See also Article 13 on ascertaining reciprocity.

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General Provision on Recognition in Property and Other Matters, Enforcement (Articles 16-18)

Article 16, a broad article on recognition, will apply unless there are applicable special provisions of the PIL Act. Paragraph 1 incorporates the principle of a nonformal recognition of judgments concerning foreign property. The recognition of a foreign property judgment shall generally not be rendered in a separate decision. This means that a foreign property judgment is recognised by the fact that the Czech authority takes it into consideration as if it were a judgment issued by a Czech authority.55 Paragraph 3 contains a rule for the enforcement of a foreign judgment in property matters that meets the recognition conditions; it may be ordered by a reasoned decision of a Czech court. Paragraph 2 contains a rule on the recognition of other (non-property) judgments. These other decisions are recognised by means of a special judgment unless the PIL Act stipulates that they shall be recognised without any special proceedings.56 As a result, in non-property matters, one either encounters a nonformal recognition or a special recognition procedure in which the fulfilment of certain conditions is verified. The recognition is then rendered in a separate judgment. The party concerned can also request the recognition of a foreign nonproperty decision by means of a special judgment; in this case, district courts shall be competent. For the recognition of a divorce judgment relating to a Czech national, the Czech Supreme Court shall be exclusively competent (Article 51 paragraph 2).57 Articles 17-19 present special rules reflecting the existence of EU and international law; they adapt the Czech legal order to these instruments. Certain EU regulations and international treaties require, prior to the ordering of enforcement of a judgment, that a declaration on its enforceability be issued (exequatur).58 This procedure is foreign to Czech law; the PIL Act contains facilitating provisions allowing for the application requesting a declaration of enforceability and enforcement, to be submitted at the same time (Article 19 paragraph 1). Similar Articles were already included in the old PIL Act.59

55 This paragraph also includes objections against the recognition of a judgment if the latter would contravene public policy or when other grounds for rejection of recognition exists. 56 Non-formal recognition of non-property judgments applies under Articles 38, 40, 52, Article 55 paragraph 2, Articles 58, 66, Article 63 paragraph 2, and Article 67 paragraph 3. 57 Unless the EU law or international treaty state otherwise. 58 Brussels II-bis Regulation, Succession Regulation, Lugano Convention. Also Brussels I Regulation required exequatur. 59 The Slovak PIL Act contains facilitating provisions as well.

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IV. Provisions on Different Types of Private-Law Relationships Part IV represents the largest section of the PIL Act, and is elaborated in Articles 29 through 101. While EU or international instruments govern some matters, some topics remain within the purview of the local private international law. A.

Certain Types of Private-Law Relationships

1.

Legal Capacity – Natural and Legal Persons (Articles 29-30)

The EU law generally excludes the capacity of a natural person from its scope; certain aspects are, however, touched upon in the respective regulations. Thus, although the question of the capacity of a natural person is not generally regulated on an EU-wide level, specific provisions concerning certain matters relating to the capacity of a natural person are dispersed throughout EU law.60 Where EU law or international treaties do not apply, the primary (general) basis for establishing legal capacity is the place of habitual residence of the natural person concerned (paragraph 1). Paragraph 2 contains a subsidiary rule that aims to preserve and support the validity of a legal act of a natural person. To that end, in order for a natural person to be able to undertake a legal act, it is sufficient that this person possess legal capacity under the law that is applicable in the place where that legal act was made. Thus, the legal act will be valid even if a natural person does not possess the capacity under the legal order of the person’s habitual residence (paragraph 1). The new provision dealing with the name of a natural person (paragraph 3), however, starts from a different assumption, whereby the principal connecting factor is lex patriae. Habitual residence presents a subsidiary connecting factor – the person concerned can invoke the application of the law of the State where he/she has his/her habitual residence. For a legal person, Article 30 brings forward the law of the State of incorporation as a connecting factor. This law shall also apply to internal affairs and other matters relating to that entity (legal personality, legal capacity, name, relations, acting on behalf of entity, etc.).61 2.

Bills of Exchange and Cheques – Capacity, Law Regimes, Declaration and Protests

The private international law rules on cheques and bills of exchange are subject exclusively to national rules; there is no homogenous EU law on these matters and For instance in the Rome II Regulation, Rome I Regulation, and Succession Regulation. 61 Formerly, the old Commercial Code regulated this topic. 60

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Petra Uhlířová the Czech Republic is not a party to any international treaty. The PIL Act now covers all private international law aspects of cheques and bills of exchange. Previously, a special law regulated conflict-of-laws aspects of the law on bills of exchange and cheques.62 Articles 31 and 32 (capacity), Article 43 (form of declaration and protests) and Articles 93-100 (bills of exchange and cheques law regimes) contain important rules. Article 31 regarding bills of exchange and cheques capacity introduces lex partiae as a connecting factor. It also allows for renvoi. Where an individual does not have the capacity either under lex patriae or the law that was established after the renvoi was accepted, Article 31 paragraph 2 states that he or she shall nevertheless be bound if the bill of exchange was signed in the State that grants the capacity to respond to obligations incurred under bills of exchange. This paragraph does not apply, however, to Czech citizens and persons habitually residing in Czech territory. Article 43 (form of declaration and protest) subjects the applicable law to the law of the State in which the declaration was made. Articles 93-100 (bills of exchange and cheques law regimes) encompass several collision rules with different connecting factors.63 3.

Limitation of Legal Capacity and Guardian Matters (Articles 33-38)

The rules on legal capacity and guardian matters will only be used insofar as the Hague Convention of 13 January 2000 on the International Protection of Adults or a bilateral treaty does not apply. The connecting factor whose application limits legal capacity and in matters related to guardianship (establishment and termination of guardianship) witnessed a major transformation, as the contents of Articles 34-36 attest. The PIL Act abandoned the connecting factor lex patriae in favour of the notion of habitual residence (either habitual residence of guardian or ward). The legal relationship between the guardian and the ward is governed by the law of the State where the guardian court sits. Article 37 (measures under Czech substantive law) shall be used only when a particular question does not fall within the purview of Articles 34-36. The jurisdiction to decide on the limitation of legal capacity and on guardian matters is granted to local courts when the person concerned habitually resides in Czech territory or is a Czech citizen. Where the local courts do not have jurisdiction based on previously mentioned criteria, their role is limited. Nonetheless, they can take measures that are necessary to protect the person and inform the foreign authority in the State of habitual residence of that person (Article 33 paragraph 2).

62 Hence, this Article presents an example of how the PIL Act aims to eliminate the fragmentation of private international law. 63 The Czech Republic is not a party to the respective conventions. Czech law is, however, drafted in the line with them. The PIL Act is therefore consistent with the previous regulation as well as with other relevant international instruments.

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New Private International Law in the Czech Republic A final foreign judgment on the limitation, absence or loss of legal capacity and guardianship matters involving a foreigner shall generally be recognised in the Czech Republic without any formal proceeding, if that judgment was rendered in the foreigner’s State of nationality or residence (Article 38). 4.

Declaration of Absence and Death (Articles 39-40)

EU law does not regulate declarations of absence or death. Therefore, unless a bilateral international treaty applies, both the jurisdiction of domestic courts and the applicable law are governed by the PIL Act. Under Article 39, only the local court can declare a Czech citizen to be deceased or missing (exclusive competence). A foreign decision to that effect shall not be recognised in the Czech Republic. According to paragraph 2, the Czech court may declare a foreigner to be deceased or missing. The legal consequences thereof will be effective, nevertheless, only in relation to Czech citizens or to their property located in Czech territory. This allows, for instance, the termination of a marriage or the opening of an inheritance proceeding before a Czech court. Article 39 paragraph 3 states that when declaring a person to be either deceased or missing, the domestic court shall always rely on Czech substantive law. Czech authorities shall generally recognise final foreign judgments having declared a foreigner to be either deceased or missing without requesting any further proceedings if the latter was rendered in the State where the foreigner had his last habitual residence or of which he was a national (Article 40). 5.

Legal Acts (Articles 41-42)

The following Articles contain general rules on the law that is applicable in order to establish the existence and validity as well as the consequence of nullity of a legal act. Article 41 is, to a large extent, superseded by EU law as well as by relevant (bilateral and multilateral) treaties, predominantly in the area of contract law.64 EU rules on legal acts are not encompassed in a single instrument; they are rather spread throughout different laws that address this issue only in relation to the questions that fall within their scope.65 Generally, the applicable law that determines the existence, validity, and nullity of legal acts is the same law that applies to the acts

64 For instance, the United Nations Convention on Contracts for the International Sale of Goods (1980), the Convention on the Contract for the International Carriage of Goods by Road (1956), the Convention for the Unification of Certain Rules for International Carriage by Air (1999), the Convention on the law applicable to contractual obligations (1980). 65 The Rome I. Regulation includes conflict-of-law rules for material validity of contracts falling within its scope and for professio juris for these contracts. The Brussels I-bis Regulation contains rules on the material validity of choice of court agreements; the Succession Regulation contains provisions on the material validity of an agreement as to succession or choice of applicable law.

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Petra Uhlířová themselves, unless the PIL Act provides otherwise66 or unless other factors trump that rule. The last sentence of paragraph 1 suggests that throughout the process of determining the applicable law, the legal act shall be considered valid. Article 42 contains general67 conflict-of-laws rules for the form of a legal act. The starting point for the legislator is the principle favour negotii. Therefore, several alternative criteria are included to preserve and support the formal validity of a legal act under at least one legal order. As a result, the legal act will be valid from a formal point of view if it complies with the law of a State: a) governing the contract itself or a legal relationship established thereby (lex causae); b)where one of the actors expressed his/her will (lex loci actus); c) where one of the actors has its seat or habitual residence (lex domicili); or d) where immovable property is located (lex rei sitae).68 Thus, the PIL Act attempts to minimise the likelihood of the legal act becoming invalid as to the form. EU law does not generally regulate the law applicable to the formal validity of the legal act. This matter, however, is partially addressed in EU law – it corresponds to the scope of a particular EU regulation and with the law applicable to the form of a legal act dealt with therein.69 6.

Agency – Certain Aspects (Articles 44-45)

Certain matters of agency are outside the purview of EU law - the Rome I Regulation literally excludes the relationship between principal and agent from its scope.70 On another note, the Czech Republic is not a party to the 1978 Hague Convention on Agency. Article 44 lists several connecting factors whilst Article 45 regulates a special type of proxy and similar specific types of agency. Details can be found in the translation of the PIL Act.71 B.

Family Law (Articles 47-67)

In today’s globalised world, the number of family law cases with a cross-border component continues to grow due to increased mobility. Family law, however, remains an area where States retain a degree of autonomy in an attempt to preserve their legal, historical and social specificity. The harmonization of family law in the Special provisions are, for instance, Articles 29-32, 44, 45, 48, 54, 67, or 77. Special provisions are, for instance, Articles 44, 48, 50, 77, 85, 86, 87 or 117. 68 For supplementary rules relating to the immovable property (formal requirements) see Article 42 paragraph 2. 69 Certain contracts, choice of court agreements, and some matters of succession. P. BŘÍZA (note 2), at 225. 70 EU law governs the question of the relationship between the principal and the agent and between the agent and third person. 71 Unofficial private translation of the PIL Act, available at . Another translation available on the official website . 66 67

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New Private International Law in the Czech Republic form of substantive rules does not seem feasible either on an EU or an international level. Although international rules on jurisdiction in this area are common, conflict-of-law rules often remain constrained to the national domain. This is amplified by the fact that the Czech Republic does not participate in the Council Regulation (EU) No 1259/2010 of 20 December 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation (Rome III. Regulation). On the other hand, the former State of Czechoslovakia concluded several bilateral treaties with ex-socialist States that usually address family matters; important multilateral instruments also influence private international law in this area (Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, Council Decision 2009/941/EC of 30 November 2009 on the conclusion by the European Community of the Hague Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations, The Hague Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations).The previous PIL Act used nationality as a traditional connecting factor; the new Act, however, mirrors international developments and introduces habitual residence as the main connecting factor in certain family law matters.72 Private international law rules in the field of family law represent a significant part of the PIL Act. This title covers relationships between spouses (Articles 47-52), between the child and parent (Articles 53-58), the rights of unmarried mothers (Article 59), adoption (Articles 60-63), guardianship and curatorship of minors (Articles 64-66). Article 67 presents a novelty – rules concerning the registered partnership and similar regimes. 1.

Marriage, Relations between Spouses, Personal and Property Regime – Applicable Law (Articles 48-50)

Articles 48-50 specify the law applicable to different issues of family law: entering a marriage, the personal and property regime of spouses, and divorce.73 EU law either does not yet cover these topics or is not binding on the Czech Republic. However, these matters are regulated in certain bilateral treaties that use common nationality or common residence of spouses or lex fori to determine the applicable law for matrimonial property regimes and lex loci celebrationis with respect to the form of marriage. When the international treaty with the State in question does not exist, the applicable law will be determined according to the PIL Act. Article 48 paragraph 1 (capacity of a person to celebrate a marriage) represents a special conflict-of-laws rule with respect to the general Article 29 dealing with the capacity of a natural person. The capacity of a person to celebrate a marriage and the validity thereof is governed by the law of the State of which the person is a national (lex patriae). However, in the event that the applicable law imposed discriminatory requirements for the capacity to celebrate a marriage (for example a ban on performing marriages between persons of different religions), the 72 73

M. PAUKNEROVÁ (note 14), at 89. Rules relating to divorce are elaborated in a separate section of this article.

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Petra Uhlířová Czech authority would apply the public order exception and the law imposing these contravening conditions should not be applied. Article 48 paragraph 2 prescribes the applicable law to the form of a marriage – it is subjected to lex loci celebrationis. In case that a marriage is being celebrated in the Czech Republic, the future spouses shall submit a public document certifying their capacity to enter the marriage. Spouse holding a foreign nationality shall also submit documents required by a special law.74 Article 49 regulates both personal and property relations of spouses as well as any maintenance obligation between them.75 Personal relations of spouses (Article 49 paragraph 1) are governed by the law of their common nationality. When the spouses are citizens of different States, the applicable law will be that of the State where they are both habitually resident, or otherwise, Czech law.76 The property relations of spouses77 (Article 49 paragraph 3) shall be governed by the law of the State where they are both habitually resident, failing that by the law of the spouses’ common nationality (if the spouses are citizens of the same State), otherwise by Czech law. In both of the cases listed above, the connecting factors are hierarchically ordered. The provision dealing with agreements as to the matrimonial property regime (marriage agreements) was widened and is to be found in paragraph 4. The inclusion of the possibility to make a choice of law is the most significant and progressive advancement in matters of matrimonial property. However, this choice of law is limited – it can be either the law of the State of which one of the spouses is a national or where one of the spouses habitually resides, the law of the State where the real estate concerned is located, or, finally, Czech law. The Act provides that the marriage agreement must be concluded in the form of a notarial actor within a comparable authentic instrument if made abroad. When the choice of law as to the matrimonial property regime is not made, the contractual matrimonial property regime shall be governed by the law applicable to the property regime of spouses at the time the marriage agreement was concluded. 2.

Jurisdiction, Recognition and Enforcement – Property and Personal Relations between Spouses

When determining the jurisdiction of the Czech court in matters of property and personal relations between spouses, Article 6 (of a general nature) of the PIL Act shall apply. For recognition and enforcement of these decisions Article 16 shall be used. In both cases an existing international treaty can supersede the PIL Act. 74 Law Nr.301/2000 of the Collection, Register of Births, Marriages and Deaths Act (zákon o matrikách, jménu a příjmení). 75 See a separate section of this article. 76 The previous Act used the common nationality of spouses as a connecting factor, while lex fori was used for personal and property relations. 77 The proposal for unified EU conflict-of-law rules applicable to the matrimonial property regimes is still being negotiated within the relevant working group in the EU. It also includes marriage agreements.

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New Private International Law in the Czech Republic 3.

Maintenance Obligations between (Ex-) Spouses – Applicable Law, Jurisdiction, Recognition

The field of maintenance obligations is one of the areas where EU and international law pre-empt national law; the Czech legislator is aware of that. Article 49 paragraph 2 and Article 50 paragraph 4 take into account the existence of relevant international instruments.78 The Act therefore refers directly to the Maintenance Regulation (to the Hague Protocol from 2007 respectively) without providing for a separate legal provision on the law applicable to maintenance obligations between spouses or ex-spouses. The bilateral international treaties can come into play as well. Article 47 paragraph 3 reflects the rules contained in the existing Maintenance Regulation. On jurisdictional matters, the PIL Act refers to this Regulation without introducing a separate provision. The decision on maintenance obligations between spouses and ex-spouses rendered in an EU Member State shall be recognized and enforced in accordance with the above-mentioned Maintenance Regulation; it introduces a “double regime”, depending on the Member State where the decision was issued (bound by the Hague Protocol from 2007 or not). If a decision on maintenance originates from a non-EU Member State and no international treaty applies, the recognition will be carried out in accordance with Article 16 paragraph 1. 4.

Divorce – Applicable Law, Jurisdiction, Recognition (Article 47, Articles 50-53)

a)

Law Applicable to Divorce, Marriage Annulment and Declaration whether Marriage Exists or Not

The Czech Republic does not participate in the enhanced cooperation for the law applicable to divorce and separation and is thereby not bound by the respective EU Regulation.79 In the event that no bilateral treaty applies, the PIL Act should be used. Article 50 paragraph 1 introduces the law applicable to dissolution of marriage; it shall be the law of the State that governs the personal relationships of spouses at the time the proceedings are opened. This means that the Article refers 78 Council Regulation (EC) No 4/2009 of the 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation on matters relating to maintenance obligations. Council Decision 2009/941/EC of 30 November 2009 on the conclusion by the European Community of the Hague Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations. The Hague Protocol from 2007. 79 Currently participating countries are: Austria, Belgium, Bulgaria, France, Germany, Hungary, Italy, Latvia, Luxembourg, Malta, Portugal, Romania, Slovenia, Spain, Lithuania and Greece (for details on Greece’s participation, see the Commission Decision of the 27 January 2014 confirming Greece’s participation in enhanced cooperation in the area of the law applicable to divorce and legal separation).

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Petra Uhlířová to Article 49 paragraph 1 and to the connecting factor of common nationality of the spouses (or to the law of the State where they are both habitually resident, otherwise to Czech law). Consequently, the same law will apply to the personal relationships of the spouses and to the divorce itself. This approach was chosen given the fact that divorce usually follows when the personal relationships between spouses are broken.80 Bilateral treaties generally use similar connecting factors – in the first place common nationality of spouses and failing that, lex fori. Article 50 paragraph 2allowsfor the so-called subsidiary application of Czech law. The Czech court might use lex fori if the foreign applicable law does not allow divorce or if divorce is permitted only under exceptionally burden some circumstances, provided that at least one of the spouses is a Czech citizen or habitually resides in the Czech Republic. In practice, however, the domestic court does not resort to an extensive use of this option. It can be said that if the applicable law is the law of an EU Member State, there should be no reason to apply paragraph 2 because all legal orders in the EU currently allow for divorce.81 Paragraph 3 addresses matters related to marriage annulment and declarations on whether a marriage exists or not. The capacity to enter a marriage and the form of a marriage are governed by the law of the State that applied to the initial conclusion of the marriage. b)

Jurisdiction of Courts for Divorce, Marriage Annulment and Declaration on whether Marriage Exists or Not

The applicability of Article 47 is strongly limited by the existence of the Brussels II-bis Regulation and of bilateral treaties with non-EU Member States. In practice, paragraphs 1 and 2 can apply only in a very limited number of cases – particularly when the Brussels II-bis Regulation allows for the possibility of using the so-called residual competence in accordance with its Article 7. Article 47 paragraph 1 grants jurisdiction in matters of divorce in cases where one of the spouses is a Czech citizen or if the defendant habitually resides in the Czech Republic. Paragraph 2regulates the situation where spouses do not hold Czech citizenship and the defendant does not have his/her habitual residence in the Czech Republic or in the EU (or the domicile in the United Kingdom or Ireland) and neither spouse is a citizen of an EU Member State. Under the conditions stated under lit. a) – c) the Czech court shall have jurisdiction. The rules have the form of a cascade. Habitual residence is a main connecting factor.

80 81

Explanatory report of Article 50. The last State in the EU that introduced divorce was Malta. P. BŘÍZA (note 2),

at 264.

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New Private International Law in the Czech Republic c)

Recognition of Decisions on Divorce, Marriage Annulment, Legal Separation, Declaration whether Marriage Exists or Not

The recognition of decisions dealing with the above-mentioned matters is regulated in Article 51 (concerning Czech citizens) and Article 52 (concerning foreigners). These Articles amount to lex specialis in relation to the general Article 16. However, the relevant EU law, represented by the Brussels II-bis Regulation, limits their application; the Regulation shall be used in relation to EU Member States except for Denmark. According to the Regulation, decisions falling within its scope shall be recognised automatically without any special proceeding being required. Also relevant international treaties may limit the applicability of Articles 51 and 52. Therefore, these Articles will only be used in relation to certain third countries.82 In the event that the PIL Act applies, Article 51 subjects the recognition of a foreign decision regarding a Czech citizen to a special proceeding that takes place before the Supreme Court of the Czech Republic. That is because the Czech State has an interest in controlling the recognition of decisions regarding its citizens in connection with matters of status. Article 52 regulates the recognition of the decision concerning foreign nationals who were, during the decisive time period, citizens of the same State, the judgment of which shall be recognised. The same applies if the judgment can be recognised in the home States of all foreigners that were parties to the original proceedings. This final judgment shall have the same legal effects within the Czech Republic without any additional proceeding being required. The reason for this facilitated recognition is that the status judgment relates to a Czech citizen; hence, the State has a lower interest in gaining control over it. Recognition is non-formal, meaning that the Czech authority takes that decision into consideration as if it were a Czech judgment. The Czech authority processing this decision will check, however, that formal requirements – such as the legal force of the decision and non-existence of any reason to refuse its recognition (e.g. contravention of public policy). 5.

Determination and Denial of Parentage (Articles 53-55)83

EU law does not address the question of determination and denial of parentage.84 The Czech Republic is not a party to any multilateral treaty. This means that, in case no bilateral international treaty applies, Articles 53 - 55 shall be used. The law applicable to the determination and denial of parentage in accordance with Article 54 paragraph 1 shall be the law of the State whose nationality the child acquired at birth (lex patriae infantis). In the event the child acquired I.e. decision made in a 3rd State not party to the Hague Convention on the Recognition of Divorces and Legal Separations or to a bilateral treaty. 83 The previous Act used only the term “fatherhood.” However, it was possible to conclude that motherhood was covered as well. 84 The Brussels II-bis Regulation expressly excludes this matter from its scope. 82

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Petra Uhlířová multiple nationalities, Czech law shall apply. An independent norm is to be found at the end of this paragraph – should it be in the interest of the child, the law of the State in which the mother had her habitual residence at the moment of conception of the child shall apply. This final part is a novelty included in the PIL Act in order to protect the interest of the child.85 The predominance of Czech law is highlighted in paragraph 2; in the event that the child has his/her habitual residence in the Czech Republic and it is in the interest of the child, Czech law shall be applicable for determination and denial of the parentage.86 Paragraph 3 supports the validity of the determination of parentage made abroad while introducing a subsidiary rule; the determination of parentage is valid if it was effected according to the law of the State where a declaration on recognition of parentage was made (in some States the declaration on recognition of parentage can be made before a Registrar). The PIL Act further states in Article 53 that Czech courts are granted jurisdiction for the determination and denial of parentage. An action on the establishment or denial of parentage shall be brought before the general court of the defendant in the Czech Republic and if the defendant has no general court, to the general court of the plaintiff.87 The Czech court shall also have jurisdiction when one of the parents or the child are Czech citizens. Rules on recognition of foreign decisions on determination and denial of parentage are integrated in Article 55. This special provision introduces two diverse procedures for recognition, depending on the nationality of the parties to the original proceedings: if at least one of the parties is a Czech citizen (paragraph 1), the Article 51 shall apply by analogy. Paragraph 2 governs the situation where all the parties to the original proceedings were foreign nationals. Then Article 52 should apply by analogy,88 provided that the partiers to the original proceedings were nationals of the State the judgment of which is concerned or in the event such foreign decision is being recognised in the home States of all the parties. 6.

Maintenance, Custody, Care of Minors and Other Matters (Articles 56-58)

Traditionally, Czech law addresses matters of maintenance and parental responsibility in a single provision whereas EU and international law deal with these questions separately.

Explanatory Report to Article 54. The formulation “court shall apply” indicates that the court is obliged to apply Czech law if the conditions are met. 87 The general court will be established according to the rules on jurisdiction in law Nr. 292/2013 of the Collection. 88 For Articles 51 and 52 see the respective sections of this article. 85 86

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New Private International Law in the Czech Republic a)

Applicable Law

The law that applies to maintenance obligations, custody and care of minors is regulated in Article 57. This provision, however, does not identify the connecting factor and it merely refers to the international instruments that apply. They are: a) The Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in Respect of Parental Responsibility and Measures for the Protection of Children (Convention on Parental Responsibility and Protection of Children) that applies to the question of parental rights and obligations (parental responsibility), and b) the Maintenance Regulation (the Hague Protocol from 2007 respectively)that applies to matters of maintenance obligations. Both the Convention and the Protocol are of universal application; the applicable law determined through the connecting factors defined therein shall be used regardless of whether it is the law of a contracting or a non-contracting State. Bilateral international treaties that are binding on the Czech Republic can come into play as well. Parental rights and obligations (parental responsibility) towards minors are assessed according to Article 15 of the Convention on Parental Responsibility and Protection of Children. The applicable law is determined through the connecting factor lex fori. As a result, if the court has jurisdiction over the case it will apply the law of its (home) State. In matters of maintenance obligations towards minors, the applicable law shall be determined according to the connecting factors contained in the Hague Protocol from 2007 - Article 15 of the Maintenance Regulation refers directly to this instrument. According to Article 3 of this Protocol, the connecting factor is the habitual residence of the entitled person. In case a certain entitled person does not succeed in obtaining maintenance under Article 3, Article 4,containing a cascade of connecting factors, shall apply. Generally, the Hague Protocol from 2007 excludes the choice of law for maintenance obligations arising from the parentchild relationship. b)

Jurisdiction

The jurisdiction of Czech courts in cases of maintenance, custody, care of minors and other matters is regulated principally in Article 56 paragraph 1. Nevertheless, the application of this provision is, to a large extent, limited by the scope of respective EU and international instruments. It is therefore possible to say that the rules included in the PIL Act will only apply exceptionally.89 Jurisdictional rules in matters of parental responsibility are incorporated in the Brussels II-bis Regulation and in the Convention on Parental Responsibility and Protection of Children. This relationship is addressed in Article 61 of the Brussels II-bis Regulation. The principal criterion for assigning jurisdiction to the court according to the Regulation is the habitual residence of the child at the

89

P. BŘÍZA (note 2), at 290.

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Petra Uhlířová moment when proceedings are opened.90 Only in cases falling under Article 14 of the Regulation can the Czech court apply the rules of the PIL Act (Article 56 paragraph 1), based on the so-called residual jurisdiction. Article 56 paragraph 1 states that the PIL Act applies only insofar as the jurisdiction in matters of maintenance obligations to the minor is not regulated by directly applicable provisions of EU law, this currently being the Maintenance Regulation. The basic rule on jurisdiction is incorporated in Article 3ofthis Regulation. The same Article contains alternative criteria for assigning jurisdiction to the court – the applicant can choose an EU Member State where he brings an action. Habitual residence presents a dominant connecting factor. The choice of court is not admissible for maintenance obligation disputes concerning a child under the age of 18 (Article 4 of the Maintenance Regulation). In contrast with the Brussels II-bis Regulation, the Maintenance Regulation does not allow the application of national law to rest on residual competence. Therefore, the competence of a Czech court in maintenance matters towards a child will always be based on the Regulation.91 c)

Recognition and Enforcement of Decisions

Rules on recognition of judgments originating in EU Member States (except for Denmark) on matters of parental responsibility are incorporated in the Brussels II-bis Regulation.92 For the recognition and enforcement of decisions in maintenance matters towards a minor originating from an EU Member State, the Maintenance Regulation is pivotal.93 The applicability of Article 58 in matters of maintenance obligations towards a minor and parental responsibility is thus limited to decisions originating from non-EU Member States, provided that no international treaty governs the subject matter.94 When the PIL Act applies, the recognition of judgments in matters of maintenance and parental responsibility is addressed in two different provisions (Articles 58 and 16). Article 58 shall apply to the recognition of a judgment that relates to a child of foreign nationality if this judgment was rendered by the State of the child’s nationality or habitual residence, and all parties are foreigners (no Czech citizen is involved). When these conditions are met and the decision concerns a non-property matter, it shall be recognised without any further The Brussels II-bis Regulation applies when a child habitually resides in the territory of an EU Member State (except for Denmark). 91 Provided that the proceedings were opened on 18.6.2011 or later. 92 The Regulation shall apply to the judgments rendered in the proceeding initiated after its entry into force (1.3.2005). 93 The Regulation makes a reference to the Hague Protocol from 2007 - the enforcement and recognition of the judgment procedure will differ depending on whether the Member State is bound by this Protocol or not. 94 The Convention of 2 October 1973 on the Recognition and the Enforcement of Decisions Relating to Maintenance Obligations Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance. 90

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New Private International Law in the Czech Republic proceedings. The authority to which this non-property judgment is submitted will check the entry into force of that decision and the non-existence of grounds to deny the recognition (i.e. manifest contradiction with public order). In the event that the judgment contains a property performance, this judgment may be recognised and enforced provided it does not contravene Article 15 (lit. b) – e). In other cases (involving children having Czech nationality) Article 16 is relevant. Paragraphs 1 and 3 apply in cases of property performance; paragraph 2 relates to a non-property decision and requires a special procedure for recognition. 7.

Adoption (Articles 60-63)

Adoption is excluded from the scope of the Brussels I-bis Regulations and Brussels II-bis; the Czech Republic is, however, a party to certain other treaties.95 When the PIL Act applies, the applicable law is determined according to the lex patrie of both the adoptee and the adopter (adopters). Thus, Article 61 presents a significant difference from the previous law as the PIL Act now requires the application of the rules on adoption of the legal orders of both the adoptee and the adopter. These two legal orders should apply cumulatively. Paragraph 3 of the same Article allows for an exception in the event foreign applicable law either does not allow adoption or only allows it under extraordinarily onerous circumstances. In this case Czech law shall apply, provided that the adoptee, the adopter or at least one of the adopting spouses habitually resides in the Czech Republic. Article 62 contains a specific rule relating to the effects of an adoption (for instance the end of the family relationship to the original family and establishment of the new relationship to the new family). The rule is formulated in a cascade; three connecting factors are to be applied in a given order: the law of the State of citizenship of all the parties at the time of adoption; the law of the State where the parties have their habitual residence at the time of adoption; failing that, the law of the State of the adoptee at the time of adoption. The PIL Act in Article 60 grants jurisdiction to Czech courts when the adopter is a Czech national; in case of spouses, it is sufficient that either one of them have Czech nationality. The local court is granted jurisdiction according to paragraph 2 also in the event that at least one adopter or one of the adopting spouses resides in the Czech Republic and provided that the Czech judgment may be recognised in the home State of the adopter or in the home States of both adopting spouses. The Czech court can also exercise its jurisdiction when the adopter or one of the adopting spouses has his/her habitual residence in the Czech Republic. If the minor adoptee is a Czech citizen and habitually resides in Czech territory, the competence of local courts is exclusive (paragraph 3). The Recognition of foreign judgments in matters of adoption is regulated in Article 63. This Article distinguishes between the decision concerning a Czech citizen and a foreigner. Hence, if the adopter or the adoptee is a Czech citizen, the 95 Bilateral treaties with former socialist States; some multilateral treaties are reflected in the substantive rules on adoption. The Convention of 29 May 1993 on the Protection of Children and Co-operation in Respect of Intercountry Adoption.

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Petra Uhlířová final foreign decision on adoption shall be recognised in the Czech Republic if it does not violate norms of public policy and the exclusive competence of Czech courts (Article 60 paragraph 3), and if the adoption would be allowed under Czech substantive law.96 The proceeding on recognition is in this case subject to Article 16 paragraph 2. If all parties are foreigners, the foreign judgment on adoption would be recognised without any further proceedings needed, provided that it does not contravene public policy and provided that the judgment may be recognised in the home States of all the parties involved (Article 63 paragraph 2). 8.

Registered Partnership and Similar Relationships (Article 67)

The Czech Republic regulates registered partnership in a separate law. Private international law rules are also addressed in a special chapter. Although substantive law has dealt with registered partnerships for some years, the reflection of this notion in private international law was achieved only through the adoption of the PIL Act. Article 67 represents a special rule with respect to other provisions of the PIL Act. There is no EU law covering this subject matter.97 The law applicable to registered partnership is the law of the State where that partnership (or similar relationship) was concluded. The same law applies to the effects of that bond, to the capacity to conclude and terminate it, to its form, to its annulment and non-existence as well as to the personal and property relationship that it creates between partners. The jurisdiction of Czech courts to decide on termination, annulment and non-existence of a registered partnership is granted in the event the partnership was concluded in the Czech Republic or at least one of the partners is a Czech citizen habitually residing in the Czech Republic. The Recognition and enforcement of foreign judgments on termination, annulment and non-existence of a registered partnership is, according to Article 67 paragraph 3, done automatically (Article 16), provided that the recognition concerns a decision rendered in a State where: a) the partnership was concluded, or b) the decision can be recognised. C.

Succession Law (Articles 74-79)

Czech succession law (both substantive law in the Civil Code and private international law in the PIL Act) presents a legal field where significant changes can be observed. Czech inheritance law is an area that has, for a long time, remained almost immune to changes. However, the recodification brought the most significant advancements especially in the field of succession law (legal relations 96 This requirement should prevent the parties, Czech citizens, from circumventing the Czech law on adoption when adopting abroad. 97 The currently negotiated proposal deals only with a partial question - the property consequences of registered partnerships.

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New Private International Law in the Czech Republic arising from succession). Succession law with a cross-border element is also influenced by the existence of bilateral international treaties. As of 17.8.2015, the directly applicable Regulation Nr. 650/2012, the Succession Regulation, shall apply.98 1.

Applicable Law

The determination of the law that is applicable to a succession is based on the habitual residence of the deceased at the moment of his/her death. However, if the deceased was a Czech national and at least one of his/her heirs is habitually resident in the Czech Republic, Czech law shall apply (Article 76). The old PIL Act used lex patriae as an exclusive connecting factor. Bilateral treaties continue to use the scission principle of the law applicable to succession. Thus, in bilateral relations the connecting factor lex patriae is used for movable and lex rei sitae for immovable property. The term “legal relations arising from succession” is not defined in the PIL Act. It is rather broad and includes several elements relating to succession such as: assessment of the reason to inherit – whether it exists or not, assessment of what items of the property of the deceased belong to the estate, the moment when the estate is inherited, disinheritance, reserved share, etc. Inheritance disputes are, however, excluded. Article 77 paragraph 4 represents a significant change; it allows for the choice of law in matters of succession (professio juris). In contrast to the previous law, estate planning99 is reasonably allowed and supported. The testator can choose either the law of his nationality or of his habitual residence as determined at the moment when the disposition mortis causa was made.100 The choice of law shall be included directly in the will itself. Paragraph 5, referring to paragraph 4, allows the parties to a succession agreement to make professio juris as well; parties can choose the applicable law either according to lex patriae or the habitual residence of any one of them. The new PIL Act is, in this regard, very progressive. Article 77 incorporates special rules relating to the law that applies to certain questions of mortis causa disposition (capacity to testate, form, etc.). According to paragraph 1, the capacity to testate is governed by the law of the State of nationality of the deceased or where he or she habitually resided at the time the intent of the deceased was expressed. The same law is used in answering the question of what types of disposition mortis causa are admissible (bequest, joint will, succession agreement).

The Regulation will prevail over almost the entire section on succession. The new Civil Code contains new rules on inheritance (introduction of bequest, succession agreement), supports the will of the testator and includes several other novelties, such as a conditional will. 100 After the entry into force of Regulation Nr. 650/2012 a limited choice of law shall be allowed – the Regulation enables the testator to choose lex patriae to apply to his/her succession. 98 99

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Petra Uhlířová Article 77 paragraph 2 introduces the law applicable to the form of the disposition of property upon death. The testament shall therefore be valid as to the form if it complies with the law of the State: a) of which the deceased was a national at the time of the making of an expression of intent or at the time of death, b) in whose territory the testament was made, c) where the deceased habitually resided at the time of expressing the intent or at the time of death, d) which shall be applied to legal relations arising from the succession or which was supposed to be applied to them at the time of making a disposition, or e) in which immovable property is located. The same law also applies to the revocation thereof. Paragraph 2 shall apply accordingly to the form of the agreement as to succession and other dispositions mortis causa. 2.

Jurisdiction

Jurisdiction is, according to Article 74 paragraph 1, granted to Czech courts101 provided that the deceased had his habitual residence in the Czech Republic at the moment of his/her death. As described above, the PIL Act traditionally encompasses both substantive and procedural rules. As a result, the jurisdiction of the Czech court in succession matters as well as the applicable law will be determined according to the habitual residence of the deceased at the moment of his death. This solution is plausible: lex and forum come together and the Czech court will, in a vast majority of succession cases, apply domestic law. Paragraph 2 reserves an exclusive competence for the Czech court in cases where the succession proceeding concerns real estate located in Czech territory. According to paragraph 3,the Czech court has jurisdiction when the deceased did not have his/her habitual residence in Czech territory; there must, nonetheless, be some connection to the Czech Republic (a Czech citizen leaving the estate in the Czech Republic and the habitually residing heir pleads that the succession should be dealt with by a local court). Additionally, if an estate is located in Czech territory and the foreign law does not grant reciprocity in succession matters (does not grant jurisdiction to the Czech courtsto decide the matter in the reverse situation or does not recognise the effects of Czech court decisions) or when a foreign court refuses to hear the succession or does not communicate that it will hear it, the Czech court shall be competent. The reason behind this is to prevent a situation where property without an heir remains in Czech territory. According to paragraph 4, in the event that the Czech court does not have jurisdiction, it should limit itself to the measures necessary to secure the property of the deceased. In the event that the property of the deceased is located abroad, the Czech authorities are not granted automatic competence to hear the case. On the contrary, the Czech court shall, under Article 75, hear the succession matter only if the relevant foreign State gives Czech courts the authority for a hearing regarding such property or if it attributes legal effects to the Czech judgments. Thus, Czech law recognises that some States may grant an exclusive competence to their authorities 101

In the Czech Republic the notary also acts as a court commissioner in succession

matters.

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New Private International Law in the Czech Republic to decide upon succession property located in their territory and do not allow foreign courts to hear the case. In this way, the existence or non-existence of reciprocity in bilateral relations is aptly showcased.102 3.

Recognition and Enforcement

Article 79 presents a special rule to the general provisions on recognition and enforcement of judgments in property matters. The foreign final judgment on succession matters can be recognised without any special proceeding as long as it was rendered in the State of which the deceased was a citizen or habitual resident at the time of his or her death. It is also essential that the State concerned recognise the authority of the Czech courts to hear the succession of a deceased with an habitual residence in the Czech Republic, or attribute legal effect to the judgments of the Czech courts in the same matters (reciprocity). A judgment contradicting Article 78 (bona vacantia) and violating the exclusive jurisdiction of Czech courts shall not be recognised. The conditions of recognition can be summarized as follows: a) the judgment must be final, b) the judgment must originate in the State of habitual residence or nationality of the deceased, c) material reciprocity should exist, d) the decision should not violate the exclusive jurisdiction of the Czech court, e) there is no contradiction with Article 78, and f) the decision does not contravene norms of public policy. If these conditions are fulfilled, the foreign judgment shall be informally recognised without any further proceedings, meaning that the Czech authority takes this decision into consideration. Judgments in succession matters can originate from the court stricto as well as largo sensu (notary as a court commissioner). The term judgment also covers the authentic instruments rendered in succession matters in some States (acte de notoriété, Erbschein). However, it is necessary to distinguish between the different types of authentic instruments – the ones that can be recognised and enforced and those that merely possess higher evidentiary value.103 Contested matters of succession (for instance dispute about the items of the estate) are excluded from the scope of this Article. The recognition of judgments on these matters would be subject to other provisions of the PIL Act.104 4.

Bona Vacantia, Escheat (Article 78)

According to this Article, the property and rights of the deceased that are located in Czech territory shall be attributed to the Czech Republic provided that there is no heir. Only Czech courts have the jurisdiction to decide on this matter. The State The court can ascertain the information about the reciprocity from the Ministry (Article 13). 103 Regulation No. 650/2012 also distinguishes between those two types of instruments in succession matters. 104 P. BŘÍZA (note 2), at 457. 102

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Petra Uhlířová shall not be deemed an heir unless it was so named in a will. This provision attempts to prevent a foreign State from taking over property without an heir in Czech territory. Foreign judgments violating Article 78 shall not be recognised. D.

Law of Obligations

The law of obligations is an area where EU law plays a decisive role; domestic rules will only come into play in a negligible number of cases. The introductory Article 84 aptly reflects this fact, while stating that the Articles concerning the law of obligations apply in connection to EU law or international treaties.105 The Article further states that this Chapter shall be limited to the matters not falling under the scope of EU law or international treaties, unless these instruments allow for the application of the Act (meaning allowing the application of domestic law). Taking into account that the Rome I and Rome II Regulations are truly comprehensive and that they are of universal application, that is, the law determined is applied whether or not it is the law of a Member State, the relevance of national rules in the PIL Act is very limited. Articles 85 and 86 include rules on the jurisdiction of Czech or foreign courts, based on a written choice of court agreement (prorogatio fori). The choice of a foreign court agreement (Article 86) indicates that the jurisdiction of the domestic court is waived in favour of a foreign court. An independent provision on the choice of court agreement is incorporated in Article 88 - it includes special rules relating to the consumer and labour contracts. All the provisions mentioned above are more or less marginalised (obsolete) after the entry into force of the Brussels I-bis Regulation and of certain other instruments. This is true especially for Article 85.106 Conflict-of-law provisions for the determination of the law applicable to the contract (Article 87) can only be used in a limited number of cases, especially when the particular obligation does not fall within the scope of EU law, when EU law allows for the application of domestic law or where no international treaty prevails. Hence, its use is limited.107 However, Article 87 is strongly inspired by the Rome I Regulation– the parties can choose the law that is applicable to their contract. When the choice of law is not made, the law of the State with which the contract is most closely connected applies. Exceptions to this rule are listed in paragraph 2 (consumer contracts), 3 (contracts of insurance) and 4 (timesharing). Article 89 describes the rules concerning applicable law for labour relations that were established by means other than a contract (for instance through a 105 Such as the Hague Convention on the Law Applicable to the Traffic Incidents, the United Nations Convention on Contracts for the International Sale of Goods, the Convention for the Unification of Certain Rules for International Carriage by Air, bilateral treaties. 106 Limited by the Lugano Convention; in the future also by the Hague Convention of 30 June 2005 on Choice of Court Agreements. 107 The Rome I Regulation excludes from its scope matters mentioned in Article 1 paragraph 2. Excluded areas are, however, often covered by other EU acts. The application of Article 87 seems to be limited to Article 7 paragraph 3 of the Rome I Regulation.

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New Private International Law in the Czech Republic nomination or election). It is not sure whether these relationships fall under the Rome I Regulation;108 however, under the PIL Act they shall be governed by the State law under which employment was established. Article 90 states that unilateral acts shall be governed by the law that the individual concerned has chosen, otherwise stated, the law of the State in which the person making the unilateral legal act was habitually residing at the time this legal act was undertaken. It is necessary to ascertain whether the unilateral legal act cannot be closely connected with an existing contract (and for instance considered as an offer or termination thereof). Such a legal act should be governed by the Rome I Regulation. Therefore, the PIL Act should apply to “purely unilateral acts” such as a request for tender/procurement or binding promise.109 Article 91 regulates questions of security, consequences of breach and alteration of an obligation. The general rule is that security and consequences of a breach of an obligation shall be governed by the law that governs the (secured) obligation itself.110 The same law applies to the consequences of breach of that obligation. The alteration of an obligation (transfer of rights and obligations by the operation of law) is governed by the law that is applicable to cases for which the law stipulates this transfer. Article 91 comes into play only when Regulation Rome I does not apply. Thus, it will be used towards the secured interests that do not have the nature of an obligation. Article 92 contains a rule for unilateral set-off cases – they should be governed by the same law as the claim against which the set-off is asserted. Yet, parties are free to choose a different applicable law in a choice of law agreement. Article 92 shall not apply to the set-off of a contractual claim: Article 17 of the Rome I Regulation shall cover these. Article 101 relates to non-contractual obligations, however, it fully takes into consideration the existence of relevant EU and international law. Within the EU, the basic source of the conflict-of-law provisions for non-contractual obligations (applicable to damages, unjust enrichment, pre-contractual liability, etc.) is the Rome II Regulation. However, it excludes from its scope questions of privacy violations and the rights relating to personality (including defamation). As a result, only these aspects of non-contractual obligations are addressed in the PIL Act. The applicable law is governed by the law of the State where the violation occurred. The person affected (injured party) may, however, additionally choose the law of the State where he/she has his/her habitual residence (seat), where the perpetrator has his habitual residence (seat) or where the result of violating conduct occurred provided that the perpetrator could predict it.

Relevant case law does not yet exist. P. BŘÍZA (note 2), at 550. 110 Paragraph 1, however, sets up four exceptions from that general rule. 108 109

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Other Types of Private-Law Relationships

1.

Rights in rem (Articles 68-72)

The law applicable to immovable property and to tangible movable property is, according to the Article 69 paragraph 1, the law of the place where the property is located (connecting factor lex rei sitae), unless the Act provides otherwise or the parties have otherwise agreed. The same law is also applicable to the question whether the property is considered to be movable or immovable. The law applicable to rights in rem in relation to aircraft and vessels, if registered, is the law of the State where the public register is kept (paragraph 2). Nevertheless, it is important to distinguish between the rights in rem as such (and their effects erga omnes) and the effect of a contract (effect inter partes only).111 Articles 76 (succession) and 70 paragraph 3 (res in transitu) are special provisions. The Act in its Article 68 grants exclusive jurisdiction to the Czech court or other competent authorities to decide upon the rights on immovable property located in the Czech Republic. According to EU law on this matter, the Member States shall have exclusive competence in matters of rights in rem with respect to immovable property situated in their territory.112 Bilateral treaties regularly attribute competence to the courts of the State where the real estate concerned is located. According to Article 70 paragraph 1, the creation and extinction of rights in rem to tangible movable property is governed by the law of the place where this property was located at the time when the occurrence giving rise to the creation or extinguishment of the right occurred. Special attention shall be given to paragraph 2, introducing a significant modification. According to the current Act, the creation and extinction of ownership is subject to the law governing the contract on the basis of which the ownership over an item is being transferred, regardless of where the object of a contract was located at the time when the respective contract was concluded. 2.

Trust Funds or Similar Institution (Article 73)

The new Article 73 regulates the conflict-of-laws rules for trust funds (trusts). The legislator deemed it necessary to insert this provision in the PIL Act as a reaction to the inclusion of trusts in the new Czech Civil Code. This matter is not addressed exhaustively at the EU level113 and the relevant international treaty, the Hague Convention on the Law Applicable to the Trusts and on their Recognition, does not have too many signatories. However, the wording of this Convention was taken as a starting point while drafting the PIL Act. Thus, the basic principle is that the founder/settlor of the trust can make a choice of law applicable to the trust SDEU C-294/92 Webb. Article 24 paragraph 1 Brussels I-bis Regulation. 113 The Rome I Regulation and Succession Regulation both exclude the creation of the trusts from their scope, the Brussels I-bis Regulation grants special jurisdiction in relation to trusts. 111 112

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New Private International Law in the Czech Republic (paragraph 1). If professio juris does not exist, the general rule is that the trust fund shall be governed by the law of the State with which this trust fund has the closest connection (paragraph 2). While ascertaining the closest connection, regard shall be taken of the place where: a) the trust fund is administered, b) the majority of property is located, c) the seat or habitual residence of the trustee is found, or d) of the purpose of the trust fund. According to paragraph 4, a trust fund established abroad is recognized in the Czech Republic, provided it bears the basic characteristics required by Czech law. 3.

Cross-Border Bankruptcy/Insolvency (Articles 111-116)

Within the EU, the question of cross-border bankruptcy is regulated in the Insolvency Regulation. The general Article 111 of the PIL Act extends, however, the effects of the insolvency proceeding opened by Czech courts to a third State in line with the Regulation (paragraph 1), provided that the given State attributes the effects to this proceeding in its territory. This provision was included in reaction to the demand of legal practitioners114 and covers situations outside of the Insolvency Regulation. This Article also regulates the position of an insolvency liquidator. Subsequent Articles deal with insolvency of financial institutions (Article 112-114) and of insurance undertakings (Articles 115, 116). 4.

Rules on Arbitration and Recognition of Foreign Arbitral Awards (Articles 117-122)115

Before the adoption of the new PIL Act, this area was regulated in a special law. EU law does not cover matters of arbitration; international conventions, nevertheless, play an important role. Different aspects of arbitration are contained in Article 117 (arbitration agreement), in Article 118 (capacity of a foreigner to be an arbitrator), Article 119 (applicable law), and in Articles 120-122 (enforcement and recognition of foreign arbitral awards). F.

Role of the Ministry of Justice of the Czech Republic

The Ministry of Justice is the competent body for certain matters under the PIL Act. As mentioned, in accordance with Article 13, a Czech court can ask the Ministry for a statement as to the existence of a relationship of reciprocity with the State in question (for instance reciprocity in matters of security on the costs of proceedings, reciprocity in succession matters, reciprocity in recognition of judgments). As a novelty, the Explanatory Report indicates that this statement is

M. PAUKNEROVÁ (note 12), at 219. For a comparative overview of arbitration see the detailed work of Professor Alexander BĚLOHLÁVEK, Rozhodčí řízení v zemích Evropy, Praha 2012. 114 115

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Petra Uhlířová not binding. The court will consider it as any other evidence (legal question) in the proceeding; no higher evidentiary value is given to that statement. Article 23 paragraph 3 allows courts and public authorities to ask the Ministry for a statement about the content of applicable law in a given case.116Furthermore, Article 110 gives the court the possibility of requesting a statement from the Ministry in matters regulated by the PIL Act. If EU law or international treaties do not state otherwise, the Ministry plays an important role as a contact point between domestic courts and foreign authorities for the service of (judicial) documents and for the gathering of evidence. Within the scope of the PIL Act, the courts shall communicate with foreign authorities through the Ministry.117 The Ministry shall, on request, issue a certificate on the content of law that is or was effective in the Czech Republic on a given date when a person concerned needs to ascertain his/her rights abroad (Article 108)118; the Ministry is not entitled to interpret it. According to Article 109, the holder of a document may request the Ministry of Justice and subsequently the Ministry of Foreign Affairs to attach the legalisation stamp to the document issued (by a court, a notary or a court executor) or legalised in the Czech Republic. More information on the procedure for legalisation and obtaining an Apostille119 of judicial and notarial documents is available on the website of the Ministry.120

V.

Brief Note about Slovak Private International Law 121

Law Nr. 97/1963 of the Slovak Collection of Laws, Code on Private International and Procedural Law (Slovak PIL Act), was adopted at the time of the establishment of the Czechoslovak Republic. Until 31.12.1992, the private international law in former Czechoslovakia had been developed under a more or less unified doctrine, although scholarly opinion on this varies as the breadth of literature on the issue abounds. However, after the peaceful split of Czechoslovakia, both legal orders have started to differ. Private international law in both countries set out in a See also the section on the application and determination of foreign law. Bilateral international treaties can state otherwise, i.e. allow a direct exchange of requests between the courts. 118 This is advantageous when a party must prove the content of Czech law in proceedings in a common law jurisdiction. 119 The Ministry is competent to issue an Apostille on judicial and notarial documents under the Apostille Convention. 120 Available at . 121 Unofficial translation of the Slovak PIL Act, in M. HATAPKA/ B. VERSCHRAEGEN, Legal Sources of Private International Law, 2010. 116 117

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New Private International Law in the Czech Republic slightly different direction; this difference has, however, been rather moderate122 and reflects local particularities or specific national concerns. The Slovak PIL Act is currently used in a subsidiary manner, that is, it is subject to being superseded by relevant EU Regulations and international treaties. After accession to the EU and a swift reaction to international developments, the applicable law as well as jurisdiction in the Slovak Republic has, in contrast with the old Czech PIL Act, often been determined by means of the connecting factor of habitual residence. Unlike the old Czech PIL Act, the Slovak PIL Act was, in this regard, regularly amended to reflect relevant advances. Thus, habitual residence has already been introduced in a number of cases (guardianship and custody of minors, Article 26a, jurisdiction in matters of adoption, Article 41a, maintenance, Article 24a, competence in cases of maintenance, Article 38, competence in case of parental responsibility, Article 39). Slovak private international law, like the old Czech PIL Act, in certain general matters, relies on the doctrine of private international law. Therefore, the Slovak PIL Act does not expressly regulate matters of acta iure imperii, overriding mandatory rules or fraude à la loi. Choice of law is allowed only for property matters (Article 9). Similarly to the Czech PIL Act, the Slovak law addresses public order (Article 36). Public order should be used only when the application of foreign law would be contrary to the fundamental principles that shall be observed without exception. Nationality as a connecting factor has been kept, for instance, in succession matters (Article 17). The competence of the Slovak courts in succession matters is determined either by means of reference to the Slovak nationality of the deceased or with referring to the residence of the deceased, in the event that the deceased was a foreign national (Articles 44 and 45). Therefore, Slovak private international law in inheritance matters will, as of 15.8.2015, witness a major change once the Succession Regulation Nr. 650/2012 enters into force. General jurisdiction is granted to Slovak courts in Article 37 of the Slovak PIL Act. This general rule gives jurisdiction to Slovak courts where the defendant is domiciled or has its seat in the Slovak Republic or where he or she has property in the Slovak Republic, when the rights in such property are disputed. Rules elaborating on the jurisdiction of Slovak courts are contained in Articles 37a-37f, including the choice of court agreement (Article 37e). The exclusive jurisdiction of Slovak courts is contained in Article 37d. It applies in proceedings: a) having as their object rights in rem in immovable property or tenancies of immovable property if the property is situated in the Slovak Republic and b) concerned with the registration or validity of patents, trademarks, designs or other rights required to be registered, and it is granted in matters of real estate located in the Slovak territory and in matters relating to the registration and validity of patents, trademarks, design or other rights. The jurisdiction of Slovak courts, similarly to those of the Czech Republic, in a majority of cases, is superseded by the EU rules on jurisdiction (predominantly the Regulation 1215/2012), is inspired by them, or

122 M. PAUKNEROVÁ, Private International Law in the Czech Republic, 2011, p. 16. C. ESPLUGUES (note 40), at 173.

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Petra Uhlířová reflects them. 123 Furthermore, bilateral international treaties concluded between the former Czechoslovakia and a third State can be of interest. Rules on jurisdiction barring the enforcement of a non-EU judgment are contained in Article 64 of the Slovak PIL Act. The foreign judgment cannot be recognised or enforced when Slovak courts have exclusive jurisdiction. Another reason to deny the recognition or enforcement of foreign judgements is, inter alia, when the Slovak court has already decided the matter. The recognition and enforcement of foreign judgments is to a large extent influenced by the EU rules, predominantly Regulation 1215/2012, and bilateral international treaties concluded by the former Czechoslovakia. Recognition and enforcement of foreign judgments according to the Slovak PIL Act is facilitated; the Slovak PIL Act corresponds to the system that was newly introduced by the Regulation 1215/2012, i.e. abolition of exequatur.

VI. Conclusion Czech private international and private law have been facing some of the most significant changes in the last fifty years. The novelties introduced in the PIL Act were tailored to reflect current legal developments and to enable a smooth application of private international law in a patchwork legal environment, presented by relevant EU law and international treaties. The future will show whether the new PIL Act will be as successful as its predecessor and will be ready to face rapidly changing and instantly challenging legal settings.

123 Introduced by the change to the Slovak PIL Act, law Nr. 589/2003 of the Slovak Collection.

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FORUM ________________

THE LAW APPLICABLE TO PRODUCT LIABILITY IN CONTEXT: ARTICLE 5 OF THE ROME II REGULATION AND ITS INTERACTION WITH OTHER EU INSTRUMENTS Chiara MARENGHI*

I. II. III.

IV.

V.

Introduction Art. 5 Rome II: A Brief Overview of Underlying Policies and Connecting Factors Relationship and Interaction between Art. 5 Rome II and the Product Liability Directive A. The Reference to the Product Liability Directive as a Fundamental Tool for the Interpretation of Art. 5: “Handle with Care” B. The Mandatory Character of the Product Liability Directive in the Framework of the Rome II Regulation The Product Liability Regime under Rome II and the forum commissi delicti under the Brussels I-bis Regulation: The Need for Coherence and its Limits A. Place of Acting under Art. 7(2) Brussels I-bis as Place of Marketing of the Product in the Sense of Art. 5 Rome II B. The Interpretation of Art. 17 Rome II in Product Liability Cases Concluding Remarks

* Post-Doc Research Fellow in International Law at the Università Cattolica del Sacro Cuore, Piacenza. This article summarizes and develops some of the ideas expressed in the author’s work Profili internazionalprivatistici della responsabilità del produttore e diritto dell’Unione europea, Lecce 2013. Abbreviations: Camb. Yearb. Eur. Leg. Stud.: The Cambridge Yearbook of European Legal Studies; Comunicazioni e studi: Comunicazioni e studi. Istituto di diritto internazionale e straniero. Università di Milano; Contr. impr. Eur.: Contratto e impresa. Europa; Dalloz: Recueil Dalloz de doctrine, de jurisprudence et de législation; Eur. dir. priv.: Europa e diritto privato; Eur. Leg. Forum: European Legal Forum; Journ. dr. eur.: Journal de droit européen; NILR: Netherlands International Law Review; NIPR: Nederlands Internationaal Privaatrecht; Nuove leggi civ.: Le nuove leggi civili commentate; Rev. dr. comm. belge: Revue de droit commercial belge; Tul. L. Rev.: Tulane Law Review; Yale L. J.: Yale Law Journal.

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Printed in Germany

Chiara Marenghi

I.

Introduction

Regulation (EC) no 864/2007 of the European Parliament and of the Council of 11 July 2007 (so-called “Rome II”)1 has introduced in almost all Member States of the

Regulation (EC) no 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), OJ L 199 of 31 July 2007, p. 40 et seq. In general on the Rome II Regulation see, inter alia, J. AHERN/ W. BINCHY (eds), The Rome II Regulation on the Law Applicable to Non-Contractual Obligations. A New International Litigation Regime, Leiden/ Boston 2009; C. BRIÈRE, Le règlement n. 864/2007 du 11 juillet 2007 sur la loi applicable aux obligations non contractuelles (Rome II), Clunet 2008, p. 31 et seq.; G.-P. CALLIES (ed.), Rome Regulations. Commentary on the European Rules on Conflict of Laws, Alphen aan den Rijn 2011; A.-L. CALVO CARAVACA/ J. CARRASCOSA GONZÁLES, Las obligaciones extracontractuales en Derecho internacional privado. El Reglamento “Roma II”, Granada 2008; S. CORNELOUP/ N. JOUBERT (eds), Le règlement “Rome II” sur la loi applicable aux obligations non contractuelles, Paris 2008; L. DE LIMA PINHEIRO, Choice of Law of NonContractual Obligations between Communitarization and Globalization. A First Assessment of EC Regulation Rome II, Riv. dir. int. priv. proc. 2008, p. 5 et seq.; A. DICKINSON, The Rome II Regulation: The Law Applicable to Non-Contractual Obligations, Oxford 2008; ID., The Rome II Regulation: The Law Applicable to Non-Contractual Obligations, Updating Supplement, Oxford 2010; B. DUTOIT, Le droit international privé des obligations non contractuelles à l’heure européenne: le Règlement Rome II, in G. VENTURINI/ S. BARIATTI (eds), Nuovi strumenti del diritto internazionale privato. Liber Fausto Pocar, Milano 2009, p. 309 et seq.; S. FRANCQ, Le règlement Rome II sur la loi applicable aux obligations non contractuelles. Présentation générale, in Actualités de droit international privé, Louvain-laNeuve 2009, p. 67 et seq.; P. FRANZINA, Il regolamento n. 864/2007/CE sulla legge applicabile alle obbligazioni extracontrattuali (“Roma II”), Nuove leggi civ. 2008, p. 971 ss.; C. FRÖLICH, The Private International Law of Non-Contractual Obligations According to the Rome II Regulation, Hamburg 2008; F.J. GARCIMARTÍN ALFÉREZ, The Rome II Regulation: On the Way towards a European Private International Law Code, Eur. Leg. Forum 2007, p. I-77 et seq.; P. HAY, Contemporary Approaches to Non-Contractual Obligations in Private International Law (Conflict of Laws) and the European Community’s “Rome II” Regulation, Eur. Leg. Forum 2007, p. 137 et seq.; the contributions by G. HOHLOCH, Th.M. DE BOER, P. HUBER/ M. ILLMER, M. HELLNER, T. KADNER GRAZIANO, N. BOSCHIERO, G. PALAO MORENO, B. VOLDERS, G. GARRIGA, S.C. SYMEONIDES, Y. NISHITANI, C. FRESNEDO DE AGUIRRE/ D.P. FERNANDEZ ARROYO, Yearbook of Private International Law 2007, p. 1 et seq.; P. HUBER (ed.), Rome II Regulation, München 2011; T. KADNER GRAZIANO, Le nouveau droit international privé communautaire en matière de responsabilité extracontractuelle, Rev. crit. dr. int. priv. 2008, p. 445 et seq.; J. KOZYRIS, Rome II: Tort Conflicts on the Right Track! A Postscript to Simeon Symeonides’ “Missed Opportunity”, Am. J. Comp. L. 2008, p. 471 et seq.; R. PLENDER/ M. WILDERSPIN, The European Private International Law of Obligations, 3rd edn, London 2009; I. PRETELLI, La legge applicabile alle obbligazioni non contrattuali nel Regolamento “Roma II”, in A. BONOMI (ed.), Diritto internazionale privato e cooperazione giudiziaria in materia civile, Torino 2009, p. 409 et seq.; S.C. SYMEONIDES, Rome II and Tort Conflicts: a Missed Opportunity, Am. J. Comp. L. 2008, p. 173 et seq.; S. TONOLO, La nuova disciplina di conflitto delle obbligazioni extracontrattuali nel Regolamento CE Roma II, Studium Iuris 2008, p. 1 et seq.; J. VON HEIN, Something Old and Something Borrowed, but Nothing New, Tul. L. Rev. 2008, p. 1663 et seq. 1

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The Law Applicable to Product Liability in Context European Union2 a set of uniform conflict-of-laws rules in the field of noncontractual obligations as of January 2009.3 As far as torts/delicts are concerned, Chapter II of the Regulation contains a general rule (Art. 4) followed by a number of special provisions dealing with specific torts, such as product liability (Art. 5),4 which derogate in their scope of application from the rule governing torts in general. In the context of “non-contractual obligation[s] arising out of damage caused by a product”, the drafters’ choice to deviate from the lex loci commissi delicti rule, as embodied in Art. 4 as lex generalis, reflects an awareness that According to the opting-out mechanism provided by Protocol no. 22 annexed to the TFEU, Denmark is not bound by the Regulation. 3 Regarding the temporal scope of application of the Rome II Regulation see Arts. 31 and 32. As clarified by the ECJ in the Homawoo case (ECJ, 17 November 2011, C-412/10), the abovementioned provisions “read in conjunction with Article 297 TFEU, must be interpreted as requiring a national court to apply the Regulation only to events giving rise to damage occurring after 11 January 2009 and that the date on which the proceedings seeking compensation for damage were brought or the date on which the applicable law was determined by the court seised have no bearing on determining the scope ratione temporis of the Regulation” (para. 37). Indeed, such an interpretation “is the only one which ensures (…) the full attainment of the Regulation’s objectives, that is to say the predictability of the outcome of litigation, legal certainty as to the law applicable and the uniform application of that regulation in all the Member States” (para. 34). 4 Art. 5 provides as follows: “1. Without prejudice to Article 4(2), the law applicable to a non-contractual obligation arising out of damage caused by a product shall be: (a) the law of the country in which the person sustaining the damage had his or her habitual residence when the damage occurred, if the product was marketed in that country; or, failing that, (b) the law of the country in which the product was acquired, if the product was marketed in that country; or, failing that, (c) the law of the country in which the damage occurred, if the product was marketed in that country. However, the law applicable shall be the law of the country in which the person claimed to be liable is habitually resident if he or she could not reasonably foresee the marketing of the product, or a product of the same type, in the country the law of which is applicable under (a), (b) or (c). 2. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraph 1, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question”. On this rule see in particular S. CORNELOUP, La responsabilité du fait des produits, in S. CORNELOUP/ N. JOUBERT (note 1), at 85 et seq.; A. DICKINSON (note 1), at 363 et seq.; T. HARTLEY, Choice of Law for Non-Contractual Liability: Selected Problems under the Rome II Regulation, I.C.L.Q. 2008, p. 899 et seq.; P. HUBER/ M. ILLMER, International Product Liability. A Commentary on Article 5 of the Rome II Regulation, Yearbook of Private International Law 2007, p. 31 et seq.; M. ILLMER, The New European Private International Law of Product Liability – Steering Through Troubled Waters, RabelsZ 2009, p. 269 et seq.; G. PALAO MORENO, Product Liability: Jurisdiction and Applicable Law in Cross-Border Cases in the European Union, ERA Forum 2010, p. 45 et seq.; A. SCHWARTZE, A European Regime on International Product Liability: Article 5 Rome II Regulation, NIPR 2008, p. 430 et seq.; R. PLENDER/ M. WILDERSPIN (note 1), at 543 et seq.; Ch. SCHMID/ T. PINKEL, Article 5 Product Liability, in G.-P. CALLIES (note 1), at 431 et seq.; P. STONE, Product Liability under the Rome II Regulation, in J. AHERN/ W. BINCHY (note 1), at 175 et seq. 2

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Chiara Marenghi “[c]onnection solely to the place of the direct damage is not suitable here as the law thus designated could be unrelated to the real situation, unforeseeable for the producer and no source of adequate protection for the victim”.5 Indeed, as a result of the development of international trade as well as the growing mobility of people and goods, most product liability cases are likely to have connections with several countries (i.e. they may often be characterized as multi-local torts) and the place of injury as a connecting factor could lead to fortuitous and unpredictable results. In addition, the lex loci commissi delicti criterion is completely blind to policies underlying product liability, which should properly be taken into account by any conflict-of-laws rule dealing with the subject at hand. The substantial changes that the special provision faced during the legislative process are symptomatic of difficulties that arise in practice when selecting connecting factors leading to a “proper law of producer’s liability”.6 Both the Commission and the Council share the idea of having achieved a “balanced solution”,7 although the approaches followed by the two are considerably different. Therefore, it is clear that the best means of striking a fair balance between the parties’ interests is a matter on which opinions may be polarised: whereas the Commission favoured a hard and fast rule based on the habitual residence of the injured person supplemented by a foreseeability clause,8 the Council in its Common Position provided for a more structured solution (then adopted as Art. 5), which bears a resemblance to the approach taken by 1973 Hague Convention on the law applicable to products liability9 (which in turn was influenced by the US 5 See Explanatory Memorandum to the Commission’s Proposal for a Regulation of the European Parliament and the Council of the 22 July 2003, COM(2003) 427 final, p. 13 et seq. (hereinafter Commission’s Explanatory Memorandum). 6 The expression recalls the well-known article entitled “The Proper Law of Producer’s Liability” (I.C.L.Q. 1977, p. 703 et seq.), authored by D.F. CAVERS. On product liability from a conflict-of-laws perspective see generally, and for further references, H. DUINTJER TEBBENS, International Product Liability. A Study of Comparative and International Legal Aspects of Product Liability, Alphen aan den Rijn 1979; M. FALLON, Les accidents de la consommation et le droit, Bruxelles 1982; J.J. FAWCETT, Products Liability in Private International Law: A European Perspective, Recueil des Cours 1993-I, p. 9 et seq.; A. LUPONE, Conflitti di leggi e di giurisdizioni nella disciplina statunitense e comunitaria della responsabilità del produttore, Comunicazioni e studi 1985, p. 733 et seq.; A. SARAVALLE, Responsabilità del produttore e diritto internazionale privato, Padova 1991; S.C. SYMEONIDES, Choice of Law for Products Liability, Tul. L. Rev., 2004, p. 1247 et seq. 7 See recital 10 of the Commission’s First Proposal (note 5) and recital 20 of the Rome II Regulation. 8 More precisely Art. 4 of the Commission’s First Proposal (note 5) provides as follows: “Without prejudice to Article 3(2) and (3), the law applicable to a non-contractual obligation arising out of damage or a risk of damage caused by a defective product shall be that of the country in which the person sustaining the damage is habitually resident, unless the person claimed to be liable can show that the product was marketed in that country without his consent, in which case the applicable law shall be that of the country in which the person claimed to be liable is habitually resident”. Such a provision incorporates, by reference to Art. 3, the lex domicilii communis partium rule and the escape clause. 9 Available at .

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The Law Applicable to Product Liability in Context method of “grouping of contacts”).10 Indeed, Art. 5(1) features a cascade system of connecting factors, tending to select the law most closely connected to the subjectmatter on the assumption that no connection as such could accommodate competing interests in international product liability cases. The cascade system is then complemented by a foreseeability defence, which is traditional in this field and designed to afford additional protection to the defendant. Finally, in order to create “a flexible framework of conflict-of-law rules”,11 two exceptions are included in the special provision. This level of complexity has (also) been criticised by the Commission, which “continues to regret the approach in the common position (...) persuaded that its original solution offered an equally balanced solution for the interests at stake, while expressed in much simpler drafting”.12 Another criticism addressed to the final version of Art. 5 concerns its unclear language, leaving it open to several interpretations, which undermines the rationale of the provision itself, namely the need for legal certainty. Moreover, from a systematic perspective, an important point to note in relation to Art. 5 is that in EU Member States competing sources might come into play in determining the law applicable to product liability. Accordingly, it is necessary to assess how the operation of the Rome II regime is affected by this interplay. In this respect it is worth mentioning first that, in addition to national provisions applicable in Denmark, two conflict-of-laws regimes on international product liability apply in the European Union. Although the Regulation sought to establish uniform rules for the private international law of non-contractual obligations, in cases of damages caused by products this objective has not been fully achieved. Indeed, when it is a matter of selecting the applicable law in this field, Rome II Regulation has to be coordinated with the 1973 Hague Convention in those Member States which have ratified it (i.e. Finland, France, Luxembourg, Netherlands, Slovenia and Spain). In accordance with Art. 28 Rome II, such a coordination leads to the prevalence of the Hague Convention over the European regime for matters falling within the scope of the Convention itself.13 According to such an approach, especially developed by the New York Court of Appeals, “justice, fairness and the «best practical result» (...) may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation” (Babcock v. Jackson, 240 N.Y.S.2d 743, 191; N.E.2d 279, 1963). In this connection, see A. SARAVALLE (note 6), at 146. 11 See recital 14 of the Rome II Regulation. 12 See the Communication from the Commission to the European Parliament concerning the Common Position of the Council on the adoption of a Regulation of the European Parliament and of the Council on the law applicable to non-contractual obligations (“Rome II”), COM(2006) 566 final, p. 3. 13 The different approaches in defining their scope of application followed by the Rome II Regulation and the 1973 Hague Convention may induce to conclude that there are substantial differences in their reach. On a close analysis, however, the material scope of Art. 5 turns out to be very similar to that of the Convention. In this sense see S. CORNELOUP (note 4), at 90 et seq. Therefore, there is no way Art. 5 is applicable within the countries that have ratified the Convention. However, this does not mean that the Rome II Regulation as a 10

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Chiara Marenghi In addition, within the framework of the European Union Law, both private law and private international law rules may influence the system for determining the law applicable to product liability set out in the Rome II Regulation. With regard to substantive rules laid down by secondary legislation, the most significant initiative taken by the legislator in this area is “the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products” enacted by Council Directive (EEC) No 85/374 of 25 July 1985 (hereinafter the Product Liability Directive or the Directive).14 The existence within the EU acquis of two special regimes on product liability raises interesting questions on the relationship and interaction between substantive rules and private international law rules that both deal with the subject at hand.15 As far as EU private international law instruments are concerned, it is wellknown that, in order to develop the European Union as an area of freedom, security and justice, the Rome II Regulation is intended to complete – with the Regulation

whole has no relevance in selecting the law applicable to product liability claims before the courts of such countries. Indeed, unlike the Convention, the Regulation covers several issues, especially relevant in practice, such as e.g. the choice of law by the parties. Therefore, the Rome II Regulation seems to be applicable to product liability cases also in the aforementioned countries to the extent that it fills the gaps of the Convention and it does not contrasts with objectives and scheme of the Convention itself. 14 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ L 210 of 7 July 1985, p. 29 et seq.), as amended by Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999 (OJ L 141 of 4 June 1999, p. 20 et seq.). 15 Another Directive potentially affecting the functioning of Art. 5 is the so-called E-Commerce Directive (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178 of 17 July 2000, p. 1 et seq.), which might come into play by virtue of Art. 27 Rome II whenever the product has been acquired via the Internet. According to this rule, the Regulation “shall not prejudice the application of provisions of Community law which, in relation to particular matters, lay down conflict-oflaws rules relating to non-contractual obligations”. In this regard, the Rome II Preamble (recital 35) expressly refers to the said Directive as an example. In our view, however, there is no interaction between the conflict rule on product liability and the principle of origin enshrined in Art. 3(1) and (2) of this instrument, since the former does not fall within the Directive’s coordinated field. Indeed, whereas the coordinated field covers “only requirements relating to on-line activities, such as on-line information, on-line advertising, on-line shopping, on-line contracting” (recital 21), it does not concerns requirements applicable to goods as such (Art. 2, lit. h (ii)), e.g. safety standards or liability for goods. In this connection, it has been observed that “the law of the country of origin governs only products in form of society information services sold and delivered via electronic means, e.g. software sold directly by the manufacturer by download via the Internet” (see M. ILLMER (note 4), at 310). However, the fact that the coordinated field refers only to online activities seems to militate against the interaction (albeit limited) between the two regimes. Indeed, in case of indirect electronic commerce as well, after the successful download of the defective software, the producer’s liability does not derive from an online activity, but from the activity where the software was written.

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The Law Applicable to Product Liability in Context (EC) No 593/2008 on the law applicable to contractual obligations (Rome I)16 – jurisdictional rules provided by Regulation (EU) No 1215/201217 (hereinafter Recast Brussels I Regulation or Brussels I-bis Regulation, former Regulation (EC) No 44/2001,18 so called Brussels I). The main goals of these measures are to promote legal certainty, predictability and the free movement of judgments as well as to reduce the risk of forum shopping. Both Regulations on the applicable law, mirroring each other, are complementary to Brussels I-bis Regulation and all three aspire to create a coherent body for the private international law of obligations in civil and commercial matters.19 The fact that Art. 5 is part of this triangle of rules raises several questions regarding, inter alia, how to approach its interpretation. Against this background, the recent ruling Kainz v. Pantherwerke20 addressed the aforementioned issues of connection and coherence between and among European instruments dealing with different aspects of the topic at hand. Here, the Court of Justice of the European Union was called on to interpret Art. 5(3) of the Brussels I Regulation (now Art. 7(2) of the Recast) with the purpose of clarifying the place of the event giving rise to the damage in a product liability case. The referring court identified three possibilities in this respect, asking whether such a place should be regarded as “the place where the manufacturer is established”, “the place where the product was acquired by the user” or the place “where the product is put into circulation”. If the latter was the case, the national court further asked if the product is put into circulation either “when it has left the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed” or “when it is marketed in a structured way to end users”. The way in which the referring court framed the preliminary question well illustrates, on the one hand, the intimate relationship between the private law and the private international law perspective and, on the other hand, the close connection between the allocation of jurisdiction and conflict-of-laws matters. Therefore, taking such a question as a starting point and in order to clarify some critical aspects of the European regime on product liability established by the Rome II Regulation, this paper will consider Art. 5 in the framework of the EU acquis. In particular, after briefly recalling its underlying policies – to bear in mind as guiding principles when interpreting the special provision – and the system for 16 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), OJ L 177 of 4 July 2008, p. 4 et seq. 17 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters (recast), OJ L 351 of 20 December 2012, p. 1 et seq. 18 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L 12 of 16 January 2001, p. 1 et seq. 19 In this connection see recently E.B. CRAWFORD/ J.M. CARRUTHERS, Connection and Coherence Between and Among European Instruments in the Private International Law of Obligations, I.C.L.Q. 2014, p. 1 et seq. 20 ECJ, 16 January 2014, C-45/13, Kainz.

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Chiara Marenghi determining the law applicable to product liability laid down by this rule (II), it will examine first the influence of the Product Liability Directive – both in terms of interpretation and from a conflict-of-laws perspective – on Art. 5 Rome II (III). The article will then go on to consider the interplay (and more precisely the potential cross-fertilization) between the special head of jurisdiction in tort provided by the Recast Brussels I Regulation and the European regime on the law applicable to product liability in the light of the need for “systematic” coherence in the private international law of obligations (IV). A comprehensive analysis of the issues arising from Art. 5 Rome II falls outside the scope of this paper.

II.

Art. 5 Rome II: A Brief Overview of Underlying Policies and Connecting Factors

Considering the general objectives of choice-of-laws rules for non-contractual obligations relevant to the subject at stake, it is worth mentioning first recital 14 of the Rome II Regulation, which encapsulates the philosophy behind this instrument.21 According to this recital “[t]he requirement of legal certainty and the need to do justice in individual cases” are the key objectives of the European lawmaker in the selection of the relevant connecting factors. To achieve these objectives, the Regulation provides for “a general rule but also for specific rules and, in certain provisions, for an «escape clause», which allows a departure from these rules where it is clear (…) that the tort/delict is manifestly more closely connected with another country”. Accordingly, for non-contractual obligations deserving a special regime, the European legislator conceived tailor-made solutions, aiming at ensuring inter alia predictability of decisions in a “flexible framework”, which “enables the court seised to treat individual cases in an appropriate manner”.22 Another objective that is particularly relevant in the field at stake is mentioned in recital 16 and reflects the Regulation’s general attitude, exceptions aside,23 vis-à-vis the injured party. The latter is not perceived to be in need of protection as such and the Regulation tends to “ensure a reasonable balance 21 On the objectives of the Rome II Regulation see for all Th.M. DE BOER, The Purpose of Uniform Choice-of-Law Rules: The Rome II Regulation, NILR 2009, p. 295 et seq. 22 The Rome II Regulation seeks to combine legal certainty and flexibility, even if it is clear from the approach taken by the EU legislator that the former principle play a prominent role in the framework of the Regulation. 23 See Art. 7 Rome II Regulation concerning liability for environmental damage, which allows the person sustaining the damage to choose between the lex loci damni and the lex loci actus. The preferential treatment afforded to the claimant, however, tends to indirectly ensure a high level of environmental protection. Therefore, in this case as well, the victim is not considered in need of protection as such and the attribution of the right to choose the applicable law goes beyond the favor laesi principle. In this sense see recently P. IVALDI, Unione europea, tutela ambientale e diritto internazionale privato: l’art. 7 del regolamento Roma II, Riv. dir. int. priv. proc. 2013, p. 861 et seq.

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The Law Applicable to Product Liability in Context between the interests of the person claimed to be liable and the person who has sustained damage” rather than affording preferential treatment to the victim of tort. Such a balance should correspond to the parties’ legitimate expectations, as highlighted by the Commission’s Explanatory Memorandum on a number of occasions.24 Following Albert Ehrenzweig’s call for a special regime for international product liability cases,25 striking a fair balance between the parties’ justified expectations has become the leitmotif of conflict-of-laws rules adopted on national and international level. Such rules should ensure adequate protection to consumers, which are the weaker parties both in economic and legal terms, taking into account at the same time the manufacturers’ position.26 The same could be said for the special provision set out in Rome II Regulation, as clarified by recital 20, listing the objectives that Art. 5 should meet. In expressing the idea of a balance between the parties’ interests, the rephrased version of the recital 16 general objective underlines first the need for “fairly spreading the risks inherent in a modern hightechnology society” and then goes on to mention the aim of “protecting consumers’ health”. Following this line of reasoning – consistent with policies underlying the harmonized substantive regime27 – great consideration seems to be dedicated to industry’s instances on the assumption that “the risk of injury can be insured by the manufacturer and distributed among the public as a cost of doing business”.28 In cross-border cases, this is true when the alleged tortfeasor could foresee with reasonable certainty the applicable law in order to be properly insured. As to consumers’ position, the Preamble seems to recognize an autonomous relevance only to the aim of protecting their health, whereas other interests (for instance the economic ones) are supposed to be encompassed in the first objective. Although these traditional policies play a prominent role, Art. 5 is designed to meet other, equally significant, objectives that are strictly connected to the 24 As far as the special rule on product liability is concerned, see Commission’s Explanatory Memorandum (note 5), at 15. 25 See A. EHRENZWEIG, Products Liability in the Conflict of Laws – Towards a Theory of Enterprise Liability under “Foreseeable and Insurable Laws”, 69 Yale L. J. 1960, p. 794 et seq. 26 See A. SARAVALLE, The Law Applicable to Products Liability: Hopping-off the Endless Merry-Go-Round, in A. MALATESTA (ed.), The Unification of Choice-of-Law Rules on Torts and Other Non-Contractual Obligations in Europe, Padova 2006, p. 107 et seq. 27 Indeed, the Preamble of the Product Liability Directive, after recalling that approximation of the laws of the Member States concerning product liability “is necessary because the existing divergences may distort competition and affect the movement of goods within the common market and entail a differing degree of protection of the consumer against damage caused by a defective product to his health or property” (recital 1), refers to the “fair apportionment of risk between the injured person and the producer” (recital 7). Moreover, it is affirmed that the liability system introduced by the Directive “is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production” (recital 2). 28 See the concurring opinion by Justice Traynor in Escola v. Coca Cola Bottling Co., 24 Cal. 2d 453, 150 P 2d 436 (1944), which, according to Ehrenzweig, clearly reflects the rationale of producer’s liability.

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Chiara Marenghi proper functioning of the internal market. Thus, echoing the Treaties, recital 20 mentions the aim of “stimulating innovation, securing undistorted competition and facilitating trade”. According to the Commission’s Explanatory Memorandum, by virtue of a conflict-of-laws rule “ensuring that all competitors on a given market are subject to the same safety standards, producers established in a low-protection country could no longer export their low standards to other countries, which will be a general incentive to innovation and scientific and technical development”.29 In order to achieve these objectives, which correspond with ones listed in recital 10 of the Commission’s First Proposal, the current version of Art. 5 provides for a rather complex system of connecting factors, resulting from an original combination of traditional elements. In the absence of a choice by the parties under Art. 14 Rome II, the special provision points first to the lex domicilii communis partium, incorporated by reference to Art. 4(2). If the parties do not have their residence in the same country, the cascade system comes into play (Art. 5(1) lit. a) to c). This mechanism, which represents (along with the foreseeability defence) the core of the European regime on international product liability, combines three connecting factors in descending order, with the marketing requirement as a common element. Therefore, the non-contractual obligation arising from damage caused by a product shall be governed by the law of the country of the habitual residence of the person sustaining the damage, if the product was marketed in that country. Failing that, the law of the country in which the product was acquired or the law of the country in which the damage occurred respectively apply, always under the aforementioned condition. In other words, the operation of this three-step cascade of connecting factors depends on the occurrence of the marketing condition. In any case, the law designated following each level of this system could be replaced by the national law of the country in which the person claimed to be liable is habitually resident, if the latter proves that he/she “could not reasonably foresee the marketing of the product, or a product of the same type,” in the relevant country. Finally, by repeating the wording of Art. 4(3), Art. 5(2) provides for an escape clause, which allows the seised court to depart from all the other rules laid down in the first paragraph, “where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected” with another country. Accordingly, the law of that country shall apply. The classic case of a pre-existing relationship between the parties (such as a contract) is expressly mentioned as an example of potential operation of the escape clause.

III. Relationship and Interaction between Art. 5 Rome II and the Product Liability Directive Directive 85/374/EEC introduced the principle of “strict liability” in Member States of the European Union (former European Community) in 1985. According 29

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The Law Applicable to Product Liability in Context to this principle, any producer must compensate damages caused by its defective products to the physical well-being or property of individuals, irrespective of negligence. As a result, the injured person needs to prove only the damage, the defect and the causal relationship between defect and damage, as stated in Art. 4 of this instrument. The Directive does not contain any conflict-of-laws provision and it is not disputed that private international law issues are important in this field notwithstanding the harmonized regime. Indeed, although the Court of Justice has clarified that the Product Liability Directive follows the scheme of “full harmonization” (with the consequence that “the margin of discretion available to the Member States in order to make provision for product liability is entirely determined by the Directive itself and must be inferred from its wording, purpose and structure”),30 it still makes sense to determine the law applicable to international product liability cases given at least three factors. First, from a general viewpoint, the approximation of national substantive laws by means of directives implies a certain degree of divergence among them. In this regard, the Commission’s Third Report on the implementation of the Product Liability Directive stressed that the existing differences in the interpretation of certain concepts of the Directive lead to disparities in its judicial application from one Member State to another.31 Second, the full harmonization established by the Directive is not exhaustive. Indeed, notwithstanding that the Directive covers a number of issues concerning the producer’s liability for damages caused by defective products, it allows Member States to exercise certain options and does not prejudice compensation for non-material damage pursuant to national legislations. Moreover, under Art. 13, as interpreted by the European Court of Justice, the Directive itself does not affect “any rights which an injured person may have according to the [national] rules of contractual or non-contractual liability or a special liability system existing at the moment when that directive was notified”.32 In practice, this means that Member States may maintain general systems of liability based on grounds other than those provided by the Directive as well as special systems regarding specific sectors of production. Finally, conflictof-laws issues concerning product liability remain untouched by the substantive regime insofar as relations involving third States come into play, whereas the Rome II Regulation is of universal application, since the governing law can be the law of any country, EU Member State or not.33

30 ECJ, 25 April 2002, C-52/00, Commission v. France, ECR [2002] I-03827, para. 16; ECJ, 25 April 2002, C-154/00, Commission v. Greece, ECR [2002] I-03879, para. 12; ECJ, 25 April 2002, C-183/00, Gonzáles Sánchez, ECR [2002] I-03901, para. 24. This principle have been confirmed in other cases, e.g. ECJ, 10 January 2006, C-402/03, Skov, ECR [2006] I-00199, para. 33. 31 See Commission’s Third Report on the application of Council Directive 85/374/EEC of 25 July 1985, amended by Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999, COM(2006) 496 final. On the remaining differences among national legislations see also Commission’s Fourth Report, COM(2011) 547 final. 32 ECJ, 4 June 2009, C-285/08, Moteurs Leroy Somer, ECR [2009] I-04733, para. 22. 33 See Art. 3 Rome II Regulation.

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Chiara Marenghi However, the fact that two regimes in the field of product liability coexist within the EU acquis raises several questions regarding their interpretation and their interaction, which will be addressed in the following paragraphs. On the one hand, one may wonder whether these instruments should be read, as far as possible, in parallel or whether, given their peculiar nature and function, they should be interpreted independently (A). On the other hand, the question is whether the substantive regime, which purports to be neutral from a conflict-of-laws perspective, could influence the operation of the private international law regime provided by the Rome II Regulation (B). A.

The Reference to the Product Liability Directive as a Fundamental Tool for the Interpretation of Art. 5: “Handle with Care”

The rule on product liability laid down in the Commission’s First Proposal covered the “non-contractual obligation arising out of damage or a risk of damage caused by a defective product”.34 On the contrary, Art. 5 in its final wording does not contain any reference to the concept of defect, which instead plays a prominent role within the substantive regime provided by the Directive. Accordingly, it seems that the special provision extends to damages caused by inherently dangerous products (e.g. cigarettes), while it is left to the applicable law to establish if there is liability or not. Moreover, whereas recital 12 of the Commission’s Amended Proposal expressly refers to product liability, “as penalised under Directive 374/1985/EEC”,35 the current version of the Preamble does not mention this instrument at all. Nonetheless, looking at the travaux préparatoires, other links could be established between the special provision and the Product Liability Directive, namely the latter seems to be of some guidance in clarifying certain key terms of Art. 5, undefined by the legislator. Similarly, considering the relationship between the two, the ECJ case-law concerning the Directive may be helpful in interpreting the Rome II regime on product liability. Caution is needed, however, when transposing a legal category from one instrument to another, as illustrated by the following remarks. Although it is clear from the outset that the scope of application of Art. 5 is broader than that of the Product Liability Directive,36 the Commission’s Explanatory Memorandum suggests that the term “product” should be interpreted

See Art. 4 of the Commission’s First Proposal (note 8), emphasis added. See Commission’s Amended Proposal for a European Parliament and Council Regulation on the law applicable to non-contractual obligations (“Rome II”), COM(2006) 83 final. 36 The scope of application of Art. 5 is broader than that of the Product Liability Directive in several respects. For instance, the former would apply to every category of damages, whereas the latter covers only “(a) damage caused by death or by personal injuries; (b) damage to, or destruction of, any item of property other than the defective product itself, with a lower threshold of 500 ECU, provided that the item of property: (i) is of a type ordinarily intended for private use or consumption, and (ii) was used by the injured person mainly for his own private use or consumption” (Art. 9). 34 35

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The Law Applicable to Product Liability in Context in accordance with Art. 2 of the Directive itself.37 Furthermore, as to the meaning of “person claimed to be liable”, it recalls the content of Art. 3 of the Directive, simply stating that this expression “does not necessarily mean the manufacturer of a finished product”, but “it might also be the producer of a component or commodity, or even an intermediary or a retailer. Anybody who imports a product into the Community is considered in certain conditions to be responsible for the safety of the products in the same way as the producer”.38 Turning to the first reference to the Directive made by the Commission, there is a wide consensus amongst scholars that the definition of “product” provided by Art. 2 is broad enough to ensure “a satisfactory solution”.39 In this regard it has been observed, however, that “this approach is questionable since it excludes important product types such as software and information from the customized product liability rule in art. 5, whereas situations damage caused by such products remains within the material scope of Rome II Regulation, which applies to non-contractual obligations arising from damage caused by any product type”.40 While in principle the concern of ensuring a broad understanding of the term “product” is to be shared, such a criticism needs to be put into perspective for several reasons. Art. 2 of the Product Liability Directive (as amended by the Directive 1999/34/EC)41 refers to “all movables even if incorporated into another movable or into an immovable”, including electricity. According to the ECJ case-law, this concept is to be understood in a broad sense, extending for instance to a perfusion fluid designed for flushing a human organ prior to transplantation42 or to blood.43 Moreover, as to the sensitive issue of the software’s inclusion, following a written question in this respect, the Commission answered in the affirmative, clarifying that “the Directive applies to software in the same way (…) that it applies to handicraft and artistic products”.44 It should be noted, on the other hand, that, drawing a comparison with the 1973 Hague Convention,45 at least a category of products See Commission’s Explanatory Memorandum (note 5), at 13. Ibidem, at 15. 39 See M. ILLMER (note 4), at 283. In the same sense see e.g. A. DICKINSON (note 1), at Ch. SCHMID/ T. PINKEL (note 4), at 435. 40 See R. PLENDER/ M. WILDERSPIN (note 1), at 551. 41 In the aftermath of the so-called “mad cow” crisis (BSE epidemic) the scope of application of the Product Liability Directive have been extended to unprocessed primary agricultural products. 42 ECJ, 10 May 2001, C-203/99, Veedfald, ECR [2001] I-03569. 43 Gonzáles Sánchez (note 30). 44 See Written question no 706/88 by Mr Gijs De Vries to the Commission of the European Communities, OJ C 114 of 8 May 1989, p. 42. With regard to the inclusion of handicraft and artistic products, it is submitted that the key feature which allows products to be distinguished from other movables lies in the fact that the former are the outcome of a professional activity. See, C. CASTRONOVO, La nuova responsabilità civile, Milano 2006, p. 688. 45 According to Art. 2 of the 1973 Hague Convention “the word «product» shall include natural and industrial products, whether raw or manufactured and whether movable or immovable”. 37 38

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Chiara Marenghi seems to be excluded from the scope of application of Art. 5, i.e. immovable assets. This exclusion, however, appears to narrow the material scope of Art. 5 less than it seems at first glance, considering for example that defective building materials, such as bricks or steel girder, could be regarded as movable, although incorporated in an immovable. Therefore, it would seem that such a parallel interpretation accords with the rationale of Art. 5, at the same time establishing a link with the substantive regime. As far as the person claimed to be liable is concerned, the reference to Art. 3 of the Product Liability Directive (again broadly accepted among commentators as still valid) is to be understood as an illustration of the main categories of tortfeasors considered by Art. 5 and certainly not as an exhaustive list. For instance, in the framework of the Rome II Regulation, which is of universal application, a restriction of this concept to EU importers pursuant to Art. 3(2) does not make sense.46 Accordingly, depending on the circumstances of the case potential defendants under Art. 5 Rome II may be all persons involved in the chain of production and distribution of the product. Finally, the reference to the Directive (rectius to the ECJ case-law concerning the Directive) could be helpful to clarify the decisive element of the cascade system of connecting factors, namely the marketing requirement, which is undefined by the legislator and especially ambiguous. Several interpretations of the concept were proposed, ranging from the beginning of the distribution process from the manufacturer’s perspective, to the moment in which “the product causing harm is sold or otherwise let to a final user for the first time”.47 Strong arguments, however, militate against both these positions, suggesting that the answer may be found somewhere in the middle of the spectrum. Indeed, whereas the latter solution would imply an overlap of the marketing requirement with the place of acquisition criterion, thus undermining the very structure of the cascade system, the first position has to be excluded by virtue of a comparison with the similar (but not identical) concept of putting into circulation, as provided by the Product Liability Directive (Arts. 6, 7, 11, 17). In this respect, the Court’s view in O’Byrne is critical. In fact, in interpreting Art. 11 of the Directive the ECJ made it clear that a product must be considered as having been put into circulation “when it leaves the production process operated by the producer and enters a marketing process in the

46 Under Art. 3(2) of the Product Liability Directive, “[w]ithout prejudice to the liability of the producer, any person who imports into the Community a product for sale, hire, leasing or any form of distribution in the course of his business shall be deemed to be a producer within the meaning of this Directive and shall be responsible as a producer”. In this regard, see S. WHITTAKER, The Product Liability Directive and Rome II Article 5: “Full Harmonisation” and the Conflict of Laws, 13 Camb. Yearb. Eur. Leg. Stud. 2010-2011, p. 435 et seq., at 459. 47 This is the interpretation suggested by the HAMBURG GROUP FOR PRIVATE INTERNATIONAL LAW (Comments on the European Commission’s Draft Proposal for a Council Regulation on the Law Applicable to Non-Contractual Obligations, RabelsZ 2003, p. 1 et seq., at 17) when proposing the place of commercialisation as connecting factor for product liability cases.

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The Law Applicable to Product Liability in Context form in which it is offered to the public in order to be used or consumed”.48 As clarified by the Advocate General’s opinion, in order to identify the moment when the product is put into circulation the most suitable approach is to consider the manufacturer’s loss of control over the product as the decisive factor, irrespective of the distribution methods.49 In principle, the Court observed, it is not important in this connection “that the product is sold directly by the producer to the user or to the consumer or that that sale is carried out as part of a distribution process involving one or more operators”.50 Accordingly, it would be wrong to assume that these concepts correspond,51 as suggested (only) by the German language version of the Regulation.52 Indeed, “putting into circulation” and “marketing” of the product seem to be contiguous rather than coinciding notions. Whereas in the substantive regime the manufacturer’s perspective is to be taken into account (and the fact that he “voluntarily relinquishes control over the product by transferring it, in a commercial transaction, to a separate entity”),53 in the conflict-of-laws area the circulation of the product is from the consumer’s viewpoint and, more generally, is considered with regard to the market in which the product is “offered to the public in order to be used or consumed”.54 In the light of the above considerations and looking at the wording of the 1973 Hague Convention,55 the marketing requirement seems to be fulfilled whenever the product is made available in the relevant market through commercial channels.56 The latter includes not only sales networks, but also hiring, leasing as well as any form of commercial distribution (e.g. distribution of free samples). Marketing via the Internet is also covered.57 Conversely, the fact that a batch of ECJ, 9 February 2006, C-127/04, O’Byrne, ECR [2006] I-01313, para. 27 (emphasis added). 49 Opinion of Advocate General Geelhoed, 2 June 2005, case C-127/04, O’Byrne, para. 37 50 O’Byrne (note 48), para. 28. 51 This view is taken by e.g. P. FRANZINA (note 1), at 1005; J. VON HEIN, Die Produkthaftung des Zulieferers im Europäischen Internationalen Zivilprozessrecht, IPRax 2010, p. 330 et seq., at 337 et seq. 52 The wording used to refer to the concept of marketing in the German version of Art. 5 (“in Verkehr gebracht wurde”) is the same used for the concept of putting into circulation in the German version of the Product Liability Directive. 53 Opinion of Advocate General Geelhoed in O’Byrne (note 48), para. 37. 54 In the same sense see A. DICKINSON (note 1), at 375. 55 Pursuant to Art. 7, “[n]either the law of the State of the place of injury nor the law of the State of the habitual residence of the person directly suffering damage shall be applicable by virtue of Articles 4, 5 and 6 if the person claimed to be liable establishes that he could not reasonably have foreseen that the product or his own products of the same type would be made available in that State through commercial channels” (emphasis added). 56 A similar conclusion, albeit not necessarily through the same line of reasoning, seems to be reached e.g. by A. DICKINSON (note 1), at 371 et seq.; M. ILLMER (note 4), at 290 et seq.; Ch. SCHMID/ T. PINKEL (note 4), at 440 et seq.; P. STONE (note 4), at 188. 57 In this case, however, a broad understanding of such a concept would deprive the marketing requirement of its meaning, thus undermining the structure of the cascade system. 48

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Chiara Marenghi products is stocked in a certain country should not suffice, since they could simply be goods in transit, destined to be sold elsewhere. B.

The Mandatory Character of the Product Liability Directive in the Framework of the Rome II Regulation

In accordance with Art. 12 of the Directive, the liability of the producer arising from this instrument “may not, in relation to the injured person, be limited or excluded by a provision limiting his liability or exempting him from liability”. In this respect, the Preamble of the Directive stresses that “to achieve effective protection of consumers, no contractual derogation should be permitted as regards the liability of the producer in relation to the injured person”.58 As a result, the liability system provided by the Directive could not be derogated from by party autonomy, at least in the sense of depriving the injured party from the protection afforded by the Directive itself.59 The mandatory character of the harmonized provisions is relevant in a number of ways to the framework of the Rome II Regulation. First of all, the rules “which cannot be derogated from by agreement” fall within the scope of Art. 14(2) and (3), providing limitations to the freedom of choosing the applicable law which mirrors those established by Art. 3(3) and (4) Rome I Regulation. In particular, pursuant to Art. 14(3) parties’ choice of law shall not prejudice the application of the Directive, as implemented in the forum Member State, “where all the elements relevant to the situation (…) are located in one or more of the Member States”. Moreover, if the law chosen by the parties (outside the scope of Art. 14(3)) or designated by Art. 5 is the law of a non-Member State providing lower standards of protection vis-à-vis the European regime, the question is whether – under some circumstances – national provisions transposing the Product Liability Directive should be qualified as overriding mandatory rules in the sense of Art. 16 Rome II.60 It is well-known that in the case of a Directive lacking an express indication regarding the internationally mandatory character, ECJ case-law allows this to be inferred by way of interpretation. Indeed, in Ingmar the policies underlying Directive 86/653/EEC led the Court to recognize its mandatory nature, to the Therefore, in order to regard the online offer of products as relevant for the purpose of Art. 5 Rome II, reference can be made to the “targeted activity” criterion provided by Art. 17(1) lit. c) Brussels I-bis Regulation and Art. 6(1) lit. b) Rome I Regulation, concerning consumer contracts, which “take account of the development of distance-selling techniques” (as specified by recital 24 Rome I Regulation). Concurring A. DICKINSON (note 1), at 373; Ch. SCHMID/ T. PINKEL (note 4), at 441. 58 See recital 12 of the Product Liability Directive. 59 On the meaning of Art. 12 see, inter alia, Y. MARKOVITS, La directive C.E.E. du 25 juillet 1985 sur la responsabilité du fait des produits défectueux, Paris 1990, p. 271; C. CASTRONOVO, (note 44), at 733. 60 According to Art. 16 Rome II, “[n]othing in this Regulation shall restrict the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation”.

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The Law Applicable to Product Liability in Context extent that the situation was closely connected to the European Union.61 In particular, in such a situation Arts. 17 and 18 of this instrument are required to be applied, irrespective of the law chosen by the parties, since they foster, through the protection of commercial agents, freedom of establishment as well as undistorted competition in the internal market. Accordingly, their application “is essential for the Community legal order”.62 Mutatis mutandis, similar considerations may apply to the Product Liability Directive. On the one hand, by striking a fair balance of risk between consumers and producers, the Directive itself is intended to “unite consumers” interests with Single Market policies (namely free exchange of goods and elimination of competition distortions)”.63 On the other hand, as already suggested in legal literature,64 the fact that the defective product has been put into circulation within the internal market may be regarded as the close connection with the European Union defining the spatial scope of application of the Directive. Several arguments seem to support this interpretation.65 Firstly, Art. 3(2) of the Directive may be an illustration of its intended scope of application. Indeed, this provision, extending the strict liability system laid down by the harmonized regime to EU importers, is designed to offer individual consumers an adequate and effective protection and tends to create a genuinely single market for all products put into circulation from both the products safety and the compensation perspective. Secondly and with regard to the intimate relationship between product liability and product safety, the implicit scope of application of the Product Liability Directive may be inferred by a comparison with those of the Directive 2001/95/EC on general product safety,66 which covers all products “placed on the market”,67 ECJ, 9 November 2000, C-381/98, Ingmar, ECR [2000] I-09305. Ibidem, para. 25. 63 See Commission’s Third Report on the application of the Product Liability Directive (note 31), at 4. 64 See e.g. P. CERINA, Osservazioni di diritto internazionale privato sulla direttiva C.E.E. n. 85/374 in materia di responsabilità per danno da prodotti difettosi, Riv. dir. int. priv. proc. 1991, p. 355 et seq.; S. FRANCQ, L’applicabilité du droit communautaire dérivé au regard des méthodes du droit international privé, Paris/ Bruxelles 2005, p. 334 et seq.; ID., The Scope of Secondary Community Law in the Light of the Methods of Private International Law – Or the Other Way Around?, Yearbook of Private International Law 2006, p. 333 et seq., at 341 et seq. 65 Some of these arguments are highlighted also by S. FRANCQ (note 64), who however draws a different conclusion, thinking that the will of application of the Product Liability Directive is just an example of the massive use of the unilateralist method displayed by EU law. 66 Directive 2001/95/EC of the European Parliament and of the Council of 3 December 2001 on general product safety, OJ L 11 of 15 January 2002, replacing the Directive 92/59/EEC, OJ L 228 of 11 August 1992. On the relationship between the Product Liability Directive and the General Product Safety Directive see A. ALBANESE, La sicurezza generale dei prodotti e la responsabilità del produttore nel diritto italiano ed europeo, Eur. dir. priv. 2005, p. 977 et seq.; A. CORDIANO, Sicurezza dei prodotti e tutela preventiva dei consumatori, Padova 2005, p. 47 et seq. 67 See Art. 1 of the General Product Safety Directive. 61 62

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Chiara Marenghi including both products originating in Member States and in free circulation. In order to protect consumers’ health and safety as well as to ensure the proper functioning of the internal market, the Product Liability Directive is indeed complemented by the General Product Safety Directive, the former providing private law rules coming into play after the damage occurred, the latter establishing a public law regime imposing a priori obligations to producers and distributors. Their connection and consistency in aim suggest a parallel reading of their scope of application. Finally, although consumer protection is not the paramount objective of the Product Liability Directive (which set up a scheme of full harmonization), this objective is nevertheless important and, together with the aim of ensuring undistorted competition and the free movement of goods, may require the Directive’s application whenever the product has been put into circulation within the internal market. The Commission seems to share this view in affirming that the Directive “applies to any product marketed in the European Economic area”.68 Accepting the internationally mandatory character of the Directive and assuming it affects not only the law chosen by the parties but also the law designated by virtue of Art. 5, the question remains as to what impact such a rules have on the operation of the special provision on product liability. Although the issue is disputed, the most convincing opinion (in the author’s view) regards lois de police as not excluding by definition and a priori the functioning of choice-of-laws rules.69 As a matter of fact, according to this line of reasoning (followed by the ECJ in the Ingmar case), internationally mandatory rules interact with conflict-of-laws rules, leading to displace the foreign law only in case of inconsistency with it, namely when the lex causae could not afford an equivalent protection to the 68 Commission’s Third Report on the application of the Product Liability Directive (note 31), at 4. 69 See in this respect, among others and for further references, A. BONOMI, Le norme imperative nel diritto internazionale privato, Zürich 1998, p. 143 et seq.; ID., Mandatory Rules in Private International Law. The Quest for Uniformity of Decisions in a Global Environment, Yearbook of Private International Law 1999, p. 215 et seq., at 226 et seq.; P. BERTOLI, Corte di giustizia, integrazione comunitaria e diritto internazionale privato e processuale, Milano 2005, p. 364 et seq.; ID., The Court of Justice, European Integration and Private international Law, Yearbook of Private International Law 2006, p. 375 et seq., at 390 et seq. and 400 et seq.; N. BOSCHIERO, Art. 17, in S. BARIATTI (ed.), Legge 31 maggio 1995, n. 218. Riforma del sistema italiano di diritto internazionale privato. Commentario, Nuove leggi civ. 1996, p. 1062 et seq.; ID., Norme inderogabili, “disposizioni imperative del diritto comunitario” e “leggi di polizia” nella proposta di regolamento “Roma I”, in Il nuovo diritto europeo dei contratti: dalla convenzione di Roma al regolamento “Roma I”, Milano 2007, p. 101 et seq., at 114. With specific regard to the relationship between the Rome II Regulation and the Product Liability Directive see also M. FALLON, La relation du règlement Rome II avec d’autre règles de conflit de lois, Rev. dr. comm. belge 2008, p. 549 et seq., at 563. Following the author, who considers the interplay between the two instruments in the light of the Ingmar case, “chaque fois que la règle de rattachement conduira au droit d’un pays tiers alors que le produit est commercialisé dans la Communauté, il y aura lieu de mesurer l’écart entre le régime de la directive et le droit désigné pour apprécier si le premier doit être préféré, au nom d’une impérativité particulière qui commanderait le recours à une règle d’applicabilité implicite retenant pour critère la commercialisation de la marchandise dans un État membre”.

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The Law Applicable to Product Liability in Context interests at stake. This is the key feature that distinguishes overriding mandatory provisions from other rules expressing their own scope of application, e.g. unilateral ones.70 Moreover, this is one of the reasons why it seems preferable to regard the domestic legislations implementing the Product Liability Directive as internationally mandatory rules in the sense of Art. 16 rather than as an expression of the unilateralist method, since the former approach is more flexible, being based on a case-by-case analysis, and is in line with the proportionality principle. Whichever view is taken, putting the abovementioned issues into perspective, the resulting picture is less complicated than it seems for at least three reasons.71 First, it is self-evident that, since the scope of application of Art. 5 Rome II is broader than those of the Product Liability Directive, questions related to their interaction arise only whenever the harmonized regime comes into play. Second, it is worth recalling that both instruments focus on the “law of the market”: although there is no coincidence between the concepts of putting into circulation under the Directive and marketing under the Regulation, in most cases the outcome may arguably be the same. Finally, if the situation is manifestly more closely connected with a Member State, the escape clause laid down by Art. 5(2) may be invoked, with the consequence that the level of protection provided by the Directive should be assured in any case.

IV. The Product Liability Regime under Rome II and the forum commissi delicti under the Brussels I-bis Regulation: The Need for Coherence and its Limits Although the dichotomy between jurisdiction and conflict-of-laws issues is generally accepted, the exact relationship between the two in terms of their mutual influence is far from clear. In this respect, the Preamble of the Rome II Regulation suggests that “[t]he substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I)”, now recast in Regulation Brussels I-bis. Indeed, as already mentioned, the Rome II regime is part of a triangle of rules which aspire to be regarded as a coherent body for the private international law of obligations in civil and commercial matters. It is doubtful, however, to what extent such a need for coherence should influence the interpretation of the relevant provisions.72 On this point see A. BONOMI (note 69), at 161 et seq. See in the same vein, notwithstanding the different approach taken, S. FRANCQ, Le règlement “Rome II” concernant la loi applicable aux obligations non contractuelles. Entre droit communautaire et droit international privé, Journ. dr. eur. 2008, p. 289 et seq., at 294 et seq. 72 On the interpretation of private international law provisions adopted under Art. 81 TFEU see generally M. AUDIT, L’interprétation autonome du droit international privé communautaire, Clunet 2004, p. 789 et seq.; R. BARATTA, The Process of Characterization 70 71

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Chiara Marenghi As far as product liability claims are concerned, it is self-evident that in principle there is no systematic synchronization between the special head of jurisdiction for “matters relating to tort, delict or quasi-delict” laid down by Brussels I-bis Regulation and the law designated by virtue of Art. 5 Rome II. Indeed, Art. 7(2) Brussels I-bis allows the claimant to sue the defendant before the courts of “the place where the harmful event occurred or may occur”. Following the ECJ case-law, in multi-local torts (such as classic product liability cases) that place should be interpreted in accordance with the ubiquity principle, as being both the place where the event giving rise to the damage occurred (locus acti) and the place where the damage occurred (locus damni),73 with the result that the claimant, besides the general forum under Art. 4 (former Art. 2 Brussels I Regulation), is provided with a further option. Therefore, with the negligible exception of the third step of the cascade system set forth by Art. 5(1) lit. c) (pointing to the law of the country in which the damage occurred), neither of the two fora available under Art. 7(2) display any intentional link with the connecting factors adopted by Art. 5 Rome II. Thus, the only possible cross-fertilization between the two provisions seems to be the transposition of the ECJ case-law regarding Art. 7(2) Brussels I-bis to Art. 5(1) lit. c) Rome II.74 In the Kainz case, however, following the claimant’s position, the conflictof-laws regime laid down by the Rome II Regulation should be taken into account when interpreting the place of acting criterion for the purpose of Art. 5(3) Brussels I Regulation (now Art. 7(2) Brussels I-bis). In his view, a parallel reading of the two provisions may result in qualifying the marketing of the product as the relevant conduct in the sense of Art. 5(3) Brussels I.75 The Court rightly rejected such an approach – identifying the place of the event giving rise to the damage with the place where the product was manufactured76 –, but the claimant’s argument allows in the EC Conflict of Laws: Suggesting a Flexible Approach, Yearbook of Private International Law 2004, p. 155 et seq.; S. BARIATTI, Qualificazione e interpretazione del diritto internazionale privato comunitario: prime riflessioni, Riv. dir. int. priv. proc. 2006, p. 361 et seq.; P. BERTOLI (note 69), at 403 et seq.; ID., Il ruolo della Corte di giustizia e l’interpretazione del futuro regolamento “Roma I”, Riv. dir. int. priv. proc. 2006, p. 999 et seq.; S.M. CARBONE, Base giuridica e criteri interpretativi delle norme comunitarie sullo spazio giudiziario europeo, Contr. impr. Eur. 2003, p. 183 et seq. 73 The twin approach taken by the ECJ to localise the harmful event (confirmed so far) dates back to 1976 when the Court delivered its judgment on Art. 5(3) of the Brussels Convention in the so-called Mines de Potasse case. See ECJ, 30 November 1976, 21/76, Bier, ECR [1976] 01735. 74 Thus, assistance in interpreting Art. 5(1) lit. c) may be derived from the ZuidChemie case (ECJ, 16 July 2009, C-189/08, ECR [2009] I-06917), regarding a product liability claim between professionals. According to it, the Court located the place of damage under Art. 5(3) Brussels I at the place “where the initial damage occurred as a result of the normal use of the product for the purpose for which it was intended” (para. 32). 75 For the sake of precision, it must be noticed that the claimant actually refers to the place where the defective product “was brought into circulation”, arguably assuming the coincidence between the concept of marketing under Art. 5 Rome II and the notion of putting into circulation under the Product Liability Directive. See Kainz (note 20), at para. 13. 76 See Kainz (note 20), at para. 26.

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The Law Applicable to Product Liability in Context European judges to address the sensitive issue of connection and coherence between jurisdiction and conflict-of-laws instruments. According to the Court’s reasoning, the need for consistency expressed in the Preamble of the Rome II Regulation does not imply that “the provisions of Regulation No 44/2001 must (…) be interpreted in the light of the provisions of Regulation No 864/2007”. Indeed, the abovementioned goal “cannot, in any event, lead to the provisions of Regulation No 44/2001 being interpreted in a manner which is unconnected to the scheme and objectives pursued by that regulation”.77 The ruling seems to be perfectly in line with the ECJ case-law in various respects. First, in order to establish jurisdiction in cases where the tortious conduct consists of several elements located in different countries, the Court takes into consideration the first element of the causal chain leading to the damage occurring,78 i.e. the place of manufacture. Such a solution is supported by two main arguments. On the one hand, the efficacious conduct of proceedings and the sound administration of justice plead for granting jurisdiction to the court of the place where the product was manufactured, which seems to be the most suitable to take evidence when a defective product is involved. On the other hand, the manufacturing site tends to ensure a high degree of foreseeability to both the claimant and the defendant thereby being functional to legal certainty. Second, the Court appears to be very cautious in endorsing a holistic approach when considering a parallel interpretation of European instruments governing different aspects of the same topic.79 In fact, the Court statement on the relationship between the Brussels I Regulation and the Rome II Regulation seems to reflect the structural differences underlying jurisdictional rules and choice-oflaw provisions and may be considered as a general principle to be borne in mind in every potential case of cross-fertilization between the two fields. Indeed, the hermeneutic criteria of systematic and teleological interpretation represent the natural boundaries of the search for consistency claimed by the EU legislator in the Rome I and Rome II recitals. Such limits could affect the need for coherence in the interpretation of similar if not identical notions embodied in Regulations respectively dealing with jurisdiction and conflict-of-laws issues as well as situations encompassing other types of mutual interaction in the interpretation process. This is not to Ibidem, at para. 20. Along the same line see ECJ, 7 March 1995, C-68/93, Shevill, ECR [1995] I-00415; ECJ, 5 February 2004, C-18/02, DFDS Torline, ECR [2004] I-01417; ECJ, 25 October 2011, C-509/09 and C-161/10, e-Date Advertising and Martinez, ECR [2011] I-10269. 79 In this respect, reference can be made not only to the well-know Falco case (ECJ, 23 April 2009, C-533/07, ECR [2009] I-03327), but also to the Corman-Collins case (ECJ, 19 December 2013, C-9/12) for instance, where the Court, even if a parallel interpretation was adopted in practice, seemed to avoid any explicit endorsement of a general presumption in this sense. Indeed, the Court did not follow the suggestion of the Advocate General (who is “in favour of the Court taking expressly into consideration the approach followed by the legislature in the Rome I Regulation and adopting a method of interpretation which ensures that that Regulation is consistent with Regulation No 44/2001”), preferring to substantiate its rulings relying on other grounds. See Opinion of Advocate General Jääskinen, 25 April 2013, para. 58, emphasis added. 77 78

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Chiara Marenghi deny the fact that the interpretation provided by the ECJ regarding the Brussels “family” has represented (and indeed should represent) a primary point of reference for the proper understanding of conflict-of-laws matters under the Rome “family” et vice versa. However, as already stressed by several authors,80 caution is needed in transposing sic et simpliciter the Court’s reasoning from one instrument to another. Therefore, notwithstanding the importance of fostering systematic connection and coherence between and among instruments governing the private international law for obligations in civil and commercial matters, the Court seems to share the view that a case-by-case approach (taking into account rules’ objectives and scheme as well as tending to ensure their effet utile) is the only way forward. In this connection, suffice it to say that, on the one hand, the jurisdictional regime established by the Recast Brussels Regulation has its cornerstone in the general forum of the defendant’s domicile (which is complemented, inter alia, by a number of special rules on jurisdiction – based on the principle of proximity and aiming to ensure foreseeability and the sound administration of justice – to be read restrictively being exceptions to the general rule) and, on the other hand, the Rome I and Rome II Regulations tend to select the proper law for each legal relationship. Furthermore, the Brussels I-bis Regulation frequently allows the claimant a choice from a range of fora, whereas under Rome I and Rome II Regulations only one law tends to be identified as the applicable law. These differences clearly influence the autonomous definition of the relevant notions as well as the interpretive process in general. However, a parallel reading of similar or identical expressions becomes easier (and especially desirable) when weaker parties are involved.81 Indeed, jurisdiction and conflict-of-laws rules regarding consumer and employment contracts, for instance, share the same policy of protection and require tight coordination in order to achieve their effet utile. Rules governing product liability do not fall within the above category. This is especially true as far as the special jurisdiction in tort is concerned (as was clearly reaffirmed in Kainz),82 but also according to the Rome II Regulation the 80 See, among other authors, B. HAFTEL, Entre “Rome II” et “Bruxelles I”: l’interprétation communautaire uniforme du règlement “Rome I”, Clunet 2009, p. 761 et seq., at 766 et seq.; E. LEIN, La nouvelle synergie Rome I/ Rome II/ Bruxelles I, in E. CASHIN RITAINE, A. BONOMI (eds), Le nouveau règlement européen “Rome I” relatif à la loi applicable aux obligations contractuelles, Genève/ Zurich/ Bâle 2008, p. 27 et seq., at 44 et seq.; Z. CRESPI REGHIZZI, “Contratto” e “illecito”: la qualificazione delle obbligazioni nel diritto internazionale privato dell’Unione europea, Riv. dir. int. priv. proc. 2012, p. 317 et seq., at p. 323 et seq. Contra, see e.g. T. AZZI, Bruxelles I, Rome I, Rome II: regard sur la qualification en droit international privé communautaire, Dalloz 2009, p. 1621 et seq. 81 In this connection see e.g. V. PARISOT, Vers une cohérence des textes européens en droit du travail? Réflexion autour des arrêts Heiko Koelzsch et Jan Voogsgeerd de la Cour de justice, Clunet 2012, p. 597 et seq.; P. PIRODDI, La tutela del contraente debole nel regolamento Roma I, Padova 2012, p. 11 et seq.; E.B. CRAWFORD/ J.M. CARRUTHERS (note 19), at 18 et seq. See also Opinion of the Advocate General Trstenjak, 16 December 2010, C-29/10, Koelzsch, at para. 58 et seq., especially at para. 82 et seq. 82 See Kainz (note 20), at para. 31.

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The Law Applicable to Product Liability in Context person injured by a product is not considered in need of protection as such. As a matter of fact, Art. 5 Rome II does not follow the favor laesi principle and the consumers’ health protection mentioned in recital 20 is to be understood as referring to a collective interest (and not to an individual one)83 to balance with the producers’ instances. Accordingly, a parallel reading of provisions selecting the competent court and the applicable law in product liability cases is neither necessary nor advisable. A deeper consideration of the interdependent interpretation suggested by the claimant in the Kainz case clearly illustrates the side-effects of a forced coordination between Art. 7(2) Brussels I-bis and Art. 5 Rome II (A). Similarly, considering the implications for conflict-of-laws of the Kainz ruling, the transposition of the Court’s approach to the interpretation of “the event giving rise to the liability” for the purpose of Art. 17 Rome II, governing the rules of safety and conduct, appears to be unconvincing (B). A.

Place of Acting under Art. 7(2) Brussels I-bis as Place of Marketing of the Product in the Sense of Art. 5 Rome II

In order to establish a systematic coordination between the head of jurisdiction in tort and the special provision on the law applicable to product liability, the place of acting criterion under Art. 7(2) Brussels I-bis should be identified with the place of marketing of the product in the sense of Art. 5 Rome II. Following this approach, and in the light of the above considerations concerning the meaning of the marketing requirement, the place of the event giving rise to the damage should be regarded as the place where the product was made available through commercial channels. Moreover, proceeding with the parallel reading, it seems that such a place should cover both the place where the specific product causing the damage was marketed and the places of marketing of products of the same type. Indeed, the prevailing opinion (shared by the author) supports a broad understanding of the marketing requirement laid down in Art. 5(1) lit. a) to c) (as referring also to products of the same type)84 and its extension to the field of jurisdiction would be necessary to achieve an effective synchronization between the place of acting and the law applicable by virtue of the cascade system. This approach clearly runs counter to objectives and scheme of jurisdictional rules, based on the principle of proximity and designed to ensure foreseeability of results and legal certainty. The outcome appears to be even more See Th.M. DE BOER (note 21), at 320. Despite the wording of the cascade system differs from that of the foreseeability clause and in the former no reference is made to products of the same type, the structure of the cascade system as well as teleological considerations plead against a literal interpretation of the marketing proviso. Concurring e.g. P. HUBER/ M. ILLMER (note 4), at 42 et seq.; R. PLENDER/ M. WILDERSPIN (note 1), at 574 et seq. Contra, T. HARTLEY (note 4), at 904; J. VON HEIN (note 51), at 338. An intermediate approach has been suggested by A. DICKINSON (note 1), at 373, who considers that the marketing proviso refers to the specific product causing the damage and to identical products, but not to products of the same type. 83 84

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Chiara Marenghi unacceptable considering that no limit is provided by Art. 7(2) on the large number of jurisdictions potentially competent according to this reasoning, whereas the cascade system of Art. 5 is complemented by a foreseeability clause, designed to afford additional protection to the defendant. Moreover, the different role played by the marketing requirement, on the one hand, and the place of acting, on the other hand, highlights the inconsistency of such a cross-fertilization.85 Indeed, whereas the former does not operate as a connecting factor, being simply a tool (albeit decisive) to validate the law selected by the main connections employed by Art. 5 Rome II (i.e. habitual residence of the injured party, place of acquisition, place where the damage occurred), the latter is a relevant connecting factor from the point of view of the special jurisdiction in tort in the same extent as the place of damage, both allowing the plaintiff to sue the defendant before a court closely connected to the situation. B.

The Interpretation of Art. 17 Rome II in Product Liability Cases

Where the law governing product liability cases under Art. 5 is not the law of the place where the “event giving rise to the liability” occurred, Art. 17 Rome II allows the seised court to take into account, as a matter of fact and in so far as appropriate, “the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability”. This provision, modelled on Art. 7 of the Hague Convention on Traffic Accidents and Art. 9 of the Hague Convention on Products Liability,86 tends to “strike a reasonable balance between the parties”, by trying to compensate asymmetries which may result from the application of the lex loci damni rather than the lex loci actus.87 Although the functioning of Art. 17 is limited (if not excluded) when liability under the applicable law is strict (i.e. at least in every case in which the Product Liability Directive comes into play), it has no little relevance in the field at stake and one may wonder whether it is appropriate to extend the approach taken by the Court in Kainz to the interpretation of the “event giving rise to the liability” for the purposes of Art. 17. As a preliminary remark, it is worth noting that, despite a slight difference in wording, such an event is to be understood as the “event giving rise to the damage” in the sense of Art. 4(1) Rome II and correspond to the place of acting under Art. 7(2) Brussels I-bis. This flows from teleological and systematic considerations and it is confirmed by the Commission’s First Proposal and the pertaining Explanatory Memorandum88 as well as by recital 34, according to which “account See J. VON HEIN (note 51), at 339. See Commission’s Explanatory Memorandum (note 5), at 25. 87 On this provision see generally, and for further references, I. BACH, Articles 17. Rules of Safety and Conduct, in P. HUBER (note 1), at 365 et seq.; A. DICKINSON (note 1), at 638 et seq.; P. FRANZINA (note 1), at 1038 et seq.; S.C. SYMEONIDES (note 1), at 211 et seq.; J. VON HEIN, Article 17 Rules of Safety and Conduct, in G.-P. CALLIES (note 1), at 569 et seq. 88 Art. 13 of the Commission’s First Proposal (note 5) referred to the “rules of safety and conduct which were in force at the place and time of the event giving rise to the 85 86

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The Law Applicable to Product Liability in Context must be taken, in so far as appropriate, of the rules of safety and conduct in operation in the country in which the harmful act was committed”.89 Therefore, if one accepted to transpose the reasoning followed by the Court in the field of jurisdiction to conflict-of-laws matters, in product liability cases rules of safety and conduct of the place of manufacture would be considered. As an alternative interpretation, however, reference can be made to “the rules of conduct and safety prevailing in the State where the product was introduced into the market”, as provided by Art. 9 of the 1973 Hague Convention. Notwithstanding the general presumption in favour of a uniform interpretation of similar notions that the Rome II Preamble seems to imply, the latter solution should be regarded as a better option for several reasons. First and foremost, the reference to the safety and conduct standards of the place where the product comes into contact with final users (that is, the place of marketing) appears to be much more consistent with policies underlying the Rome II Regulation and with the rationale of the special regime on product liability. Indeed, such an approach tends to strike a reasonable balance between the parties and meet their justified expectations: in fact, whereas on the one hand it contributes to ensure a high level of protection for consumers’ health and safety (giving relevance to the standards in force where final users may be affected by harmful products), on the other hand it does not put too heavy a burden on producers, who must comply with standards of the market they target. Moreover, taking into account the rules of safety and conduct of the marketplace favours undistorted competition, since all competitors are subject to the same standards. Finally, from a systematic viewpoint, such an interpretation seems to be more in line with the core of Art. 5 Rome II, which refers to the law of the market, even if the latter would play a different role in the provisions at stake. According to the suggested approach, the operation of Art. 17 Rome II in product liability cases narrows further. As a matter of fact, there is no need for recourse to it, at least in every case falling under Art. 5(1) lit. a) to c), both provisions referring to the same law. This is of little consequence, however, because it simply means that in this way Art. 5 directly overcomes the drawbacks potentially connected to the application of a law other than the lex loci actus, with the advantages (in terms of consistency) of a single law governing all the issues arising from a product liability claim.

damage”. Moreover, according to the Commission’s Explanatory Memorandum (note 5), at 25, such a provision “is based on the fact that the perpetrator must abide by the rules of safety and conduct in force in the country in which he operates, irrespective of the law applicable to the civil consequences of his action, and that these rules must also be taken into consideration when ascertaining liability” (emphasis added). 89 Emphasis added.

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Chiara Marenghi

V.

Concluding Remarks

One of the main criticisms addressed to Art. 5 Rome II refers to the fact that it is unnecessarily complex. However, notwithstanding the structured solution finally adopted to govern product liability conflicts, the law of the habitual residence of the injured party is likely to apply in most cases.90 Therefore, apart from the lack of uniformity resulting from the coexistence of the Rome II regime with the 1973 Hague Convention, the primary weakness of Art. 5 seems to be its open texture, which may lead to an increasing of litigation instead of ensuring foreseeability of results and legal certainty in an area where out-of-court settlements go up to 90%.91 The unclear language is among the reasons why contrasting opinions on the fairness of the system laid down by Art. 5 have been expressed by commentators.92 Depending on the preferred interpretation of the key terms and issues, the balance between the parties’ interests may be tilted in favour to one or the other93 (even if in the author’s view the risk is especially that of unbalancing the content-neutral provision in favour to the alleged tortfeasor). Considering Art. 5 in the framework of the EU secondary legislation may be helpful in order to clarify certain aspects of the special provision. However, as it is well-known, cross-fertilization between instruments governing different aspects of the same topic requires a careful assessment. As far as the relationship between Art. 5 and the Product Liability Directive is concerned, it is regrettable that there is a lack of a systematic coordination between the two, which complement each other to the extent that they contribute the same objectives being achieved. On the other hand, lacking such a coordination, their differences both in function and scope (whereas the Directive is a very specific instrument that covers only a part of product liability cases, the conflict rule provided by the Rome II Regulation is designed to govern every “non-contractual obligation arising out of damage caused by a product” defective or not, in order to deviate from the lex loci damni rule, inadequate in this area) suggest that the substantive regime should influence the interpretation of Art. 5 Rome II only to the extent that it does not undermine its broad nature and in accordance with its peculiarities. As to the relationship of the 90 This results from a US study on product liability cases reported by S.C. SYMEONIDES (note 1), at 207 et seq. 91 See Commission’s Second Report on the application of Directive 85/374 on liability for defective products, COM(2000) 893 final, p. 10. 92 Some commentators regard Art. 5 as a pro-claimant rule, whereas others think it is more generous to the defendant or, rectius, more sensitive to economic considerations. Among the former, see e.g. R. PLENDER/ M. WILDERSPIN (note 1), at 565 et seq.; J. VON HEIN (note 1), at 1697. Among the latter, see e.g. I. PRETELLI (note 1), at 444; S.C. SYMEONIDES (note 1), passim. Certainly such contrasting opinions depend also on the fact that conflict-oflaws issues in product liability cases are inherently complex as well as on the role given to relevant policies by each author. 93 For instance, accepting that the application of the law of his/her habitual residence implies considerable benefits for the claimant, extending or not the marketing proviso laid down by the cascade system to products of the same type may modify the equilibrium between the parties.

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The Law Applicable to Product Liability in Context conflict-of-laws regime with the special jurisdiction in tort, it seems that the systematic link apparently established by recital 7 of the Rome II Regulation between this instrument and the Brussels “family” needs to be put into perspective insofar as interdependency of interpretation does not mean that the solutions have to coincide; nor does it mean that similar notions have to, by default, be interpreted in the same way. The suggested reading of the “event giving rise to the liability” for the purpose of Art. 17 Rome II provides a good example of this. Moreover, the interplay between Art. 5 and the EU instruments affecting its operation (in one way or another) has to be taken into account when assessing the suitability of the European regime on international product liability as a whole. From this point of view, with respect to situations connected to third countries (i.e. countries outside the EU) the Product Liability Directive would seem to play a key role in striking a fair balance between the parties. Indeed, accepting that national legislations implementing the Directive may be characterized as overriding mandatory provisions in the sense of Art. 16 Rome II, standards of protection afforded by the Directive would be granted to all victims affected by the substantive regime, irrespective of their habitual residence, whenever the product causing the damage has been put into circulation in the internal market (rectius, in the European Economic Area). Therefore, the influence of the Directive on the operation of Art. 5 Rome II would seem, inter alia, to partially compensate for the fact that the special provision tends to disadvantage residents of lesser developed countries. On the other side, in relation to the coordination of jurisdiction and choice-of-law in the field at stake, no particular problem would seem to arise from the fact that there is no systematic synchronization between the special jurisdiction in tort and the conflict rule on product liability. Indeed, notwithstanding that it is generally accepted that the application of the lex fori implies several advantages in terms of litigational convenience and cost reduction, the search for such parallels does not belong, exceptions aside, to the objectives of the European legislator.94 In fact, taking into account the peculiar function and nature of jurisdictional rules, the Brussels I-bis Regulation provides the claimant with multiple fora (all closely connected to the situation) and, although no intentional link is established between the special head of jurisdiction in tort and the conflict-of-laws regime laid down in the Rome II Regulation, it seems that “Art. 5 typically ensures a reasonable degree of «Gleichlauf», or congruence, between the choice of law result and the State with jurisdiction under the [Recast] Brussels I Regulation”.95

In this connection see e.g. P. FRANZINA (note 1), at 992. See R. PLENDER/ M. WILDERSPIN (note 1), at 566. According to the US study mentioned by S.C. SYMEONIDES (note 90), in 72% of the product liability cases the country of the victim’s habitual residence is likely to have at least one or more additional pertinent contacts with the situation. 94 95

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THE ROLE OF THE NATIONAL JUDGE IN A EUROPEAN JUDICIAL AREA FROM AN INTERNAL MARKET TO CIVIL COOPERATION Marjolaine ROCCATI*

I.

II.

An Asserted Role in the Domestic Legal Order A. European Restrictions on National Judicial Rules 1. General Restrictions Derived from the Elaboration of European Rules a) Two Types of Restrictions of Domestic Law by European Judicial Rules b) A Parallelism between the Two Types of Restrictions 2. Particular Restrictions Focused on the Control of Domestic Rules a) The Equivalence and Effectiveness Principles b) The Mutual Trust Principle B. European Restrictions on the Application of National Judicial Rules 1. The National Judge, Relay of European Intervention a) A Pre-Existing Function Necessary for the Internal Market b) A Desired Function in Civil Cooperation 2. The National Judge, Leading the Evolution of Domestic Rules a) Extension of European Law b) Domestic Reforms Due to the Application of European Law An Expected Role in the European Legal Order A. The National Judge, Outside any European Supervision 1. A Distinctive Autonomy a) Questions Unresolved by European Law b) Questions Partly Resolved by European Law 2. An Uncontested Autonomy a) The Limited Action of the E.C.J. b) The Relative Abandon of Sovereignty from National Courts B. The National Judge, on a European Equal Footing 1. The Complementary Action of E.C.J. and National Judge a) A Pro-National Standing of the E.C.J. b) Towards a Pro-European Standing of the National Judge 2. Consolidation of Current Cooperation a) Keeping Preliminary Ruling b) Reinforcing Horizontal Cooperation

* Maître de conférences at the University of Paris Ouest Nanterre La Défense. This paper is the synthesis of a book published at Bruylant, in July 2013.

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Marjolaine Roccati The idea of a European judicial area could be surprising since European law is applied in Member States alongside with domestic law. Indeed, it has very early been stated, in a ruling of the European court of justice – hereafter the E.C.J., that “it is for the domestic legal system of each Member State to designate the courts having jurisdiction and to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which citizens have from the direct effect of Community law”,1 referred later as the principle of procedural autonomy. Therefore, the European judicial area should leave room to a juxtaposition of domestic judicial areas. Nonetheless, the European legislator was given specific attributions by Member States to build an area of justice, freedom and security, duly separated from the internal market. The European judicial area seems to refer to this European space, born with the Amsterdam Treaty in 1997. This space covers policy areas that range from management of the European Union’s external borders to judicial cooperation in civil and criminal matters. Regarding judicial cooperation in civil matters, numerous legal instruments have been adopted since the entry into force of the Amsterdam Treaty. Through enactment of various judicial rules, they aim to improve collaboration between Member States in the resolution of cross border litigations. The European judicial area could be confused with this specific area of justice. In fact, the European judicial area refers to a broader space than this specific area of justice. The E.C.J. has originally made clear that the principle of procedural autonomy applies “in the absence of community rules on the subject”.2 European judicial rules are not to be found only in the area of justice, freedom and security. Many E.U. instruments on various subjects contain spare judicial rules elaborated to ensure protection of rights derived from other provisions. Furthermore, European authorities have brought limits on domestic judicial rules to ensure protection of the rights guaranteed by European law. The E.C.J. plays a major part in this respect. These different ways of building legal protection of European rights are also parts of the European judicial area. More than the European legislator or the E.C.J., the national judge is the central figure of this European judicial area. Privileged interlocutor of the E.C.J., he is also the direct addressee of instruments in judicial cooperation in civil matters, which do not need any transposition law to be enforceable in Member States. With the increase of rules composing this European judicial area, the national judge faces as well a new dimension in his role: developing horizontal cooperation with other judges in the European Union. Enforcement of European rights used to be considered only in a vertical way, through the relationship between European authorities and national judges of each Member State. The development of horizontal cooperation among judges constitutes the first step of a real horizontal European justice.

1 Judgments of 16 December 1976, Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland, Case 33-76 and Comet BV v Produktschap voor Siergewassen, Case 45-76. 2 Idem.

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The Role of the National Judge in European Judicial Area All these components of the role of the national judge in the European judicial area deserve a regain of attention. In order to analyse this role, it is interesting to examine the role of the national judge compared to the national legislator and then his role compared to other European actors, i.e. the European legislator and the E.C.J. Indeed, if such a role seems to be clearly recognized and admitted in the domestic legal order (I), it remains to be reinforced and is mainly expected in the European legal order (II).

I.

An Asserted Role in the Domestic Legal Order

The role of the national judge in ensuring this European judicial area is particularly important, given the number of judicial rules dealing with this matter. Therefore, highlighting the role of the national judge implies previous developments on these judicial rules, composed of European restrictions brought directly to domestic judicial rules (A) and to the application of these rules (B). A.

European Restrictions on National Judicial Rules

European restrictions on domestic judicial norms operate in different manners. On one hand, general restrictions on domestic judicial rules may directly derive from the elaboration of European rules (1). On the other hand, particular restrictions aim more specifically at controlling domestic judicial rules (2). 1.

General Restrictions Derived from the Elaboration of European Rules

European judicial law occupies a specific area, elaborating rules in judicial cooperation in civil matters. Outside this area, European law has also brought restrictions on domestic judicial rules to ensure enforcement of rights contained in several European instruments. These two types of general restrictions on domestic judicial rules (a) may be compared (b). a)

Two Types of Restrictions of Domestic Law by European Judicial Rules

The intervention of the European Union on judicial rules has operated through the intervention of the European legislator as well as the E.C.J. The legislator introduced judicial provisions in many instruments, to ensure that rights inserted in the rest of the concerned instruments were enforced in front of national courts. Indeed, in several directives or regulations, the European legislator has inserted some judicial provisions. Some of them invite Member States to provide for review

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Marjolaine Roccati procedures3 or give precisions on the burden of proof between litigants.4 Other provisions specify such procedures, which could lead Member States to create new review procedures.5 In parallel, the E.C.J. has elaborated a set of principles to ensure the enforcement of rights contained in European instruments. The cornerstone is probably the principle of sincere cooperation, initially grounded on article 5 EEC Treaty6 and now expressly formulated by article 4 § 3 of the Treaty on European Union. This principle has been broadly interpreted by the E.C.J., who has extended this obligation to national courts.7 Together with the principles of immediate application and primacy8 as well as direct effect,9 the E.C.J. ensures the effectiveness of rights derived from European rules in domestic legal orders. Such an action is nonetheless limited, as being solely related to the specific instrument which contains judicial provisions or which is interpreted by the E.C.J. The judicial protection may thus vary from one European instrument to the other, because of the lack of a general and coordinated intervention. Such an intervention does already exist, for judicial provisions that compose the specific area of judicial cooperation. This field has its first foundations in the Rome Treaty, which started to build cooperation between Member States, leading to the conclusion of 3 See for instance Directive 2004/35/CE of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage, OJ L 143, 30.4.2004, p. 64, Article 13; Directive 92/59/EEC of 29 June 1992 on general product safety, OJ L 228, 11.8.1992, p. 30, Article 14. 4 See for instance Directive 97/80/EC of 15 December 1997 on the burden of proof in cases of discrimination based on sex, OJ L 14, 20.1.1998, p. 6–8; Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4.1.2003, p. 10, Article 2. 5 See for instance Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, OJ L 395, 30.12.1989, p. 33-35 and Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, OJ L 76, 23.3.1992, p. 14-20; both modified by Directive 2007/66/EC of 11 December 2007; Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, OJ L 95, 21.4.1993, p. 32, Article 7 on the necessity to enable organizations to take action. 6 Article 5 of the EEC Treaty was thus formulated: “Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. […]”. 7 Judgment of 10 April 1984, Sabine von Colson and Elisabeth Kamann v Land Nordrhein-Westfalen, case 14/83, § 26: “The Member States’ obligation arising from a directive to achieve the result envisaged by the directive and their duty under article 5 of the Treaty […], is binding on all the authorities of Member States including, for matters within their jurisdiction, the Courts”. 8 Judgment of 15 July 1964, Flaminio Costa v E.N.E.L., case 6/64. 9 Judgment of 5 February 1963, NV Algemene Transport - en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, case 26-62.

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The Role of the National Judge in European Judicial Area international conventions such as the Brussels convention.10 Nonetheless, the major step in the construction of a judicial European area is related to the entry into force of the Amsterdam Treaty, whereby judicial cooperation in civil matters was transferred to European institutions.11 On the basis of orientations given in Tampere in October 1999 and by following European Councils,12 many instruments have been enacted. Some of them contain provisions on jurisdiction and enforcement of judgments,13 others provide for entire European procedures14 or contain rules on service of documents15 or related to taking of evidence.16 This area of judicial cooperation in civil matters, which seemed to be dependent of the internal market, may pursue other objectives than the proper functioning of the market.17 Alongside with the traditional objective of mutual recognition of judgments, without barriers, in the European Union, the

10 Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, based on Article 220 of EEC Treaty. 11 Title IV of the EC Treaty, Article 65. 12 The Hague in November 2004; Stockholm in May 2010. 13 Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency proceedings, OJ L 160, 30.6.2000, p. 1-18; Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L 12, 16.1.2001, p. 1-23; Regulation (EC) No. 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No. 1347/2000, OJ L 338, 23.12.2003, p. 1-29; Regulation (EC) No. 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, OJ L 7, 10.1.2009, p. 1-79. 14 Regulation (EC) No. 805/2004 of 21 April 2004 creating a European Enforcement Order for uncontested claims, OJ L 143, 30.4.2004, p. 15-39; Regulation (EC) No. 1896/2006 of 12 December 2006 creating a European order for payment procedure, OJ L 399, 30.12.2006, p. 1-32; Regulation (EC) No. 861/2007 of 11 July 2007 establishing a European small claims procedure, OJ L 199, 31.7.2007, p. 1-22; Regulations “order for payment” and “small claims procedure” contain uniform procedures from introduction of action to enforcement of decision, whereas Regulation “European Enforcement Order” aims only to simplify recognition of a judgment rendered in compliance with internal procedure of another Member State. 15 Regulation (EC) No. 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters, OJ L 160, 30.6.2000, p. 37-52; now repealed by Regulation (EC) No. 1393/2007 of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), OJ L 324, 10.12.2007, p. 79-120. 16 Regulation (EC) No. 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, OJ L 174, 27.6.2001, p. 1-24. 17 See Article 81 § 2: “the European Parliament and the Council […] shall adopt measures, particularly when necessary for the proper functioning of the internal market”; the adjunction of the term “particularly” shows that other aims may be pursued by European authorities.

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Marjolaine Roccati necessity to provide easier access to justice for all citizens18 and to strengthen mutual trust has been reasserted.19 Thus, the European authorities intervene in the judicial area of Member States. On the one hand, they create a specific area of judicial cooperation in civil matters and on the other hand, they adopt more widespread restrictions on judicial domestic rules to ensure the effectiveness of rights issued from European instruments. A parallelism may be made between these two ways of European intervention. b)

A Parallelism between the Two Types of Restrictions

European institutions seem to use indifferently the means they have at disposal for the construction of this European judicial area. These different means are leaning towards a common objective: the elaboration of a right to an effective legal protection in front of national Courts. Indeed, European instruments have normally different effects in internal legal orders. A classification is usually drafted, with the distinction between unification, harmonisation and coordination, the latest having usually a specific meaning in the European context.20 Nonetheless, the area of judicial cooperation in civil matters reveals how difficult it is to determine if the instruments enacted aim specifically at unifying, harmonising or coordinating domestic procedures. For instance, a regulation, whose nature is to unify, creating a European Enforcement Order for uncontested claims,21 has established minimum standards,22 which are normally used by directives in order to harmonize domestic rules. Furthermore, the European intervention in this field seems to be limited to a simple “coordination” of judicial procedures in Member States. However, the European legislator may also suggest a European model to be followed by the parties, such as the European order for payment procedure23 or the European small claims procedure.24 Nonetheless, such procedures are not replacing other domestic procedures but coexist with the formers. Unification, harmonisation and cooperation appear thus to interact in judicial cooperation in civil matters. There is no direct equation between the type of instrument and the level of integration operated. The action of the E.C.J. is grounded on different principles, which tend to interact as well. For instance, even if the principle of direct effect has been presented as deriving from the principle of sincere cooperation,25 the E.C.J. may 18 The Stockholm Programme — An open and secure Europe serving and protecting citizens, OJ C 115, 4.5.2010, p. 1-38, § 3.4.1. 19 Ibid., § 3.1 et 3.2. 20 See Articles 5 and 6 TFEU. 21 Regulation (EC) No. 805/2004, aforementioned. 22 See whereas (12). 23 Regulation (EC) No. 1896/2006, aforementioned. 24 Regulation (EC) No. 861/2007, aforementioned. 25 Judgment of 27 February 1980, Hans Just I/S v Danish Ministry for Fiscal Affairs, case 68/79, § 25.

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The Role of the National Judge in European Judicial Area also refer to the principles of immediate application and primacy as well as direct effect in the same decision26 to ensure the application of rights guaranteed by European law. The E.C.J. may also have relied solely on “the effectiveness of Community law”.27 Furthermore, the application of such principles may evolve. Direct effect has thus been denied and subsequently granted to the same disposition.28 It is therefore difficult to determine a role specifically attributed to any of these principles. They may be used indifferently to ensure the effectiveness of European law. Both the European legislator and the E.C.J. use indifferently several means, but these means appear to lean towards the same objective: the construction of a right to legal protection in front of national Courts. The action of the European Union is evaluated according to the “objectives set out in the Treaties”.29 As far as the judicial cooperation in civil matters is concerned, such objectives seem to be related to an easier access to justice in reducing obstacles for litigants involved in cross-borders cases. Access to justice is similar to legal protection, whose reference may be found since 1991 in the internal market area.30 For the latter, objectives set out in European instruments require ensuring in front of national Courts legal protection of rights contained in such instruments. This right to a legal protection has thus to be developed in the different areas of the European Union, from the internal market to judicial cooperation. In that sense, the Lisbon Treaty has introduced a general reference in the UE Treaty, according to which “Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law”.31

26 Judgment of 17 May 1972, Orsolina Leonesio v Ministero dell'agricoltura e foreste, § 21 and 22. 27 Judgment of 19 June 1990, The Queen v Secretary of State for Transport, ex parte: Factortame Ltd and others, case C-213/89, § 20; Judgment of 5 March 1996, Brasserie du Pêcheur SA v Bundesrepublik Deutschland and The Queen v Secretary of State for Transport, ex parte: Factortame Ltd and others, joined cases C-46/93 and C-48/93, § 20. 28 See for an example Article 6 of Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, OJ L 39, 14.2.1976, p. 40-42: Judgment of the Court of 10 April 1984, Sabine von Colson (note 7), § 27, and then judgment of the Court of 2 August 1993, M. Helen Marshall v Southampton and South-West Hampshire Area Health Authority, case C-271/91, § 36. 29 See for instance Article 352 § 1 TFEU: “If action by the Union should prove necessary, within the framework of the policies defined in the Treaties, to attain one of the objectives set out in the Treaties[...]”. 30 Judgment of 21 February 1991, Zuckerfabrik Süderdithmarschen AG v Hauptzollamt Itzehoe and Zuckerfabrik Soest GmbH v Hauptzollamt Paderborn, joined cases C-143/88 and C-92/89. 31 Article 19 § 1 TEU.

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Marjolaine Roccati 2.

Particular Restrictions Focused on the Control of Domestic Rules

Legal protection is not just a broad concept whose concrete applications are left to the Member States. In order to apply this concept, the European legislator and the E.C.J. exercise a direct control on domestic rules in the judicial field. The control is traditionally exercised through the principles of equivalence and effectiveness (a). Another principle has also been encountered in civil cooperation which tends to the same aim, the principle of mutual trust (b). a)

The Equivalence and Effectiveness Principles

The E.C.J. developed the equivalence and effectiveness principles in 1976, just after having asserted that each Member State designates the courts having jurisdiction and determines the procedural conditions governing actions intended to ensure the protection of the rights derived from European law.32 Indeed, the Court immediately added that “such conditions cannot be less favourable than those relating to similar actions of a domestic nature”33 and cannot render “virtually impossible or excessively difficult”34 the exercise of rights conferred by Community law. Through these principles of equivalence and effectiveness, the E.C.J. is not formulating a general standard but checks on a case-by-case basis whether domestic procedural rules ensure the legal protection of rights contained in European instruments. The Court has thus stated, concerning the principle of effectiveness, that “each case [...] must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, before the various national instances”.35 The domestic context in which the contested rule is grounded explains that in many decisions, the E.C.J. refers to the national judge for their concrete application. The equivalence and effectiveness principles cannot be easily delimitated as they depend on the domestic context. Furthermore, as far as the principle of equivalence is concerned, it is difficult to evaluate if domestic procedures are “similar”. As regards the principle of effectiveness, an exercise “excessively difficult” of rights conferred by Community law may be as well difficult to establish. These principles thus give a great room for manoeuvre in their interpretation and may be considered as the direct vectors of legal protection of European law in front of national Courts. Indeed, the E.C.J. has referred to the “Community principles of effectiveness and equivalence of judicial protection”.36 Judgments of 16 December 1976, Rewe and Comet (note 1). Idem. 34 Idem; condition precised in a later case: see Judgment of 9 November 1983, Amministrazione delle Finanze dello Stato v SpA San Giorgio, case 199/82, § 14. 35 Judgment of 14 December 1995, Peterbroeck, Van Campenhout & Cie SCS v Belgian State, case C-312/93, § 14. 36 Judgment of 24 April 2008, Arcor AG & Co. KG, v Bundesrepublik Deutschland, intervening party: Deutsche Telekom AG, case C-55/06, § 190. 32 33

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The Role of the National Judge in European Judicial Area In the area of judicial cooperation in civil matters, the E.C.J. ensures that domestic judicial rules do not impair effectiveness of European instruments. The Court was already doing this control with the application of the previous Brussels convention.37 More than an application of equivalence and effectiveness principles, such restrictions may directly be related to the “useful effect” of any European instrument. Alongside with these principles ensuring legal protection, in front of national Courts, of rights contained in EU instruments, the E.C.J. seems to use another type of control in the area of judicial cooperation in civil matters, related to the mutual trust principle. b)

The Mutual Trust Principle

In the area of judicial cooperation in civil matters, many European instruments contain references to a principle or concept of mutual trust.38 Nonetheless, such references are to be found in recitals of the concerned regulations and are not legally binding. The European legislator relies on the principle of mutual trust to elaborate a principle of mutual recognition. The latter aims at removing obstacles to the free movement of judgments. This interpretation has been followed by the E.C.J.39 Nonetheless, principles of mutual trust and mutual recognition do not receive the same meaning in the area of judicial cooperation than in other fields of European law, in particular the internal market. Indeed, already in the Cassis de Dijon40 case, the E.C.J. asserted the free movement of goods but also made clear that obstacles must be accepted when requirements laid down by the State of origin are deemed to be insufficient. Therefore, mutual recognition should not be confused with complete freedom of movement and the sole removal of intermediate barriers. In judicial matters, the E.C.J. has once characterized a restriction but has considered it justified by overriding reasons in the general interest.41 This traditional meaning of mutual recognition should be transposed to the area of judicial cooperation in civil matters. 37 Judgment of 15 May 1990, Kongress Agentur Hagen GmbH v Zeehaghe BV, case C-365/88, § 20. 38 See for instance whereas (22) of Regulation (EC) No. 1346/2000, aforementioned; whereas (21) of Regulation (EC) No. 2201/2003, aforementioned. 39 For an application concerning Regulation (EC) No. 1346/2000, see Judgment of 2 May 2006, Eurofood IFSC Ltd, case C-341/04, § 40. 40 Judgment of 20 February 1979, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, case 120/78. 41 Judgment of 12 December 1996, Reisebüro Broede v Gerd Sandker, case C-3/95; in this case, the national rule prohibited an undertaking established in another Member State from securing judicial recovery of debts on the ground that the exercise of that activity in a professional capacity was reserved to the legal profession. The objective accepted was to protect recipients of services against the harm which they could suffer as a result of using the services of persons not possessing the necessary professional or personal qualifications and to safeguard the proper administration of justice.

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Marjolaine Roccati Furthermore, the E.C.J. extended implications of mutual trust, using this principle at an earlier stage, in applying rules of lis pendens42 and jurisdiction. Indeed, in the Gasser,43 Turner44 and West Tankers45 cases, the E.C.J. justified a strict compliance to European rules by the principle of mutual trust. According to the E.C.J., mutual trust comes from a common agreement of Member States. As they have agreed to be bound by common rules in adopting European Regulations, they transferred to the E.C.J. the competence to enforce these rules and to make sure that they prevail. Therefore, mutual trust may be seen as a tool at disposal of the European legislator, who on the same time also encourages Member States to develop it. In fact, the E.C.J. could have based its decisions directly on the effectiveness principle rather than the principle of mutual trust, to achieve the same results. Nonetheless, the Court has chosen to ground its decisions on the principle of mutual trust in order to depart from a vertical control between the Court and the national judge. The invocation of such a principle reasserts the role of mutual trust in the adoption of common rules. As a consequence, the E.C.J. does not blame national judges for having violated EU law but for having mistrusted their neighbours. The shift in the grounds of its restrictions is therefore highly symbolical. B.

European Restrictions on the Application of National Judicial Rules

The European intervention does not apply in a static way on domestic rules. The European legislator and the E.C.J. pay particular attention to the national judge, who ensures legal protection of rights derived from European law (1). This preeminent role in applying European rules gives to the national judge a new authority towards the national legislator (2). 1.

The National Judge, Relay of European Intervention

The national judge is the necessary vector of the application of European rules. This long-standing role in European history has pre-existed in the internal market (a). Together with this traditional role, the national judge is also the direct addressee of the European legislator to apply the judicial cooperation in civil matters provided for in European regulations (b). Lis pendens occurs where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, see Article 27 of Regulation (EC) No. 44/2001 of 22 December 2000, aforementioned. 43 Judgment of 9 December 2003, Erich Gasser GmbH v MISAT Srl, case C-116/02, § 72. 44 Judgment of 27 April 2004, Gregory Paul Turner v Felix Fareed Ismail Grovit, Harada Ltd and Changepoint SA, case C-159/02, § 24. 45 Judgment of 10 February 2009, Allianz SpA and Generali Assicurazioni Generali SpA v West Tankers Inc, case C-185/07, § 30. 42

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The Role of the National Judge in European Judicial Area a)

A Pre-Existing Function Necessary for the Internal Market

The national judge has first and foremost a function of guardian in the internal market. The national judge ensures that domestic rules respect European law. To this end, any judge, even a judge of first instance, may refer for a preliminary ruling in interpretation and validity to the E.C.J. and is not bound by the ruling of a superior court.46 Furthermore, the E.C.J. elaborated an obligation for national judges to raise of their own motion an issue concerning the breach of provisions of European law, if examination of that issue would not oblige them to go beyond the ambit of the dispute defined by the parties themselves.47 Thus, the European court transformed a possibility for national judges into an obligation. The E.C.J. also sets conditions and permits to prescribe any necessary interim measure when judges are faced to European violations.48 Finally, once a violation has been established, the E.C.J. empowered the national judge to hold its Member State responsible49 and compel it to refund national charges which have been levied in breach of European law.50 The Court also set aside domestic rules which could prevent from such a refunding, such as the condition to produce proof that charges have not been transferred to third parties.51 The national judge is not only the guardian of European law, ensuring that violations by Member States are sanctioned in front of a court. He also promotes objectives of the European Union. Indeed, even if there is no violation of a European law provision, the E.C.J. has considered that “effective protection of the consumer may be attained only if the national court acknowledges that it has power to evaluate [unfair terms of a contract] of its own motion”.52 The Court has thus

46 Judgment of 16 January 1974, Rheinmühlen-Düsseldorf v Einfuhr- und Vorratsstelle für Getreide und Futtermittel, case 166-73. 47 Judgment of 14 December 1995, Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting Pensioenfonds voor Fysiotherapeuten. - References for a preliminary ruling: Hoge Raad – Netherlands, joined cases C-430/93 and C-431/93, § 15. 48 Judgment of 19 June 1990, The Queen v Secretary of State for Transport, ex parte: Factortame Ltd and others, case C-213/89, § 21 and § 23; Judgment of 21 February 1991, Zuckerfabrik Süderdithmarschen AG v Hauptzollamt Itzehoe and Zuckerfabrik Soest GmbH v Hauptzollamt Paderborn, joined cases C-143/99 and C-92/89, § 27; Judgment of 9 November 1995, Atlanta Fruchthandelsgesellschaft mbH and others v Bundesamt für Ernährung und Forstwirtschaft, case C-465/93, § 51. 49 Judgment of 19 November 1991, Andrea Francovich and Danila Bonifaci and others v Italian Republic, joined cases C-6/90 and C-9/90. 50 Judgment of 27 February 1980, Hans Just I/S v Danish Ministry for Fiscal Affairs, case 68/79, § 27. 51 Judgment of 9 November 1983, Amministrazione delle Finanze dello Stato (note 34), § 18. 52 Judgment of 27 June 2000, Océano Grupo Editorial SA v Roció Murciano Quintero (C-240/98) and Salvat Editores SA v José M. Sánchez Alcón Prades (C-241/98), José Luis Copano Badillo (C-242/98), Mohammed Berroane (C-243/98) and Emilio Viñas Feliú (C-244/98), § 26; Judgment of 26 October 2006, Elisa María Mostaza Claro v Centro

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Marjolaine Roccati precluded a procedural rule preventing the national court from doing so, on expiry of a limitation period.53 Together with the objective of protection of the consumer, European rules on competition may justify the same behaviour from the national judge.54 The question lies in a possible extension of this case-law to other objectives of the European Union. Decisions of the E.C.J. do not only concern the duty of the national court to examine of its own motion certain terms of contracts. In some decisions, the Court reversed the burden of proof, in various areas of European law, such as nondiscrimination between men and women55 or free movement of goods.56 These decisions show a range of possible adjustments of domestic judicial rules in order to ensure effectiveness of European law. These adaptations shall be done by the national judge, on the request of the Court of justice. This preeminent role of the national judge in its domestic legal order may be noticed in the area of judicial cooperation in civil matters as well, following a choice of the European legislator. b)

A Desired Function in Civil Cooperation

While enacting European regulations on judicial cooperation in civil matters, the European legislator has relied on the national judge for the development of mutual trust between Member States. In fact, the national judge has the possibility to limit mutual trust when it conflicts with the proper administration of justice. For instance concerning service of documents, he “may give judgment even if no certificate of service or delivery has been received, if [among other conditions] no certificate of any kind has been received, even though every reasonable effort has been made to obtain it through the competent authorities or bodies of the Member State addressed”.57 In parallel, mutual trust between Member States may be improved notably through the initiatives of national judges. For instance, the French Supreme Court has granted an appeal on jurisdiction even though the Court of Appeal had not ruled on the substance of the case,58 in order to determinate jurisdiction of courts as fast as possible in cross-border context. Móvil Milenium SL, case C-168/05, § 39; Judgment of 4 June 2009, Pannon GSM Zrt. v Erzsébet Sustikné Győrfi, case C-243/08, § 35. 53 Judgment of 21 November 2002, Cofidis SA v Jean-Louis Fredout, case C-473/00, § 38. 54 Judgment of 4 June 2009, Pannon GSM Zrt. v Erzsébet Sustikné Győrfi, case C-126/97, § 41. 55 Judgment of 17 October 1989, Handels- og Kontorfunktionærernes Forbund I Danmark v Dansk Arbejdsgiverforening, acting on behalf of Danfoss, case 109/88. 56 Judgment of 8 April 2003, Van Doren + Q. GmbH v Lifestyle sports + sportswear Handelsgesellschaft mbH and Michael Orth, case C-244/00. 57 Regulation No. 1393/2007 on service of documents, aforementioned, Article 19 § 2. 58 Cour de cassation, 1ère chambre civile, 7 May 2010, No. 09-11177, No. 09-11178 & No. 09-14324.

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The Role of the National Judge in European Judicial Area Further strengthening of mutual trust will be possible through the development of direct cooperation between judges, without the need of any diplomatic entity, which is the major innovation of regulations in this area. Indeed, the legislator decided to adopt mechanisms of a concrete collaboration between judges to improve judicial cooperation between Member States in civil matters. This cooperation is particularly important in the field of taking of evidence,59 where the judges clearly collaborate to this aim, but may also be found in other instruments of judicial cooperation in civil matters. For instance, if a competent court considers that a court of another Member State is best suited to hear a case on parental responsibility, courts shall cooperate to decide whether the case should be transferred or not.60 As regards the same instrument, the E.C.J. has also encouraged national courts to cooperate in cases of lis pendens.61 This direct cooperation between judges may be supported by the European judicial network in civil matters.62 Networks in the administration of justice already existed in other areas of the European Union. The European competition network is now well established between the different authorities of Member States. However, the application of common rules on competition – articles 101 and 102 TFEU – facilitates its functioning. Indeed, there is no such cooperation between national courts in the same area. As regards the European judicial network, it has first appeared in criminal matters.63 This network was intended to favour establishment of appropriate contacts between contact points in Member States, organise periodic meetings and provide a certain amount of up-to-date background information. Parallel activities take place in the judicial network in civil matters, thus enabling direct cooperation to be strengthened. Improvement of direct cooperation will then necessarily permit to develop mutual trust between judges. This new authority of national judges to apply European law has also enabled them to gain authority towards national legislators. 2.

The National Judge, Leading the Evolution of Domestic Rules

Domestic law is influenced by European law. The national judge may conduct this influence in applying European law in some occasions beyond what seemed to be its initial boundaries (a). Furthermore, if some major reforms related to the influence of European law are passed by the national legislator, the national judge has an important role in interpreting such new rules in compliance with EU law (b).

Regulation (EC) No. 1206/2001, aforementioned. Regulation (EC) No. 2201/2003, aforementioned, Article 15 § 6. 61 Judgment of 9 November 2010, Bianca Purrucker v Guillermo Vallés Pérez, case C-296/10, § 81. 62 Decision 2001/470/EC of 28 May 2001 establishing a European Judicial Network in civil and commercial matters, OJ L 174, 27.6.2001, p. 25-31. 63 Joint Action 98/428/JHA of 29 June 1998 adopted by the Council on the basis of Article K.3 of the Treaty on European Union, on the creation of a European Judicial Network, OJ L 191, 7.7.1998, p. 4-7. 59 60

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Marjolaine Roccati a)

Extension of European Law

European law may extend to domestic situations. This expansion can be explained by the difficulty to determine precisely what a European situation is. For instance in the internal market, the E.C.J. has applied provisions relating to freedom of movement to situations which could be considered as purely internal to a Member State.64 In the area of judicial cooperation in civil matters, European regulations do not adopt the same criteria in order to define the situations they cover. Although the regulation in matrimonial matters and matters of parental responsibility contains a list of criteria,65 the European situation covered by the Regulation creating a European order for payment procedure66 is much more restrictive, for instance. The difficulty to determine if one situation is falling into the scope of European rules may give rise to the application of European law to domestic situations. For example, a British Court of Appeal relied on an E.C.J. case in a domestic litigation.67 Indeed, Lord Justice explained that it is “anomalous that, as a result of Reg. H v. Secretary of State for Transport, Ex parte Factortame Ltd. (No. 2) (Case C 213/89) [1991] 1 A.C. 603 and the operation of European Community law, [the courts] now have comprehensive powers even where a central government is involved, but only in relation to rights under Community law”.68 The E.C.J. may thus give to the national judge a range of tools that could be used in internal situations. Extension of European law may then be found in situations involving third States. The E.C.J. has made clear that a judge having jurisdiction under a European instrument cannot transfer the case to a third State on the basis of a domestic procedural tool – in this case the exception of forum non conveniens.69 Furthermore, European provisions on competition law and protection of consumers have been included in the public policy exception and opposed to arbitral awards.70 They may be opposed as well to decisions not covered by European instruments such as decisions rendered in third States. Nonetheless, the application of an exception of “European public policy” may so far have been justified by the Judgment of 2 October 2003, Carlos Garcia Avello v Belgian State, case C-148/02; Judgment of 8 March 2011, Gerardo Ruiz Zambrano v Office national de l’emploi (ONEm), case C-34/09. 65 Regulation (EC) No. 2201/2003 of 27 November 2003, aforementioned, Article 3. 66 Regulation (EC) No. 1896/2006 of 12 December 2006, aforementioned, Article 3. 67 Court of Appeal, M. v. Home Office, 29 November 1991, [1992] 4 All ER, p. 139; [1992] Q.B., p. 270. 68 [1992] Q.B., p. 306-307, §§ C and A. 69 Judgment of 1 March 2005, Andrew Owusu v N. B. Jackson, trading as “Villa Holidays Bal-Inn Villas” and Others, case C-281/02. 70 Judgment of 1 June 1999, Eco Swiss China Time Ltd v Benetton International NV, case C-126/97; Judgment of 26 October 2006, Elisa María Mostaza Claro (note 52); Judgment of 6 October 2009, Asturcom Telecomunicaciones SL v Cristina Rodríguez Nogueira, case C-40/08; Order of 16 November 2010, Pohotovosť s.r.o. v Iveta Korčkovská, case C-76/10. 64

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The Role of the National Judge in European Judicial Area existence of numerous connecting factors between the situations concerned and Member States, through the place of arbitration or the law applied by arbitrators. Before integrating such rules in its public policy exception, the national judge may similarly control if there is a sufficient link between the European Union and the situation to be recognized. All these illustrations reveal a willingness to apply European law beyond what seemed to be its initial boundaries. The role of the national judge is particularly important in such an extension. Nonetheless, the role of the national judge should not be neglected as regards domestic reforms passed by the legislator due to the application of European law. b)

Domestic Reforms Due to the Application of European Law

There are different kinds of domestic reforms due to the application of European law. Reforms may be necessary for its application or may be spontaneous, European law being followed as a model by the national legislator. In both cases, the national judge has an important part to play. Firstly, the national legislator implements rules that are necessary for the application of European law. Even European regulations, directly applicable in domestic legal orders, may give rise to some domestic measures of implementation.71 Furthermore, domestic rules contrary to European law must be repealed.72 The intervention of the legislator is essential, but the national judge is also in charge of ensuring effectiveness of European law. Initially related to the legislation adopted for the implementation of a directive, the technique of consistent interpretation enables the judge to “interpret and apply the legislation [...] in conformity with the requirements of community law, in so far as it is given discretion to do so under national law”.73 This discretion has been broadly interpreted. For instance, the E.C.J. has invited the national judge to refer to general provisions of civil and labour law and set aside provisions normally applicable to reparation in case of discrimination as regards access to employment.74 Whenever possible, the national judge must interpret domestic rules in compliance to European law. He thus compensates the eventual lack of intervention of the national legislator. In other cases, the national legislator may have spontaneously reformed domestic law. In these situations, European law is used as a model for domestic law. For instance, the French legislator has extended the application of European review procedures, related to public supply and public works contracts, to other In France, see for instance Décret n°2008-1346 du 17 décembre 2008 relatif aux procédures européennes d’injonction de payer et de règlement des petits litiges (J.O.R.F. n°295 du 19 décembre 2008). 72 For instance, the Italian legislator has enacted a law in 1990 and 2007 in order to comply with the judgment of the E.C.J. of 9 November 1983, Amministrazione delle Finanze dello Stato (note 34). 73 Judgment of 10 April 1984, Sabine von Colson (note 7), § 28. 74 Judgment of 22 April 1997, Nils Draehmpaehl v Urania Immobilienservice OHG, case C-180/95, § 30. 71

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Marjolaine Roccati domestic situations.75 In Italy, the statute on private international law adopted in 1995 uses the same criteria than the Brussels convention outside its scope of application.76 When applying such domestic rules, the national judge may seek a preliminary ruling from the E.C.J. on interpretation of European law which served as a source of inspiration. The European Court has always retained jurisdiction to interpret European rules even though they are not legally binding, since domestic rules inspired by them are enacted outside the scope of European law.77 When applying domestic rules implementing European instruments or only inspired by such instruments, the national judge has to adopt reconciling interpretation between domestic and European rules. To this aim, he has a great room of manoeuvre and asserts his authority in the domestic legal order. This authority has now to be extended in front of the European legislator and the E.C.J.

II.

An Expected Role in the European Legal Order

The importance of the national judge in his domestic legal order seems to contrast with his apparent timidity in the European legal order. Able to stand up to the national legislator, the national judge would be under the authority of the European legislator and the E.C.J. in the European legal order. In fact, the national judge asserts his role outside any kind of supervision coming from European authorities (A), being on an equal footing with them (B). A.

The National Judge, Outside any European Supervision

European rules are enacted alongside to domestic law, and a certain number of questions are left by the European legislator to be solved by the national judge. In the application of such norms, the national judge thus benefits from a distinctive autonomy (1), which is not further challenged by the E.C.J. (2). 1.

A Distinctive Autonomy

The autonomy of the national judge lies in questions that are left unresolved (1) or are only partly resolved (2) by the European legislator or the Court of justice. 75 Directive 89/665/EEC of 21 December 1989 and Directive 92/13/EEC of 25 February 1992, both modified by Directive 2007/66/EC, aforementioned; on the subject, see B. LE BAUT-FERRARÈSE, Arrêts récents de la Cour de justice des Communautés européennes en matière de mesures provisoires: réflexions sur l’effet de “modèle” des procédures issues de la Communauté européenne, Rec. Dalloz 1998, p. 310, § 14. 76 Legge No. 218 of 31 May 1995, Riforma del sistema italiano di diritto internazionale privato, Article 3.2. 77 Judgment of 18 October 1990, Massam Dzodzi v Belgian State, joined cases C-297/88 and C-197/89.

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The Role of the National Judge in European Judicial Area a)

Questions Unresolved by European Law

Questions left unresolved by the European legislator and the E.C.J. may expressly be referred to domestic law. This behaviour is predictable in the internal market, since the European legislator has no express authorization from Member States to enact rules in the judicial area, traditionally associated to the principle of procedural autonomy. This principle is linked to the Rewe and Comet cases in 1976, in which the E.C.J. asserted that “it is for the domestic legal system of each Member State to designate the courts having jurisdiction and to determine the procedural conditions governing actions at law”.78 Nonetheless, similar expressions already existed in the previous E.C.J. case-law.79 Procedural autonomy gives a great role to the national judge, who may have to choose among several domestic remedies those that are appropriate for the application of European law. European instruments that contain some judicial provisions leave details of their implementation to national authorities. For instance, it is up to Member States, on the burden of proof in cases of discrimination based on sex, to “take such measures as are necessary, in accordance with their national judicial systems, to ensure that […] it shall be for the respondent to prove that there has been no breach of the principle of equal treatment”.80 The European legislator grants discretion to Member States, concerning the choice of domestic remedies, to ensure the effectiveness of European rules. Furthermore, the E.C.J. tries to coordinate existing domestic rules and European law more than to impose European standards. For instance, the Court made clear in a case that it is for the national court to interpret and apply domestic rules in conformity with the requirements of European law, “in so far as it is given discretion to do so under national law”.81 The approach of the Court is therefore very cautious. Even in a field where the European legislator has an express authorization from Member States to enact rules, i.e. in the field of judicial cooperation in civil matters, the legislator relies on national rules and takes into account disparities among Member States. For example, article 13 of the Regulation on service82 enables any Member State to refuse service by diplomatic or consular agents.83

Judgments of 16 December 1976, Rewe and Comet (note 1). Judgment of 21 May 1976, Société Roquette frères v Commission of the European Communities, case 26-74, § 11; Judgment of 4 April 1968, Firma Gebrüder Lück v Hauptzollamt Köln-Rheinau, case 34-67. 80 Directive 97/80/EC of 15 December 1997, aforementioned, Article 4. 81 Judgment of 10 April 1984, Sabine von Colson (note 7), § 28. 82 Regulation (EC) No. 1393/2007 of 13 November 2007, aforementioned. 83 § 2: “Any Member State may make it known […] that it is opposed to such service within its territory, unless the documents are to be served on nationals of the Member State in which the documents originate”. 78 79

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Marjolaine Roccati Furthermore, it is not rare that European instruments contain optional rules offering alternatives to Member States.84 Details of the implementation of European instruments are also deliberately left to Member States, such as the designation of competent authorities in charge of the judicial cooperation provided for in European rules85 or some details of the procedure left to domestic law.86 Some referrals to domestic law may be more complex, requiring the concurring application of different domestic laws. For instance, in the taking of evidence, a person may refuse to be heard, relying either on the law of the Member State of the requesting court or the law of the Member State of execution of the measure.87 The national judge may also execute a request in accordance with a special procedure provided for by the law of the requesting State, thus having to conciliate the foreign and its domestic laws.88 It is for the national judge to ensure a coordinated application of different laws to the same situation. If they contain express referrals to domestic laws, the European instruments may also remain silent on certain issues. For instance, nothing is mentioned on possible review proceedings in case of a litigation on the application of European instruments. Potential appeals are thus to be solved in compliance with domestic rules, the national judge eventually taking into account the European context.89 These are questions left unresolved by European law; others may only be partly resolved. b)

Questions Partly Resolved by European Law

Even when European instruments seem to address specific issues in the field of judicial cooperation in civil matters, some questions may remain unanswered. First of all, the proliferation of instruments in the same area may create difficulties as regards their articulation. In particular, some international conventions may coexist with European regulations, but the E.C.J. has made clear that conventional rules may be applied provided that “they ensure, under By considering several means to comply with minimum standards for uncontested claims procedures in Chapter III of Regulation (EC) No. 805/2004 of 21 April 2004, aforementioned. 85 Article 2 of Regulation (EC) No. 1393/2007 of 13 November 2007, aforementioned; Article 2 § 2 of Regulation (EC) No. 1206/2001 of 28 May 2001, aforementioned. 86 See for instance Article 63 § 1 of Regulation (EC) No. 4/2009 of 18 December 2008, aforementioned: “Notification of the data subject of the communication of all or part of the information collected on him shall take place in accordance with the national law of the requested Member State”. 87 Article 14 § 1 of Regulation (EC) No. 1206/2001 of 28 May 2001, aforementioned. 88 Article 10 § 3 of Regulation (EC) No. 1206/2001 of 28 May 2001, aforementioned. 89 See for instance the decision of the French Supreme Court, referred to in note 58. 84

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The Role of the National Judge in European Judicial Area conditions at least as favourable as those provided for by the regulation, the free movement of judgments in civil and commercial matters and mutual trust in the administration of justice in the European Union”.90 The Court was asked on the articulation of the Convention on the Contract for the International Carriage of Goods by Road (CMR)91 and the Brussels 1 Regulation,92 but this solution may be extended to the other instruments in the same area. If European instruments may be difficult to articulate, the delimitation of European concepts may also be hard to draw with precision. In the internal market, the definition of State liability for violations of its obligations may give rise to different interpretations, according to which objectives are prioritised. Indeed, the objective to sanction the State may prevail to the objective to repair loss suffered by individuals, or conversely. The absence of delimitation of such concept gives great latitude to the national judge when deciding to trigger liability of the State or not. In the area of judicial cooperation in civil matters, the national judge may also have a strict or extensive vision of concepts contained in European instruments. To take an example, the lis pendens rule may be interpreted differently whether a strict or a broad conception of the identity of cause of action is adopted. The absence of precise delimitation of concepts gives rise to requests for precisions, such as questions deliberately remained unsolved by European authorities. The national judge may use the preliminary ruling procedure but the E.C.J. does not restrain its autonomy. 2.

An Uncontested Autonomy

The autonomy of national judges is not subject to the supervision of the E.C.J. and may be considered as uncontested. Indeed, the action of the E.C.J. is limited for internal (a) as well as external reasons, related to a relative abandon of sovereignty from national Courts (b). a)

The Limited Action of the E.C.J.

The action of the E.C.J. is limited because of the particularity of its role. In fact, the European Court has to face a very large mission but within the very limited conditions of submission of the cases heard. Indeed, the European Court of justice is the sole Court on the top of the legal order of European Union. Its mission is very large. The Court “shall ensure that in the interpretation and application of the Treaties the law is observed”.93 Because of the specificity of the European legal order, composed of disparate and 90 Judgment of 4 May 2010, TNT Express Nederland BV v AXA Versicherung AG, case C-533/08, § 56. 91 Convention of the United Nations signed in Geneva, 19 May 1956. 92 Regulation (EC) No. 44/2001 of 22 December 2000, aforementioned. 93 Article 19 § 1 of the EU Treaty.

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Marjolaine Roccati non-hierarchized rules, the E.C.J. becomes a very important actor in the construction of the European legal order. This very large mission must however be exercised in restrictive conditions. First of all, only Courts of last resort are compelled to request the European Court to give a ruling on a question concerning the interpretation or validity of European law raised before them.94 Such a procedure is optional for lower judges. Furthermore, the national judge may always consider that the European rule is clear and that there is no need for a preliminary ruling in interpretation and validity.95 To clarify the conditions of submission of a case, the E.C.J. held that a national judge is not obliged to refer to the Court of justice a question if “it has established that the question raised is irrelevant or that the Community provision in question has already been interpreted by the court or that the correct application of Community law is so obvious as to leave no scope for any reasonable doubt”.96 The Court thus gives room for manoeuvre to the national judge, which is free to decide on the reasonable doubt. Once the European Court is seized by the national judge, its function is to assist with the resolution of a particular case. The Court then refuses to deliver advisory opinions on general or hypothetical questions.97 The factual elements of the case are taken into account, thus enabling the judge to depart from the interpretation of the E.C.J. in subsequent cases, provided the facts are slightly different. When interpreting European law, the E.C.J. uses different methods: exegetic, historical, comparative, systematic and teleological. These methods are often combined to enlighten the meaning of a disposition, even if the teleological method seems to be preferred. This method, which refers to the objectives of the legislation, gives also a great latitude to the judge, since there may be manifold and evolving objectives. For instance in the area of judicial cooperation in civil matters, the E.C.J. may adopt a strict or large interpretation of the head of jurisdiction “where the harmful event has occurred”98 whether the Court decide to give priority to the objective of legal certainty or to the objective of protection of victims. Consequently, the national judge keeps great latitude in interpreting European rules, the rulings of the E.C.J. cannot really restrict its action. b)

The Relative Abandon of Sovereignty from National Courts

National judges never abandoned their sovereignty, refusing to give up all controls to the insertion of European rules. Resistance of national judges may have been particularly strong in the past. The most famous example is the case “Solange I” Article 267 of the TFEU Treaty. See the theory of the “acte clair” that may have been used in an abusive way: Conseil d’Etat, 22 December 1978, Cohn Bendit, Rec. D-S 1979 Jur. 155. 96 Judgment of 6 October 1982, Srl CILFIT and Lanificio di Gavardo SpA v Ministry of Health, case 283/81, § 21. 97 See for instance Judgment of 16 July 2009, Zuid-Chemie BV v Philippo’s Mineralenfabriek NV/SA, case C-189/08, § 36. 98 Regulation (EC) No. 44/2001 of 22 December 2000, aforementioned, Article 5 § 3. 94 95

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The Role of the National Judge in European Judicial Area rendered by the German Supreme Court in 1974,99 in which the Court asserted that the national judge will keep controlling fundamental rights as long as (“so lange”) these rights wouldn’t be adequately protected at a European level. Similar resistance has been observed in France100 or in Italy.101 This resistance has been tempered in subsequent cases.102 Nonetheless, even in the most recent decisions, these Supreme Courts showed that they “keep an eye” on European rules, which do not prevail over their domestic constitution.103 They refuse to give a blank cheque to European authorities. This refusal to insert European rules in the domestic legal order without any control goes along with a persistent control in their application. Indeed, in the area of judicial cooperation in civil matters, national Courts remain suspicious about the complete trust they should place in foreign courts. The E.C.J. must thus regularly reassert the automatic recognition clearly stated in some regulations, concerning insolvency proceedings104 or decisions ordering the return of a child.105 Even if the text of European instruments is clear, many national judges keep asking to the European Court questions on this automatic recognition, more difficult to assert in sensitive situations such as a child’s removal. This reveals a certain distrust of national courts towards this automatic recognition, which has needed to be reasserted in various decisions by the E.C.J.106

99 Bundesverfassungsgericht, 2nd chamber, 29 May 1974, Internationale Handelsgesellschaft. 100 Conseil constitutionnel, Decision No. 76-71 DC of 30 December 1976 relative à la Décision du Conseil des communautés européennes relative à l’élection de l’Assemblée des Communautés au suffrage universel direct, § 2; Conseil constitutionnel, Decision No. 92-308 DC of 9 April 1992, in which the Constitutional court declared that Articles 3A §2, 109G al. 2 et 109L §4 of the EC Treaty violated the Constitution. 101 Corte costituzionale, No. 183, 18 December 1973 – deposito in cancelleria: 27 December 1973, Frontini, § 9. 102 See for instance in Germany the decision of the Bundesverfassungsgericht, 22 October 1986, Wünsche Handelsgesellschaft, named “Solange II”; in Italy the decision of the Corte costituzionale, No. 170, 5 June 1984 – deposito in cancelleria: 8 June 1984, Granital. 103 Conseil constitutionnel, Decision No. 2010-79 QPC of 17 December 2010 à la suite d’une question de M. Kamel D. [Transposition d’une directive], § 3; Conseil d’Etat Ass., No. 287110, 8 February 2007, Socitété Arcelor Atlantique et Lorraine et autres; Bundesverfassungsgericht, 30 June 2009, 2 BvE 2/08; Corte costituzionale, No. 129, 23 March 2006 – deposito in cancelleria: 28 March 2006, § 5.3; Consiglio di Stato, No. 4207, 8 August 2005, Federfarma. 104 Regulation (EC) No. 1346/2000 of 29 May 2000, aforementioned. 105 Regulation (EC) No. 2201/2003 of 27 November 2003, aforementioned. 106 On insolvency proceedings, see Judgment of 21 January 2010, MG Probud Gdynia sp. z o.o., case C-444/07; on decisions ordering the return of a child, see Judgment of 11 July 2008, Inga Rinau, case C-195/08 PPU or Judgment of 22 December 2010, Joseba Andoni Aguirre Zarraga v Simone Pelz, case C-491/10 PPU.

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Marjolaine Roccati Furthermore, several specific regulations abolish all intermediate measures, at the stage of the exequatur, to the free movement of judgments.107 This tendency has not prevented Member States from keeping a public policy exception in a subsequent regulation, at a later stage than the exequatur, i.e. directly at the stage of enforcement.108 Through this exception, they may refuse to execute a foreign decision deemed contrary to their fundamental principles. It is difficult for the E.C.J. to control the limits of the public policy exception. Therefore, it is up to national judges to decide to trigger such exception. The national judge may rely on the Court of justice but is also relatively free not to do so. Consequently, the Court of justice does not act as a supervisory authority. The national judge must be aware to be on an equal footing with the European court and thus proceeds in a more active way in its contribution to the uniform interpretation of European rules. B.

The National Judge, on a European Equal Footing

The action of the national judge on the interpretation of European law is not really constrained by the European Court of Justice. The latter is already conscious of the complementary action of both actors and develops a real dialogue with the national judge (1). Nonetheless, due to the increasing number of European rules, the sustainability of this procedure requires to develop new forms of cooperation to assist national judges in the interpretation of European law (2). 1.

The Complementary Action of E.C.J. and National Judge

The procedure of preliminary ruling is not limited to an answer given by the E.C.J. to a question asked by the national judge. A real dialogue operates between them, with an increasing pro-national standing of the E.C.J. (a) that encourages a proEuropean standing of the national judge (b). a)

A Pro-National Standing of the E.C.J.

The pro-national standing of the E.C.J. does not come from referrals to national law. Even if similarities may be observed between some European and national concepts in the case-law of the Court, the E.C.J. does not explicitly state the particular origin of such concepts, in order to remain independent and impartial towards all Member States. This requirement of neutrality legitimates its decisions for all Member States.

107 Regulation (EC) No. 805/2004 of 21 April 2004, Regulation (EC) No. 1896/2006 of 12 December 2006 and Regulation (EC) No. 861/2007 of 11 July 2007, aforementioned. 108 Article 45 § 1 (a) of the Regulation No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351, 20.12.2012, p. 1-32, replacing Regulation No. 44/2001.

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The Role of the National Judge in European Judicial Area In fact, the European Court may refer to the differences of legislation between Member States.109 It does so in order to adopt a solution that could be suitable for all domestic legal orders. In their opinions, if Advocates general may refer to a specific legal order, these references are not replicated by the Court.110 Furthermore, if the European Court relies on “the constitutional traditions common to the Member States”,111 this vague reference may not really be considered as a referral to precise domestic laws but more as a means to legitimate the interpretation of the Court, grounded on national constitutions. In reality, the pro-national standing of the E.C.J. may be observed by its reliance on the national judge. The Court reasserted the trust placed in national courts. It stated that “the possibility thus given to the national court by the second paragraph of Article 267 TFEU of asking the Court for a preliminary ruling before, if necessary, disapplying directions from a higher court which prove to be contrary to European Union law cannot be transformed into an obligation”.112 The Advocate general was even of the view to go one step further, saying that “European Union law must be interpreted as meaning that it does not preclude a lower court [...], in proceedings in which it has already given a first judgment, from being required under national law, after the case has been referred back to it, to apply the directions set out in the judgment on appeal given by a higher court in the same proceedings”.113 The Advocate general thought that time had come for the European Court to trust Supreme Courts in their interpretation of European law. If this position has not yet been followed by the European Court, an increasing number of interpretations is delegated to its national counterpart. For instance, as far as liability of a State for violation of its European obligations is concerned, the Court rendered many decisions in which it is impossible to know whether this liability has eventually been triggered or not.114 Furthermore, the Court is rather reluctant to sanction national judges if they violate their European obligations. Indeed, the E.C.J. admitted that an infringement of European law may stem from a decision of a court adjudicating at last

109 See for instance Judgment of 8 May 2008, Ingenieurbüro Michael Weiss und Partner GbR v Industrie- und Handelskammer Berlin, case C-14/07, § 43. 110 For an example, see Judgment of 6 October 2009, Asturcom Telecomunicaciones SL v Cristina Rodríguez Nogueira, case C-40/08 and the Opinion of Advocate general TRSTENJAK delivered on 14 May 2009. 111 See, for instance, Judgment of 15 May 1986, Marguerite Johnston v Chief Constable of the Royal Ulster Constabulary, case 222/84, § 18. 112 Judgment of 5 October 2010, Georgi Ivanov Elchinov v Natsionalna zdravnoosiguritelna kasa, case C-173/09, § 28. 113 Opinion of Advocate general CRUZ VILLALON delivered on 10 June 2010 in the Elchinov case, § 38. 114 Lately, Judgment of 23 April 2009, Kiriaki Angelidaki and Others v Organismos Nomarchiakis Autodioikisis Rethymnis (C-378/07), Charikleia Giannoudi v Dimos Geropotamou (C-379/07) and Georgios Karabousanos and Sofoklis Michopoulos v Dimos Geropotamou (C-380/07), §§ 202 and 203 or Judgment of 25 November 2010, Günter Fuß v Stadt Halle, case C-429/09, § 59.

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Marjolaine Roccati instance.115 Nonetheless, the Court refused to establish the violation in the concerned case, although a careful reading of the decision shows that the violation of the Court seemed quite obvious, as demonstrated by the Advocate general.116 The Court appears to act with good will in order to ensure a peaceful cooperation with national judges and encourage their pro-European standing. b)

Towards a Pro-European Standing of the National Judge

The pro-European standing of the national judge needs to be encouraged notably through their real contribution to the interpretation of certain European notions. For instance, implementation of the equivalence and effectiveness principles require the assistance of national judges. Indeed, thanks to their knowledge of domestic remedies, they are at the best place to determine that remedies ensuring the respect of European law are not less favourable than those relating to similar actions of a domestic nature and cannot render virtually impossible or excessively difficult the exercise of rights conferred by European law. That is why, in many cases, the E.C.J. directly refers to the national judge for the interpretation of such notions,117 giving neutral precisions118 or giving orientations but without final answers.119 If the European Court appears to give a clear answer, it is mostly relied on the elements previously given by the national judge.120 The interpretation of the equivalence and effectiveness principles seem therefore given with “four hands”, showing as much implication of the national judge as the European Court. This collaboration between the E.C.J. and the national judge for the interpretation of European notions goes beyond the area of internal market to be noticed as well in the field of judicial cooperation in civil matters. Indeed, the European Court may adopt the pragmatic approach of determining jurisdiction on the basis of a set of corroborating evidence (“faisceau d’indices”). Several notions are thus 115

Judgment of 30 September 2003, Gerhard Köbler v Republik Österreich, case

C-224/01. Opinion of Advocate general LÉGER delivered on 8 April 2003 in the Köbler case. See for instance Order of 1 October 2010, Franco Affatato v Azienda Sanitaria Provinciale di Cosenza, case C-3/10, § 60; Judgment of 13 April 2010, Wall AG v La ville de Francfort-sur-le-Main and Frankfurter Entsorgungs- und Service (FES) GmbH, case C-91/08, § 65. 118 See for instance Judgment of 28 January 2010, Belgische Staat v Direct Parcel Distribution Belgium NV, case C-264/08, § 35; Order of 24 April 2009, Archontia Koukou v Elliniko Dimosio, case C-519/08, § 72. 119 See for instance Judgment of 8 July 2010, Judgment of 8 July 2010, Susanne Bulicke v Deutsche Büro Service GmbH, case C-246/09, §§ 34 and 42; Order of 18 January 2011, Souzana Berkizi-Nikolakaki v Anotato Symvoulio epilogis prosopikou (ASEP) and Aristoteleio Panepistimio Thessalonikis, case C-272/10, § 59. 120 See for instance, Judgment of 6 May 2010, Club Hotel Loutraki AE and Others v Ethnico Symvoulio Radiotileorasis and Ypourgos Epikrateias (C-145/08) and Aktor Anonymi Techniki Etaireia (Aktor ATE) v Ethnico Symvoulio Radiotileorasis (C-149/08), § 77; Judgment of 3 September 2009, Amministrazione dell’Economia e delle Finanze and Agenzia delle entrate v Fallimento Olimpiclub Srl, case C-2/08, § 29. 116 117

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The Role of the National Judge in European Judicial Area concerned, such as the habitual residence121 or the “activity directed to the Member State of the consumer’s domicile”.122 In this way, the Court increasingly delegates the interpretation of notions to the national judge, free to assess the strength to be given to the different criteria. The European Court thus acknowledges the great importance of the factual and legal domestic context of questions that are raised on the interpretation of European law. Therefore, the E.C.J. affirms the importance of the national judge, best suited to interpret such notions in their context. The Court may delegate the interpretation of such notions because of better understanding and collaboration of the national judge. These growing understanding and collaboration are revealed by the increasing number of preliminary rulings and the appropriation of European “logics” by national judges, trying to follow the reasoning of the European Court. As regards British judges for instance, traditionally considered as refractory to the European Union, an author observed “the increasing readiness of the United Kingdom courts to depart from the literal approach to statutory interpretation and to adopt a more purposive approach [that] may be partly explained by the influence of European law itself”.123 The implication of national judges in interpreting the case law of the E.C.J. must be encouraged. To this end, mechanisms of current cooperation in the European judicial area must be rethought. 2.

Consolidation of Current Cooperation

In the European judicial area, cooperation refers prima facie to the sole procedure of preliminary ruling. Nonetheless, victim of its success, it is now necessary to develop other mechanisms of cooperation to ensure a uniform interpretation of European rules. Consequently, if the procedure of preliminary ruling must be maintained (a), it must be accompanied by a reinforcement of horizontal cooperation between judges (b). a)

Keeping Preliminary Ruling

Maintaining preliminary rulings is not obvious, since this procedure has originally been planned for six Member States. There is, indeed, a real threat of clogging the E.C.J. provided the huge increase of European legislation since the implementation of such procedure. Proposals for replacing such a procedure have been put forward, but they do not offer the same advantages. In fact, the procedure of preliminary ruling offers a direct cooperation with each national judge. Such a direct cooperation is desirable, 121 Judgment of 2 April 2009, A., case C-523/07, § 44; Judgment of 22 December 2010, Barbara Mercredi v Richard Chaffe, case C-497/10 PPU, § 47. 122 Judgment of 7 December 2010, Peter Pammer v Reederei Karl Schlüter GmbH & Co. KG (C-585/08) and Hotel Alpenhof GesmbH v Oliver Heller (C-144/09), § 93. 123 F.G. JACOBS, Approaches to Interpretation in a Plurilingual Legal System, in M. HOSKINS/ W. ROBINSON (eds), A true european. Essays for Judge David Edward, Oxford 2003, p. 300.

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Marjolaine Roccati since every single judge may be faced to difficulties in interpreting European law. Several alternatives have been suggested, in order to accompany or suppress preliminary rulings, but they are not convincing. First of all, it has been suggested to introduce more selection in front of the E.C.J. At the time being, Article 53 § 2 of the Rules of Procedure of the Court states that “where it is clear that the Court has no jurisdiction to hear and determine a case or where a request or an application is manifestly inadmissible, the Court may […] at any time decide to give a decision by reasoned order without taking further steps in the proceedings”. The E.C.J. assesses a presumption that questions referred by national courts are relevant and may be rebutted only in exceptional cases.124 Increasing filtering could result in prejudicing the direct cooperation with any national judge. Secondly, a part of preliminary rulings could be delegated to the General Court, such a possibility being already provided for in Article 256 § 3 TFEU. Nonetheless, the General Court faces as well an increasing number of questions in the field of its own jurisdiction. Similarly, the Court of justice considered in 1999 “the potential advantages and drawbacks arising from a “decentralisation” of the preliminary ruling procedure. This would involve setting up, in each Member State, judicial bodies having either European or national status, with responsibility for dealing with references for preliminary rulings from courts within their territorial jurisdiction”.125 Such a possibility would nevertheless put an end to the direct dialogue between the E.C.J. and the national judge. Thirdly, it has been proposed to add a supranational Constitutional Court, composed of members from national Constitutional courts. This Court would have jurisdiction after the drafting of European legislation and before their entering into force, on the delimitation of competences between the European Union and Member States, especially on the application of the principle of subsidiarity.126 However, some drawbacks were outlined: the decisions of this Constitutional Court would not be more convincing than the decisions of the Court of Justice; members of the Constitutional Court could give precedence to political concerns of their colleagues on the Bench; the jurisdiction would not extend to decisions on the application of European legislation, ruled by the E.C.J., whose decisions raised some of the most sensitive conflicts between the Court of Justice and the national constitutional courts.127 Therefore, such alternative procedures are not totally satisfactory and may threaten the direct dialogue between the E.C.J. and national judges. Furthermore, the E.C.J. has introduced several mechanisms in order to improve rapidity and See for instance Judgment of 17 February 2011, Artur Weryński v Mediatel 4B spółka z o.o., case C-283/09, § 34. 125 Press release No. 36/99, 28 May 1999, “The President of the Court of justice presents the Council of Justice ministers with a number of proposals and ideas on the future of the judicial system of the European Union”. 126 See J.H.H. WEILER/ U.R. HALTERN, The Autonomy of the Community Legal Order – Through the Looking Glass, Harv. Int. Law Journal 1996, p. 411-448, esp. p. 447. 127 M. CLAES, Kompetenz Kompetenz, in The National Courts’ Mandate in the European Constitution, Oxford 2006, p. 719-722. 124

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The Role of the National Judge in European Judicial Area publicity of its decisions. A reply by reasoned order is possible under several circumstances, for instance where the answer to the question referred for a preliminary ruling admits of no reasonable doubt.128 An expedited preliminary ruling procedure has also been created, where the nature of the case requires that it be dealt with within a short time.129 In the area of judicial cooperation, the E.C.J. may also deal with a request under another urgent procedure, the urgent preliminary ruling procedure.130 Furthermore, in the Programme Civil Justice of 2007, the European authorities specified among their specific objectives their intention “to promote the training of legal practitioners in Union and Community law”.131 The knowledge of the E.C.J. case-law should be improved through increasing consistency of the caselaw, the E.C.J. referring to the European legal order as a whole and not to a particular instrument. A reflection must also be conducted on a better implication of the national judge in the preliminary ruling procedure. This implication should go along with the development of horizontal cooperation between national courts. b)

Reinforcing Horizontal Cooperation

The development of horizontal cooperation requires the implementation of a network among national judges. In fact, such networks do exist. If the European Judicial Network in civil and commercial matters132 is the most well-known, many other networks coexist, such as the Association of the Councils of State and Supreme Administrative Jurisdictions of the European Union133 or the network of the Presidents of the Supreme Judicial Courts of the European Union.134 These networks have similar activities. Indeed, they facilitate the exchange of information among their members; organize meetings in order to share experiences and draft reports or studies enabling a deeper reflection on some specific issues. These activities reveal their common concerns towards improving a uniform application of European law. Nonetheless, the links between these different networks seem to be rare, although their objects of studies may overlap. Cooperation should be improved to that regard. Furthermore, judicial networks may also rely on other networks of legal professions, such as the Council of the Notariats of

See Article 99 of the Consolidated version of the Rules of Procedure of the Court of Justice of 25 September 2012 for all hypothesis. 129 Ibid., Article 105. 130 Ibid., Article 107. 131 Decision No. 1149/2007/EC of the European Parliament and of the Council of 25 September 2007 establishing for the period 2007-2013 the Specific Programme “Civil Justice” as part of the General Programme “Fundamental Rights and Justice”, OJ L 257, 3.10.2007, p. 16-22, Article 3 (e). 132 See . 133 See . 134 See . 128

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Marjolaine Roccati the European Union,135 the Council of Bars and Law Societies of Europe136 or the European Union of Rechtspfleger.137 European authorities already support the different actions of these networks.138 However, further actions may be suggested. For instance, the E.C.J., through its Library, Research and Documentation service, could directly collaborate with these networks on some studies, for instance involving judicial cooperation in civil matters. The role of networks is indeed essential in the exchange of judicial practices between Member States. The European Judicial Network was also established in order to “identify best practices in judicial cooperation in civil and commercial matters and ensure that relevant information is disseminated within the Network”.139 Such exchange of practices is especially organised in judicial cooperation in civil and commercial matters but has to be extended to all areas of interpretation and application of European law, among the different networks. Indeed, the exchange of practices promotes a mutual understanding and develops mutual trust between Member States. In the judicial area, it could also give rise to a gradual approximation of domestic judicial norms, in order to ensure similar legal protection of European rights in the whole European Union. As a consequence, a real European justice could be associated to this European judicial area.

See . See . 137 See ; Rechtspfleger are judicial officials to whom judicial tasks were transferred to be done by themselves independently and in their own responsibility. They belong to the higher staff of the judicial organization. 138 See Article 4 of the Decision No. 1149/2007/EC of the European Parliament and of the Council of 25 September 2007 establishing for the period 2007-2013 the Specific Programme “Civil Justice”, aforementioned. 139 Article 10 § 1 (c) of the Decision 2001/470/EC of 28 May 2001 establishing a European Judicial Network in civil and commercial matters, aforementioned. 135 136

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INDEX ________________

Absence declaration of in Czech PIL 489 Acta iure gestionis 477 Actor sequitur 225, 246 Adoption Adoption and Children Act 2002 (UK) 291 in Czech PIL 499 Agency in Czech PIL 490 Agency theory and the jurisdiction in the U.S. 15-16 Amiable compositeur in Portuguese arbitration 44 Amsterdam Treaty 540 Anchor defendant related actions jurisdiction 18 Ancillary proceedings and arbitration 91 Annulment of marriage in Czech PIL 494 choice of court 114 Ante causam interim measures 62 also see Ex parte provisional measures Anti-suit injunctions and arbitration 92 Arbitrability in Portuguese law 29 Arbitration in Portugal 25-56 Brussels I Regulation 85-104 and child custody issues 148 Arbitration agreements and Brussels I Regulation 90 and provisional measures 71

form 30 in Portugal 29 negative effect 31 Argentinian PIL 411-428 Astreintes 63 Attachment of assets as a basis for jurisdiction 400 Austrian Civil Code 175 Belgian PIL and surrogacy 316 Best interests of the child in Argentinian PIL 425 also see Child best interests Bill of exchanges in Czech PIL 487 Bona vacantia in Czech PIL 503 Brussels Convention 249 Brussels I Regulation (Recast) see EU Regulation No 1215/2012 of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters Brussels II-bis Regulation see Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000 Bustamante Code 443 Capacity to make a will 501 and Czech PIL 488

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Printed in Germany

Index Car Trim 187, 192, 194, 227, 237 Center of gravity 133 Child custody 129-165 and arbitration 148 Child best interests 129-165 Choice of court agreement form 114, 120 in Czech PIL 504 in divorce proceedings 114 in matrimonial property 120 in South African Development Community 370 in succession matters 113, 121 Choice of law in South African Development Community 371 CISG 227 and definitions for the purposes of jurisdiction with respect to contracts 182 Civil union in Argentinian PIL 414 Closest connection principle and PIL of Montenegro 436 Color Drack 192 Confidentiality and arbitration in Portugal 40 Conflict of interests 142 Conflict of judgments 129-165, 356 Conflict of jurisdictions 138, 142 Conflicts between legal orders 126-165 Consent and jurisdiction 19 Consumer contracts 504 Contempt of court 92 Continuous and systematic activities as the test for doing business jurisdiction 10 Contracts for services and jurisdiction 174 also see Service contracts Contractual obligations and renvoi 479 Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation

568

in Respect of Parental Responsibility and Measures for the Protection of Children 1996 130, 131, 140, 154, 157, 163 Convention on the Rights of the Child 321 Council Regulation (EC) No 1206/2001, of 28 May 2001, on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters 80 Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations 116, 345, 431 Council Regulation (EU) No 1259/2010 of 20 December 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation 491 Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000 and provisional measures 77 and party autonomy 113, 114 and divorce proceedings 114 Culpa in contrahendo 259, 260 Custom Made 177, 182, 2000 Cyberspace torts 272 Czech PIL 469-510 D and Others v Belgium 333 De Bloos v. Bouyer 173 De Cavel v De Cavel I 70 De Cavel v De Cavel II 70

Yearbook of Private International Law, Volume 16 (2014/2015)

Index Declaration of enforceability in Czech PIL 486 Defamation in Czech PIL 505 Default judgments and recognition in Greece 352 Denial of justice 142 in Czech PIL 481 Denilauler v Couchet Frères 64, 78 Dépeçage and Arbitration in Portugal 51 Directive 2000/31/EC on electronic commerce 230 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights 81, 82 Divorce and jurisdiction 115 and party autonomy 114 and PIL of Montenegro 435 in Czech PIL 493 in Venezuelan PIL 441-456 Doing business jurisdiction 11 Domicile as a jurisdictional basis 3 in Brussels I Regulation 9 in Venezuelan PIL 444 in Argentinian PIL 416 Due process 9 jurisdictional requirements 19 E-Date 265 Effet utile 245, 271 Einzelfallgerechtigkeit 146 Electronic commerce and software contracts 231 Electrosteel 194 Enforcement arbitral awards in Portugal 48 of foreign judgments in Czech PIL 484 of provisional measures 62 Environmental damages 248, 252 Escape clause in PIL of Montenegro 432

EU Regulation No 1215/2012 of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters and provisional measures 58-83 and general jurisdiction in the U.S. 11 and contracts 257 European Court of Human Rights and surrogacy 275, 277 European Enforcement Order 544 Evidence and jurisdiction 79 in tort matters 256 and jurisdiction in contracts 203 Ex aequo et bono Portuguese arbitration law 44 Ex ante provisional measures 61, 64 Ex parte decisions and recognition in Greece 353 Exception clause 414 Exequatur and foreign arbitral awards in Portugal 54 Falco Privatstiftung 174 Family law in Czech PIL 490 and party autonomy 105-128 Family life protection of in the European Convention of Human Rights 281, 319 Favor consumptoris 259 also see Weaker party Favor laesi 259 Favour negotii in Czech PIL 490 Filiation 286 also see Surrogacy Finality of judgment as a condition for recognition in the South African countries 390

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Index Foreign law application and determination of in Czech PIL 480 Foreign public documents 483 Foreigners their status in Czech PIL 483 Foreseeability in tort matters 270 also see Predictability Form of disposition of property upon death in Czech PIL 502 Forum actoris 212 Forum and ius 110, 128 Forum delicti commissi 245, 251, 267 Forum necessitatis in Argentianian PIL 416, 417 Forum non conveniens 552 Forum shopping 115, 260 Fraude à la loi 476 French PIL and surrogacy 275-288 Fumus boni iuris 58, 60 Gasser 548 Genuine link and interim measures 76 Greek PIL and surrogacy 289-314 and recognition of foreign judgments 346 Guardianship and Czech PIL 488 Habitual residence 113, 115 and Czech PIL 477 and legal capacity 487 and succession 501 in PIL of Montenegro 434 in tort matters 435 of the child 154 of the deceased 122 Hague Conference on Private International Law 12 and South Africa 375 Hague Convention on the Law Applicable to the Trusts on their Recognition 506

570

Hague Convention on the Protection of Children and Cooperation in Respect of Inter-country Adoption 285, 301 Hague Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations 111, 435, 491 Harmonization of PIL in the South African countries 365-403 Harmony of solutions child custody cases 129-165 Heidelberg Report 86 Helicopteros Nacionales de Colombia S.A. v. Hall 5 Hengst Import v Campese 66 Immunity of jurisdiction 477 Impartiality and independence of arbitrators in Portugal 33 of national courts 145 In personam interim measures 79 In rem interim measures 79 Incoterms and Argentinian PIL 424 Inheritance law and party autonomy 105-128 also see Succession law Inlandsbeziehung 325 Insolvency and Czech PIL 507 Intellectual property 272 and jurisdiction 174 and software contracts 236 Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards 453 Interests of the child 129-165 Interim measures and arbitration 37 also see Provisional measures Interim payment and provisional measures 77 Interim relief 57-83 International mandatory provisions 425

Yearbook of Private International Law, Volume 16 (2014/2015)

Index International Shoes 4, 21 Internet choice-of-forum clauses 219 Investor protection 258 Irreconcilable judgments 18 also see Conflict of judgments Italian torpedo 251 Iura novit curia in Czech PIL 480 Joinder Portuguese arbitration law 42 Joint ventures 174 Judgment and definition under Brussels I Regulation 62 Jurisdiction and PIL of Montenegro 437 and provisional measures 59 general jurisdiction 1-23 in Argentian PIL 414 in contractual matters 167-217 in Czech PIL 482 in divorce proceedings 115 over corporate defendants in the U.S. 1-23 related actions 18 with respect to adoption 499 with respect to absence 489 Kainz 255 Kompetenz-Kompetenz 36, 87 Kronhofer 261 Labassé 280, 319 Lack of international jurisdiction as a basis for non-recognition 357 Law of obligations in Czech PIL 504 Legal capacity in Czech PIL 487 Legal persons and capacity in Czech PIL 487 Lex causae approach in determining jurisdiction in contracts 180, 225 Lex fori regit processum 451 Lex loci actus in Czech PIL 490 Lex loci celebrationis 491

Lex loci damni 269 Lex loci protectionis 270 Lex mercatoria and arbitration in Portugal 51 Lex patriae and Czech PIL 488 Lex rei sitae in Czech PIL 490, 506 Lex situs and PIL of Montenegro 436 Lis pendens 251, 357, 415, 548 and arbitration 87 in Czech PIL 485 in Argentinian PIL 419 Lugano Convention of 30 October 2007 on jurisdiction and the recognition of judgments in civil and commercial matters 117 Maintenance obligations 111, 116 jurisdiction 116 choice-of-court agreement 117 in Czech PIL 491, 493 Mandatory rules 149 also see Overriding mandatory provisions Marc Rich 87, 93 Mauritius the Hague Conference 373 Marriage agreements 492 also see Matrimonial property Mater semper certa est 277 Matrimonial property prorogation of jurisdiction 119 in Czech PIL 492 Mennesson 280, 319 Mesures d’anticipation 74 Mietz 75 Mines de Potasse d’Alsace 244 also see Ubiquity principle Minimum contacts 4 Montenegro PIL 429-439 Montevideo Treaties on Civil International Law 416 Most significant relationship in tort issues 249 Multi-party arbitrations 34

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Index Multiple nationalities 484 Mutual trust principle of 547 Name in Czech PIL 487 Nationality maintenance 117, 491 in surrogacy 277 in family law in Czech 491 in PIL of Montenegro 433 Negative declaration 92, 251 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) 53, 90 Non-contractual obligations in PIL of Montenegro 435 in Czech PIL 505 also see Torts Non-resident defendants and jurisdiction 1-23 Nullity of legal acts in Czech PIL 489 Overriding mandatory provisions in PIL of Montenegro 432 also see Mandatory provisions Parallel proceedings and arbitration 94 also see Lis pendens Parent / subsidiary company and jurisdiction 15 Parental authority 129-165 Parental responsibility 129-165 in Czech PIL 497 Partial choice-of-court 124 Party autonomy and matrimonial property 120 and Czech PIL 478 in Argentinian PIL 420 succession in Czech PIL 501 in family law 105-128 in PIL of Montenegro 435 Pennoyer v. Neff 3, 19 Periculum in mora 58, 60 Perkins v. Benguet Consolidated Mining Co. 4, 5 Personality rights 265, 435

572

Place of business as a jurisdictional basis 5 Place of causal event 271 Place of damage as basis for jurisdiction 243 Place of delivery 237 Place of destination of the goods and jurisdiction 198, 205 Place of harmful event as basis for jurisdiction 242 Place of incorporation as a jurisdictional basis 3 Place of performance and jurisdiction with respect to contracts 167-217 in software contracts 219-239 Portuguese PIL 25-56 Pre-contractual liability in Czech PIL 505 Predictability of law 146 also see Foreseeability Preliminary Draft Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters of August 2000 211 Preliminary question 479 Presumption of paternity and surrogacy 277 Principle of foreseeability 247 Principle of ubiquity 241, 268 Privacy 268 also see Personality rights Product liability 254 Professio iuris and trusts in Czech PIL 507 Protective measures 405-410, 57-83 Brussels II-bis Regulation 77 Provisional measures 57-83 and arbitration proceedings 91 and recognition in Greece 350 Public policy and Czech PIL 476 and recognition of awards in Portugal 50, 52, 54 and recognition of foreign judgments in Greece 348

Yearbook of Private International Law, Volume 16 (2014/2015)

Index in Argentinian PIL 425 and international surrogacy arrangements 278, 315-343 temporal relativity of ordre public 325 in child custody 148, 160 Purrucker 77, 132 Recognition and PIL of Montenegro 438 in child custody matters 160 in succession matters 503 in matrimonial property 492 in maintenance 493 of decisions in the South African countries 381 of divorce in Venezuela 452 of divorce in Czech PIL 495 of foreign adoptions 499 of foreign judgments in Czech PIL 484 of parentage established through surrogacy 275-288 of provisional measures 62 Registered partnership prorogation of jurisdiction 119 in Czech PIL 500 property consequences 119 Rehder 193 Related actions jurisdiction 18 Related contracts and specific jurisdiction 13-14 Renvoi arbitration law in Portugal 51 in Czech PIL 479 in PIL of Montenegro 432 Reproductive technology 289 Reproductive tourism 284 also see Surrogacy Res in transitu 506 Residence see Habitual residence Right to be heard and recognition of foreign judgments 350 Rights in rem in Czech PIL 479, 486, 506 in Venezuelan PIL 454

Rome II Regulation 245, 247, 248, 249 Rome III Regulation 115 Rule of Law 130, 471 Sale of goods and software contracts 226 Schwerpunkt 133 Seat of arbitration Portuguese arbitration law 42 Security for costs in Czech PIL 483 Service contracts and jurisdiction 174, 211 and software contracts 226 Service of process and recognition 352, 550 Shenavai v. Kreischer 173 Shevill 265 Slovak PIL 508 Small claims procedure (EU) 544 Software contracts 219-239 South Africa and the Hague Conference 373 South African Development Community 365-403 Special jurisdiction in contracts 167-217 Specific jurisdiction as opposed to general jurisdiction 9, 12 St Paul Dairy 80, 81 Submission as a basis for jurisdiction 387 in Venezuelan PIL 444 Subsidiary jurisdiction over the parent company 15 Succession in Czech PIL 500 in PIL of Montenegro 435, 436 and choice of court 121 Surrogacy 275-288, 315-343 altruistic surrogacy 290 Swiss PIL 432 and exception clause 414

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Index Tacconi 259 Tacit prorogation 118, 120 also see Choice of court and Submission Tessili v. Dunlop 173 Torpedo actions 92, 93 Torts 241-274 Transfer of jurisdiction in inheritance matters 122 in matrimonial property 121 Translation of documents 361 Trust 126 Turner 548 U.S. PIL 1-23 U.S. Supreme Court 1-23 UCC and software contracts 227 UK and surrogacy 287, 289-314 UNCITRAL Model Law on International Commercial Arbitration 1985 and Portuguese PIL 27, 34, 35, 36, 38, 45

574

UNIDROIT Principles of International Commercial Contracts 424 Unilateral choice-of-court in succession matters 125 Unjust enrichment 505 Urgency in provisional measures 58 Van Uden 71, 72, 87 Venezuelan PIL in divorce matters 441-456 Violation of personality rights 265 also see Personality rights Visitation rights 131 Weak party and jurisdiction in maintenance obligation 118, 245, 257 West Tankers 85, 93, 95, 548 Wood Floor 206 Zambia and the Hague Conference 373

Yearbook of Private International Law, Volume 16 (2014/2015)