Lecture Private International Law 11052014

8/17/2019 Lecture Private International Law 11052014

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European International Private

Law

Emil Viitala

Roschier Attorneys Ltd.


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Structure

• Introduction and basic concepts of private

international law

• Jurisdiction (forum)

• Applicable law (lex causae)

• Recognition and Enforcement

•

Other issues


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Introduction

• Private international law is national law

• Harmonisation and convergence on the EU

level is scarce, no ”EU Code ”

• Conflict of laws

• Private international law aims to regulate the

relationships of private parties and to functionon the domestic level in domestic courts

- as opposed to international law


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The three processes

• Jurisdiction – Which court ( forum) has the

authority to consider and solve the case?

• Applicable law – Which domestic law (lex

causae) shall the court apply to the case?

• Recognition and enforcement of foreign

judgements – Will the judgment be effective?


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Importance of jurisdiction

• Lex fori – In certain issues the applicable law is

determined by the national law of the court

• Procedural issues – the concept of fair trial

– Evidence

– Legal aid

– Recovey of costs, etc.

• The inflence of the national legal culture and

customs on the determination of the judge


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Determination of applicable law

1. Characterization – The facts of the case need

to be indentified in legal context as a part of

certain legal categories.

2. Connecting factor – Which legal system has

the strongest or closest connection to the

legal questions. Eg. residence, nationalty.

3. Application of lex cause – The scope of

application as governed in the domestic law.


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Causal connecting factors

• Lex domicilii

• Lex fori

• Lex contractus

•Lex loci contractus, lex loci actus

• Lex delicti, lex loci delicti commissi, lex damni

• Lex situs

• Lex loci celebrationis

• Lex incorporationis

• Lex protectionis


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Characterization

• ”Mailman” –analogy: fields of law, legalconcepts and other categories

• The national laws do not follow the same

categories – In paricular cases some facts may refer to certain

choice of law where other facts of the case referto different choice of law (”Vorfrage”)

– In contract and tort – lex causae (Rome I)

• Renvoi – the ”carousel of referrals”


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Forum Shopping

• The private international law can be seen as atool to find the most favourable place to sue

– Or the most unfavorable to defend: ”a torpedo”

• Also a means to public policy andinternational competition

• Forum non conveniens – choice on the basis of

suitability for the interest of the parties andthe ends of justice

• Choice of law by the parties of agreement


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CHOICE OF JURISDICTIONUnder Brussels I Regulation


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Brussel I Regulation

• i.e. Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters

• Applicable in the courts in EU Member States• Based on mutual trust between the domestic

courts

–

Domestic rules on jurisdiction have to berespected

• Brussels I Regulation overrides national law


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Scope of Application

A two-tier determination

1. Subject matter – ’Civil and commercial´

2. Ratione Personae – Domicile


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’Subject matter’ in brief

• ”This Regulation shall apply in civil and

commercial matters whatever the nature of

the court or the tribunal.--” Art. 1.

• Distinction between civil and public law

• Exercise of public powers (LTU / Eurocontrol)

• Nature of the legal obligation that lies at the

foundation of the claim (Frahuil)


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’Ratione Personae’ in brief

• The three separate options where theRegulation is applicable:

1. The defendant is domiciled in a Member

State2. A court in Member State has exclusive

jurisdiction under Art. 22

3. One of the parties is domiciled in a MemberState and there is a valid agreement onforum


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Jurisdictional rules by exclusivity

1. Exclusive jurisdiction, Art. 22

2. Jurisdiction by appearance, Art. 24

3. Insurance, consumer and employment, 8-21

4. Agreements on Jurisdiction, Art. 235. General jurisdiction, Art. 2

6. Special jurisdiction, Art. 5-7

7. Residual jurisdiction, Art. 4

8. Loss of jurisdiction, Art. 27-30

9. Provisional or protective measures, Art. 31


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’Subject matter’ in detail

• International element:

– The Regulation takes effect only when an

international element is involved

– Factors such as domicile of the parties, place of

occurrence of the events etc. may constitute an

iternational element

–

Legal certainty – Protection of defendants domiciled in the EU


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’Subject matter’ in detail

• Civil and commercial matters:

– Where the public authority acts in the exercise of its powers (Case 29/76 Eurocontrol)

– Determination either by reason of the legalrelationships between the parties to the action orof the subject matter of the action (Case 814/79Ruffer)

– Examination of the basis and the detailed rulesgoverning the bringing of that action (Case C-271/100 Gemeente Steenberger)


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Exclusions

Art. 1(2): The Regulation shall not apply to

a) The legal status or capacity of natural persons,rights inproperty arising out of matrimonialrelationship, wills and succession;

b) Bankruptcy, proceedings relating to the winding-up of insolvent companies or other legalpersons, judicial arrangements, compositionsand analogous proceedings;

c) Social security

d) Arbitration


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’Ratione Personae’ in detail

The Regulation applies only if:

1. The defendant is domiciled in a Member

State. Nationality is irrelevant.

2. A court of a Member State has exclusive

jurisdiction pursuant to Art 22.

3. At least of the parties is dimiciled in a

Member State and a valid choice of forum

clause has been made pursuant to Art 23.


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’Domicile’ Art 59

1. In order to determine whether a party is

domiciled in the Member State whose courts are

seised of a matter, the court shall apply its

internal law.2. If a party is not domiciled in the Member State

whose courts are seised of the matter, then, in

order to determine whether the party isdomiciled in another Member State, the court

shall apply the law of that Member State.


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’Domicile’ Art. 60

1. For the purposes of the Regulation, a

company or other legal person or association

of natural or legal persons is domiciled at the

place where it has its:

(a) statutory seat, or

(b) central administration, or

(c) principal place of business.


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Unknown domicile

• Lindner (C-327/10)

• Art 16(2)

•

Domicile of a consumer was deemedunknown in the circumstances.

• ECJ: Art 16(2)Domicile is where the

consumer’s last known domicile is.


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Domicile of legal person (companies)

• The three options

• Low degree of likeliness of negative coflict of

jurisdiction

• Forum shopping, enforcement


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The international impact of the

Regulation

Article 2

1. Subject to this Regulation, persons domiciledin a Member State shall, whatever their

nationality, be sued in the courts of thatMember State.

2. Persons who are not nationals of the Member

State in which they are domiciled shall begoverned by the rules of jurisdictionapplicable to nationals of that State.


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Regulation (cont’d)

Article 3

1. Persons domiciled in a Member State may be

sued in the courts of another Member State

only by virtue of the rules set out in Sections 2

to 7 of this Chapter.

2. In particular the rules of national jurisdiction

set out in Annex I shall not be applicable as

against them.


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Regulation (cont’d)

Article 4

1. If the defendant is not domiciled in a MemberState, the jurisdiction of the courts of eachMember State shall, subject to Articles 22 and 23,be determined by the law of that Member State.

2. As against such a defendant, any persondomiciled in a Member State may, whatever hisnationality, avail himself in that State of the rules

of jurisdiction there in force, and in particularthose specified in Annex I, in the same way as thenationals of that State.


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Exclusive Jurisdiction

• When a court of a Member State shall have jurisdiction regardless of domicile.

• Comprises five situations as governed by Art.

22.• ’Principal subject matter’ of action a prevailing

factor.

•

If two possible outcomes, the court first seisedhas exclusive jurisdiction

• Public policy, proper administration of justice


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1/5 Real estate

• In proceedings which have as their object rights in remin immovable property or tenancies of immovableproperty, the courts of the Member State in which theproperty is situated.

•

However, in proceedings which have as their objecttenancies of immovable property concluded fortemporary private use for a maximum period of sixconsecutive months, the courts of the Member State inwhich the defendant is domiciled shall also have

jurisdiction, provided that the tenant is a naturalperson and that the landlord and the tenant aredomiciled in the same Member State;


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2/5 Incorporation of companies

• In proceedings which have as their object thevalidity of the constitution, the nullity or thedissolution of companies or other legal

persons or associations of natural or legalpersons, or of the validity of the decisions of their organs, the courts of the Member Statein which the company, legal person or

association has its seat. In order to determinethat seat, the court shall apply its rules of private international law


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3/5 Public registers

• In proceedings which have as their object the

validity of entries in public registers, the

courts of the Member State in which the

register is kept;


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4/5 Immaterial property

• In proceedings concerned with the registration or validityof patents, trade marks, designs, or other similar rightsrequired to be deposited or registered, the courts of theMember State in which the deposit or registration has beenapplied for, has taken place or is under the terms of a

Community instrument or an international conventiondeemed to have taken place.

• Without prejudice to the jurisdiction of the EuropeanPatent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the

courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedingsconcerned with the registration or validity of any Europeanpatent granted for that State;


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5/5 Enforcement

• In proceedings concerned with the

enforcement of judgments, the courts of the

Member State in which the judgment has

been or is to be enforced.


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Insurance, consumer and employment

contracts Art. 8-21

• Protection for the benefit of the assumed

”weaker” parties

• Harmonization promotes legal certainty from

the start

• Limited party autonomy, i.e. where the

plaintiff is the protected party


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Consumer contracts, applicability

Article 151. In matters relating to a contract concluded by a person, the

consumer, for a purpose which can be regarded as being outside histrade or profession, jurisdiction shall be determined by this Section,without prejudice to Article 4 and point 5 of Article 5, if:

(a) it is a contract for the sale of goods on instalment credit terms; or(b) it is a contract for a loan repayable by instalments, or for any other

form of credit, made to finance the sale of goods; or

(c) in all other cases, the contract has been concluded with a personwho pursues commercial or professional activities in the MemberState of the consumer's domicile or, by any means, directs suchactivities to that Member State or to several States including thatMember State, and the contract falls within the scope of suchactivities.


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Consumer contract, jurisdiction

Article 16

1. A consumer may bring proceedings against the otherparty to a contract either in the courts of the MemberState in which that party is domiciled or in the courts

for the place where the consumer is domiciled.

2. Proceedings may be brought against a consumer by theother party to the contract only in the courts of theMember State in which the consumer is domiciled.

3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with thisSection, the original claim is pending.


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Consumer contracts, forum clause

Article 17The provisions of this Section may be departed from only by

an agreement:

1. which is entered into after the dispute has arisen; or

2. which allows the consumer to bring proceedings in courtsother than those indicated in this Section; or

3. which is entered into by the consumer and the other partyto the contract, both of whom are at the time of conclusionof the contract domiciled or habitually resident in the same

Member State, and which confers jurisdiction on the courtsof that Member State, provided that such an agreement isnot contrary to the law of that Member State.


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Definition of consumer contract

• ’Contract’ – must give rise to reciprocal and

interdependent obligations

• ’Consumer’ – only contract concluded outside

and independently of any trade or

professional activity – solely for the purpose

of satisfactying an individual’s own private

needs in terms of private consumption.(Gruber, C-464/01)


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E-commerce

• Mere existence of website is not an indication

of direction of services to certain State

• The trader must have manifested intentions to

establish commercial relationships to certain

Member States

• ”clear expressions” (Joined cases Pammer, C-

585/08 & Alpenhof, C-144/09)

• Language, domain-names, distance?


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Employment contracts

Article 181. In matters relating to individual contracts of

employment, jurisdiction shall be determined by thisSection, without prejudice to Article 4 and point 5 of

Article 5.2. Where an employee enters into an individual contract

of employment with an employer who is not domiciledin a Member State but has a branch, agency or otherestablishment in one of the Member States, the

employer shall, in disputes arising out of theoperations of the branch, agency or establishment, bedeemed to be domiciled in that Member State.


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Employment contracts (cont’d)

Article 201. An employer may bring proceedings only in the courts of the

Member State in which the employee is domiciled.

2. The provisions of this Section shall not affect the right to bring acounter-claim in the court in which, in accordance with this Section,

the original claim is pending.

Article 21

The provisions of this Section may be departed from only by anagreement on jurisdiction:

1. which is entered into after the dispute has arisen; or2. which allows the employee to bring proceedings in courts other

than those indicated in this Section.


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Insurance contracts

An insurer domiciled in a Member State may be sued:(a) in the courts of the Member State where he is domiciled, or

(b) in another Member State, in the case of actions brought by thepolicyholder, the insured or a beneficiary, in the courts for the placewhere the plaintiff is domiciled,

(c) if he is a co-insurer, in the courts of a Member State in whichproceedings are brought against the leading insurer. Art. 9

An insurer may bring proceedings only in the courts of the MemberState in which the defendant is domiciled, irrespective of whether

he is the policyholder, the insured or a beneficiary. Art. 12


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Agreements on Jurisdiction

’Choice of forum’ or ’prorogation of jurisdiction’

Article 23

1. If the parties, one or more of whom is domiciled in a Member State, have agreedthat a court or the courts of a Member State are to have jurisdiction to settle anydisputes which have arisen or which may arise in connection with a particular legal

relationship, that court or those courts shall have jurisdiction. Such jurisdictionshall be exclusive unless the parties have agreed otherwise. Such an agreementconferring jurisdiction shall be either:

(a) in writing or evidenced in writing; or

(b) in a form which accords with practices which the parties have established betweenthemselves; or

(c) in international trade or commerce, in a form which accords with a usage of which

the parties are or ought to have been aware and which in such trade or commerceis widely known to, and regularly observed by, parties to contracts of the typeinvolved in the particular trade or commerce concerned.


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Art. 23 (2-3, 5)

2. Any communication by electronic means which provides adurable record of the agreement shall be equivalent to"writing".

3. Where such an agreement is concluded by parties, none of whom is domiciled in a Member State, the courts of otherMember States shall have no jurisdiction over theirdisputes unless the court or courts chosen have declined

jurisdiction.

5. Agreements [or provisions of a trust instrument] conferring jurisdiction shall have no legal force if they are contrary to

Articles 13, 17 or 21, or if the courts whose jurisdiction theypurport to exclude have exclusive jurisdiction by virtue of Article 22.


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a) ’In writing or evidenced in writing’

• A guiding principal: ’a true agreement’

between the parties

• Express reference to general terms and

conditions

• Express reference to earlier offers, if it can be

checked by a party exercising reasonable care

b) h h h h


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b) …practices which the parties have

established

• Oral agreements in continuing business

relationships

• No objections against a confirmation

conferring jurisdiction (Segoura, 25/76)

• Good faith

• General conditions

( ) i i i l d


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(c) usage in international trade or

commerce

• Note: the ECJ has not considered any national

elements pertaining to the concept of

’consent’ or ’agreement’

• Prorogation seen as separate from the

underlying agreement

• Formal validity v. material validity

G l j i di i d f d ’


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General jurisdiction: defendant’s

domicile

• Art. 2: Persons domiciled in a Member State

shall, whatever their nationality, be sued in

the courts of that Member State.

• Determines the Member State only, the seat

of the court of the Member State is

determined under the national law.


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Special jurisdiction - contracts

Article 5 (1)A person domiciled in a Member State may, in another Member State,

be sued:

(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, theplace 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 beendelivered,

•

in the case of the provision of services, the place in a Member Statewhere, under the contract, the services were provided or shouldhave been provided,

• (c) if subparagraph (b) does not apply then subparagraph (a)applies;


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Special jurisdiction – contracts (con’t)

• Supplementary to general jurisdiction

(defendant’s domicile)

• Connection between the claim and the

contractual obligation is relevant

– Establishment of a legal obligation freely

consented to by one person towards another and

on which the claimant’s action is based (Engler, C-27/02)


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’Place of the obligation in question’

• ”The obligation” being the one corresponding to

the contractual right to which the plaintiff’s

action is based.

• No harmonized definition: national law applies

• The actual place of delivery takes precedence

over consented place of delivery

• If several places, apply ’principal place of delivery’, if no such ’principal place’, free choice


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T t ’ l f th h f l t


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Tort – ’place of the harmful event

occured or may occur’

• The connecting factor can be both the eventgiving rise to damage or the occurrence of thedamage (Bier), direct damage only

•Product liability, where the defective productcaused damage

• Consequential loss, where the damage firstmaterializes (Marinari)

• Shevill: limits the court’s authority to losses inonly one country (press distribution)


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Case Shevill in internet context

• A person who has suffered an infringement of

a personality in the internet may bring action

in one forum in respect to all damage caused,

at the place of the centre of main interests(eDate Advertizing)

• Where the material was placed online or

accessible, the court has only territorialauthority


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Location of damage

• DFDS Torline: the place where the harmful

event was originated

• Place of registration of the ship was to be

regarded as only one factor in identifying the

place where the harmful event took place, and

a decisive factor only if the harmful event took

place onboard


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Multi-party litigations

Art. 6: A person domiciled in a Member State may also be sued:1. where he is one of a number of defendants, in the courts for the place

where any one of them is domiciled, provided the claims are so closelyconnected that it is expedient to hear and determine them together toavoid the risk of irreconcilable judgments resulting from separateproceedings;

2. as a third party in an action on a warranty or guarantee or in any otherthird party proceedings, in the court seised of the original proceedings,unless these were instituted solely with the object of removing him fromthe jurisdiction of the court which would be competent in his case;

3. on a counter-claim arising from the same contract or facts on which theoriginal claim was based, in the court in which the original claim is

pending;4. in matters relating to a contract, if the action may be combined with an

action against the same defendant in matters relating to rights in rem inimmovable property, in the court of the Member State in which theproperty is situated.


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Multiple defendants, Art. 6(1)

• In a court of a Member state where one of the

defendant is domiciled

• Requires/promotes expediency, close connection

• Unless the sole purpose is to remove a certaindefendant from the jurisdiction of its domicile

(Kafelis)

• Avoid the risk of irreconcilable judgments,divergence on the same situation of law and fact

(Roche)

Warranty or guarantee or in any other


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Warranty or guarantee or in any other

third party proceedings, Art. 6(2)

• The action being brought for the purpose of being indemnified of the consequences of aprior action

•Unless the warrantor and warrantee have aforum clause

• Unless the sole purpose is to remove a certaindefendant from the jurisdiction of its domicile

• May be only used for the defendant to’forward’ the claim


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Residual jurisdiction

Art. 41. If the defendant is not domiciled in a Member

State, the jurisdiction of the courts of eachMember State shall, subject to Articles 22 and 23,

be determined by the law of that Member State.2. As against such a defendant, any person

domiciled in a Member State may, whatever hisnationality, avail himself in that State of the rules

of jurisdiction there in force, and in particularthose specified in Annex I, in the same way as thenationals of that State.


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Residual jurisdiction

• Prevents refusal of recognition and

enforcement of a judgment

• Serves a function in situation of lis pendens


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Lis pendens

Article 27

1. Where proceedings involving the same cause of actionand between the same parties are brought in thecourts of different Member States, any court other

than the court first seised shall of its own motion stayits proceedings until such time as the jurisdiction of thecourt first seised is established.

2. Where the jurisdiction of the court first seised is

established, any court other than the court first seisedshall decline jurisdiction in favour of that court.


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Lis pendens (cont’d)

Article 281. Where related actions are pending in the courts of different

Member States, any court other than the court first seised may stayits proceedings.

2. Where these actions are pending at first instance, any court other

than the court first seised may also, on the application of one of theparties, decline jurisdiction if the court first seised has jurisdictionover the actions in question and its law permits the consolidationthereof.

3. For the purposes of this Article, actions are deemed to be relatedwhere they are so closely connected that it is expedient to hear and

determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.


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Article 29

Where actions come within the exclusive

jurisdiction of several courts, any court other

than the court first seised shall decline jurisdiction in favour of that court.


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Article 30

For the purposes of this Section, a court shall be deemed to be seised:

1. at the time when the document instituting the proceedings or anequivalent document is lodged with the court, provided that the

plaintiff has not subsequently failed to take the steps he wasrequired to take to have service effected on the defendant, or

2. if the document has to be served before being lodged with thecourt, at the time when it is received by the authority responsiblefor service, provided that the plaintiff has not subsequently failed totake the steps he was required to take to have the document

lodged with the court.


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• Same action, same parties

• I.e. Identities of the parties, the subject-

matter and cause (Gubish Machinenfabrik,

The Tatry)

• Applies also to cases of exclusive jurisdiction

• Subject-matter: the end the action has in view

• Cause: The facts and the rule of law


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Lis pendens – forum non conveniens

• Another court objectively more suitable

• Core issues: predictability and legal certainty

• Not to be applied alongside with lis pendens


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RECOGNITION AND ENFORCEMENT

Under Brussels I Regulation III Title


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General

• Free movement of judgments

• Fewer grounds for preventing recognition

• Simplified procedure on recognition

• Near-automatic recognition

• Enforcement is left for national law

•

’Exequatur’


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Recognition

Art. 331. A judgment given in a Member State shall be recognised in

the other Member States without any special procedurebeing required.

2. Any interested party who raises the recognition of a judgment as the principal issue in a dispute may, inaccordance with the procedures provided for in Sections 2and 3 of this Chapter, apply for a decision that the

judgment be recognised.

3. If the outcome of proceedings in a court of a Member Statedepends on the determination of an incidental question of recognition that court shall have jurisdiction over thatquestion.

1 Adjudication from a court of a


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1. Adjudication from a court of a

Member State

• Excludes judgments from non-Member States

• ’judgment’ solely to judicial decision given by

a court, not e.g. settlement

• Not arbitral awards itself but judgments

recognising arbitral awards

• Adversarial proceedings, rights of the

defendant observed

2 Given in a Civil or Commercial


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2. Given in a Civil or Commercial

Matter

• Follows from the scope of the Brussel I

Regulation

• Second guessing

• If not considered in the first proceedings, a

consideration on th subject-matter may be

required

• The scope should be considered from start to

finish

3 Not impeachable for Jurisdictional


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3. Not impeachable for Jurisdictional

Error

Art. 351. Moreover, a judgment shall not be recognised if it conflicts

with Sections 3, 4 or 6 of Chapter II, or in a case providedfor in Article 72.

2. In its examination of the grounds of jurisdiction referred toin the foregoing paragraph, the court or authority appliedto shall be bound by the findings of fact on which the courtof the Member State of origin based its jurisdiction.

3. Subject to the paragraph 1, the jurisdiction of the court of the Member State of origin may not be reviewed. The testof public policy referred to in point 1 of Article 34 may notbe applied to the rules relating to jurisdiction.

4 Not impeachable for procedural or


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4. Not impeachable for procedural or

substantive reasons

Art. 34A judgment shall not be recognised:

1. if such recognition is manifestly contrary to public policy in the MemberState in which recognition is sought;

2. where it was given in default of appearance, if the defendant was notserved with the document which instituted the proceedings or with an

equivalent document in sufficient time and in such a way as to enable himto arrange for his defence, unless the defendant failed to commenceproceedings to challenge the judgment when it was possible for him to doso;

3. if it is irreconcilable with a judgment given in a dispute between the sameparties in the Member State in which recognition is sought;

4. if it is irreconcilable with an earlier judgment given in another MemberState or in a third State involving the same cause of action and betweenthe same parties, provided that the earlier judgment fulfils the conditionsnecessary for its recognition in the Member State addressed.


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Enforcement

• A simplified procedure ’exequatur’

• Two phases: production of documents and

declaration of enforcement (possible appeal)

• Authority to review whether the right of

defence was observed (Trade Agency)

• Authority not to grant enforcement of a one-

sided judgment, after review of the merits

(Trade Agency)


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CHOICE OF APPLICABLE LAW - Contracts

Under Rome I Regulation


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Principles

• Predictability (internal market)

• Room for manoeuvre for the forum

• Applies to contractual obligations in civil and

commercial matters, no to e.g. tort

• Freedom of contract – no connections between

the parties and lex causae required

• Prodived protection for ’weaker’ parties• Absence of choice, ’characteristic performance’


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Scope of application, Art 1.

1. This Regulation shall apply, in situations

involving a conflict of laws, to contractual

obligations in civil and commercial matters.

It shall not apply, in particular, to revenue,

customs or administrative matters.


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Exclusions

2. The following shall be excluded from the scope of this Regulation:(a) questions involving the status or legal capacity of natural persons,

without prejudice to Article 13;

(b) obligations arising out of family relationships and relationshipsdeemed by the law applicable to such relationships to have

comparable effects, including maintenance obligations;(c) obligations arising out of matrimonial property regimes, propertyregimes of relationships deemed by the law applicable to suchrelationships to have comparable effects to marriage, and wills andsuccession;

(d) obligations arising under bills of exchange, cheques and promissory

notes and other negotiable instruments to the extent that theobligations under such other negotiable instruments arise out of their negotiable character;

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Exclusions

(e) arbitration agreements and agreements on the choice of court;

(f) questions governed by the law of companies and otherbodies, corporate or unincorporated, such as the creation,by registration or otherwise, legal capacity, internal

organisation or winding-up of companies and other bodies,corporate or unincorporated, and the personal liability of officers and members as such for the obligations of thecompany or body;

(g) the question whether an agent is able to bind a principal,

or an organ to bind a company or other body corporate orunincorporated, in relation to a third party;

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Exclusions

(g) the question whether an agent is able to bind a principal, or an organ tobind a company or other body corporate or unincorporated, in relation toa third party;

(h) the constitution of trusts and the relationship between settlors, trusteesand beneficiaries;

(i) obligations arising out of dealings prior to the conclusion of a contract;

(j) insurance contracts arising out of operations carried out by organisationsother than undertakings referred to in Article 2 of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002concerning life assurance (1) the object of which is to provide benefits foremployed or self-employed persons belonging to an undertaking or groupof undertakings, or to a trade or group of trades, in the event of death orsurvival or of discontinuance or curtailment of activity, or of sicknessrelated to work or accidents at work.

i l li i


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Universal application

Article 2: Universal applicationAny law specified by this Regulation shall be applied whether or

not it is the law of a Member State.

Article 22: States with more than one legal system

1. Where a State comprises several territorial units, each of which has its own rules of

law in respect of contractual obligations, each territorial unit shall be consideredas a country for the purposes of identifying the law applicable under thisRegulation.

2. A Member State where different territorial units have their own rules of law inrespect of contractual obligations shall not be required to apply this Regulation toconflicts solely between the laws of such units.

3. Where all other elements relevant to the situation at the time of the choice are

located in a country other than the country whose law has been chosen, thechoice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement.

F d f h i A 3


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Freedom of choice, Art. 3

1. A contract shall be governed by the law chosen by the parties. The choiceshall be made expressly or clearly demonstrated by the terms of thecontract or the circumstances of the case. By their choice the parties canselect the law applicable to the whole or to part only of the contract.

2. The parties may at any time agree to subject the contract to a law otherthan that which previously governed it, whether as a result of an earlier

choice made under this Article or of other provisions of this Regulation.Any change in the law to be applied that is made after the conclusion of the contract shall not prejudice its formal validity under Article 11 oradversely affect the rights of third parties.

3. Where all other elements relevant to the situation at the time of the choiceare located in a country other than the country whose law has beenchosen, the choice of the parties shall not prejudice the application of

provisions of the law of that other country which cannot be derogatedfrom by agreement.

F d f h i A 3


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Freedom of choice, Art. 3

4. Where all other elements relevant to the situation atthe time of the choice are located in one or moreMember States, the parties' choice of applicable lawother than that of a Member State shall not prejudicethe application of provisions of Community law, where

appropriate as implemented in the Member State of the forum, which cannot be derogated from byagreement.

5. The existence and validity of the consent of the parties

as to the choice of the applicable law shall bedetermined in accordance with the provisions of Articles 10, 11 and 13.

F d f h i


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Freedom of choice

• ’Clearly demonstrated’ compared to ”implicit”

• Court clauses

• Reference to laws of a non-State or a model

law?

• Possibility of severance

• Limited freedom as regards ’weaker’ parties,

consumers, empolyees, passangers etc. (Art.

5-8)

Ab f h i A t 4 (1)


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Absence of choice, Art. 4 (1)

(a) a contract for the sale of goods shall be governed by the law of thecountry where the seller has his habitual residence;

(b) a contract for the provision of services shall be governed by the lawof the country where the service provider has his habitualresidence;

(c) a contract relating to a right in rem in immovable property or to atenancy of immovable property shall be governed by the law of thecountry where the property is situated;

(d) notwithstanding point (c), a tenancy of immovable propertyconcluded for temporary private use for a period of no more thansix consecutive months shall be governed by the law of the country

where the landlord has his habitual residence, provided that thetenant is a natural person and has his habitual residence in thesame country;

Ab f h i A t 4 (1)


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Absence of choice, Art. 4 (1)

(e) a franchise contract shall be governed by the law of the countrywhere the franchisee has his habitual residence;

(f) a distribution contract shall be governed by the law of the countrywhere the distributor has his habitual residence;

(g) a contract for the sale of goods by auction shall be governed by thelaw of the country where the auction takes place, if such a placecan be determined;

(h) a contract concluded within a multilateral system which bringstogether or facilitates the bringing together of multiple third-partybuying and selling interests in financial instruments, as defined byArticle 4(1), point (17) of Directive 2004/39/EC, in accordance with

non-discretionary rules and governed by a single law, shall begoverned by that law.

Ab f h i A t 4 (2 4)


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Absence of choice, Art. 4 (2-4)

2. Where the contract is not covered by paragraph 1 or wherethe elements of the contract would be covered by morethan one of points (a) to (h) of paragraph 1, the contractshall be governed by the law of the country where theparty required to effect the characteristic performance of

the contract has his habitual residence.3. Where it is clear from all the circumstances of the case that

the contract is manifestly more closely connected with acountry other than that indicated in paragraphs 1 or 2, thelaw of that other country shall apply.

4. Where the law applicable cannot be determined pursuantto paragraphs 1 or 2, the contract shall be governed by thelaw of the country with which it is most closely connected.

Ab f h i


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Absence of choice

• Characterisation of contract – where is thedesired effect of the contract?

• Habitual residence, at the time of the conclusionof the contract

– Central administration (companies) – Principal place of business (natural person)

– Location (branch office, agency etc.)

• The context of adjudication

• Manifestly closer connections, to be appliedrestrictively

C t


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Consent

Article 10: Consent and material validity1. The existence and validity of a contract, or of any term

of a contract, shall be determined by the law whichwould govern it under this Regulation if the contract or

term were valid.2. Nevertheless, a party, in order to establish that he did

not consent, may rely upon the law of the country inwhich he has his habitual residence if it appears from

the circumstances that it would not be reasonable todetermine the effect of his conduct in accordance withthe law specified in paragraph 1.

F l lidit


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Formal validity

Article 11: Formal validity1. A contract concluded between persons who, or whose agents, are in

the same country at the time of its conclusion is formally valid if itsatisfies the formal requirements of the law which governs it insubstance under this Regulation or of the law of the country whereit is concluded.

2. A contract concluded between persons who, or whose agents, are indifferent countries at the time of its conclusion is formally valid if itsatisfies the formal requirements of the law which governs it insubstance under this Regulation, or of the law of either of thecountries where either of the parties or their agent is present at thetime of conclusion, or of the law of the country where either of theparties had his habitual residence at that time.

C it


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Capacity

Article 13: Incapacity

In a contract concluded between persons who

are in the same country, a natural person whowould have capacity under the law of thatcountry may invoke his incapacity resulting fromthe law of another country, only if the other party

to the contract was aware of that incapacity atthe time of the conclusion of the contract or wasnot aware thereof as a result of negligence.

Mandator La


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Mandatory Law

Art. 33. Where all other elements relevant to the situation at the

time of the choice are located in a country other than thecountry whose law has been chosen, the choice of theparties shall not prejudice the application of provisions of

the law of that other country which cannot be derogatedfrom by agreement.

4. Where all other elements relevant to the situation at thetime of the choice are located in one or more MemberStates, the parties' choice of applicable law other than that

of a Member State shall not prejudice the application of provisions of Community law, where appropriate asimplemented in the Member State of the forum, whichcannot be derogated from by agreement.

Mandatory Law


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Mandatory Law

• Elements located – the issue needs to beexclusively linked to that country, partial linkwill not suffice

•

Freedom of choice?• ’All elements’ to be interpreted by courts

• iIncreasing mandatory EU law, e.g. inconsumer protection, suggests that the choiceof law may lose its meaning in consumercontracts

Overriding Mandatory Law


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Article 9: Overriding mandatory provisions1. Overriding mandatory provisions are provisions the

respect for which is regarded as crucial by a countryfor safeguarding its public interests, such as its

political, social or economic organisation, to such anextent that they are applicable to any situation fallingwithin their scope, irrespective of the law otherwiseapplicable to the contract under this Regulation.

2. Nothing in this Regulation shall restrict theapplication of the overriding mandatory provisions of the law of the forum.



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Art. 9(3)Effect may be given to the overriding mandatoryprovisions of the law of the country where theobligations arising out of the contract have to be

or have been performed, in so far as thoseoverriding mandatory provisions render theperformance of the contract unlawful. Inconsidering whether to give effect to those

provisions, regard shall be had to their nature andpurpose and to the consequences of theirapplication or non-application.



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• A ground to reject enforcement (Foster vDriscoll, English law)

• The difference between Art. 9 and Art 3(4):

provisions considered overriding v EU law thatcannot be derogated by an agreement

• A gold plating?

Ordre public


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Ordre public

Article 21: Public policy of the forum

• The application of a provision of the law of any

country specified by this Regulation may be

refused only if such application is manifestlyincompatible with the public policy (ordre public)

of the forum.

• Impact in the application only: the ’manifestly

incompatible’ provision will just vanish


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CHOICE OF APPLICABLE LAW - Tort

Under Rome II Regulation

Principles


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Principles

• Predictability of the outcome of the litigation

• Certainty on the applicable law

• Free movement of judgments

• Proper functioning of the internal market

• Defines material and temporal scope

•

Freedom of choice of the parties• Universal application

Scope of application


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• Events after 11 January 2009 giving rise todamage

• Art 1 (1): Scope

This Regulation shall apply, in situations involvinga conflict of laws, to non-contractual obligationsin civil and commercial matters. It shall not apply,in particular, to revenue, customs or

administrative matters or to the liability of theState for acts and omissions in the exercise of State authority (acta iure imperii).



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• Application in arbitral proceedings notexpressly excluded

• ’Non-contractual obligations’ should be

understood as autonomous concept• Residual in relation to contract, e.g. agent

without capacity, unjust enrichment, culpa incontrahendo

• Situations with both contractual and non-contractual features?

Exclusions


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Exclusions

(a) non-contractual obligations arising out of family relationships and relationships deemed by the lawapplicable to such relationships to have comparable effects including maintenance obligations;

(b) non-contractual obligations arising out of matrimonial property regimes, property regimes of relationships deemed by the law applicable to such relationships to have comparable effects tomarriage, and wills and succession;

(c) non-contractual obligations arising under bills of exchange, cheques and promissory notes and othernegotiable instruments to the extent that the obligations under such other negotiable instrumentsarise out of their negotiable character;

(d) non-contractual obligations arising out of the law of companies and other bodies corporate orunincorporated regarding matters such as the creation, by registration or otherwise, legal capacity,internal organisation or winding-up of companies and other bodies corporate or unincorporated,the personal liability of officers and members as such for the obligations of the company or bodyand the personal liability of auditors to a company or to its members in the statutory audits of accounting documents;

(e) non-contractual obligations arising out of the relations between the settlors, trustees andbeneficiaries of a trust created voluntarily;

(f) non-contractual obligations arising out of nuclear damage;

(g) non-contractual obligations arising out of violations of privacy and rights relating to personality,including defamation.

General rule – lex loci damni


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General rule – lex loci damni

• ”Where the damage occurs” Art. 4(1)

• Irrespective of the country in which the event

giving rise to the damage occurred

• Irrespective of the country or countries in

which the indirect consequences of that event

occur

A general exception


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A general exception

Art 4(2): However, where the person claimed tobe liable and the person sustaining damage

both have their habitual residence in the same

country at the time when the damage occurs,the law of that country shall apply.

Habitual residence Art 23


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Habitual residence, Art. 23

1. For the purposes of this Regulation, the habitual residence of companies and other bodies, corporate or unincorporated, shall bethe place of central administration.

Where the event giving rise to the damage occurs, or the damagearises, in the course of operation of a branch, agency or any otherestablishment, the place where the branch, agency or any otherestablishment is located shall be treated as the place of habitualresidence.

2. For the purposes of this Regulation, the habitual residence of a

natural person acting in the course of his or her business activityshall be his or her principal place of business.

Escape clause Art 4(3)


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Escape clause, Art. 4(3)

Where it is clear from all the circumstances of thecase that the tort/delict is manifestly moreclosely connected with a country other than thatindicated in paragraphs 1 or 2, the law of that

other country shall apply. A manifestly closerconnection with another country might be basedin particular on a preexisting relationshipbetween the parties, such as a contract, that is

closely connected with the tort/delict inquestion.

Specific choice of law rules


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Specific choice of law rules

• Product liability

• Competition

• Environment

• Intellectual property rights

• Industrial actions

• Note: specific torts, not ’victims’

Product liability Art 5


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Product liability, Art. 5

1. Without prejudice to Article 4(2), the law applicable toa non-contractual obligation arising out of damagecaused by a product shall be:

(a) the law of the country in which the person sustainingthe damage had his or her habitual residence when thedamage occurred, if the product was marketed in thatcountry; or, failing that,

(b) the law of the country in which the product wasacquired, 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.

Product liability Art 5


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Product liability, Art. 5

However, the law applicable shall be the law of the country inwhich the person claimed to be liable is habitually residentif he or she could not reasonably foresee the marketing of the product, or a product of the same type, in the countrythe law of which is applicable under (a), (b) or (c).

2. Where it is clear from all the circumstances of the case thatthe tort/delict is manifestly more closely connected with acountry other than that indicated in paragraph 1, the law of that other country shall apply. A manifestly closerconnection with another country might be based in

particular on a pre-existing relationship between theparties, such as a contract, that is closely connected withthe tort/delict in question.

Competition Art 6


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Competition, Art. 6

1. The law applicable to a non-contractualobligation arising out of an act of unfaircompetition shall be the law of the countrywhere competitive relations or the collectiveinterests of consumers are, or are likely to be,affected.

2. Where an act of unfair competition affects

exclusively the interests of a specificcompetitor, Article 4 [general rule] shall apply.

Competition Art 6


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Competition, Art. 6

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

(b) When the market is, or is likely to be, affected in more than one country, theperson seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court

seised, provided that the market in that Member State is amongst those directlyand substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises; where the claimant sues,in accordance with the applicable rules on jurisdiction, more than one defendantin that court, he or she can only choose to base his or her claim on the law of thatcourt if the restriction of competition on which the claim against each of thesedefendants relies directly and substantially affects also the market in the MemberState of that court.

4. The law applicable under this Article may not be derogated from by an agreementpursuant to Article 14.

Environmental damage Art 7


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Environmental damage, Art. 7

• The law applicable to a non-contractualobligation arising out of environmental

damage or damage sustained by persons or

property as a result of such damage shall bethe law determined pursuant to Article 4(1),

unless the person seeking compensation for

damage chooses to base his or her claim on

the law of the country in which the event

giving rise to the damage occurred.

Environmental damage Art 7


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Environmental damage, Art. 7

•

Recital (24): ‘Environmental damage’ should be understood asmeaning adverse change in a natural resource, such as water, landor air, impairment of a function performed by that resource for thebenefit of another natural resource or the public, or impairment of the variability among living organisms.

• Recital (25): Regarding environmental damage, Article 174 of the

Treaty, which provides that there should be a high level of protection based on the precautionary principle and the principlethat preventive action should be taken, the principle of priority forcorrective action at source and the principle that the polluter pays,fully justifies the use of the principle of discriminating in favour of the person sustaining the damage. The question of when the

person seeking compensation can make the choice of the lawapplicable should be determined in accordance with the law of theMember State in which the court is seised.

Rules of safety and conduct Art 17


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Rules of safety and conduct, Art. 17

• In assessing the conduct of the person claimed tobe liable, account shall be taken, as a matter of

fact and in so far as is appropriate, of the rules of

safety and conduct which were in force at theplace and time of the event giving rise to the

liability.

• Permits under lex loci delicti commissii not

relevant if applicable law is lex loci damni

• Corporate headquarters

Infringements of IPR Art 8


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Infringements of IPR, Art. 8

1. The law applicable to a non-contractual obligation arisingfrom an infringement of an intellectual property right shallbe the law of the country for which protection is claimed.

2. In the case of a non-contractual obligation arising from aninfringement of a unitary Community intellectual property

right, the law applicable shall, for any question that is notgoverned by the relevant Community instrument, be thelaw of the country in which the act of infringement wascommitted.

3. The law applicable under this Article may not be derogated

from by an agreement pursuant to Article 14.

Industrial action, Art 9.


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Industrial action, Art 9.

• Without prejudice to Article 4(2), the lawapplicable to a non-contractual obligation in

respect of the liability of a person in the

capacity of a worker or an employer or theorganisations representing their professional

interests for damages caused by an industrial

action, pending or carried out, shall be the law

of the country where the action is to be, or

has been, taken.

Freedom to choose applicable law


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Art 14 (1)1. The parties may agree to submit non-contractual

obligations to the law of their choice:

(a) by an agreement entered into after the event giving

rise to the damage occurred; or(b) where all the parties are pursuing a commercial

activity, also by an agreement freely negotiated beforethe event giving rise to the damage occurred.

The choice shall be expressed or demonstrated withreasonable certainty by the circumstances of the caseand shall not prejudice the rights of third parties.



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Art. 14 (2-3)2. Where all the elements relevant to the situation at the time when

the event giving rise to the damage occurs are located in a countryother than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of thelaw of that other country which cannot be derogated from by

agreement.3. Where all the elements relevant to the situation at the time when

the event giving rise to the damage occurs are located in one ormore of the Member States, the parties’ choice of the lawapplicable other than that of a Member State shall not prejudicethe application of provisions of Community law, where appropriate

as implemented in the Member State of the forum, which cannotbe derogated from by agreement.

Scope of the law applicable, Art. 15


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Scope of the law applicable, Art. 15

The law applicable to non-contractual obligations under this Regulation shallgovern in particular:

(a) the basis and extent of liability, including the determination of persons who maybe held liable for acts performed by them;

(b) the grounds for exemption from liability, any limitation of liability and any divisionof liability;

(c) the existence, the nature and the assessment of damage or the remedy claimed;

(d) within the limits of powers conferred on the court by its procedural law, themeasures which a court may take to prevent or terminate injury or damage or toensure the provision of compensation;

(e) the question whether a right to claim damages or a remedy may be transferred,including by inheritance;

(f) persons entitled to compensation for damage sustained personally;

(g) liability for the acts of another person;(h) the manner in which an obligation may be extinguished and rules of prescription

and limitation, including rules relating to the commencement, interruption andsuspension of a period of prescription or limitation.

Mandatory law


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Mandatory law

Art. 16: Overriding mandatory provisions

Nothing in this Regulation shall restrict the

application of the provisions of the law of the

forum in a situation where they are mandatoryirrespective of the law otherwise applicable to

the non-contractual obligation.

Ordre public


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Ordre public

Art. 26: Public policy of the forum

The application of a provision of the law of any

country specified by this Regulation may be

refused only if such application is manifestlyincompatible with the public policy (ordre public)

of the forum.

Lecture Private International Law 11052014

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Transcript of Lecture Private International Law 11052014