Hrvatske Sume: A View from Oxford
The post below was written by Adrian Briggs QC, who is Professor of Private International Law Emeritus at the University of Oxford. It is the second contribution to the EAPIL online symposium, announced by an earlier post, regarding the ruling of the Court of Justice in the case of Hrvatske Šume. The previous post of Peter Mankowski can be found here.
The arrival of the decision in C-242/20 Hrvatske Šume in December 2021 was as predictable as it was depressing. So was the omicron variant of covid-19: early December 2021 will not go down as the high point of anyone’s year. Those who have already contributed to this commentary have highlighted the technical shortcomings in the apology for a judgment, and there is no need to repeat their criticisms which are, in my view and in any rational world, unanswerable. Their careful work allows others to paint a more impressionistic picture.
The claimant in the case sustained damage: any consequence arising out of … unjust enrichment, as this is explained in the Rome II Regulation. The reason why the claim was not within Article 7(2) of the Brussels I Regulation will therefore have been that there was no harmful event when the defendant refused to repay a sum which it had no legal basis to retain. Although English is only one of twenty-odd languages, each of which is equally authentic, in what sense is that refusal, assuming it is unjustified in law, not a harmful event ? Consider the child who, sent on a shopping errand, refuses to hand over to her mother the change from the original £10 which the shopkeeper had given her. This refusal is, it seems, not to be understood as a harmful event. That will come as news to many. If while out walking I find a wallet which someone has evidently dropped, and decide to pick it up and keep it, does the claim later brought against me by the owner fall within Article 7(2) ? One would think so; and it makes no difference whether the claim is for the leather folder or the banknotes which it contains. Or take the case in which I attempt to make an electronic transfer of funds to my favourite nephew’s bank account but which, as a result of my incompetent typing, I manage to transfer to a complete stranger (it happens; don’t ask). When I discover my mistake, and the bank, in the modern way of banks, refuses point blank to do anything to help, I am left to sue the intransigent recipient for repayment. Does the claim fall within Article 7(2) ? The answer should be yes, and the proposition that the refusal to repay that which one should not have received and certainly should never have kept is not a harmful event rejected as the nonsense which it certainly is.
In what sense is the refusal to pay over not a harmful event ? The only illumination has to come from bare and conclusory paragraph 55 of the judgment, which says that ‘a claim for restitution based on unjust enrichment is based on an obligation which does not originate in a harmful event. That obligation arises irrespective of the defendant’s conduct, with the result that there is no causal link that can be established between the damage and any unlawful act or omission committed by the defendant’. The proposition that there is no causal link between the damage (which seems to be admitted) and anything the defendant did or didn’t do is apparent only to those who value belief above observation. The damage of which the claimant now complains would not have occurred if the defendant had behaved otherwise: how is that relationship not a causal one ? The Court may say that it depends on the meaning of ‘causal’, which it may do. That, however, is not elaborated by the judgment. So we must try to do it ourselves.
One possible explanation might be that the recipient does me no harm; that I harmed myself and everything which follows is an immaterial consequence of that self-harm. If that is so, it would reflect developments within the judicial exegesis of ‘damage occurring’ as this relates to Article 7(2). Maybe so, but it makes cases of transfer or property as a result of fraud or misrepresentation hard to deal with. If it is suggested that the delayed-refusal to deliver or redeliver is not a harmful event, what of the case in which the person to whom I have lent my bicycle (gratuitously, not for reward) refuses to return it to me ? He did no wrong when I handed it over and he borrowed it, but it would make one rub one’s eyes in disbelief if it were said that his refusal to return it on my demand hand it over was not a wrongful act because I had self-harmed by voluntarily parting with it in the first place.
And so one could continue unto length of days. Not everyone will see the lines as needing to be drawn in the same place as I would locate them, which is, no doubt, exactly as it should be. One should instead ask why the Court has decided to turn its back on Kalfelis and thirty-odd years of general (granted, not universal) assumption that ‘all actions which seek to establish the liability’ of a defendant does not mean what it said, in favour of some abstract and doctrinaire distinction-drawing, which serves no useful purpose at all. It will now require a judge at first instance, perhaps in the remoter regions of the Union where theories of unjust enrichment and waiver of tort are not part of daily discourse, to figure out whether a non-contractual obligation giving rise to a pleaded claim is – as a matter of general European law, rather than within his or her own legal system, as paragraph 40 makes perfectly clear – based on a harmful event. What on earth was the sense of that ?
Thank you for your interesting contribution.As stressed out by my own contribution to this symposium, I strongly disagree (but, then, that the nice part about any good debate). Failure to return a sum received without cause is not the act that gives rise to an action for unjust enrichment. The operative event is the unjust enrichment itself, ie the payment received without. It is not a question of engaging the liability of the person who has refused to return a sum without cause. It is a matter of obtaining the restitution of the sum received without cause. It seems to me, therefore, that your presentation leads to a confusion of two different things: the action for restitution of the sum paid without cause and the possible action for liability which would seek to emphasise that the refusal to make restitution is wrongful and that it compels the person who made it to compensate the damage suffered by the other party (which would imply that a damage was suffered beyond the absence of restitution). This second action would clearly be a tort action, but the question would then arise as to the articulation of the two. But this second action is not the action for unjust enrichment. In other words : I gave you money for which you had no claim : give it back to me. In my view, the unjust enrichment action is the “give it back to me” part. The potential “you haven’t given it back to me and therefore I have suffered further loss which you have to compensate part” is another question.
I am enriched, I hope not unjustly, by the observations: thank you, very much. I do not quarrel with your analysis when it points out the essential abstract difference between a tort claim and a claim in unjust enrichment, of course. I have more trouble in finding the apt word for what the position of the recipient, who in most cases receives what he receives at the will of the claimant. I don’t think one can say he has no claim to receive, for that is true of any donee. What he has no claim to is to retain (laws may disagree on whether a demand is an essential part of the claimant’s cause of action), and in my obstinacy I still don’t see why a refusal to return is not (also) a wrongful act, and all the more so in systems which require a demand to complete the cause of action. My real objection, though, is that the practical effects are dismal. When there is only one dividing line to worry about, life for a litigant (and does anyone else matter?) is far easier than when there are two, especially if the second one is opaque. A claimant who has two ways of organising the facts and putting his claim, where one may emphasize the elements of a tort, the other unjust enrichment (in a case where the claimant waives, or disregards what may be a tort), what is he to do ? I suppose your answer may be that he has to concentrate and work out what his cause of action really is, and in answering that question he will need to look beyond the way his own system would conceptualise such claims); that of M Lehmann that he can always sue in the defendant’s domiciliary court. No doubt he should do the former and may do the latter; and neither would strikes me as demonstrating that the Regulation has become more useful to those who have to organise their litigation lives according to it.
Dear colleague, thank you for your reply. I quite agree with you on the practical argument. But it seems to me that the problem is actually deeper. The recurring difficulties with Article 7 seem difficult to overcome and I am increasingly convinced that it would probably be better to repeal it. However, as long as it exists, I still think it is difficult to characterise the unjust enrichment claim as tortious. I still think that the refusal to return a sum unduly received, on which you focus, is not the event giving rise to the action for unjust enrichment. The operative event is, in my view, the unjust enrichment itself, the payment without cause. Of course, one could say that the cause of action is the refusal to make restitution. Obviously, if there is spontaneous restitution, then there will be no action for unjust enrichment. But it seems to me that it is an illusion to present the refusal to make restitution as the cause of action for unjust enrichment. In the same way, if the author of a harmful act spontaneously compensates for the loss, he would not have a tort action. However, the cause of action is not the refusal to compensate spontaneously for the loss, but the harmful act which caused the loss. In the same way, one could say that the refusal to execute a contract, or to respect the obligations arising from marriage, or from company law, are harmful acts. In fact, anything can be presented as giving rise to a tort. And this is perhaps a tendency in common law. I seem to recall that consideration, and hence the modern contract, arose from the writ of trespass. But this seems to me to be a mere figment of the imagination. In civil law systems at least, it is indeed enrichment or payment without cause that is the basis of the action for enrichment. In this sense, in particular, enrichment is the starting point for the limitation period. And I don’t think, at list from a civil law perspective, that any donee receives a sum without cause. In French law, the cause would be the liberal intent, ie the will to reward. I don’t see how there could be no cause to retain a sum receive of there wasn’t first no cause to receive it. Thanks anyway for this interesting discussion.