Archive for category: Normative texts

EP’s First Reading on the Proposal to Amend the Corporate Sustainability Due Diligence Directive

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Marco Pasqua
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On 16 December 2025, the European Parliament approved at first reading the proposal for a directive amending, among other legislative measures, Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD).

The proposal now awaits approval by the Council of the European Union.

As reported on this blog, the amending directive, part of the Omnibus Simplification Package, aims to recalibrate certain corporate sustainability reporting and due diligence obligations.

Both the scope of application of the CSDDD and several of its substantive provisions are affected by the proposed directive.

As regards the scope, the due diligence obligations in the CSDDD will apply only to EU companies with more than 5,000 employees and a net annual turnover exceeding 1.5 billion Euros. Non-EU companies generating the latter turnover within the EU would also be covered.

The substantive amendments concern, inter alia, the provisions whereby a company is required to adopt and implement transition plans ensuring the compatibility of its business model with the transition to a sustainable economy (these will no longer appear in the CSDDD, as amended), and the provisions on the identification and assessment of adverse impacts (which will be adjusted and mitigated). The rules on  penalties will also be affected.

Of particular interest for the readers of this blog are the changes affecting Article 29 of the CSDDD on the civil liability of companies. While some elements of the existing provision are retained, others have been removed or reformulated.

Article 29(1) establishes an autonomous EU-level basis for civil liability, defining when companies incur liability for intentional or negligent breaches of their due diligence obligations under Articles 10 and 11, while excluding liability where damage is caused solely by business partners. This paragraph would be deleted under the amending directive, meaning that the above issues will be left to the applicable national law.

Article 29(2) links the right to full compensation to liability established under paragraph 1 and expressly excludes punitive or multiple damages. The directive, as amended, will preserve the right to full compensation but anchors it in national civil liability regimes.

Article 29(3) is concerned with remedies and access to justice, and covers issues such as limitation periods, litigation costs, injunctive relief, representative actions and access to evidence. Most safeguards remain unchanged, but the proposal deletes point (d), which set out the obligation to allow trade unions, NGOs or national human rights institutions to bring actions on behalf of alleged injured parties.

Article 29(4) clarifies that participation in industry or multi-stakeholder initiatives, third-party verification or contractual clauses does not exclude liability. The directive, as amended, refers this provision to liability under national law, consistently with the removal of an EU-harmonised liability regime.

Article 29(5) preserves the liability of subsidiaries and business partners and expressly provides for joint and several liability where damage is caused jointly. The provision will be narrowed under the amended directive, stating only that the company’s liability is without prejudice to that of its subsidiaries or business partners, without any express reference to joint and several liability.

Article 29(7) provides that Member States shall ensure that the provisions of national law transposing the Article are of overriding mandatory application in cases where the law applicable to claims to that effect is not the national law of a Member State. This paragraph will no longer appear in the amended directive.

A review clause has nevertheless been introduced, requiring the Commission to reassess the need for an EU-level liability regime at a later stage.

Under the amended rules, the deadline for transposition of the CSDDD is postponed by one year, to 26 July 2028. The companies concerned will be required to comply with the new obligations from 26 July 2029.

EAPIL to Establish a Working Group on the HCCH Jurisdiction Project

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Gilles Cuniberti
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The European Association of Private International Law calls for expressions of interest from its members to participate in a Working Group on the Jurisdiction Project of the Hague Conference on Private International Law.

The immediate goal of the EAPIL Working Group would be to answer to the public consultation on the draft text developed by the HCCH Working Group.

The deadline is 26 January 2026, at 9:00 CET.

A Working Group established under the auspices of the Hague Conference on Private International Law (HCCH) has developed draft provisions for a possible convention (Draft Text) to address parallel proceedings and related actions taking place in multiple States, acknowledging the primary role of both jurisdictional rules and the doctrine of forum non conveniens. The Permanent Bureau of the HCCH is seeking feedback on whether the Draft Text would, in practice, assist in addressing such matters and how the provisions in the Draft Text could be improved. Responses received from this consultation will be submitted to the governing body of the HCCH, the Council of General Affairs and Policy (CGAP), where, in March 2026, CGAP will decide on the next steps for the project.

EAPIL Members interested in joining the EAPIL Working Group are invited to contact Gilles Cuniberti at gilles.cuniberti@uni.lu before 18 December 2025, stating “EAPIL WG on the Jurisdiction Project” in the object of the message.

The Impact of Cupriak-Trojan on the Commission LGBTIQ+ Equality Strategy 2026–2030

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Marco Pasqua
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This post was written by Marco Pasqua (PhD, Catholic University of the Sacred Heart of Milan). It is the final contribution to the EAPIL on-line symposium on the judgment of the Court of Justice in Cupriak-Trojan. The previous posts were written by Laima Vaige, Alina Tryfonidou, Elizabeth Perry and Anna Wysocka-Bar, and can be found here, here, here and here, respectively. Readers are encouraged to participate in the discussion by commenting on the various posts in the symposium.

On 8 October 2025, the European Commission published a Communication entitled Union of Equality: LGBTIQ+ Equality Strategy 2026–2030, concerning LGBTIQ+ rights and LGBTIQ+ related actions. The document identifies three main strategic objectives.

The first, Protect, focuses on strengthening safeguards against violence and discrimination, including hate crime, hate speech, online safety and the protection of LGBTIQ+ youth. The second, Empower, aims at enabling LGBTIQ+ people to live and work freely across the EU, promoting inclusion in education, health and employment, and reinforcing anti-discrimination protection. The third objective, Engage, is about cooperation with Member States and international partners to advance LGBTIQ+ equality, support civil society and promote human rights globally.

Relevance of Cupriak-Trojan to the Commission’s Equality Strategy

The ruling of the Court of Justice in Cupriak-Trojan (C-713/23) is relevant to the above objectives in several ways and helps clarify how they may be implemented in practice.

As regards the relevant legal framework, Cupriak-Trojan further consolidates the trajectory of the Court’s case law in Coman (C-673/16), Pancharevo (C-490/20), K.S. (C-2/21) and Mirin (C-4/23). These rulings confirm that, when assessing Member State measures affecting the exercise of EU citizenship rights and family life, the central question is whether a particular action, at Member States level, amounts to an infringement of those rights derived from Articles 20-21 TFEU read together with Articles 7 and 21(1) of the Charter.

In addition, Wojewoda Mazowiecki reaffirms the direct effect of Articles 20-21 TFEU in this context, thereby ensuring that individuals can rely directly on these provisions before national authorities and courts. A further development may result from a pending case – Shipov (C-43/24) – which raises related questions and may offer additional clarification.

This line of case law reinforces the view that the Commission may legitimately prioritise measures aimed at ensuring procedural equivalence and effective administrative recognition as core elements of LGBTIQ+ equality policy. The above aspects are particularly relevant to the Empower objective, as they help ensure that individuals can meaningfully exercise their EU citizenship and free-movement rights in cross-border family situations.

Ensuring Equal Rights Across Borders: The Role of Private International Law

The policy context – namely, the Commission’s overarching approach to LGBTIQ+ equality as set out in the Communication – forms the backdrop for the section Ensuring equal rights across borders. In this part of the document, the Commission highlights the role of private international law in facilitating the continuity and recognition of family and personal status rights for LGBTIQ+ people who move within the Union.

While 22 Member States currently provide for marriage equality and/or registered partnerships, national rules on family status still differ significantly. This diversity is not, in itself, problematic. It becomes an issue when appropriate private international law mechanisms are lacking, creating uncertainty for families whose status has been validly established in one Member State but is not automatically recognised in another. According to the EU Agency for Fundamental Rights’ third LGBTIQ survey, around 14% of LGBTIQ+ parents face challenges of this type, particularly regarding the recognition of parent–child relationships.

The issues addressed in this section of the Communication – in particular, the challenges arising from the absence of adequate private international law rules – are directly affected by the Wojewoda Mazowiecki ruling. The Court of Justice clarified that the refusal to recognise or transcribe a family status already established in another Member State may amount to an unjustified restriction on free movement and an interference with the right to family life. This reinforces the need for reliable cross-border recognition mechanisms under EU law.

At the same time, it is important to acknowledge that these questions require balancing different considerations. In addition to free movement and fundamental rights, the EU Treaties also refer to the respect for national identities and legal traditions under Article 67 TFEU. The challenge, therefore, is not to assert the primacy of one objective and policy over all others, but to develop fair and workable solutions that operate coherently within the EU’s multi-layered constitutional structure.

This tension between EU-level guarantees and Member States’ constitutional identities has already been examined by this author in the EAPIL blog post commenting on Advocate General de la Tour’s opinion in the same case. As noted there, a convincing analysis must account not only for EU integrationist values – such as freedom of movement and non-discrimination – but also for the legitimate interests of Member States in regulating personal status according to their own constitutional traditions. EU law itself recognises that national competences remain protected, provided they are exercised without depriving EU rights of their essence.

Several Member States have entrenched definitions of marriage and parenthood at the constitutional level. Article 18 of Polish Constitution defines marriage as a union between a man and a woman. Hungary’s Fundamental Law, as amended in 2020, similarly states that “the mother shall be a woman, the father shall be a man”. Romanian Constitution defines the family in Article 48, and although the 2018 referendum to specify that marriage is between a man and a woman did not meet the turnout threshold, the debate reflects a deliberate constitutional stance.

Most recently, Slovakia adopted Constitutional Law No. 255/2025, amending the Constitution with provisions that emphasise national identity and sovereignty in areas such as marriage, parenthood, personal status and family life. The reform introduces new paragraphs 6 and 7 in Article 7, affirming that these matters fall within the exclusive domain of the Slovak constitutional order and cannot be delegated, limited, or interpreted as being transferable to any external authority beyond the national constitutional framework. Article 15 is amended to prohibit any agreement to create a child for another person. Article 41 is revised to state that the parents of a child are the mother (a woman) and the father (a man), and to restrict adoption primarily to married couples or, exceptionally, to single persons when in the child’s best interests. A new Article 52a further provides that Slovakia recognises only the biologically determined sex of men and women.

These examples illustrate that constitutional identity claims are not abstract arguments but concrete legal constraints that shape how Member States approach questions of family status and recognition – an issue that the Cupriak-Trojan judgment cannot disregard, even as it strengthens EU-law-based guarantees.

A more grounded point emerging from the ruling is its focus on the tangible difficulties created by divergent national practices. These include fragmented administrative approaches, obstacles in accessing social protection, difficulties in obtaining identity documents and uncertainty around property or inheritance rights. By highlighting these concrete effects, the judgment adds political and legal momentum to the Strategy’s commitments on cross-border recognition and judicial cooperation.

In its Communication, the Commission notes that several EU private international law instruments – including Regulation (EU) 2019/1111 on matrimonial and parental responsibility matters, Regulation (EC) No 4/2009 on maintenance obligations, Regulation (EU) 2016/1103 and Regulation 2016/1104 on matrimonial and partnership property regimes and Regulation (EU) No 650/2012 on succession – already ensure the mutual recognition of judgments in cross-border family situations, irrespective of sexual orientation or gender identity. The Commission monitors how these instruments operate in practice for LGBTIQ+ families and maintains dialogue with Member States to identify practical challenges.

The Communication’s selective examples raise a question worth noting. Regulation (EU) 606/2013 on mutual recognition of protection measures in civil matters is not included in the short list, despite its clear relevance to the Protect pillar. This omission may reflect the Communication’s focus on instruments that shape status recognition, but it also suggests a potential blind spot: distinctly procedural protection tools and their interaction with status recognition deserve explicit consideration when designing comprehensive cross-border safeguards for LGBTIQ+ families.

The Communication also reiterates the Commission’s support for the Proposal for a Regulation on parenthood. This initiative would harmonise core private international law rules and require Member States to recognise parenthood established in another Member State for its civil effects more broadly, not only when free movement is at stake. Recognition, however, would still operate within the limits and safeguards set out in the proposed Regulation itself (e.g., public policy), so it would not guarantee recognition in every possible case. Still, the instrument would markedly improve legal certainty and strengthen the protection of children’s rights across the Union.

Cupriak-Trojan also reinforces the logic underpinning these initiatives. It confirms that, where a family status has been lawfully created in one Member State, the authorities of another cannot simply disregard it in ways that undermine free movement or the right to family life. At the same time, the judgment operates within the established framework of EU private international law, which already accommodates exceptions and safeguards rather than imposing an unqualified, binary model of recognition.

Finally, the Commission notes that legal gender recognition remains uneven across Europe. While some Member States have embraced self-determination models, others still require medical interventions – a practice the European Court of Human Rights has deemed incompatible with human rights standards (Application No 55216/08, S.V. v Italy; Applications No 79885/12, 52471/13 and 52596/13, A.P., Garçon and Nicot v. France). The Commission explains that greater convergence in this area would also support the consistent functioning of EU law in cross-border situations, and it therefore intends to facilitate exchanges of best practices to encourage Member States to adopt self-determination procedures free from unnecessary medical or age-related barriers. Again, Cupriak-Trojan confirms that procedural mechanisms cannot be used to undermine substantive EU rights, highlighting that recognition must be effective and available to all without discrimination – relevant for both the Empower and Protect pillars of the Strategy.

Judicial Cooperation and Enforcement Perspective

The ruling in Cupriak-Trojan reinforces the Strategy’s attention to judicial cooperation under both Article 81 and Article 83 TFEU. While the role of Article 81 in supporting mutual recognition and cooperation in family matters has already been highlighted, the judgment signals that Article 83 TFEU – traditionally associated with combating hate crime and enhancing criminal-law responses under the Protect pillar – may also be relevant in framing EU-level responses to discrimination against LGBTIQ+ families. At the same time, instruments based on Article 81 TFEU (and proposals such as the Commission’s parenthood regulation) appear increasingly viable, both politically and legally, as tools to secure cross-border recognition of parenthood and other family-law effects without requiring Member States to alter their domestic definitions of marriage under (Empower).

From an enforcement perspective, as ‘guardian of the Treaties’, the Commission monitors Member States’ compliance with EU law and acts decisively to uphold EU values. For example, in 2022 it referred Hungary to the CJEU over discriminatory national rules affecting LGBTIQ+ people, arguing that these laws violated fundamental rights, single market rules and core EU values under Article 2 TEU (C-769/22). The case drew support from sixteen Member States and the European Parliament, and while the Advocate General issued an opinion in June 2025, the CJEU’s judgment is still pending. Cupriak-Trojan reinforces the Commission’s supervisory toolkit – infringement action, targeted guidance and structured dialogues with Member States – by clarifying the minimum baseline of recognition EU law requires, signalling to national courts and administrations the obligation to interpret or, where impossible, disapply domestic provisions that would produce the legal vacuum condemned by the CJEU (Engage).

Practical Priorities and Next Steps

The judgment of the Court of Justicealso clarifies and strengthens the Strategy’s practical priorities: it highlights the need to develop procedural tools that provide recognition and legal certainty, such as European certificates and improved mutual-recognition rules; it emphasises that monitoring and Member State action plans should focus not only on legal reforms but also on administrative practice, interoperability of registers and training of officials; it underlines the importance of linking anti-discrimination enforcement with private international law, so that equality and free-movement rights are effective in practice; and it supports targeted capacity-building in those countries where legal and administrative gaps cause the greatest obstacles for LGBTIQ+ families.

In short, Cupriak-Trojan provides judicial momentum for the Strategy, highlighting the need to complement high-level policy objectives with concrete administrative and procedural mechanisms. The Commission’s next steps should focus on translating these commitments into practical instruments and administrative tools that ensure cross-border recognition and prevent the fragmentation that the ruling highlights.

The European Commission Work Programme for 2026: Europe’s Independence Moment

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Marco Pasqua
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On 21 October 2025, the European Commission adopted its 2026 work programme, titled Europe’s Independence Moment.

It outlines how the EU plans to respond to current and emerging challenges, from security threats and geopolitical tensions to economic vulnerabilities and the accelerating climate crisis, building on the priorities set out in President von der Leyen’s Political Guidelines 2024-2029 and the 2025 State of the Union address.

The initiatives that the Commission plans to prioritise in 2026 are set out across three annexes.

Annex I outlines the new initiatives. Although the document does not list any new measures based on Article 81 TFEU, certain initiatives, particularly those grounded in Article 114 TFEU, may nonetheless have an indirect effect on matters of private international law.

Among these, more specifically among the “simplification initiatives” listed in the programme, the 28th Regime for Innovative Companies aims to create an optional EU framework for startups and cross-border business.

Beyond simplification, the Digital Fairness Act will enhance consumer protection in the digital environment, ensuring greater transparency and accountability in online markets.

As non-legislative, the Gender Equality Strategy 2026–2030 will set new priorities to promote equal opportunities across the EU, with private international law playing a key role in safeguarding EU citizens’ rights when status and relationships cross national borders.

Annex II covers the annual plan for evaluations and fitness checks, while pending legislative proposals are discussed in Annex III, which includes: the Proposal for a Directive amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements; the Proposal for a Regulation on combating late payment in commercial transactions; the Proposal for a Directive harmonizing certain aspects of insolvency law; the Proposal for a Regulation on jurisdiction, applicable law, recognition of decisions, and acceptance of authentic instruments in matters of parenthood, including the creation of a European Certificate of Parenthood; the Proposal for a Regulation on jurisdiction, applicable law, recognition, enforcement of measures, and cooperation in matters relating to the protection of adults; and the Proposal for a Regulation establishing the Justice programme for the period 2028-2034 and repealing Regulation (EU) 2021/693.

It also cover the Proposal as regards the enforcement of passenger rights within the EU, and the Proposal in the context of multimodal journeys; the Proposal on the establishment of a digital euro and related measures; the Proposal on substantiation and communication of environmental claims (the Green Claims Directive); and the Proposal on safety, resilience and sustainability of space activities in the Union.

Also interesting is Annex IV, on withdrawals. The list of proposals that the Commission plans to withdraw includes the Proposal for a Directive on European cross-border associations.

Amendment to Annexes A and B of the EU Insolvency Regulation

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Marco Pasqua
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On 17 October 2025, Regulation (EU) 2025/2073 of the European Parliament and of the Council of 8 October 2025 amending Regulation (EU) 2015/848 on insolvency proceedings to replace its Annexes A and B was published in the Official Journal of the European Union.

The amendment reflects recent notifications by several Member States introducing new types of insolvency proceedings and insolvency practitioners in their domestic legal systems. Specifically, notifications were submitted by Slovakia, Estonia, Spain, Italy, Belgium, Malta and Luxembourg, later followed by Bulgaria, Czechia, Spain (for a second time) and France.

These new national procedures and practitioner types comply with the requirements of the Insolvency Regulation, warranting their inclusion in the Annexes to ensure the Regulation’s uniform and up-to-date application across the Union.

The Regulation also recalls Ireland’s decision, pursuant to Protocol No 21, to participate in the adoption and application of this instrument, while Denmark, under Protocol No 22, remains outside its scope.

As a result, Annexes A and B to Regulation (EU) 2015/848 have been replaced by the text set out in the Annex to this amending Regulation. The new Annexes A and B list the insolvency proceedings and the corresponding insolvency practitioners applicable in each Member State.

Pursuant to Article 2, Regulation (EU) 2025/2073 will enter into force on 6 November 2025.

European Commission Withdraws Proposals on Assignments of Claims and AI Liability

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Marco Pasqua
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The European Commission has formally withdrawn two legislative proposals related to judicial cooperation in civil matters, namely the Proposal for a Regulation on the law applicable to the third-party effects of assignments of claims, as well as the Proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive).

A notice of the withdrawals has been published in the Official Journal on 6 October 2025, following the Commission’s 2533rd meeting on 16 July 2025. Both proposals had previously been listed in Annex IV of the Commission 2025 Work Programme of 11 February 2025, already noted on this blog.

Reasons for the withdrawals are set out in Annex IV referred to above. As regards the proposal on the law applicable to the third-party effects of assignments of claims, the stated reason is the absence of a foreseeable agreement among the EU political institutions. For the AI Liability Directive, the stated reason is also the lack of a foreseeable agreement; the Commission further indicated that it will evaluate whether to present a revised proposal or to pursue an alternative approach.

Supporting Families Following International Child Abduction – Online Survey

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The Editors of the EAPIL blog
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Professors Marilyn Freeman (University of Westminster, UK) and Nicola Taylor (University of Otago, NZ) are carrying out a research project on international child abduction.

The research investigates what happens after children have been removed to, or retained in, a country in a way which is considered wrongful in law. This is an issue which has not been properly investigated so far.

The research pursues multiple aims. First, to understand the impact of these removals and retentions on the children and family members affected. Second, to determine the support, if any, that was given to the children and family members in question, and to assess how to provide better services for children and their families internationally. Third, to investigate whether any further legal proceedings occurred following the return decision, and whether the abduction played a role in those proceedings.

Two online surveys are available for completion (in English).

The first survey is for parents and family members of children who have experienced their child’s removal to, and/or retention in, another country in a way which was considered wrongful in law

The second survey is for persons over 18 years of age who were previously abducted as children.

Those willing to complete the surveys may do so until 28 February 2026.

Information is being collected anonymously.

A research report on the findings will be published on the website of the University of Westminster around July 2026.

Detailed information on ethics and privacy guidelines are provided in the first page of each questionnaire. The research has been approved by the Liberal Arts and Sciences Research Ethics Committee at the University of Westminster, London.

Readers of this blog are encouraged to fill-in the surveys, if appropriate, or to publicise the research and share the survey links as widely as possible.

— Thanks to Costanza Honorati for drawing this initiative to the attention of the editors of the blog.

UK MoJ Consultation on the Singapore Convention

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Ugljesa Grusic
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The United Kingdom signed the Singapore Convention on Mediation (United Nations Convention on International Settlement Agreements Resulting from Mediation, New York, 7 August 2019) on 3 May 2023.

Ahead of the UK’s ratification of the Convention, the Ministry of Justice is seeking views on certain proposals and options for how the Convention might be implemented and operate in the UK.

This is not a full public consultation (hence the absence of information on the UK Government website), but rather a targeted consultation.

Nevertheless, the MoJ is keen to reach a wide stakeholder audience and will be happy to send a copy of the consultation paper to private international law specialists who request it by emailing PIL@justice.gov.uk. The deadline for responses is 15 October 2025.

Migliorini and Ilhão Moreira on the EU AI Act and Arbitration

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The Editors of the EAPIL blog
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This post was written by Sara Migliorini and João Ilhão Moreira, who both teach at the Faculty of Law of the University of Macau. It builds on article they co-authored, titled Clashing Frameworks: the EU AI Act and Arbitration, just published on the European Journal of Risk Regulation.

The EU AI Act (hereinafter, the “Act” or the “AI Act”) is now in force, and arbitration is firmly in its sights. The Act classifies certain uses of AI in arbitration as ‘high risk’, triggering a demanding set of obligations for providers and deployers alike: arbitral institutions, individual arbitrators, and specialised legal tech companies.

In doing so, the Act directly affects cornerstone principles of arbitration, such as party autonomy, procedural flexibility, and confidentiality. As we argue in our recent article, this marks a sharp departure from the EU’s long-standing hands-off approach to commercial arbitration.

With the Act’s high‑risk provisions set to take effect within the next 15 months, we think it is timely to assess their impact and take steps to mitigate potential negative effects, including a targeted carve‑out for commercial arbitration.

The Traditional EU Approach to Arbitration

Over the years, EU law and arbitration have had a relationship that, with the exception of consumer arbitration, was largely one of mutual indifference. Despite available legislative avenues, the EU’s competence to regulate arbitration has been significantly underutilised. For example, although Article 81 TFEU empowers the EU to adopt harmonisation measures for the development of ADR, arbitration has been systematically excluded from measures based on Article 81. This approach appears to be substantially maintained in the latest document by the Commission regarding the review the Brussels I bis Regulation.  The CJEU has traditionally interpreted these exclusions broadly, confirming the EU’s restraint in regulating arbitration (e.g.London Steam-Ship).

On occasion, the EU legislator has utilised other legal bases to regulate arbitration, notably in the area of consumer protection (e.g., the Consumer ADR Directive, or the Digital Service Act). Yet commercial arbitration, as a whole, has remained largely untouched by direct EU legislation.Consequently, before the AI Act, the relationship between EU law and commercial arbitration was mainly limited to issues of substantive law arising out of court proceedings related to arbitrations and awards. The classic concern was the risk that arbitrators might commit errors of law and the fact that, unlike in litigation, there are limited avenues to correct such errors. In such contexts, the CJEU has addressed matters of arbitrability (e.g., Mostaza Claro), public policy (e.g., Eco Swiss), and generally the interaction with the judicial procedures for the annulment, recognition, and enforcement of arbitral awards (e.g., London Steam-Ship).

By contrast, EU law has abstained from regulating procedural issues of commercial arbitration. Traditionally, such aspects are regulated by party autonomy (often through institutional rules), supplemented by national arbitration laws and rules produced by the arbitral community itself.

The EU’s legislative and judicial abstention has sustained the doctrinal view that the EU’s legal order and commercial arbitration would evolve in parallel, with minimal interference between them. This arrangement was welcomed by a community that has historically self-regulated.

High-Risk Classification under the Act

Things have changed with the AI Act. Under the combined reading of Article 6, Annex III(8)(a), and Recital (53), AI systems are classified as high risk where they are intended to (1) assist arbitrators in researching or interpreting facts and the law, (2) apply the law to a specific set of facts, unless they fall within a closed series of use cases where the impact on fundamental rights and decision-making is not substantial.

Such use cases are (a) “narrow procedural tasks”, such as transforming unstructured data or classifying documents; (b) tasks that are adjunct to human effort, such as enhancing the language of documents; and (c) preparatory tasks, such as indexing and data processing activities.

This definition raises questions of interpretation, especially while we wait for the European Commission to issue clarifying guidelines (due in February 2026).

In our view, there are clear-cut cases. For example, AI used for ancillary tasks such as proofreading or language enhancement falls outside the high‑risk category, as these functions merely refine prior human work. By contrast, use of AI for any core decision‑making task is unequivocally high risk (and very likely in tension with existing principles of arbitration).

However, between these extremes lies a vast grey area: tasks like legal research, drafting, summarizing or reviewing submissions can still shape how arbitrators interpret facts and the law. Given this, the Act’s broad language might cause uncertainty for potential addressees of these rules.

Personal Scope and Obligations

Where a system is high risk, two groups of actors assume compliance obligations: those who develop or commercialise the systems (“providers”) and those who use such systems under their own authority (“deployers”).

Arbitral institutions, individual arbitrators, and specialised legal tech companies will be subject to obligations in both capacities.

The demanding obligations for providers are listed in Sections 2 and 3 of the Act and include: risk management (Article 9), data quality/governance (Article 10), effective human oversight (Article 14), accuracy, robustness, and cybersecurity (Article 15), registration of the system, demonstration of conformity on request, and accessibility compliance (Article 16).

The relatively less demanding obligations for deployers are listed in Article 26 and include: keeping logs for at least six months, organising oversight implementation, and ensuring suitable input data, among others.

Arbitral Institutions and Specialised Legal Tech Companies

Many tools currently marketed to support arbitration, from legal research platforms to document analysis systems, will likely be qualified as ‘high-risk’, because they are, indeed, intended to be used to research facts and the law. Even more general legal tech widely used in law firms, such as Harvey or Robin AI, may qualify as high risk when used by arbitrators. In all these cases, the costs and regulatory uncertainty may prove particularly burdensome for smaller providers and institutions.

Individual Arbitrators

Arbitrators using AI tools face two scenarios. Firstly, an arbitrator who relies on an AI system specifically designed for arbitration will be treated as a “deployer” of a high‑risk system and subject to the relevant obligations.

Secondly, general-pourpose tools not specifically designed for arbitration and not considered AI risk, such as ChatGPT, may still fall into the high‑risk category if used for legal reasoning or applying the law to facts. A literal reading of Article 25 of the Act could even mean that arbitrators who use systems such as ChatGPT, may be requalified and fall within provider‑level obligations, which are more demanding than provider-level obbligations.

Difficulties in Enforcement

Notwithstanding all the uncertainty surrounding its interpretation, non‑compliance with the Act exposes actors to serious risks. Fines are up to 15 million Euros or 3% of global turnover, whichever is higher. For individual arbitrators, small firms, or smaller institutions, such fines may be unsustainable, discouraging innovation and consolidating the market around large providers.

Arbitrators also face reputational and, possibly, civil liability risks, with unresolved questions as to how misuse of AI might affect the validity of an award.

Enforcement is complicated by the confidentiality of arbitration. Under current confidentiality practices, it may be difficult to determine whether AI was used, let alone whether its use complied with the Act. For example, reliance on AI for legal research may never appear in the procedural record. How enforcement might affect the duties of arbitrators, notably with respect to confidentiality, remains also to be seen.

Impact Outside of the EU

The Act’s extraterritorial scope adds further complexity. Under Article 2, the Act applies not only to EU‑based providers and deployers, but also to those outside the EU when (a) the output of an AI system is used within the EU, or (b) an affected party is located in the EU.

EU‑based companies, institutions, and arbitrators fall directly under the Act. However, depending on how “use of an output” in the EU is interpreted, it can be argued that the Act extends to non‑EU arbitral institutions and arbitrators who, although physically outside the EU, conduct arbitral proceedings that are legally seated in the EU.  The expression “use of an output”  may even cover enforcement of awards before EU courts or cases involving a party located in the EU, irrespective of any other link with the EU.

For non‑EU actors in particular, this creates significant uncertainty.

Our Proposal

 We belive that the best option would be for the EU Commission to completely exclude commercial arbitration from the scope of the Act. This could be done via a delegated act under Article 7(3), which would exclude commercial arbitraiton from Annex III(8)(a), while keeping consumer ADR within the Act’s scope.

An alternative option would be for the EU Commission to adopt guidelines under Article 6(5) of the Act, clarifying which uses of AI in arbitration are not high risk, following consultation with arbitral institutions and practitioners.

Law Commission’s Consultation Paper on Digital Assets/ETDs and PIL: An Outline

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Ugljesa Grusic
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The Law Commission of England and Wales is reviewing how private international law operates in the context of electronic trade documents and digital assets. As previously reported on this blog, on 5 June 2025 the Law Commission published a consultation paper (paper; summary) proposing reform to certain rules of private international law that apply in the context of digital assets and electronic trade documents. The Consultation Paper follows a call for evidence (Digital assets and ETDs in private international law: which court, which law? Call for evidence) and three FAQs documents (Digital assets in private international law: FAQs on the relationship with tax law, banking regulation, and the financial markets; Property and permissioned DLT systems in private international law: FAQ; ETDs in private international law: FAQs).

This post outlines the Consultation Paper and offer some preliminary remarks.

The Consultation Paper makes four key contributions:

(1) Proposals for a new free-standing information order, designed to assist claimants at the initial investigation stage of proceedings where the pseudo-anonymous and decentralised nature of the crypto-token environment presents significant obstacles to formulating and issuing a fully pleaded substantive claim;

(2) An analysis of the preferred interpretation of the tort and property jurisdictional gateways for service out of the jurisdiction in the context of claims relating to crypto-tokens;

(3) Proposals for a supranational approach in cases where the degree of decentralisation is such that the Rome I Regulation and the lex situs rule cannot meaningfully apply;

(4) Proposals to reform section 72 of the Bills of Exchange Act 1882 (‘1882 Act’) for all disputes, whether or not concerning electronic trading documents.

New Free-Standing Information Order

The Law Commission proposes creating a new power for the courts to grant free-standing information orders, enabling claimants who have lost crypto-tokens through fraud or hacking to obtain information about the perpetrators or the whereabouts of their tokens without having to go through the existing jurisdictional gateways.

Specifically, the Law Commission proposes that:

(1) Such a power should be grounded in the principles of access to justice, necessity and the prevention of injustice in modern digital and decentralised environments.

(2) A claimant must satisfy the following four-limb threshold test before the court’s discretion to grant an order may be exercised:

(a) A case of sufficient strength (the merits test);

(b) Necessity;

(c) Impossibility or unreasonableness;

(d) A connection to England and Wales.

Tort and Property Jurisdictional Gateways

The Law Commission suggests that, in cases involving crypto-tokens, the tort and property gateways in Civil Procedure Rules Practice Direction 6B, para 3.1(9)(a), (11), (15)(b) and (21)(a) can be applied without undue difficulty by reference to the general principles of international jurisdiction that underpin the gateway requirements.

Specifically, the Law Commission is of the view that:

(1) For the property gateways based on the location of property within the jurisdiction ((11) and (15)(b)), the appropriate court to hear a cross-border property claim concerning a crypto-token is the court of the place where the crypto-token can be controlled or otherwise dealt with effectively (for example, the place where the person who knows or has access to the private key is located or where control over the software underpinning the network is exercised) at the time proceedings are issued;

(2) For the tort gateways based on damage sustained within the jurisdiction ((9)(a) and (21)(a)):

(a) Where the tortious act involves interference with, or deprivation of, an object that can be localised (such as a private key controlling a crypto-token), the focus should be on the location of the object at the time of the interference/deprivation;

(b) In other cases where the tortious act involves interference with, or deprivation of, an object, the focus should be on the victim, that is, damage is sustained where the victim was physically present at the time of the damage;

(c) Where damage consists of being denied access to an online account that could, in principle, have been accessed from anywhere in the world and no real reason can be given for locating the damage in one place over another, the defendant should be sued in their home court, where possible;

(d) Where damage consists in the experience or consequences of being deprived of a crypto-token or access to a crypto-token, damage could be sustained in a different location from where the victim was physically present at the time of the deprivation.

Supranational Approach to Applicable Law

The Law Commission proposes moving away from the traditional multilateral or bilateral approach to determining the applicable law for issues arising in wholly decentralised applications of DLT – for example, contracts (purportedly) concluded by smart contracts in wholly decentralised finance applications and crypto-tokens held in accordance with the Bitcoin decentralised ideal. It recommends a supranational approach to the conflict of laws, that is, special substantive rules that would apply where a court is faced with an omniterritorial element.

Under this approach, the courts should take into account a range of factors to determine a ‘just disposal of the proceedings’, including the legitimate expectations and understandings of the parties. This might involve considering the terms of a coding protocol that participants have signed up to and any relevant blockchain conventions. However, the Law Commission considers it too early to propose legislative intervention on these issues, which should instead be left to judicial development.

Section 72 of the 1882 Act

The proposals to reform section 72 of the 1882 Act are of a general nature and are not confined to digital and decentralised contexts. The Law Commission proposes changes to paragraph 1, which concerns the determination of the law applicable to the formal validity of bills of exchange, paragraph 2, which concerns the determination of the law applicable to the contractual aspects of bills of exchange, namely the interpretation of the drawing, indorsement, acceptance or acceptance supra protest of the bill, and paragraph 3, which concerns the determination of the law applicable to the duties of the holder of the bill. Since section 72 also applies to cheques and promissory notes, the proposals apply mutatis mutandis to these instruments.

Regarding section 72(1), the Law Commission proposes a pro-validity rule. The proposed menu of options includes:

(1) The law governing the substance of the relevant contract;

(2) The law governing the substance of the drawer’s contract;

(3) The law governing the substance of the acceptor’s contract;

(4) The law of the place where the instrument is payable.

Regarding section 72(2), the Law Commission proposes a multi-limb structure that would use party autonomy as the default rule, followed by rules applicable where each relevant party has not made a valid choice. Specifically:

(1) The default rule for the law applicable to each contract on a bill of exchange should be the law chosen by the party incurring the relevant obligation, as indicated on the bill alongside their signature;

(2) In the absence of a valid choice by the acceptor, the applicable law should be that of the place where the instrument is payable, as interpreted consistently with the place of ‘proper presentment’ under section 45 of the 1882 Act;

(3) In the absence of a valid choice by the drawer, indorsees, and other secondary parties, the applicable law should be that of the relevant secondary party’s habitual residence;

(4) Such a multi-limb structure should not have an ‘escape clause’ or a ‘catch all’ provision;

(5) Section 72(2) should be amended to make clear that it applies to determining the law applicable to the substantive rights and obligations of the parties, material validity and not only interpretation.

Regarding section 72(3), the Law Commission proposes reform that would clearly distinguish the four sub-rules implicit in the current rule and avoid connecting factors referring to the location of the bill itself at the relevant times. Specifically:

(1) The duties of the holder with respect to presentment for acceptance should be governed by the law of the place where the drawee has their habitual residence;

(2) The necessity for, or sufficiency of, a protest or notice upon dishonour by non-acceptance should be governed by the law of the place where the drawee has their habitual residence;

(3) The duties of the holder with respect to presentment for payment should be governed by the law of the place where the bill is payable;

(4) The necessity for, or sufficiency of, a protest or notice upon dishonour by non-payment should be governed by the law of the place where the bill is payable.

 

Preliminary Thoughts

The analysis of the preferred interpretation of the tort and property gateways does not make new proposals. It merely expresses the Law Commission’s view on how the gateways should be interpreted and applied. It is sensible to highlight the difficulties with the existing case law and offer a view on how best to interpret and apply these jurisdictional gateways. There is, of course, no guarantee that the courts will not continue interpreting and applying the gateways in expansive and potentially inconsistent ways, although the discussion of the relevant issues before the courts should now be more informed.

Similarly, the ‘proposals’ for a supranational approach in cases where the Law Commission believes the degree of decentralisation is such that Rome I and the lex situs rule cannot meaningfully apply are not a call for legislative intervention in the field of choice of law, but rather amount to advice to the courts on how to approach such cases. In my view, there are two key points of criticism.

First, the Law Commission is against the application of the law of the forum where Rome I and the lex situs rule cannot meaningfully apply and sees its supranational approach as an alternative (see, eg, paras 6.32, 6.103). But it is not clear, from a legal-technical point of view, how the courts, which are supposed to apply Rome I and the lex situs rule to cases falling within their scope, can disapply these rules (especially Rome I) without a statutory instruction to do so.

Second, the Law Commission has spent several years explaining how substantive English law applies to smart contracts, electronic trade documents, decentralised autonomous organisations and digital assets. Much of its work has focused on how substantive English law applies to cases with a high degree of decentralisation. Yet now we are told that, in at least some such cases falling within the scope of Rome I and the lex situs rule, the courts should not apply English or any other domestic law, but rather nebulous ‘supranational law’ that is seemingly yet to be developed. In other words, the precise relationship between English law and the supranational approach is not defined. The following explanation of the relationship in para 6.60 is more confusing than clarifying:

In essence, the supranational approach recognises that, in cases with an omniterritorial element, it is not necessarily appropriate to apply the purely domestic private law of any one given country. Whilst any substantive rules developed and applied by the courts of England and Wales would ultimately remain a common law decision of our courts, it would not be an application of the “ordinary” law of England and Wales that would continue to apply in a purely domestic case. Rather, it would be a special body of substantive rules of decision that apply only in private law cases in which the law of no country would be appropriate to apply to resolve the issue in dispute, and the law of every country would be appropriate to apply to resolve the issue in dispute. (original emphasis)

I am sceptical that English courts, which are well-known for their legal-technical prowess, will ever be willing to adopt such an approach without a clear statutory instruction.

By contrast, the proposals for a new free-standing information order and the reform of section 72 of the 1882 Act would require, in the view of the Law Commission, legislative intervention (although the Law Commission thinks that the courts could probably develop the power to grant free-standing information at common law).

The new free-standing information order could be a useful device in cases where (1) there is no way in the country where a crypto-exchange is located to compel it to disclose information about the identity of the perpetrator of the fraud or hacking, the holder of the crypto-token or the whereabouts of the crypto-token and (2) there is some, even tenuous, link with England. Given requirement (1), the order will likely be available in cases where a crypto-exchange is located in a country with strict confidentiality laws. Yet an English order may put the crypto-exchange in the difficult situation of having to choose between complying with either the order or the law of the country in which it is located. This is something that should be taken into account when designing the new order and the test that the courts should apply before granting it.

I generally agree with the proposals to reform section 72 of the 1882 Act. However, I question whether the use of fixed connecting factors without an escape clause in the proposed paragraph 2 might be too rigid. In a consultation event following the publication of the Consultation Paper, some stakeholders expressed the view that, at least in some contexts, it may be desirable for different legal relationships arising under a bill of exchange to be governed by the same law. If the fixed connecting factors do not produce this outcome, and assuming this outcome is indeed desirable, an escape clause seems a logical solution. Any concern that an escape clause would lead to an unacceptable degree of legal uncertainty can be addressed by imposing a high threshold for its application.

The consultation period ends on 8 September 2025. Responses may be submitted to the Law Commission via an online form, by e-mail to conflictoflaws@lawcommission.gov.uk or by post.

Arbitration Act 2025 Comes into Force on 1 August 2025

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Ugljesa Grusic
by

Today (1 August 2025), the Arbitration Act 2025 comes into force. This is provided by the Arbitration Act 2025 (Commencement) Regulations 2025. The Act applies to arbitration proceedings commenced on or after today, as well as to court proceedings in connection with arbitration that falls within the temporal scope of the Act (section 17(4)(a)).

The Act implements the recommendations of the Law Commission of England and Wales for reform to the arbitral framework in England and Wales and Northern Ireland.

It addresses the following matters: Law applicable to arbitration agreement; Impartiality: duty of disclosure; Immunity of arbitrator: application for removal; Immunity of arbitrator: resignation; Court determination of jurisdiction of tribunal; Power to award costs despite no substantive jurisdiction; Power to make award on summary basis; Emergency arbitrators; Court powers exercisable in support of arbitral proceedings in respect of third parties; Challenging the award: remedies available to the court; Procedure on challenge under section 67 of the Arbitration Act 1996; Challenging the award: time limit; Appeals to Court of Appeal from High Court decisions; Requirements to be met for court to consider applications; Repeal of provisions relating to domestic arbitration agreements.

Readers of the EAPIL Blog are likely to be most interested in the new rule on determining the law applicable to arbitration agreements.

6A Law applicable to arbitration agreement

(1) The law applicable to an arbitration agreement is—

(a) the law that the parties expressly agree applies to the arbitration agreement, or

(b) where no such agreement is made, the law of the seat of the arbitration in question.

(2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not constitute express agreement that that law also applies to the arbitration agreement.

(3) Subsection (1) does not apply to an arbitration agreement derived from a standing offer to submit disputes to arbitration where the offer is contained in—

(a) a treaty, or

(b) legislation of a country or territory outside the United Kingdom.

(4) In this section—

“legislation” includes any provision of a legislative character;
“treaty” includes any international agreement (and any protocol or annex to a treaty or international agreement).

Importantly, the new section 6A applies regardless of when the arbitration agreement was made (section 17(4)(b)). That is, it applies to all arbitration agreements, even those made before 1 August 2025, as long as arbitration proceedings commence on or after today.

Council of Europe Finds Danish Measures on Surrogacy Ensure Compliance with the ECHR

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Erik Sinander
by

In 2022, the European Court of Human Rights (ECtHR) held in its KK and Others v. Denmark judgment that Denmark had violated Article 8 of the European Convention on Human Rights (ECHR) by its legislative measures trying to prevent commercial surrogacy arrangements (reported for the blog here).

Measures were taken by Danish institutions in response to the ECtHR ruling. In the spring of 2024, as reported in this blog (see here), several political parties in the Danish Parliament reached a political agreement aimed at safeguarding the rights of children born through surrogacy. The agreement was designed to ensure that the children concerned would have a clearer legal connection to their intended parents, particularly by removing the prior requirement for stepparent adoption. The agreement resulted in new legislation, which had effect from 1 January 2025.

Article 46 of the ECHR provides that judgments given by the ECtHR must be submitted to the Committee of Ministers of the Council of Europe, which shall supervise their execution. With reference to the action report DH-DD(2025)336 prepared by Denmark, the Committee of Ministers held, in a decision on 12 June 2025 (CM/ResDH(2025)140), that Denmark had taken all necessary measures to comply with the judgment.

Separate from the formal decision, the matter was explained and motivated in a short summary text. Here, it was stated that it was now clear that Denmark meets the obligations of the ECHR even though the new legislation entered into effect as late as earlier this year.

Swedish Report Proposes Major Restrictions on International Adoptions

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Erik Sinander
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In response to both global and domestic revelations of serious shortcomings in the intercountry adoption system, the Swedish government launched an official inquiry on the matter in October 2021. The objective was to assess past practices and propose legal reforms as well as other appropriate measures.

Titled ‘Sweden’s intercountry adoption activities – Lessons learned and the way forward’ (officially referred as SOU 2025:61), the final report was presented on 2 June 2025. Spanning more than 1.500 pages in two volumes, the document presents a comprehensive examination of Sweden’s role in international adoptions. An eight-page summary in English is available on page 51 of volume 1.

Recommendations

Holding that serious shortcomings have occurred, the report recommends a series of measures. These include issuing a public apology to adoptees, establishing a national resource centre for adoption-related matters and providing financial grants to adoptees wishing to visit their countries of origin.

Several recommendations also pertain more directly to private international law.

First, the report suggests that the activity of arranging intercountry adoptions to Sweden shall be phased out.

Second, it is suggested that Sweden shall ratify the International Convention for the Protection of All Persons from Enforced Disappearance, emphasizing Sweden’s responsibility to investigate past adoption cases under this framework.

Third, it is also suggested that intercountry adoptions shall be restricted to situations when there is a personal relation between the child and the intended parent. For such situations when cross-border adoptions still will be allowed, Sweden as a State must take greater responsibility for securing a due process procedure as well as the best interest of the child.

Comment

If enacted, the suggested proposals will mark a paradigm shift in Sweden’s approach to international adoptions, moving away from a system designed for organized international placements to a model allowing for adoption in exceptional cases only. However, the future-looking policy-shift is perhaps not as dramatic as it first seems. From annual peaks nearing 2.000 in the late 1970’s and early 1980’s, international adoptions to Sweden have steadily dropped. In 2024, only 54 adoptions were registered (see statistics here).

Conference in Milan on the Future EU Regulation on the Protection of Adults

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Pietro Franzina
by

Two years have passed since the European Commission published two proposals on the protection of adults in international situations, namely a proposal for a Council Decision that would authorise all EU Member States to become parties of the Hague Convention of 13 January 2000 on the international protection of adults “in the interest of the European Union”, and a proposal for a Regulation of the European Parliament and the Council that would complement the Convention in the relations between the Member States.

The latter proposal has been extensively discussed within the Council of the European Union. An agreement for a partial general approach has been reached in this context in late May 2025 on the provisions in Chapters I to V, regarding respectively  the scope of the future Regulation and the rules on jurisdiction, applicable law, recognition and enforcement of measures of protection and authentic instruments.

The Presidency of the Council expressed the view that the text resulting from the agreed general approach “is stable and represents a finely balanced compromise reflecting the wide range of positions by Member States”, while noting that “more time is needed to explore the rest of the text further”, in particular concerning the establishment and interconnection of registers of powers of representation and cooperation in the event of the placement of an adult in an establishment or other place where protection can be provided, in another Member State.

Some Member States, including Spain, Estonia (with a corrigendum), and Malta, have since made public their opinion on the topics under discussion.

A conference will take place in Milan, at the Catholic University of the Sacred Heart, on 17 and 18 September 2025 to discuss the two Commission’s proposals and the developments that followed their publication.

The programme, which will be available soon, will feature, inter alia, presentations by Giacomo Biagioni, University of Cagliari; Patrizia De Luca (TBC), Senior Expert at the European Commission; Giovanni Freise, University of Hamburg; Cristina Gonzalez Beilfuss, University of Barcelona; Jan von Hein, University of Freiburg; Katja Karjalainen, University of Lapland; Thalia Kruger, University of Antwerp; Philippe Lortie, First Secretary of the Hague Conference on Private International Law; Francesca Maoli, University of Genova; Paolo Pasqualis, Notary; Geraldo Rocha Ribeiro, University of Coimbra; Rieneke Stelma-Roorda, VU Amsterdam; Chloé Terraube, Ministry of Justice of France

The working language will be English. Attendance is free and can be either in person or on-line. Prior registration, however, is required here.

Can EU Member States Set Conflict-of-Laws Rules for Substantive Matters in Arbitration?

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Erik Sinander
by

The relation between EU private international law and arbitration is notoriously complex. While the arbitration exemption of the Brussels I bis Regulation has rendered both much case law as well as legal debate, less attention has been paid to whether and how the EU conflict of law rules in the Rome I Regulation apply to the substance of disputes resolved by arbitration.

A revealing example comes from Sweden.

In 2018, the Swedish Arbitration Act (officially: lag [1999:116] om skiljeförfarande) was revised. One of the amendments was the introduction of a choice of law rule for arbitral tribunals in Section 27 a.

Mirroring Article 27 of the 2017 SCC Arbitration Rules (which has remained substantially unchanged in the revised 2023 SCC Arbitration Rules), the provision affirms that arbitrators primarily should apply the law chosen by the parties. In the absence of such a choice, the provision lets the arbitrators determine the applicable law. It is further clarified that the arbitrators “may base the award on ex aequo et bono considerations only if the parties have authorized them to do so.

When adopting this conflict of law provision, the preparatory works simply stated, with reference to Article 1(1)(e) of the Rome I Regulation, that EU private international law is not applicable to arbitration (SOU 2015:37 p. 92). However, this interpretation of Article 1(1)(e) of the Rome I Regulation deserves scrutiny.

Unlike the general exemption for “arbitration” in article 1(2)(d) of the Brussels I bis Regulation, the exclusion in Article 1(1)(e) of the Rome I Regulation encompasses “arbitration agreements and agreements on the choice of court”.

Given the doctrine of separability, it seems clear that the intention of the exemption in Rome I Regulation is simply to exclude dispute resolution clauses from the rest of the contract. It is not explicitly stated that a substantive dispute settled in an arbitration is exempted.

From a legislative point of view, it is a difference to include choice of law rules in institutional arbitration rules such as the SCC rules. Technically, institutional arbitration rules are contractual and subject to party autonomy. Introducing choice of law rules in a national arbitration act is something completely different. First, it is prohibited under EU law as EU regulations shall apply (see Article 288 of the Treaty on the Functioning of the European Union). Second, it may put arbitrators in an awkward position where they must either rely on the Swedish Arbitration Act or the EU Regulation.

In practice, this may not make much difference in most commercial cases. Both Section 27a of the Swedish Arbitration Act and the Rome I Regulation prioritize party autonomy. But the divergence becomes critical in cases involving mandatory rules, such as employment disputes. Under article 8 of the Rome I Regulation, the law chosen by the parties must be related to the law that would have been applicable if no choice of law was done. Must a Swedish arbitral tribunal dealing with an international employment dispute take the Rome I Regulation into consideration or can it apply Section 27 a of the Swedish Arbitration Act?

In my opinion, there is no doubt that the exemption of the Rome I Regulation to arbitration agreements cannot be extended to cover also substantive matters in an arbitration. Hence, the Rome I Regulation shall be applied. That must also be the case when an arbitral tribunal rules in a regular matter.

Towards an EU Law on International Commercial Arbitration?

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Gilles Cuniberti
by

A working group composed of French scholars chaired by Professors Mathias Audit and Sylvain Bollée (both Paris I Panthéon Sorbonne University) has issued a report on the opportunity of the EU lawmaker to include new provisions in the Brussels I bis Regulation on international commercial arbitration (Towards an EU Law on International Commercial Arbitration?). The report was presented in the Paris Arbitration Week and a recent conference on the recast of the Brussels I bis Regulation.

The core proposals would be to include two new provisions in the Regulation.

First, the report proposes to add a new Article 25 bis defining the jurisdiction of the courts of the Member States to support the arbitral process, to entertain challenges to arbitral awards, and to determine the existence and validity of arbitral agreements. The rule would grant jurisdiction to the court of the seat of the arbitration.

Article 25 bis

1. If the parties, regardless of their domicile, have agreed to settle their dispute by arbitration with its seat in the territory of a Member State, the courts of that Member State shall have jurisdiction over the following actions:
(a) Actions relating to the support for the constitution of the arbitral tribunal or the conduct of the arbitration procedure. This should be without prejudice to the jurisdiction of any other court expressly designated by the parties;

(b) Actions relating to the existence, validity or enforceability of the arbitration agreement. This should be without prejudice to:
– provisions of the national law of that State Member empowering the arbitral tribunal to rule on its own jurisdiction and, as the case may be, recognising it a priority in this respect; and
– article 31 bis paragraph 2.
(c) Actions for annulment, recognition or enforcement of the arbitral award.
2. Actions referred to in paragraph 1 (a) and (b) may not be brought before a court of a Member State on the basis of national rules of jurisdiction.

3. Paragraph 1 (c) should be without prejudice to the right for a party to seek recognition and enforcement of an arbitral award before a court of a Member State on the basis of its national rules of jurisdiction.

4. The provisions of this article are without prejudice to the application of a rule of national law of the Member State where the seat of arbitration is located enabling the parties to waive their right to bring an action for annulment.

5. The provision of this article do not apply in dis putes concerning matters referred to in Sections 3, 4 or 5 of Chapter II.

Second, the report proposes to add a new Article 31 bis which would grant a priority to the courts of the Member State of the seat of arbitration to decide on the existence, validity or enforceability of the arbitration agreement. The underlying policy would be to reinforce the rule of jurisdiction set out by proposed Article 25 bis, ensure the full protection of contractual agreements regarding the location of the seat, but also prevent forum shopping. On balance, the report finds it preferable that the court ruling on the existence, validity and enforceability of the arbitration agreement be that of the seat, which the parties have prima facie elected by mutual agreement, rather than a judge unilaterally seized by only one of the parties.

Article 31 bis

1. Where a court of a Member State is seized of an action and its jurisdiction is contested on the basis of an arbitration agreement establishing the seat of the arbitration in another Member State, it shall, on the application of the party seeking to rely upon the said agreement, stay the proceedings until the courts of this other Member State have ruled or may no longer rule on the existence, validity or enforceability of the arbitration agreement.

2. However the court whose jurisdiction is contested continues the proceedings if:
(a) the arbitration agreement is manifestly inexistent, invalid or unenforceable under the law of the Member State where the seat is located; or
(b) the arbitral tribunal was seized and declined jurisdiction, and the arbitration agreement is inexistent, invalid or unenforceable under the law of the Member State where the seat is located.
For the purposes of this paragraph, reference to the law of the Member State where t he seat is located encompasses conflict-of-laws rules applicable in that Member State.

3. The provisions of this article are without prejudice of the application of a rule of national law of the Member State where the seat of arbitration is located empowering the arbitral tribunal to rule on its own jurisdiction and, as the case may be, recognising it a priority in this respect.

The full report, including detailed comments of the proposed new provisions, can be downloaded here.

Denmark to Implement the Contents of the Implementing Measures of the EU Regulation on the Service of Documents:

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Marta Requejo Isidro
by

According to Article 4(1) of the Agreement between the European Community and the Kingdom of Denmark on the service of judicial and extrajudicial documents in civil or commercial matters (the ‘Agreement’), Denmark shall not take part in the adoption of opinions by the Committee referred to in Article 26 of Regulation (EU) 2020/1784 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) (recast)  [corresponding to Article 18 of the previous Service Regulation]. Implementing measures adopted pursuant to Article 25 of that Regulation [Article 17 of the previous Regulation] shall not be binding upon and shall not be applicable in Denmark.

However, pursuant to Article 4(2) of the Agreement, whenever implementing measures pursuant to Regulation on the service of documents are adopted, Denmark shall notify to the Commission of its decision whether or not to implement the content of the implementing measures. Article 4(4) establishes that a Danish notification that the content of the implementing measures has been implemented in Denmark creates mutual obligations under international law between Denmark and the Community. The implementing measures will then form part of this Agreement.

By letter of 22 December 2020, Denmark notified the Commission of its decision to implement the contents of the Service Regulation. By letter of 24 August 2022, it notified the Commission of its decision to implement also the contents of Commission Implementing Regulation (EU) 2022/423,  adopted on 14 March 2022, which lays down the technical specifications, measures and other requirements for the implementation of the decentralised IT system referred to in Regulation (EU) 2020/1784 of the European Parliament and of the Council. As a consequence, Commission Implementing Regulation (EU) 2022/423 forms a part of the Agreement.

Commission Implementing Regulation (EU) 2024/1570 amending Implementing Regulation (EU) 2022/423 was adopted on 4 June 2024. Denmark has by letter of 9 January 2025 notified the Commission of its decision to implement the contents of this Implementing Regulation too; it thus forms a part of the Agreement.

In accordance with Article 4(3) of the Agreement, the necessary administrative measures enter into force on the date of entry into force of Commission Implementing Regulations (EU) 2022/423 and (EU) 2024/1570, i.e. on 1 May 2025.

Commission Opens Infringement Procedure Against Malta for Non-Compliance with the Brussels I bis Regulation

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Pietro Franzina
by

On 18 June 2025 the European Commission opened an infringement procedure under Article 258 of the TFEU against Malta (INFR(2025)2100), alleging that Malta is failing to comply with its obligations under the Brussels I bis Regulation with respect to litigation in matters related to gambling.

Following the formal notice sent by the Commission, the Maltese Government has now two months to address the shortcomings raised by the Commission. Absent a satisfactory response, the Commission may decide to issue a reasoned opinion. If indeed such an opinion is issued, and Malta fails to comply with it, the Commission may then bring the matter before the Court of Justice.

The Alleged Infringement

As stated in its own press release, the Commission considers that Malta is breaching the Brussels I bis Regulation by requiring its courts to “systematically refuse”, on grounds of public policy, the recognition and enforcement of judgments given in other Member States against Maltese-licensed gaming companies. In the view of the Commission, Malta is also violating the Regulation by discouraging “foreign litigants from pursuing legal action in Maltese courts against these entities, despite EU rules designating such courts as the appropriate forum based on the defendant’s domicile”.

In the Commission’s view, this “undermines the principle of mutual trust in the administration of justice within the Union and violates the prohibition on reviewing judgments from other Member States on their substance, exceeds the limits of the public policy exception, and distorts the EU’s rules on jurisdiction”.

The Commission’s press release only provides a short description of the relevant facts. The circumstances of the alleged infringement, however, can be retraced based on court and media reports that have been emerging over the last few years, in particular after May 2023, when an Austrian law firm and a German lawyer wrote to the European Commission, as reported in article in the Times of Malta, to inform that the Maltese government was “undermining European rule of law through a Bill tabled in parliament to amend Malta’s gaming regulations” with a view to preventing “Maltese courts from enforcing sentences handed down against Maltese gaming companies in foreign jurisdictions”.

An article by Paulo Pena, Harald Schumann, Maxence Peigné, published on EUobserver on 6 March 2025, further explains that

[t]he world’s biggest gambling companies are using a little-known Maltese law, that nullifies court verdicts elsewhere in the European Union, to protect themselves from potentially having to pay out millions in legal claims.

Under a law known as Bill 55, Maltese courts can “refuse recognition and, or enforcement” of any foreign judgment involving companies registered on the island — namely, the scores of betting companies based there thanks to an already favourable corporate climate. 

The law effectively shields owners of brands such as Pokerstars, Betsson and Unibet from judgements handed down abroad, of which there are an increasing number.  

Bill 55, as another article in the Times of Malta recalls, has sparked significant controversy, especially in Austria, Germany, Sweden, and the Netherlands, where courts “have ruled against Malta-based online gaming companies, demanding reimbursement for losses incurred by players” using what those courts consider “illegal” foreign betting platforms.

According to a report published on 18 June 2025 on the Time of Malta, the Maltese government maintains that the “law does not establish new or separate grounds for refusing the enforcement of judgments” beyond those set in the Brussels I bis Regulation. The Malta Gaming Authority, for its part, argued that the law “does not impose a blanket ban on enforcing European judgments against Maltese-licensed gaming companies, nor does it shield them from legal action in other EU courts”.

Cases Pending before the Court of Justice

Two requests for a preliminary ruling, currently pending at the Court of Justice, are concerned with private international law issues in connection with gambling.

The first request forms the object of the Wunner case and concerns the interpretation of Articles 1 and 4 of the Rome II Regulation on the law applicable to non-contractual obligations. The second request resulted in the Mr Green case, which revolves around Article 7(1) of Regulation No 655/2014 establishing a European Account Preservation Order (EAPO) procedure.

As reported by Marta Requejo on this blog, the Wunner case arises from proceedings pending in Austria between a company running an online casino via a website from its registered office in Malta, holding a valid Maltese gaming licence but no licence under the Austrian rules on gambling, and a natural person domiciled in Austria. The latter had played online games via the company’s website, paying the amount claimed but without gaining any winnings. He sought repayment of his losses from the managing directors of the company, claiming that, in the absence of an Austrian licence, the gambling contract is null and void. He bases his claim on liability for damages, on the ground that interference with the Austrian monopoly on games of chance entails an infringement of protective provisions.

In his opinion delivered on 12 June 2025, AG Emiliou proposed that the questions referred should be answered as follows.

To begin with, AG Emiliou suggests that Article 1(2)(d) of the Rome II Regulation, which excludes from the scope of the Regulation the non-contractual obligations “arising out of the law of companies” , should be interpreted as meaning that the exclusion  does not cover an alleged non-contractual obligation of a company director arising out of the infringement of a duty or prohibition imposed by the law independently of the director’s own appointment, such as the prohibition on anyone to offer games of chance in a given Member State without a licence granted by the authorities of that State

Secondly, according to AG Emiliou, Article 4(1) of the Rome II Regulation should be interpreted as meaning that, “where a consumer alleges to have sustained gambling losses as a result of participating, from the Member State in which he or she is habitually resident, in the online games of chance offered to him or her by a provider established in another Member State without a licence granted by the authorities of the first State, the ‘damage’ within the meaning of Article 4(1) of that regulation occurred in that first State, as the country from which the bets were placed”.

The questions submitted to the Court of Justice in the Mr Green case are closely related to the facts underlying the recente infringement procedure opened by the Commission. An Austrian applied in Austria for a European Account Preservation Order against a defendant seated in Malta. The former asserted, in particular. that, following final and enforceable judgments, the defendant had moved, and could further move, its assets to Malta, apparently relying on the Maltese legislation (Bill 55) prohibiting enforcement of foreign judgments against gaming operators which have a Maltese licence. The issue arose of whether this would justify the periculum in mora required to obtain an EAPO.

Issues similar to those raised by the case are discussed in the guest post written by Carlos Santalò Goris in November 2023 fo this blog: The 2023 Reform of the Maltese Gaming Act: A Valid Ground to Reject the Issuance of an EAPO?

Further Readings

The EAPIL blog has dealt with various issues raised by cross-border (Malta-related) litigation over gambling. See, in particular, Matthias Lehmann’s posts published respectively in January 2024 (Where Do Gamblers Lose their Money? Lessons from an Austrian-Maltese Conflict), and in April 2024 (How Can Gamblers Get Their Winnings? Not Under Article 6 of Rome I!).

Geert van Calster has also discussed some private international law issues in connection with gambling and the Maltese Bill 55 in his blog, here.

How Omnibus Risks Opening a Major Gap in the Enforcement of the Corporate Sustainability Due Diligence Directive

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The Editors of the EAPIL blog
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The author of this post is Rob Rooman, PhD Researcher at KULeuven.

Ever since its adoption, the future of Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence (hereinafter, the CS3D) has been unsure.

The Directive in general is facing significant political resistance, and has seen its transposition deadline delayed. Furthermore, the European Commission in February proposed its Omnibus Simplification Package, aiming to simplifying the EU’s ESG regulations in order not to disadvantage EU companies in terms of competitiveness. In the CS3D, this is concretized for example by restricting due diligence obligations to direct business partners and not indirect business partners, or increasing the scope of maximum harmonization.

Amendments to Article 29

I will not dive into the amendments to the due diligence obligations. Rather, I will focus on the consequences of Omnibus on the civil liability regime laid down in Article 29 (for a more extensive analysis of that Article, see for example Bueno and Oehm). This liability regime should ensure private enforcement of the Directive by ensuring that claimants who have sustained damages arising out of adverse impact on human rights and environment caused by corporate activity, can hold the parent company accountable. In short, the proposal removes most of Article 29, leaving only the principle of full compensation according to national law intact, together with additional rules, for example on access to justice (although possibility for claimants to authorize organizations to bring representative actions has disappeared too). The Commission has done so to ensure respect for the different national liability regimes of the Member States, and to avoid the litigation risks of a harmonized civil liability regime.

By removing Article 29(1), which set out the liability conditions, the Commission leaves it up to national law to decide on what conditions a company will be liable for infringing the CS3D.  This means that the conditions of the liability will depend on the state in which the claim is brought, aligning with the Commission’s goal to ensure respect for different regimes.

No Overriding Mandatory Application? The Risk of a New Enforcement Gap

However, the Commission has also proposed to remove Article 29(7), which designates the liability rules to be of overriding mandatory application. This allows the Member States not only to decide on the conditions of liability, but also to decide whether or not to include an express characterization as overriding mandatory provisions (OMP’s) in the implementation of the CS3D (which, as said by Pannebakker, they might not be eager to do). If they refrain from doing that, courts will be forced to apply the normal conflict of laws rules set out in the Rome II Regulation, with the general rule pointing towards the country in which the damage has arisen (aka lex loci damni, and in such claims most likely third state law). Alternatively, the national judiciary might attempt to apply the Directive with national liability rules as OMP’s in accordance with the CJEU case law on Article 16 Rome II, but that would then lead to the necessary unpredictability and litigation.

From an enforcement point of view, this risks opening a major enforcement gap at the stage of applicable law. With the already existing enforcement gap at the stage of jurisdiction (as explained by Sommerfeld and Michaels on this blog), this could effectively put the application of the Directive’s liability rules to death.

With one of the Commission’s objectives being the avoidance of litigation risks, it is ironic that on the contrary, Omnibus actually seems to make it harder to manage those. Whether or not the company will be liable under the CS3D will depend not only on the conditions of CS3D liability in the laws of the Member State of the seized court, but also on what law those courts will apply. As noticed by Geert Van Calster, this may lead to a wide variety of possible results, and the law applicable to CS3D liability claims may now very well be the law of any country in the world where damage has arisen. In the recent study by the JARO Institute on Sustainability and Digitalization, approximately half (53%) of the surveyed businesses expect more liability risks now that the CS3D might not be of overriding mandatory application. In addition, timely clarity on the content of the rules is much needed, so that businesses can prepare accordingly. The survey shows that nearly half of the participating businesses are delaying investments due to the current state of unclarity following Omnibus.

In its opinion, the European Economic and Social Committee advises against removing the harmonized rules on liability and their application as OMP’s, as this leads to fragmentation on the internal market, and to a decrease in access to justice. With respect to the latter, Omnibus indeed proposed to remove one of the access to justice measures in Paragraph 3, i.e. on representative actions. Regarding the other four (on costs, statutes of limitations, disclosure and injunctive measures), it is of note that two of those (rules on costs and disclosure) are likely categorized as matters of procedural law. They are excluded from Rome II’s scope (Article 1(3)) and most probably subject to lex fori. EU courts will therefore always be able to apply their own laws (including the transposed CS3D) to those matters, irrespective of the law applicable.

How to Proceed

In any case, to avoid unwanted and unnecessary unpredictability, and to ensure the effective application of the Directive, even in its ‘simplified’ version, it is strongly recommended to include an express reference to OMP’s in the CS3D. This would at least harmonize the fact that if an EU court has jurisdiction to hear a CS3D liability claim, it in fact applies that Directive together with its national liability rules. Whether or not, and with what result the company will be liable in the end will then still depend on the different national liability regimes of the Member States, but at least the application of the CS3D is guaranteed.

International Family Relocation: Where to Next?

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The Editors of the EAPIL blog
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The author of this post is Nishat Hyder-Rahman, Postdoctoral Research Fellow, MSCA Impact Fellowship Programme, Department of Private and Economic Law, Vrije Universiteit Brussel.  She is also a volunteer researcher at GlobalARRK and presented findings from the GlobalARRK report in panel 2 of the conference. The views expressed in this post are the author’s own, and not to be attributed to either GlobalARRK or the VUB.

On 2-4 April 2025, the Hague Conference on Private International Law (HCCH), the International Academy of Family Lawyers (IAFL) and the Embassy of Canada in Washington D.C., co-hosted a conference entitled 15 Years of the HCCH Washington Declaration: Progress and Perspectives on International Family Relocation, spotlighting the Washington Declaration on International Family Relocation (hereinafter, the Washington Declaration, or simply ‘the Declaration’).

The event brought together legal professionals and academics, government and policy experts, and special interest groups to reflect on the impact of the Washington Declaration and contemporary issues in international family relocation more broadly.

The Washington Declaration

The Washington Declaration was adopted in 2010 as a result of discussions that took place at the International Judicial Conference on Cross-Border Family Relocation. The 2010 conference gathered judges and experts from around the world, many of whom were also present at the 2025 event. The Declaration itself is written in the HCCH’s trademark clear, concise style, containing only thirteen principles. It addresses the availability of relocation proceedings, the notice period, the factors that are relevant to a decision on international relocation, the interaction between cross-border relocation and the operation of the Hague Convention on International Child Abduction (HCCA) 1980 and the Hague Convention on International Child Protection (HCCP) 1996, out-of-court decisions on relocation, the enforcement of orders, modification of contact provisions, judicial communication and finally, a call for further research, development, and promotion of the principles.  The content of the principles is relatively neutral, reflecting, perhaps, the common ground found between delegates from different jurisdictions during the 2010 discussions. Although the Declaration is not a legally binding document, it is nonetheless valuable, offering a starting point for a consistent global approach to international relocation.

Establishing the Current Landscape in International Family Relocation

Turning then to the 2025 conference, the first panel set the scene.  The opening address, delivered by Diana Bryant, former Chief Justice of the Family Court of Australia, reflected on developments within international family law in the fifteen years since the Washington Declaration.  Professor Robert George KC gave an overview of legal scholarship in international family relocation, including recent statistics on relocation cases, and two psychological experts spoke about the impact of abduction and relocation on children.  The second panel continued setting the scene.  Philippe Lortie and Laura Martinez-Mora from the HCCH permanent bureau set out HCCH’s framework of relevant conventions (HCCA 1980, HCCP 1996, Child Support Convention 2007) and available tools, respectively.  The relatively new Canadian legislation that sets out a clear and detailed process specifically for relocation was highlighted, as was a recent study by the charity GlobalARRK, on the lived experience of parents applying for international relocation in order to return to their home country.

What Constitutes the Child’s Best Interests?

The central tension within the socio-legal discourse on relocation was apparent across the first two panels, albeit just below the surface of the conference proceedings.  Scholarship on how to approach international family relocation remains heavily polarised, due to variations in empirical results and fundamental doctrinal differences on how to determine the child’s best interests.

On the one hand are those who emphasise the importance of a child maintaining regular contact with both their parents, and the risk of parental alienation upon the left-behind parent.  This approach prejudices international relocation, which inevitably makes regular (in-person) contact much more challenging.  Both of the psychology-focused reports on panel 1, appeared to follow this approach.

On the other hand are those who emphasise the importance of the quality of time spent, rather than the frequency or amount of time spent with the left-behind parent.  Furthermore, proponents of this approach emphasise the interdependence between the welfare of the primary carer parent (who is applying for relocation) and the welfare of the child.  This approach supports facilitating international relocation, where the circumstances demand it, i.e. to protect the welfare of the child directly or via the primary carer. The GlobalARRK report aligned with this approach. (For a recent overview of this debate and the relevant literature see: R. Schuz, ‘International Child Relocation after Relationship Breakdown, in Research Handbook on International Family Law, edited by J.M. Carruthers and B.W.M. Lindsay, Edward Elgar Publishing, 2024, at p. 133 ff.).

Both these approaches place the child’s best interests at the centre – however they differ over what constitutes the child’s best interests.  Unfortunately, there was little scope within the conference to openly engage with this discussion, in the context of policy making and legal practice.  This was a missed opportunity given the depth and breadth of international expertise in the room.

Country Reports on Relocation Policy and Procedures

The following four panels, indeed the core of the conference, was dedicated to a series of country reports from legal practitioners and judges, outlining the policy and procedures for international relocation in their jurisdiction.  For those countries that were represented at the 2010 conference, this was also an opportunity to reflect on progress in the intervening years. The country reports revealed considerable variation in how states regulate relocation.  While a few countries have a specific statutory framework for relocation (e.g. Canada), other countries have developed their legal framework for relocation primarily through caselaw (e.g. England & Wales.).  Furthermore, some countries do not have any specific procedures for relocation, and the matter is instead addressed under the general legal framework pertaining to parental responsibilities (e.g. Hungary), custody (e.g. Germany, the Netherlands) or child arrangements (e.g. Spain), to name a few examples.

The Impact and Influence of the Washington Declaration

Alignment between the relevant national laws on relocation and the content of the Declaration was evident in the country reports.  A common theme throughout all the country reports was the paramountcy of the child’s best interests, which is set out in Principle 3 of the Declaration.  Furthermore, the factors relevant to relocation decisions, set out Principle 4 of the Declaration, in whole or in part, were also common to most country reports.  However, this is most likely due to general, widespread evolutions within family law (for example, the strengthening of children’s rights and, therefore, the centrality of the best interests) rather than a conscious effort to incorporate or mirror the text of the Declaration itself.  While there is a certain degree of awareness of the Washington Declaration, there were only a few reported instances of direct reference to the Declaration by the courts.

Current and Future Research and Policy Perspectives

The penultimate panel considered current and future research and policy. The international NGO, International Social Service reported on its work, and AIJUDEFA (International Association of Spanish Speaking Family Law Jurists) shared the results of its recent survey on relocation procedures in thirteen jurisdictions.  The IAFL also shared the results of its extensive research comparing international relocation laws and procedures around the world.  Finally, Professor Marilyn Freeman and Professor Nicola Taylor, leading experts in the field of (international) family law and part of the 2010 conference delegation, reflected on the academic research landscape in international relocation.  They pointed to the lack of research undertaken on international relocation in recent years and indicated key future research directions, including the impact on the child’s (right to) identity in the context of relocation and abduction.   Furthermore, they indicated the need to consider more closely how the best interests of the child are determined in different jurisdictions in the context of research on child outcomes, and the possible links between the relocation jurisdiction and abduction.

Alternative Dispute Resolution and Support Services

The final panel of the conference focused on alternative dispute resolution and support services in international relocation.  Reunite International, a charity, presented on its work involving mediation in international relocation cases.  The Italian experience of introducing a pilot project on mediation training for cross-border family matters was shared, as was the experience of mediation in the American context.  Finally, GlobalARRK presented on its work as a charity supporting stuck parents around the world, and the services it offers.

Concluding Reflections

The conference was extremely informative; in particular, the country reports offered a unique, comparative insight into the operation of relocation law around the world.  Two elements would have arguably improved an otherwise excellent event.  Firstly, a lot of information was imparted over the three days, and although there was time for questions following each panel, it was not suitable for extended discussions.  Facilitating exchanges, in a roundtable or similar format, on key issues within international relocation would have allowed for deeper, more dynamic engagement with the matters at hand.  For example, despite acknowledgment of the gendered nature of relocation (most relocation applicants are mothers), and indeed abduction (most taking parents are mothers), the gender perspective and expertise was missing from conference proceedings.  Secondly, critically reflecting on the Washington Declaration itself, in particular, considering the expansion or detailing the principles would have propelled the discourse further.  Nevertheless, the conference was well-organised, well-attended, and a genuinely interesting gathering that will hopefully reignite much-needed research on international family relocation.

Finally, interested readers will be happy to know that many of the conference presentations are available via the HCCH website.  Furthermore, presentations will be written and published by the HCCH as a Special Issue of the Judge’s Newsletter (forthcoming).

Digital Assets and Electronic Trade Documents in PIL: Law Commission of England and Wales Consultation Paper

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Ugljesa Grusic
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On 5 June 2025, the Law Commission of England and Wales published a consultation paper (paper; summary) making proposals for reform on certain rules of private international law that apply in the context of digital assets and electronic trade documents.

The Commission also made proposals for reform of section 72 of the Bills of Exchange Act 1882. Separately, the Commission published an FAQ document concerning property issues in permissioned DLT systems.

They would like to hear from anyone with an interest in or awareness of this area of law. The deadline for responses is 8 September 2025.

The Law Commission describes the problem that the consultation paper addresses and its provisional proposals as follows.

The Problem

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise: in which country’s courts should the parties litigate their dispute, and which country’s law should be applied to resolve it?

When answering these questions, private international law has traditionally placed significant emphasis on geographical location, with rules pointing to “the courts of the place where the property object is situated” or “the law of the place where the damage occurred”.

New technologies – and particularly wholly decentralised applications of distributed ledger technology (DLT) – pose novel problems for private international law because they challenge this reliance on geographical location. DLT uses a network of computers – potentially located in many different places in the world – to record and store data (and crypto-tokens), meaning it can be difficult to “locate” an asset or activity in any one place. This gives rise to legal uncertainty and the application of rules that lead to arbitrary results when applied to the modern digital and decentralised environment.

Those who invest in or use emerging technologies need a clear legal landscape, with modern, fit-for-purpose laws that reflect how these emerging technologies are actually used in modern commercial practice.

Provisional Proposals

In the context of international jurisdiction, the Commission considers how the existing jurisdictional gateways for property and tort can be applied in the context of crypto litigation. The Commission also proposes the creation of a new free-standing information order to help claimants who have lost crypto-tokens through fraud or hacking obtain information about the perpetrators or the whereabouts of their tokens without having to go through the existing gateways.

In the context of applicable law, the Commission identifies wholly decentralised uses of DLT as being particularly problematic for private international law, and suggests that a different approach is required that would no longer require courts to identify a single applicable law. Rather, the courts should take into account a range of factors to determine a just outcome of the dispute, including the legitimate expectations of the parties. We note that this might involve taking into account the terms of a protocol that participants have signed up to.

The Commission also makes proposals to modernise section 72 of the Bills of Exchange Act 1882, a private international law provision that identifies the law applicable to particular contractual issues arising in connection with bills of exchange and promissory notes. These proposals, if implemented, would apply to relevant documents in both paper and electronic form.

Call for Evidence on EU Digital Justice Strategy for 2025-2030

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Marion Ho-Dac
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On 26 May 2025, the European Commission launched a call for evidence to support the preparation of the EU Digital Justice Strategy for 2025-2030 – DigitalJustice@2030. Anyone can contribute by logging in to an EU login account. The call is open for feedback until 23 June 2025.

 General Context

As explained on the dedicated webpage, this new strategy aims “to support and strengthen Member States’ capabilities to deploy and use digital technologies, including AI tools, in their judicial systems”. Moreover, it should propose a “set of tools (…) to improve the efficiency, resilience and quality of justice”.

It is a clear continuum of Regulation (EU) 2023/2844 on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters adopted in 2023. This latter instrument only tackles certain aspects of digitalisation in the context of cross-border disputes (briefly analysed here). According to the Commission, there is a need “to digitalise practices that are common to all justice systems” notably via “[common] or similar IT tools (including AI tools) and data standards”. To achieve this innovative and integrative step in judicial digitalisation new mechanisms and common frames of reference may be beneficial at EU level.

Future EC Communication

The future document will take the format of a Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. It will therefore not be a binding legislative text, but a soft law instrument containing policy guidelines that may also give rise to future toolkits or recommendations for Member States and their judicial authorities. There are two main reasons for that. First, the digitalisation of judicial systems goes beyond the Union’s competence on judicial cooperation in civil matters (which is cross-border by nature pursuant to Article 81 TFEU), as it blurs the frontier between cross-border disputes, on one side, and purely domestic cases, on the other side. Second, the deployment of digital and AI-based technologies within the Judiciary is a highly complex and sensitive process, implying new technical, ethical and legal skills as well as financial investments. However, Member States are not progressing at the same pace on these issues.

The forthcoming Communication will be drafted under the lead of DG Justice and Consumers (DG JUST) within its “A1 Unit” in charge of Digital transition and judicial training”. The text is expected to be published in the last quarter of 2025 and should be adopted together with the new Judicial Training Strategy (2025-2030).

Next Steps

The supporting document of the call for evidence provides for a list of possible workstreams with actions to be further developed:

Data on digitalisation of national justice systems and exchange of best practices: to create an overview of digitalisation practices in national justice systems, allowing meaningful exchange of best practices. Member States should be able to exploit synergies and implement existing well-functioning systems; and to aim at their interoperability – rather than each Member State developing its own national tools.

IT/AI Toolbox for Justice: to accelerate the level of digitalisation and generate cost savings for Member States, the toolbox could pool information about IT (including AI) tools at EU level.

AI in justice: to ensure the consistent application of the rules under the AI Act and help national authorities to make informed decisions on whether to use AI tools in justice, for which purpose and how. This would include identifying the opportunities related to the development and use of AI tools in the framework of judicial proceedings.

European Legal Data Space (ELDS): to ensure wide and systematic access to EU and national legislation and case-law and to promote the use of legislative and judicial data for the training and development of justice-adapted AI tools.

Digital court proceedings: to achieve fully digitalised cross-border court proceedings in civil and commercial matters. Key enablers include the use of trusted digital identities such as the European Digital Identity Wallet and the European Business Wallet, qualified signatures and seals, time stamps, e-delivery and e-archiving.

EU funding for digitalisation: several workstreams depend on access to sufficient funding at national and EU level. Availability of EU funding should be ensured under the current multiannual financial framework (MFF) and the existing financial programmes. Without prejudice to the Commission proposal and the negotiations with the co-legislators, the need for appropriate funding will be assessed for the next MFF, covering the period 2028-2034.

Ukrainian Online Marriages and their Recognition in Poland

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Anna Wysocka-Bar
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This post was prepared together with Sofiya Kernychna PhD (Jagiellonian University).

This post aims at presenting introduction of online marriage in Ukraine and the attitude towards its recognition in neighboring Poland.

Digitalisation of Public Services in Ukraine

In 2019 the Minister of Digital Transformation of Ukraine introduced a resolution  creating a web portal, a state mobile application and the brand ‘State in a smartphone’ – Diia (acronym for ‘State and I’ in Ukrainian). Later, the Cabinet of Ministers of Ukraine approved the resolution titled Matters of the Unified State Web Portal of Electronic Services and the Unified State Portal of Administrative Services, which regulated the operation of the Diia Portal. At first Diia Portal provided access to a digital driver’s licence and vehicle registration. In 2024, the number of users was over 21 million Ukrainians.

Digitalisation of Some Aspects of Marriage Conclusion in Ukraine

The 2022 aggression of Ukraine by the Russian Federation, and the martial law that was introduced in Ukraine as a result of it, also affected family relations in Ukraine, including the procedure for conclusion of marriage and its state registration. Due to the full-scale invasion, many men and women joined the Armed Forces of Ukraine and began to take part in military operations.

On 7 March 2022, the Government of Ukraine has adopted resolution titled Some Matters of State Registration of Marriage under Martial Law, which provided for a separate procedure for military personnel and certain other persons to conclude a marriage during martial law. In particular, state registration of marriage if one of the fiancés is, for example, a member of the Armed Forces, the Security Service, a police officer or an employee of a healthcare institution, could be conducted by the departments of the state civil registration office without the personal presence of such fiancé. In such a case, the application, which was at the same time a confirmation of the fact of consent to conclude a marriage, was submitted to the commander (supervisor) of this fiancé, who certified the authenticity of the signature and ensured that the application was forwarded to the registry office. The peculiarity of this procedure was that it was possible to register a marriage outside the civil registry office, in which case the marriage certificate was drawn up by the commander. On 30 October 2024 the above resolution was repealed due to introduction of online marriage conclusion and registration.

In the context of martial law, as part of digitalisation in Ukraine, another innovation has emerged. Since 27 February 2023, it has become possible for all Ukrainians to apply for marriage via the Diia Portal. The procedure took 10 minutes. It was possible only to submit an e-application for marriage registration. The marriage itself could not yet be concluded and registered in Diia Portal. Marriage registration, as well as the issuance of a marriage certificate, took place only at the civil registry office.

Introduction of an Online Marriage in Ukraine

On 29 March 2024, the Government of Ukraine adopted the resolution Procedure for the Implementation of a Pilot Project for the State Registration of Marriages in Electronic Form. It provides that ‘the process of remote marriage through the Diia application has several stages, including: submission of an application by a man and a woman using the Diia application with an electronic signature; the process of verifying the accuracy of the data provided by the future spouses, with the possibility of correcting inaccuracies and errors; the possibility of setting the date of registration of the marriage; the process of registering a marriage with a certificate of marriage; and the process of obtaining a marriage certificate’.

In June 2024, Ukraine launched the online marriage registration service through the Diia application, opening a new era in the field of state civil registration. This historic step is aimed at maximising digitalisation and simplifying procedures for couples wishing to register their marriage. The Central Department of the Ministry of Justice of Ukraine has launched the Digital Office of the Civil Registry Office, which processes marriage applications through the Diia Portal. This innovative solution is especially relevant for couples who, due to circumstances, cannot be together, as well as for those who value minimal contact with government agencies. On 22 June 2024, first 3 couples contracted and registered their marriage online in Ukraine.

The entire process of marriage registration takes place in the Diia – from application to conclusion of the marriage. The application process takes about 10 minutes. The service is provided in one business day. The maximum cost is 1.663,85 UAH (approximately 35 EUR), depending on the selected services and the day of marriage registration. Sometime after the online ceremony, the electronic marriage record is displayed in the Diia application. Later, the Civil Registry Office ensures the delivery and handing over of the marriage certificate to the newly married husband and wife through the Ukrainian Post Office service. Online marriages not only simplify the lives of Ukrainians in the current martial law situation by enabling remote marriage through the Diia application, but also provide convenience, time savings, transparency and, most importantly, guarantee security, especially in the context of military operations.

Transcription of Foreign Marriage Certificates in Poland

Being aware of the innovations in Ukraine, Polish Ministry of Internal Affairs issued an official letter of 15 May 2025 addressed to Polish authorities concerning the potential recognition of marriages contracted online by Ukrainian citizens, which would happen in Poland via transcription of the marriage certificate into Polish Civil Status Registry. In case a Ukrainian citizen lives in Poland and needs a Polish civil status certificate for the legal use in Poland (for example in order to obtain PESEL – Polish Personal Identification Number used in numerous administrative and civil procedures), this person might want to have a Ukrainian marriage certificate transcribed. One might have doubts whether an ‘online’ marriage certificate can be transcribed in Poland if online form of contracting marriage is unknown to Polish legal system.

The Ministry of Internal Affairs informs that if a foreign law provides for the possibility to celebrate a marriage remotely (online) and an appropriate certificate was issued by a competent authority, in accordance with the local law, then transcription might be possible in accordance with the provisions of the Law on Civil Status Records. If a foreign certificate in question does not indicate that the marriage was celebrated at a distance, this aspect should not be further examined. If the document reveals that the marriage was concluded “electronically”, the discretion of the civil status registrar is still limited to the examination allowed by the Law on Civil Status Records. Potential refusal of transcription may take place on the basis of the grounds exclusively enumerated in Article 107, which include, in addition to the formal requirements relating to the foreign document itself, a public policy clause.

Marriage Certificate and Public Policy Clause

In order to assess whether the transcription might be perceived as contrary to public policy, the Ministry of Internal Affairs consulted the Department of International Cooperation and Human Rights within the Ministry of Justice. In its Opinion, the Ministry of Justice reminded that the use of public policy clause against transcription of foreign civil status certificates was lately subject to voluminous case law of administrative courts (which together with Civil Status Registrars) were faced with marriage certificates of same-sex couples or birth certificates indicating persons of same-sex as parents (aspects reported also on this blog in: Legal Status of a Child Born Through Surrogacy – Latest From Poland or AG De La Tour’s Opinion in Wojewoda Mazowiecki on Poland’s Refusal to Transcribe a Same-Sex Marriage Certificate).

Then, the question is posed whether contracting marriage by the future spouses using modern distance communication technologies constitutes a violation of any fundamental principle of the Polish legal order or whether it should rather be considered ‘another manifestation of the rapid e-development of social relations, falling within the standards of the rule of law’.

The Opinion rightly indicates that family law in Poland foresees that sometimes a declaration of a future spouse can be made by a representative, and therefore, without the simultaneous physical presence of both future spouses in the same place. Hence, the legal system recognizes that various practical difficulties may prevent future spouses from physically appearing at the same time in the same place. It is also pointed out in the Opinion that at the time these provisions were drafted, the technical possibilities of digital communication were simply unknown.

Then, it is reminded that the introduction of online marriage is ‘undoubtedly a sign of the times’. Also, the state of Polish law fully confirms such conclusion. The COVID pandemic has contributed to the rapid development of the digital society in Poland. Trends in national and international law indicate a move towards e-justice (for example, online court hearings, while the adjudicating panel, participants and witnesses are physically located in different places become reality). Even though in Poland there are no online marriages, the Ministry of Justice ‘does not see any arguments’ in favor if refusing transcription of contemplated Ukrainian marriage certificates based on public policy clause.

It is worth to mention that the Ministry of Justice supported its standpoint by reference to views presented by legal scholars (citing Ewa Kamarad, Zastosowanie klauzuli porządku publicznego w sprawach dotyczących zawarcia małżeństwa – wybrane zagadnienia, 2012 Problemy Współczesnego Prawa Międzynarodowego, Europejskiego i Porównawczego 10, pp. 106-118 and Michał Wojewoda, Zagraniczne rodzicielstwo osób jednej płci a rejestracja stanu cywilnego w Polsce, 2020 Europejski Przegląd Sądowy 8, pp. 30-38 – not available in open access).

Even thought, as the Ministry of Justice emphasized, the Opinion is not binding on Civil Status Registrars or administrative courts, it is a very welcomed voice and might have impact on the approach towards potential transcription of marriage certificates originating also from other jurisdictions (see the post on Utah’s online marriage and its reception in Germany: Match in Virtual Heaven? No, Says German Supreme Court).

The European Commission Issues Its Report on the Application of the Brussels I bis Regulation

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Pietro Franzina
by

The European Commission has made public its Report on the application of the Brussels I bis Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (COM(2025)268 of 2 June 2025), together with a Staff Working Document providing further analysis of the issues discussed in the Report (SWD(2025)135).

Consistent with Article 79 of the Regulation, which required the Commission to ‘present a report … on the application of this Regulation’, accompanied by, where appropriate, ‘a proposal for amendment’ of the Regulation’s provisions), the document assesses the practical operation of the Regulation, and discusses the challenges posed by some of its provisions.

The Report, which builds on a study prepared by Milieu based on expertise provided by a group of scholars led by Pedro de Miguel Asensio and Geert van Calster (see here), and on the findings of the JUDGTRUST project, implemented by the Asser Institute in cooperation with the University of Hamburg, the University of Antwerp and the Internationaal Juridisch Instituut, marks a further step towards a new recast of the Regulation.

General Remarks

The Report begins by noting that the Regulation is generally viewed as a ‘highly successful instrument’ and that ‘the enhancements that it provided, such as the abolition of exequatur, have strengthened judicial cooperation in civil and commercial matters and as such have been welcomed by the Member States and the stakeholders’.

The rules of the Regulation, the Report also note,s are generally ‘considered to be clear and simple’, and there is ‘a broad consensus that in principle the case-law of the CJEU provides sufficient guidance and assistance for the judiciary when applying the rules of the Regulation’.

However, on specific issues, evidence exists that the interpretation of the Regulation raises complex issues, which may warrant clarifications by the legislator.

Scope of Application of the Regulation

As regards Article 1, the Report acknowledges that difficulties have arisen, inter alia, as regards the standard to be used in order to decide whether a matter has cross-border implications, the notion of ‘civil and commercial’ matters, the delineation of insolvency-related claims (which are excluded from the Regulation’s scope), and the exclusion of arbitration.

As concerns arbitration, the Report, having regard to the ruling of the Court of Justice in London Steam-Ship Owners, observes that

possible future review could further look into whether certain practical situations can be addressed in the Regulation, for instance by providing a clear lis pendens rule which could prevent situations of irreconcilability between an arbitral award/judgment confirming such an award and another judgment.

With reference to Articles 2 and 3, on definitions, the Report focuses on the issues raised in conenction with the notions of ‘judgment’, ‘court settlement’ and ‘authentic instrument’, in partcular as regards the cross-border movement of provisional measures and the notion of ‘court’. In this respect, the Commission notes in its Report that

a possible future review of the Regulation could further look into this matter, including the possibility to provide a definition or description of the concept of ‘court or tribunal’ that would, on the one hand, enhance the effectiveness of the Regulation and, on the other hand, would possibly do away with the need to provide for exceptions

but adds that

[f]urther reflection is … needed on the concept of provisional measures, in particular on whether ex parte measures should be included.

Defendants Domiciled in Third Countries

As specifically required in Article 79 of the Regulation, the issue is discussed of the possible extension of the jurisdiction rules of the Regulation (other than those on exclusive jurisdiction, choice of court and weaker parties) to proceedings brought against persons domiciled in States outside the European Union.

The Report acknowledges that the absence of uniform rules for proceedings against third-country domiciliaries ‘poses several challenges’. In fact, the ‘current state of affairs creates an unequal access to justice and an unequal playing field for EU and non-EU businesses and citizens that are involved in international (extra-EU) dealings depending simply on where they have their domicile’. In addition, the present situation ‘seems to have a negative impact on business and human rights litigation’, specifically in litigation where victims would seek to sue both a foreign business domiciled outside the EU and a controlling parent company based in the EU: given that different Member States have different rules on this, the ‘situation creates legal uncertainty and … puts EU parties, in this case both the plaintiff and the defendant parent EU company, on an unequal footing’.

The Report recalls that the preparatory Study by Milieu ‘revealed a mixed picture on the extension of the jurisdiction rules to defendants domiciled in third countries’, and observes that

a possible future review of the Regulation could further look into the matter of extending the jurisdictional rules to include disputes involving defendants domiciled outside the Union.

Rules of Special Jurisdiction

The Report notes that most Member States ‘reported the application of Article 7 to be non-problematic’, but remarks that ‘numerous referrals from national courts to the CJEU … reveal several major issues related to Articles 7(1) and 7(2)’.

These notably include: the notion of ‘matters relating to a contract’, which appears to form the object of increasingly broad interpretation (reference is made, in particular, to the Court’s findings in Feniks, on actio pauliana); the determination of the place of performance of contractual obligations (which many perceive as overly complex, notably under the Tessili formula); the determination of the place of damage in cases of pure financial loss (with the Commission acnowledging that many complain about the uncertainty as to the criteria that the national courts have to consider when localising purely financial loss and and the lack of clarity in the case-law of the Court of Justice); and the application of the ‘mosaic’ principle in cases involving the violation of privacy rights (with many arguing that the mere accessibility of the infringing content is not sufficient to establish jurisdiction, and that the mosaic principle may result in a multiplication of fora that defies the objectives of predictability and sound administration of justice).

That said, the Report contents itself with suggesting that the future review of the Regulation could ‘consider ways to simplify and modernize Article 7(1) and 7(2)’, without providing hinting at possible solutions of the difficulties experienced.

Jurisdiction over Consumer Contracts

The Report witnesses that the major difficulties relating to the application of protective jurisdiction rules regarding disputes over consumer contracts concern the notion of a ‘consumer’, the notion of ‘directing the commercial activity’, and the exclusion of transport contracts in Article 17(3) (issues in respect of collective redress actions are also considered in this part of the Report, but they are further elaborated among the ‘horizontal issues’, discussed below).

The analysis offered in the Report is rather comprehensive, but the Commission’s findings regarding this part of the Regulation are ultimately short and cautious. The rules on consumer contracts, the Commission notes, ‘generally function well and provide a satisfactory level of consumer protection’, but

certain aspects of consumer protection could be further clarified through the case-law or strengthened by a legislative intervention, subject to further analysis during the review.

Exclusive Jurisdiction

As to Article 24, the Report makes reference to the discussion surrounding the codification of the Court’s ruling in GAT into Article 24(4), and the reflexive effect that, according to one view (which the Court of Justice failed to endorse, however), the various exclusive grounds of jurisdiction in Article 24 might produce.

The opinion of the Commission is that ‘the rules establishing exclusive jurisdiction of the Regulation generally operate well’. Nevertheless,

a future review of the Regulation could reconsider the wording of Article 24(4) that aimed at codifying the GAT jurisprudence in the light of the recent developments in BSH Hausgeräte.

The Rules on the Recognition and Enforcement of Judgments

The Report acknowledges that there are ‘some national variations’ in the interpretation of the Regulation’s rules on the circulation of judgments, especially as regards the interpretation of the refusal grounds. However, ‘this does not affect the overall good functioning of the system of recognition and enforcement’, and the Court of Justice ‘has interpreted these refusal grounds in a consistent manner throughout the years and the few cases lodged under the Regulation do not alter this situation’.

The focus of the Commission is on Article 45(1) point (a), on public policy, and on Article 45(1), points (c) and (d), on irreconcilable judgments. At the national level, the Report observes, public policy is rarely invoked and, when it is, its invocation is rarely successful. This shows that, ‘in general, national courts follow the case-law of the Court and apply a restrictive interpretation of this concept’.

As to conflicting judgments, it is noted that in London Steam-Ship Owners, the Court of Justice raised questions as to the significance of the observance of the lis pendens rules of Articles 29 and 30 of the Regulation in the context of invoking the refusal ground of irreconcilable judgments. In fact, except for the case where the court of origin has exclusive jurisdiction, the Regulation does not contain any mechanism of control of the application of the latter provisions. Contrary to Article 29 and 30, which favour the court first seised, point (d) of Article 45(1) ‘favours the earlier judgment, even where the proceedings started after those that led to the judgment to be recognised and enforced’. On the other hand, ‘point (c) of Article 45(1) does not contain any time requirement, but its scope of application is wider than that of the lis pendens rules’.

In the end,

a possible future review of the Regulation could further look at the consistency between points (c) and (d) of Article 45(1) and the lis pendens rules.

Relationship with Other Instruments

The rulig of the Court of Justice in Gjensidige, the Report notes, illustrates the difficulties that the national courts face when applying Article 71 of the Regulation, on the relationship with conventions in force for Member States. These difficulties ‘are primarily attributed to the vagueness of the TNT test and are seen as jeopardizing the uniform application of Article 71 across the Member States’.

The Commission expresses the view that the Regulation provisions on this issue ‘appear to operate well’, and merely concedes that

a future review could look into the possibility to further clarify Article 71 in light of the interpretation provided by the CJEU.

Horizontal Issues: Collective Redress Actions

The Commission’s Reports notes that the Brussels I bis Regulation does not provide specific rules applicable to collective actions, and that several of questions have been raised as to whether recourse to the ordinary rules on jurisdiction in matters related to tort or consumer contracts are fit for purpose in order to effectively deal with collective redress claims.

It is acknowledged that the Regulation ‘may create unnecessary burdens for the plaintiffs in collective redress claims because in most cases they would have to turn to more than one court in order to litigate’, which, in turn, ‘can lead to irreconcilable judgments’.

In light of this,

a possible future review of the Regulation could further look into this matter, in particular on whether the Regulation regulates in a satisfactory manner jurisdiction in collective (consumer) claims.

Horizontal Issues: The Impact of Digital Transformation on the Regulation

The challenges, here, are posed both by the the ‘multiplication of “digital” relationships that are intrinsically aterritorial and an ever-increasing use of digital technologies that are ubiquitous in nature’, notably when it comes to jurisdiction rules traditionally based on geographical connecting factors, and by the digitalisation of judicial procedures.

As to the first aspect, the Report notes that ‘the difficulties encountered by the national courts when applying the Regulation in a digital context are not so different from those arising in a “non-digital” context’, and concludes that,

at this stage, neither the questions referred to the CJEU or the decisions of the latter, nor the scarce data collected at the national level allows to draw firm conclusions as to the suitability of the current rules of the Regulation in an ever-increasing digital environment.

Concerning the digitaliasation of civil justice, the Commission takes the view in the Report that the

review of the Regulation could investigate possible ways to revise and simplify the procedures under the Regulation as part of the digital reform of civil justice systems spearheaded by the Digitalisation package.

Concluding Remarks

The Commission is ready to ‘initiate a formal review’ of the Brussels I bis Regulation in order to ‘consider and potentially prepare a proposal to amend or recast’ its provisions.

Possible innovations will be explored as regards, to sum up:

  • the possible extension of jurisdictional rules to defendants domiciled in third States
  • the clarification of concepts used in provisions dealing with the scope of application, such as the exclusion of arbitration, as well as the notion of ‘court or tribunal’ or the one related to provisionalmeasures
  • the simplification and improvement of the rules on special jurisdiction in Article 7 point (1) and point (2), as well as those related to consumer contracts
  • the grounds for refusal of recognition in Article 45(1) point (c) and point (d), regarding irreconcilable judgments.

Further analysis is needed, the Court observes, ‘in order to decide whether the necessary procedural tools to cover certain type of claims, such as those commonly referred to as collective redress, could be further enhanced through legislative intervention’.

The possibility to improve the coordination between the Regulation and international instruments, and the ways to modernise and simplify the procedures under the Regulation as part of the digital reform of civil justice systems, could also ‘be looked at’.

June 2025 at the Court of Justice of the European Union

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Marta Requejo Isidro
by

An opinion and two hearings are scheduled in June 2025 in relation to requests for preliminary rulings on private international law instruments.

On Thursday 12 June, Advocate General N. Emilou will deliver his opinion in case C-77/24, Wunner. The Oberster Gerichtshof (Supreme Court, Austria) has referred two questions to the Court of Justice of the European Union on the interpretation of Regulation No 864/2007 on the law applicable to non-contractual obligations (the Rome II Regulation):

1. Must Article 1(2)(d) of [the Rome II Regulation] be interpreted as meaning that it also applies to claims for damages against an officer of a company which a creditor of the company bases on tortious liability for infringement of protective provisions (such as provisions of legislation on games of chance) by that officer?

2. If Question 1 is answered in the negative:

Must Article 4(1) of the abovementioned regulation be interpreted as meaning that, in the event of an action for damages based on tortious liability in respect of gaming losses suffered which is brought against an officer of a company offering online games of chance in Austria without a licence, the place where the damage occurred is determined by

(a) the place from which the player effects credit transfers from his or her bank account to the player account maintained by the company,

(b) the place where the company maintains the player account in which deposits from the player, winnings, losses and bonuses are entered,

(c) the place from which the player places bets via that player account which ultimately result in a loss,

(d) the player’s place of residence as the location of his or her claim to payment of the credit balance in his or her player account,

(e) the location of the player’s main assets?

In main proceedings TE, an individual domiciled in Austria, is suing NM and OU, who used to be the managing directors of Titanium Brace Marketing Limited (‘TBM’) at the time of the facts. TBM ran an online casino via the website http://www.drueckglueck.com from its registered office in Malta. It offered its services to the European market as a whole. TMB held a valid Maltese gaming licence, but no licence under the Austrian Glücksspielgesetz (Law on Gambling), and is currently in liquidation.

TE played online games of chance via TBM’s website during the period from 14 November 2019 to 3 April 2020 without gaining any winnings.

In order to be able to play on TBM’s website, TE had to open a customer account in Malta. He made payments from his Austrian bank account into an account in a Maltese bank in order to top up his player account (his customer account). TBM booked those deposits as credit. The account opened for TE in Malta was a TBM real-money account for him as a player, not commingled with TBM’s company assets. If the respondent decided to participate in a game of chance, the stake for the game was debited from the player account. In the event of a win, said win would also have been credited to the player account. TE suffered a total gambling loss of EUR 18 547.67.

TE claims that the gambling contract is null and void in the absence of a TBM’s Austrian licence. He seeks reimbursement of its losses from both defendants. His claim is based on tortious liability – the infringement of the Austrian gambling monopoly would entail a violation of a protective law (Schutzgesetz). According to TE, NM and OU, as managers of TBM, are liable for the fact that the company offered illegal games of chance in Austria. They are personally and, as joint perpetrators, jointly and severally liable towards the persons injured by the violation of the provisions of the Austrian Gambling Act relating to the protection of players.

The court of first instance dismissed TE’s claim for lack of international jurisdiction. The appeal court overturned this decision. The appeal for Revision by NM and OU before the Austrian Supreme Court seeks the reinstatement of the decision of the court of first instance or, in the alternative, the annulment of the judgment given on appeal and referral to the previous courts. TE claims that the appeal for Revision should be dismissed.

The judgment will be adopted by a chamber of five judges, with F. Biltgen as reporting judge.

A hearing in case C- 516/24, Windermill, will be held on Wednesday 18 June. The Amtsgericht Schleswig (Local Court Schleswig, Germany) is requesting the interpretation of Regulation 4/2009 on maintenance obligations:

Is an application for legal aid, to which an application to vary in a matter relating to maintenance obligations – which is intended to be formally submitted in the event that legal aid is granted – is attached only in draft form, an ‘equivalent document’ within the meaning of Article 9(a) of the EU Maintenance Regulation, with the result that a national court has been seised and the jurisdiction of that court established?

In the case at hand the applicant resides in Sweden and his father, the defendant, resides in Germany. By application filed with the German competent court on 17 December 2021, which arrived by fax the same day, the applicant requested legal aid for an application to vary child maintenance. A draft of the latter application was attached and it was indicated that it would be submitted in the event of legal aid was granted.

On 28 January 2022, before the German court ruled on the issue of legal aid, the defendant brought an action seeking variation of the maintenance obligation before the Swedish court Eskilstuna Tingsrätt.

By order of 29 March 2022, the Local Court of Schleswig refused legal aid for the proposed application to vary in Germany for lack of international jurisdiction. By order of 27 May 2022, the Schleswig-Holsteinische Oberlandesgericht (Higher Regional Court, Schleswig-Holstein), in response to the applicant’s appeal, set aside the order of the Local Court and granted legal aid, pointing out that international jurisdiction is to be established in the main proceedings and not in the context of the granting of legal aid.

The Swedish court Eskilstuna Tingsrätt – after the action was dismissed at first instance on the grounds of lack of jurisdiction, that decision set aside by the Swedish Supreme Court, and the action referred back to the Tingsrätt – stayed the proceedings by order of 6 May 2024 pursuant to Article 12(1) of the EU Maintenance Regulation.

The legal issue to be determined is whether the application for the granting of legal aid already constitutes seising of the German court within the meaning of Article 9(a) of the EU Maintenance Regulation, and thus establishes jurisdiction as the court first seised, within the meaning of Article 12(1) of the same Regulation. In this context, the Court of Justice will need to establish whether the interpretation for the purposes of the Maintenance Regulation follows the lines of the Brussels system, or is an independent one.

A chamber of five judges (O. Spineau-Matei reporting) will be deciding on this case, counting with the support of AG R. Norkus’s opinion.

A hearing in case C-198/24, Mr Green, will take place on Thursday 19. The Landesgericht für Zivilrechtssachen Wien (Regional Court for Civil Matters, Vienna, Austria), requests the interpretation of the European Account Preservation Order (EAPO) Regulation:

Is Article 7(1) of [the EAPO Regulation] to be interpreted as meaning that action taken by the debtor three years or more previously and/or obstacles to enforcement of the judgment in the Member State of the debtor are not to be taken into account?

TQ, who resides in Austria, played from that country online games of chance offered by Mr. Green Limited, a company based in Malta. Mr. Green Limited has a Maltese online gambling licence but not an Austrian licence under the Glücksspielgesetz (Gambling Act).

Between 3 January 2017 and 25 April 2019, TQ suffered a loss of EUR 62,878, in respect of which he brought a claim in Austria. By judgment of the Landesgericht für Zivilrechtssachen Wien (Regional Court for Civil Matters, Vienna) of 2 December 2021, TQ was awarded EUR 62 878.00 including interest and costs against the defendant from the claim for recovery of those losses. The appeal lodged by Mr. Green Limited was dismissed by judgment of 21 February 2022. Both judgments have been final and enforceable since (at least) 13 April 2022. TQ’s claim has not yet been paid. Other players had in the past attempted to recover sums awarded to them by way of enforcement in Austria and had been successful.

Mr. Green Limited engaged Dimoco Europe GmbH, which is established in Austria, as a payment service provider with which he had a credit balance and which, as a third-party debtor, paid claims against the defendant until the beginning of February 2021. Mr. Green Limited terminated the contract with Dimoco Europe GmbH on an unspecified date before 16 February 2021 in order to prevent creditors from accessing assets.

By document of 13 February 2024, TQ applied for the adoption of a European account preservation order. In addition to an account held by Mr. Green Limited in Malta, TQ named five other accounts in Sweden, Luxembourg and Ireland. With regard to jeopardisation, he asserted that, following final and enforceable judgments, Mr. Green Limited had moved assets by terminating the contract with the Austrian third-party debtor Dimoco Europe GmbH after enforcement had been authorised in January 2021 or previously in other enforcement proceedings. There was a risk that it would take similar steps in other countries and all assets would be transferred to Malta. An Act had recently been adopted in that Member State prohibiting enforcement of Austrian judgments against gaming operators which have a Maltese licence, by reason of breach of public policy (On 12 June 2023, the Maltese Parliament adopted Act No XXI of 2023 to amend the Gaming Act. Under Article 56A of that Act, actions against gaming operators with a Maltese licence are prohibited and it is provided that the court must refuse recognition and/or enforcement in Malta of any foreign judgment and/or decision given upon such an action).

The Austrian court of first instance rejected the application for the adoption of a European account preservation order under Article 19 of Regulation (EU) No 655/2014 on the ground that it could not be inferred from the events in 2021 that enforcement would be impeded or made substantially more difficult in 2024. No urgency was evident because the underlying instrument was from 2021 and TQ had submitted the application only three years later. Appeal has followed before the referring Austrian court.

A chamber of five judges, with N. Jääskinen reporting, will decide on the case, which will benefit from an opinion by AG N. Emiliou.

EU Restrictive Measures and Private International Law – Update

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Marta Requejo Isidro
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Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine was from the very beginning doomed to undergo frequent amendment.

The first text contained only 14 articles. After the last modification in February 2025 (the thirty-fifth in a row), the number has more than tripled. As an anecdote, I note that the new provisions keep the original numbering, adding (in the English version, at least) a letter to it; a new insertion related to a previous one holding a number and a letter gets another letter. It may be better than simply re-numbering, but the outcome becomes a bit confusing.

The Regulation has an obvious impact on cross-border private transactions. In 2014, it already included under Article 11 a ban on the satisfaction of specific claims, and a rule on the burden of proof in proceedings for the enforcement of said claims. The provision has experienced several changes in the form of insertions and replacements in 2022 and 2024, which did not take the form of PIL rules, although, as said, they affect cross-border relations (see, on the difficulties of interpretation, case C-802/24, Reibel, currently pending). Besides, further recent additions to the Regulation immediately after Article 11 are of direct interest from a PIL perspective.

To start with, in June 2024, Articles 11a and 11b were inserted enabling Member State nationals and companies to obtain compensation from Russian individuals and entities that caused damages to them:

  1.  as a consequence of claims lodged with courts in third countries by those Russian individuals and entities, in connection with any contract or transaction the performance of which has been affected by the measures imposed under the Regulation, or
  2. by any persons, entities or bodies referred to under Article 11(1) that benefited from, or issued, a decision pursuant to the Decree of the President of the Russian Federation No. 302 of 25 April 2023 as subsequently amended, or pursuant to related or equivalent Russian legislation, provided that such decision is illegal under international customary law or under a bilateral investment treaty entered into between the relevant Member State and the Russian Federation.

[Presidential Decree No. 302 the Russian Federation established a legal framework to authorize the Government to take control of Russian assets owned or managed by investors associated with ‘unfriendly’ foreign States].

In either case, the claim for compensation is nevertheless conditional upon the lack of effective access to remedies, for example under the relevant bilateral investment treaty.

In December 2024, the 2014 Regulation was again amended. This time, a new Article 11c was inserted creating a ban on the recognition or enforcement in a Member State of any court decision pursuant to, or derived from, Article 248 of the Arbitration Procedure Code of the Russian Federation or equivalent Russian legislation. For those not familiar with Article 248 of the Arbitration Procedure Code: pursuant to it Russian courts have already issued anti-injunctions prohibiting the initiation or continuation of proceedings in foreign courts or tribunals on the part of European companies against Russian companies; the injunctions are usually coupled with disproportionately high financial penalties in cases of failure to comply. Recital 8 of the amending Regulation explains: ‘The Union considers that the manner in which Russian courts issue such anti-suit injunctions and fines is in clear violation of established international principles and long-standing practices in the resolution of international business disputes’.

The 2024 changes (which have themselves experience a few amendments afterwards) did not address international jurisdiction. In fact, until very recently, the 2014 Regulation had no rules on jurisdiction, but referred to the existing provisions of Union and Member State law regarding jurisdiction in civil and commercial matters, including those concerning interim relief.

The situation is different since February 2025. According to Article 11d of Regulation 833/2014,

Where no court of a Member State has jurisdiction pursuant to other provisions of Union law or of the law of a Member State, a court of a Member State may, on an exceptional basis, hear a claim for damages brought pursuant to Article 11a or 11b, provided that the case has a sufficient connection with the Member State of the court seised.

In other words, a forum necessitatis has been added to the already existing grounds for jurisdiction in civil and commercial matters.

Interestingly, the amending Regulation also gives guidance on the interpretation of ‘sufficient connection’, explaining in Recital 39 that the condition is met ‘for example where the claimant is domiciled in, or incorporated under the law of, that Member State.’

Moreover, it should also be noted that immediately before, Recital 38 addresses the meaning of ‘being deprived of effective access to the remedies under those domestic jurisdictions’. I indicated before that the requirement is not met, for the purposes of suing in a Member State under Articles 11a and 11 b, if the claimant has access to remedies abroad under an investment bilateral treaty. As of February 2025,

In situations where Russia or another third country takes measures to frustrate compliance with Regulation (EU) No 833/2014, Union operators can be regarded as being de facto deprived of having effective access to the remedies under those domestic jurisdictions.

I assume we will learn soon, by way of practical examples, what the actual reach of this enlargement implies – especially in combination with the forum necessitatis.

A Renewed Agenda for European Union – United Kingdom Cooperation

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Marta Requejo Isidro
by

On 19 May 2025, the leaders of the European Union (António Costa, President of the European Council, Ursula von der Leyen, President of the European Commission) and the United Kingdom (Keir Starmer, Prime Minister of the United Kingdom) met in London for the first EU-UK summit since the UK withdrew from the EU.

At the end of the meeting, the leaders adopted three documents, among which a Common Understanding setting out the conclusions of the exploratory talks on areas for potential strengthened bilateral cooperation. Those areas are clasified under the following headings:

  • Security, defence, and development cooperation, comprising security and defence; cooperation on maritime security and safety; development and disaster cooperation; health security.
  • Putting people at the centre of the European Union – United Kingdom relationship.
  • Strengthening our economies while protecting our planet and its resources, comprising energy cooperation (exploring the participation of the United Kingdom in the European Union’s internal electricity market); new technologies; working towards a Common Sanitary and Phytosanitary Area; working towards linking Emission Trading Systems of the European Union and the United Kingdom; provision of services through entry and temporary stay of natural persons for business purposes; competition cooperation.
  • Internal security and judicial cooperation, comprising reinforced law enforcement and judicial cooperation in criminal matters; judicial cooperation in civil and commercial matters; cooperation in relation to drugs risks and threats.
  • Irregular migration, comprising upstream migration; working together on practical solutions and returns; bolstering United Kingdom and European Union border security including through law enforcement cooperation; addressing challenges and abuses of visa policy

In spite of the assertion according to which ‘The UK and the European Commission agreed that it is in their mutual interest to deepen people-to-people ties, particularly for the younger generation’, only a vague non-committal paragraph (number 55) is devoted to judicial cooperation in civil and commercial matters:

The European Commission and the United Kingdom note the importance of the positive judicial cooperation in civil and commercial law, including family matters. In this context, they welcome that the Hague Convention on Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters will enter into force for the United Kingdom on 1 July 2025.

No mention to cooperation in the area appears in the dedicated website of the European Council listing the main results of the summit.

In a Joint Statement  the leaders of the UK and of the EU have agreed to hold annual summits in order to strengthen the bilateral relationship.

New Rules on the Registration in Spain of Births by Surrogacy

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Marta Requejo Isidro
by

Under Article 10 of the Spanish Law 14/2006 of 26 May 2003 on assisted human reproduction techniques, gestation agreements, for a price or not, by a woman who renounces to motherhood in favour of a party to the contract or of a third party are null and void. As a rule, the parenthood of children born by surrogacy shall be determined by childbirth.

In addition, the Organic Law 1/2023, amending the Organic Law 2/2010 on sexual and reproductive health and on the voluntary interruption of pregnancy, expressly defines surrogacy a form of violence against women.

This legal status quo has not prevented individuals of Spanish nationality from resorting to surrogate motherhood in countries where this is permitted. Once the birth occurs, they apply to have the parenthood resulting from the contract registered in the Spanish Civil Register, either by requesting the transcription of a foreign certificate, or by invoking the content of a foreign decision acknowledging the parenthood of the Spanish applicant.

On 5 October 2010, the Dirección General de los Registros y el Notariado (the current Dirección General de Seguridad Jurídica y Fe Pública, a Directorate within the Ministry of Justice) issued an Instruction laying down the conditions for the access to the Spanish Civil Register of births occurring abroad by surrogacy, when one of the parents is a Spanish national.

Pursuant to the Instruction, registration in Spain of such births required a decision by a competent court asserting the full legal capacity of the woman giving birth to the child, the legal effectiveness of the consent given, full compliance with the requirements of the legislation of the country of origin, and the absence of  simulation in the surrogacy contract masking a situation of international child trafficking. In principle, the registration of the foreign decision would need the exequatur.

However, in accordance with the case law of the Tribunal Supremo (Supreme Court, TS), where the decision results from a procedure comparable to Spanish non-contentious proceedings exequatur is not any longer compulsory, i.e., incidental recognition of the decision by the registrar suffices.

A subsequent Instruction of the same Dirección, issued on 18 February 2019 provided additional clarification.

The situation has changed since the Tribunal Supremo (TS) delivered its judgment No 1626/2024 in December 2024, upholding the refusal to recognise a US foreign judgment in a surrogacy case.

The TS held then that what constitutes the interests of the child in a given case must be determined in light of the values espoused by the society, set in the legal rules and in the principles underlying national legislation and international conventions on civil status and child protection.

The protection of the interests of the child cannot simply be based on the existence of a surrogacy contract and on the parenthood accorded by foreign law to the intended parents. Said protection must rather be established having regard, first, to the breakdown of any connection between the child and the woman who gave birth to him, and, second,  to the existence of a biological paternal parentage and of a family nucleus in which the children are integrated.

It must be based on the national and conventional rules in force in Spain, which means it will be granted either by determining the biological paternal affiliation, through adoption, or by way of the integration of the child into a family unit through foster care.

According to the TS, this solution satisfies the best interests of a child, specifically assessed, and safeguards fundamental rights that would be seriously harmed if the practice of commercial surrogacy were promoted.

As a consequence of the decision, in April 2025 the Dirección issued a new Instruction to replace the previous ones. The rules guiding the registration in a Spanish Civil Registry of births of children born to a surrogate mother are as follows:

  1. Under no circumstances shall the persons in charge of civil registers (including consular ones) accept, as suitable for the registration of birth and parentage of children born through surrogacy, a foreign registration certificate, a simple declaration accompanied by a medical certificate relating to the birth of the child, or a foreign final judgment.
  2. It may be that applicants are allowed by the local authorities to travel with the minor. In this case, once in Spain parenthood shall be established by the ordinary means provided for in Spanish law: biological parenthood, where applicable, with respect to one of the parents of intention, and subsequent adoptive parenthood where it is proved that there is a family nucleus with sufficient guarantees.

It should be noted that pending applications for the registration of the parenthood of children born by surrogacy at the date of publication of the Instruction in the Official Journal, based on the former rules, will be dismissed.

Protect USA Act of 2025 vs Corporate Sustainability Due Diligence Directive

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Marco Pasqua
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Recent legislative initiatives in the United States reflect concerns over the extraterritorial implications of Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD). One such initiative consists of a bill titled Prevent Regulatory Overreach from Turning Essential Companies into Targets Act of 2025 (Protect USA Act of 2025), introduced in the US Senate by Senator Bill Hagerty.

The bill seeks to counteract the impact of foreign sustainability regulations — like the CSDDD — on US entities deemed essential to national interests, and could also extend to other foreign frameworks with similar features.

To this end, Section 4 contemplates a prohibition on compliance with foreign due diligence regulations that impose sustainability and human rights obligations; these are seen as potentially conflicting with US laws and priorities. While generally prohibitive, the bill introduces a limited form of flexibility by allowing affected businesses to request an exemption from the President in cases of particular hardship.

Section 5 adds that no adverse action may be taken against an entity covered by the bill for action or inaction concerning a foreign sustainability regulation. This provision is particularly interesting, though its scope remains ambiguous — whether it aims to limit jurisdiction or simply regulate substantive conduct is unclear, and the wording appears to blend the two.

Further, the bill states that no judgment issued by a foreign court against an entity considered vital to US national interests — if related to a foreign sustainability due diligence regulation — will be recognized in the United State Federal or State courts, unless expressly authorized by an act of Congress.

The proposed Act would also empower affected entities to seek relief through private civil actions. In such cases, the plaintiff may obtain equitable or declaratory relief, compensation for payments made under the contested foreign rules, punitive damages (up to a capped amount), reimbursement of litigation costs and other appropriate remedies. It is unclear, however, whether this provision merely provides a substantive right to compensation or functions as a jurisdictional ground (if not both things).

Finally, the bill establishes sanctions for violations, including civil penalties of up to $1 million and the potential exclusion from federal procurement opportunities for a period of up to three years.

Overall, the PROTECT USA Act may be seen as a form of blocking statute — a legislative shield aimed at neutralizing the effects of foreign rules. The EU’s Blocking Statute (Regulation (EC) No 2271/96) sought to protect EU operators from the extraterritorial impact of US sanctions; the bill appears poised to use similar instruments to defend US from the expanding reach of EU sustainability legislation.

The bill has been read twice and referred to the US Senate Committee on Foreign Relations.

While the bill currently stands as a Republican-led initiative, it is beginning to attract broader support, particularly from officials in US States who have voiced opposition to the extraterritorial reach of the CSDDD (a letter expressing this view is available here).

US businesses, for their part, have expressed significant concerns regarding both the CSDDD and the PROTECT USA Act. In 2023, the US Chamber of Commerce has criticised the extraterritorial reach of the CSDDD, arguing that it imposes complex and burdensome obligations on US companies operating in the EU. They directive’s requirements, the Chamber contended, could lead to excessive legal risks, including potential litigation in EU Member States, and undermine US regulatory authority by subjecting US firms to European policy preferences

But apprehensions have been raised in early reactions, like the ones available here and here, about the PROTECT USA Act, as well. The act’s prohibitions could place companies in a difficult position, forcing them to choose between violating US law or facing penalties in the EU for non-compliance with the CSDDD. Additionally, there are concerns that the act could strain transatlantic trade relations and complicate the legal landscape for multinational corporations.

Briefing on Cross-Border Enforcement of the Unfair Trading Practices Directive

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Marion Ho-Dac
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The European Parliamentary Research Service has recently released a Briefing, by Nikolina Šajn, on the European Commission’s proposal for a regulation on cooperation among enforcement authorities responsible for the enforcement of Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.

Background

The proposal aims at improving farmers’ position in the agri-food supply chain, building on Directive (EU) 2019/633 on Unfair Trading Practices (UTP). In that respect, the proposed regulation lays down new rules under which the enforcement authorities of EU Member States (designated pursuant to the UTP Directive) should better cooperate and coordinate actions with each other, overcoming the principle of territoriality (Article 1 and Recital 3).

The abstract of the Briefing, titled Cross-border enforcement of the Unfair Trading Practices Directive, reads as follows:

The 2019 Unfair Trading Practices (UTP) Directive sought to address imbalances in bargaining power between suppliers and buyers of agricultural products. The directive was primarily aimed at protecting farmers, as a weaker party, selling their products to big supermarkets and food processing companies. However, experience has shown that the directive does not always provide a sufficient legal basis for mutual assistance in cross-border investigations. The Commission’s proposal for a new regulation on cross-border cooperation among authorities responsible for the enforcement of the UTP Directive is part of EU efforts to improve farmers’ position in the agri food supply chain. It would enable cooperation between enforcement authorities in cases of unfair trading practices where suppliers and buyers are in different Member States. Farmer associations have welcomed the proposal but are calling for a more substantial revision of the directive, in particular a ban on buying agricultural products below production cost. Retailers meanwhile are highly critical, saying that the proposal risks fragmenting the single market.

Private International Law Perspective

The draft regulation mainly focuses on establishing public enforcement rules and “is without prejudice to the Union and national rules on private international law, in particular rules related to court jurisdiction and applicable laws” (Article 2(2)).

However, some EU substantive rules on cross-border enforcement could have an indirect impact on conflict of laws, according to the positions of the interested parties reported in the report. Indeed, several industry representatives claim that “the proposal raises serious legal concerns for the single market as it could undermine businesses’ right to choose the law and jurisdiction applicable to their contracts” (EuroCommerce and, similarly, Independent Retail Europe).

Other stakeholders argue that the draft regulation “should help address practices such as forum shopping, ‘where some operators, particularly retail alliances, have located in certain jurisdictions to avoid the application of UTP laws’” (European Brands Association). This seems to open up avenues for exploration for PIL experts.

Adoption of the Stop-the-Clock Directive Amending Corporate Sustainability Due Diligence Directive

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Marco Pasqua
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On 14 April 2025, the Council of the European Union approved the position of the European Parliament at first reading, illustrated in this blog, on the proposal for a directive amending Directives (EU) 2022/2464 and (EU) 2024/1760 (the Corporate Sustainability Due Diligence Directive – CSDDD) as regards the dates from which Member States are to apply certain corporate sustainability reporting and due diligence requirements. The directive has thereby been formally adopted (the final text can be read here) and will be published shortly on the Official Journal of the European Union.

As result of the amendments by the stop-the-clock directive, Member States will have until 26 July 2027 to transpose the CSDDD into their national legislation.

Member States shall apply those measures: from 26 July 2028 as regards EU-based companies (over 3,000 employees and €900 million turnover), with Article 16 on communicating obligations applying from financial years starting on or after 1 January 2029; from 26 July 2028 as regards non-EU based companies (€900 million turnover), with Article 16 on communicating obligations applying from financial years starting on or after 1 January 2029; from 26 July 2029 for all other covered companies, with Article 16 on communicating obligations applying from financial years starting on or after 1 January 2030.

This prompt agreement will allow the co-legislators sufficient time to reach consensus on the substantive amendments to the CSDDD, also put forward by the Commission under the ‘Omnibus I’ sustainability package.

French Ministry of Justice Directs Public Officials to Register Foreign Surrogacy Judgments

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Gilles Cuniberti
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État civil – Ville de BaillifOn 9 April 2025, the French Ministry of Justice issued instructions for the public prosecutors of Nantes and Rennes, who are responsible of the French central status registry, to register parentage as resulting from foreign surrogacies.

The instruction expressly relies on the judgments of the Cour de cassation of October 2024 and November 2024 which both ruled that foreign surrogacy judgments were to be recognised in France.

The instruction mandates French status registries to indicate on the birth entry of the child the parents as established by the foreign decision. The instruction expressly states that the entry should indicate the parents even if they both are men or if one is a woman who did not give birth to the child.

A lawyer for some of the couples who obtained those decisions has indicated on social media that some prosecutors resisted the implementation of the judgments of the Cour de cassation in civil status registries. The goal of the instruction seems to be overcome this resistance.

Is Exequatur Necessary?

The instruction only refers to foreign decisions declared enforceable in France by a French court through exequatur proceedings. This is the procedural path that had been chosen by the lawyers who sought to implement the foreign surrogacy jugdments in these cases.

The reference to exequatur in the instruction is surprising, however, as exequatur is only necessary for enforcing foreign decisions. In contrast, the recognition of decisions which only establish a new status for the parties (for instance, establish a parentage relationship) produce effect in France without any prior judicial procedure. French courts have long held that seeking registration on civil status registries does not amount to enforcing the foreign decision and thus does not require the foreign decision to be declared enforceable (though it does not hurt if it is).

Acceptance of Recognition of Foreign Surrogacies

The instruction also demonstrates that the Ministry of Justice and the executive branch are fine with the liberal stance taken by the Cour de cassation in recent months and indeed ready to give it full effect.

The recent judgments of the French supreme court have attracted strong criticisms by a number of French academics. Leading French scholars have expressly called the court to overrule its decisions, in particular the most recent one which ruled that foreign surrogacy judgments do not violate French public policy. One of the arguments put forward by those academics was that the French lawmaker had expressed its will to forbid surrogacy, and that the judgments would amount to de facto abrogating these provisions.

The instruction signals that the executive branch is not as shocked as these scholars. The most important effect of the instruction might be to reinforce the Cour de cassation in its liberal policy and acceptance of foreign surrogacies.

European Parliament First Reading on the Proposal Amending Corporate Sustainability Due Diligence Directive

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Marco Pasqua
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As reported on this blog, the European Commission published on 26 February 2025 a proposal for a directive amending Directives 2006/43, 2013/34, 2022/2464 and 2024/1760. The initiative, part of the Omnibus Simplification Package, seeks to adjust certain corporate sustainability reporting and due diligence obligations.

On 1 April 2025, the European Parliament invoked the urgent procedure under Article 170 of its Rules of Procedure to expedite its review of the proposal in the parts aimed at postponing the implementation of social and environmental reporting, as well as due diligence requirements.

The Parliament adopted on 3 April 2025 its position at first reading voting overwhelmingly — 531 in favour, 69 against, and 17 abstentions — to postpone the transposition deadline and the initial phase of due diligence obligations under Directive 2024/1760 (the Corporate Sustainability Due Diligence Directive – CSDDD) by one year for the largest companies.

Consequently, according to the proposal, Member States have until 26 July 2027 to transpose the directive into their national laws. This one-year extension under the proposal also extends to the first group of companies subject to the new rules: EU-based companies with more than 3,000 employees and a net turnover exceeding € 900 million, and non-EU companies generating more than € 900 million in turnover in the EU. These companies will only have to apply the rules from 2028. For the other companies within the scope of the CSDDD, instead, the rules will have to be applied starting from 2029.

This decision by the European Parliament follows the Council’s Committee of Permanent Representatives (Coreper), which, on 26 March 2025, endorsed the Council’s negotiating position on the Commission’s proposal without amendments.

The proposal now requires formal approval by the Council of the European Union.

Arbitration Act 2025 Receives Royal Assent

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Ugljesa Grusic
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On 24 February 2025, the Arbitration Act 2025 received Royal Assent.

The Act implements the recommendations of the Law Commission for reform to the arbitral framework in England and Wales and Northern Ireland.

It addresses the following matters: Law applicable to arbitration agreement; Impartiality: duty of disclosure; Immunity of arbitrator: application for removal; Immunity of arbitrator: resignation; Court determination of jurisdiction of tribunal; Power to award costs despite no substantive jurisdiction; Power to make award on summary basis; Emergency arbitrators; Court powers exercisable in support of arbitral proceedings in respect of third parties; Challenging the award: remedies available to the court; Procedure on challenge under section 67 of the Arbitration Act 1996; Challenging the award: time limit; Appeals to Court of Appeal from High Court decisions; Requirements to be met for court to consider applications; Repeal of provisions relating to domestic arbitration agreements.

Readers of the EAPIL Blog are likely to be most interested in the new rule on determining the law applicable to arbitration agreements. The arbitration community and the Law Commission had expressed dissatisfaction with the common law choice of law rules, which have been the subject of three UK Supreme Court judgments since 2020 – Enka (2020), Kabab-Ji (2021) and UniCredit (2024). We have covered some of these developments extensively on the EAPIL Blog, including two symposia on the Law Commission’s reform proposals in this area and the UKSC UniCredit judgment.

The rule that ultimately found its way into the Act is similar to the Law Commission’s proposal and reads as follows:

6A Law applicable to arbitration agreement

(1) The law applicable to an arbitration agreement is—

(a) the law that the parties expressly agree applies to the arbitration agreement, or

(b) where no such agreement is made, the law of the seat of the arbitration in question.

(2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not constitute express agreement that that law also applies to the arbitration agreement.

(3) Subsection (1) does not apply to an arbitration agreement derived from a standing offer to submit disputes to arbitration where the offer is contained in—

(a) a treaty, or

(b) legislation of a country or territory outside the United Kingdom.

(4) In this section—

“legislation” includes any provision of a legislative character;
“treaty” includes any international agreement (and any protocol or annex to a treaty or international agreement).

As discussed in the two symposia, this rule raises many questions. For instance, which issues are covered by this rule? What amounts to an express agreement by the parties for this purpose? Is it a good idea to have two different choice of law rules for arbitration agreements, one in the new section 6A and another in section 103(2)(b), which implements Article V(1)(a) of the New York Convention? The uncertainties that existed under the common law rules have been replaced with new uncertainties presented by the new statutory rule. Judgment from English courts interpreting and applying this rule are keenly awaited.

An About-Face in the German Law of Names: From Nationality to Habitual Residence

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Matthias Lehmann
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The German Parliament has adopted a reform of the law of names, including private international law, to enter into force in mid-2025. It includes a ground-breaking change from the classic connecting factor, nationality, to habitual residence. This seems to be a new trend: the incoming Austrian coalition government also plans a similar shift.

The Text

As of 1 May 2025, Art 10 of the Introductory Law to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch – EGBGB) will read as follows:

1) A person’s name is subject to the substantive rules of the State in which the person has her habitual residence.

2) Spouses may, at or after the marriage, by declaration to the registry office, change their name to be used in the future in accordance with the law of a state

1. to which one of them belongs or

2. in which one of them has his or her habitual residence. …

3) The holder of parental custody may, by declaration to the registry office, determine that a child is to be given the name

1. in accordance with the law of the state to which a parent or the child belongs,

2. according to German law, if one parent has his or her habitual residence in Germany, or

3. according to the law of the state to which a person granting the name belongs. …

4) Furthermore, a person may, by declaration to the registry office, choose the law of the state to which he or she belongs for his or her name of the state to which he or she belongs. The declaration must be publicly notarized. …

The above translation, done by the author, does not include provisions that have been unchanged and new para. 5).

The Aim

The change to the habitual residence criterion was not foreseen in the original government’s bill but added by the Legal Committee of the German Parliament (Bundestag). According to its report, it intended to liberalise the law of names and improve the integration of immigrants moving to Germany. Yet the Act will also have far-reaching consequences for German nationals living outside of Germany (“expats”), whose name may in the future be governed by a different law.

Exclusion of Renvoi

The law excludes any renvoi, see the reference in Article 10(1) EGBGB to the “substantive rules”. As a result, the Private International Law rules at the place of habitual residence do not matter from a German point of view. If the country of residence accepts renvoi, it will compose the name in accordance with its own national law, since German PIL refers back. Hence, the reform is important not only for German but also for foreign authorities and tribunals. However, if the foreign PIL refers to the law of nationality and also excludes renvoi, conflicts will arise: In this case, the German court and the foreign court will determine the applicable law differently.

The Possibility to Select the Law of Nationality

The consequences of the new law are mitigated to some degree by the possibility to select the law of nationality, see Article 10(4) EGBGB. Yet this requires a declaration at the German registry office, which is not an easy feat, especially when living abroad. Moreover, the persons concerned need to be aware of this possibility in the first place. The dearth of reports over the issue in German and international media suggests this will not necessarily be the case.

Conflit mobile

If the new Act is read literally, it seems the governing law could change with every change of domicile. A German moving to Madrid could change his name from Christian Müller to “Christian Müller Müller”, since Spanish last names are composed of the names of both parents. If he then moves on to Kairo, he could be called “Christian Rainer Otto Müller”, given that Egyptian names include the first name of the father and the grand-father. A German called Graf von X could lose the “Graf von” if he decided to take a home in Austria, where noble titles are banned.

These unwelcome consequences are avoided by the principle of name continuity, which is recognised in Germany. According to this principle, the mere change of domicile does not constitute a ‘name changing event’, but only official acts like marriage or divorce. But this limits the utility of the new connecting factor for immigrants coming to Germany, who will not be able to rely on the law of their new domicile until they marry or get divorced. Another problem is that the principle of name continuity is nowhere spelled out in the new law. Foreign courts looking into the EGBGB risk simply applying the law of the current domicile. It is unlikely that they are familiar with specialised German PIL books. Let’s hope that they read this blog!

Further Reflections

The amendment was passed quite quickly. Changes of government bills by deputies are of course welcome in a democracy, but the parliamentary documents do not show any thorough discussion. While the habitual residence is the more modern connecting factor, the law of names is quite special and would have deserved some deeper reflections. After all, the name is a factor of identification and therefore should be stable. Perhaps it would have been better to offer the law of the habitual residence only as a choice (suggestion by Paul Eichmüller). Then immigrants and expats could have decided for themselves whether, where and when to change their name.

— Many thanks to Anatol Dutta and Paul Eichmüller for their critical review and helpful suggestions.

On European PIL, Codification and (Simple) Better Law-Making

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Marta Requejo Isidro
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On 4 March 2025, Prof. Thomas Kadner-Graziano presented publicly on line the project of research and the achievements to date of the EAPIL’s Working Group on the Feasibility of a European Private International Law Act (to which I belong).

A few days earlier, the EAPIL blog had informed about an article of Prof. K. Boele-Woelki available on SSRN entitled The next step in the unification of private international law in Europe: should it be codification?, published in November last year. Further references can be found there to recent publications on the topic, such as Prof. C. González Beilfuss’s Reflexiones en torno a una eventual codificación del Derecho internacional privado europeo (Cuadernos de Derecho Transnacional, 2024). It can be claimed that, at least for the ‘invisible college’ of PIL scholars, the topic is recovering momentum.

The EAPIL project is the only ongoing attempt to draft a wide-ranging European Private International code (rather: act), understood as something different to a simple structured compilation of unchanged law.

Still, according to the Working Group’s name, the final goal of the project is not necessarily to produce a code (act). The key word is ‘feasibility’: the possibility that something can be made, done, or achieved, or is reasonable. In this regard, one could say that the Group follows the European Parliament resolution of 7 September 2010 on the implementation and review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. There, the Parliament encouraged the Commission ‘to review the interrelationship between the different regulations addressing jurisdiction, enforcement and applicable law’; it considered that ‘the general aim should be a legal framework which is consistently structured and easily accessible’ and that ‘for this purpose, the terminology in all subject-matters and all the concepts and requirements for similar rules in all subject-matters should be unified and harmonised (e.g. lis pendens, jurisdiction clauses, etc.).’ Eventually, it posited that ‘the final aim might be a comprehensive codification of private international law’ (italics added).

It is indeed known that no proposal for a binding EU PIL code or act, even partial or restricted, will be put forward by the Commission any time soon.

The reason does not lie with it rejecting ‘codification’ as a law-making method. Codification, as well as consolidation and simplification of legislation figure expressly in the Political Guidelines for the next European Commission 2024-2029, of 18 July 2024. ‘Codes’ exist in other areas of EU law, such as those regulating medicinal products for human use, or the movement of persons across borders. In principle, this kind of codification appears to be related to amendments to the original legislative measure: after a number of amendments by way of new acts, the whole is assembled in a single document ‘in the interests of clarity and rationality’. The word ‘code’ is sometimes used, though, to designate the outcome of a recast of an act in need of amendment, as it happened with the Union customs code.

As things stand, coming up with a text like the one the EAPIL Working Group has in mind would prove that codification of European PIL is feasible. A second step to bring such a code or act into being would be to convince the legislator that it is not only convenient, but also needed and worth the effort and the investment. An impact analysis of non-economic and, above all, economic advantages would be required. Such analysis falls outside the remit of the EAPIL Working Group and , to the best of my knowledge, has not yet been done. Neither the study commissioned by the European Parliament ‘A European Framework for Private International Law: Current Gaps and Future Perspectives’ (2012) nor the workshop organized for the JURI committee ‘Towards a European Code on Private International Law? In -Depth Analysis for the Committee on Legal Affairs of the European Parliament’ (2014) addressed the point.

A report drawn up in 2013 by the European Added Value Unit of the Directorate for Impact Assessment and European Added Value, aimed at quantifying the cost of not having a Code on Private International Law. However, this ‘Cost of non-Europe’ report, based on a study by Nick Bozeat, mainly identified areas directly related to the citizens’ day-to-day lives which, at the time (and today), were still unregulated at European, in order to provide an estimation of the related costs for said citizens – around €138 million a year.

Assuming numbers confirmed that a codification of EU PIL is a sound policy option, there would be other obstacles to surmount for it to become a reality. The transactions and legal relationships falling under the scope of PIL rules are not a priority focus for the second half of this decade, neither at the political level nor for the lawmaker. Concern for cross-border civil and commercial matters, particularly those related to family, fits probably better with periods of calm and stability.

In theory, the time is ripe for a legislative proposal aimed at improving the regulatory environment for said matters. To start with, after the 2015 assessment on the implementation of the 2003 Inter-institutional Agreement on better law-making, new better regulation guidelines and a new Better regulation toolbox were respectively published in 2021 and 2023. Secondly, as already hinted, the Political Guidelines for the next European Commission 2024-2029, of 18 July 2024, proclaim the will to ‘make proposals to simplify, consolidate and codify legislation to eliminate any overlaps and contradictions while maintaining high standards’.

As a follow up, last February the Commission published its communication Simpler and Faster Europe. Communication on Implementation and Simplification. Indeed, the 2025 Commission work programme has a stronger focus on simplification than ever before. However, the Omnibus packages and the other simplification proposals listed (although non-exhaustively) in the above-mentioned Communication are meant to tackle specific priority areas, which, according to the Communication, have been identified with stakeholders over 2024.

None of them connects directly with the legal issues dealt with in the currently in force PIL regulations, or in the one(s) in the making. An indirect association is also far from evident. Only with good will, some PIL rules could be linked to the motto ‘Making business easier’ to which the quote of the Political Guidelines reproduced above corresponds.

Against this background, the task and findings of the EAPIL Working Group could be of a practical use in a different way. Code or no code, it is always legitimate to expect from the Commission, the EU Parliament and the Council that they care for consistency among the legal instruments they propose and adopt.

To this effect, formulae like (by way of example) recital 21 and Article 2, paragraph 3 of Directive 2020/1828 on representative actions for the protection of the collective interests of consumers, are clearly not enough. The interface between the Directive and the Brussels I bis regulation has been put to the test before the Court of Justice in case C-34/24, but the potential difficulties it generates do not stop there. In order to establish the exact terms of the relationship between both instruments it is necessary to consider as well the acts listed in Annex I to the Directive: while some of them express their intention to apply without prejudice to Regulation No 1215/2012, others indicate the opposite (see, for instance, recital 80 of Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services, and recital 147 of the GDPR).

More sophisticated solutions are viable and actually being implemented. An example is the proposed Directive to harmonise certain aspects of insolvency law. Said proposal, of 7 December 2022, aims to encourage cross border investment within the single market through targeted harmonisation of insolvency proceedings. It was published after stakeholders consultation, and is preceded by several studies, one of them (not publicly available, to the best of my knowledge) assessing abusive forum shopping practices in insolvency proceedings after Regulation (EU) 2015/848.

In principle, nothing new there. More interesting is the fact that the proposal and the impact assessment led to critical comments from the Regulatory Scrutiny Board, an independent body within the Commission that examines the quality of impact assessments, replacing the former Impact Assessment Board and being endowed with a strengthened role. The Board concluded in its first opinion on 24 June 2022 that adjustments were necessary before proceeding further with this initiative. Among other, more extensively explanations of the differences between Regulation (EU) 2015/848 and the Commission’s proposal were required.

In line with it, the Directive proposed by the Commission acknowledges the existence of Regulation (EU) 2015/848 on insolvency proceedings and connects both instruments (see recital 2, Articles 20, 45, 59, 68). It is therefore admitted that even if the Regulation has no impact on the contents of national insolvency law, it is a) possible to build on it for harmonization purposes and, b) clashes with the Directive may exist. The Partial general approach of the Council, dated November 29, 2024, insists on creating bridges  between the texts, and clarifies some of the links between them (see recital 2 , Article 2, Article 36, and, in particular, recutal 58 and Article 68).

Regulation (EU) 2015/848 is not the only EU legal act which the proposed Directive takes into account. The final product and how the ‘dialogue’ among instruments will fare in practice remain to be seen. In any case, the law-making process shows already a refined and cautious attitude in that it accords relevant weight to systemic coherence.

It is in this context that I see the added value of  a project such as the EAPIL one on the feasibility of a European PIL Act. Whatever its final conclusion (that is to say, even if it ends up denying the feasibility of the Act as such), it will map the areas where systemic coherence is more needed, indicate whether achieving it is or not possible, and if yes, how. Because of the wide material reach of the project and the thorougness of the research, it will fill an existing gap. It can thus provide precious support to the European lawmaker both in the drafting of new limited-in-scope PIL rules, and in producing an all-inclusive recast of the current ones, if and when, in his view, the time comes.

Conclusions and Decisions of the 2025 CGAP Meeting – An Overview

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Pietro Franzina
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The conclusions and decisions adopted by the Council on General Affairs and Policy (CGAP) of the Hague Conference on Private International at its 2025 meeting, which ended today, have just been made available here.

Ongoing Projects

In the coming months, additional meetings will be convened of the Working Groups in charge of the Parentage / Surrogacy Project and the Jurisdiction Project, respectively.

Regarding the former project, CGAP noted the Aide-mémoire prepared by the Chair of the Working Group and welcomed the progress made by the group. To further develop provisions for a draft instrument and draft a final report of the work of the group, CGAP invited the Permanent Bureau, in addition to the April 2025 meeting, to convene one further meeting, possibly in the second half of 2025, with intersessional work as required, as well as, if
necessary, one online meeting before CGAP 2026. The CGAP conclusions and decisions reiterate that any work by the Conference in relation to private international law matters related to legal parentage resulting from surrogacy arrangements should not be understood as supporting or opposing surrogacy.

As proposed by the Permanent Bureau of the Conference (see the post published on this blog a few days ago), a written consultation process will be launched to gather feedback from operators regarding the instrument that will represent, in due course, the outcome of the Jurisdiction Project. Following the completion of the current work on the latter project, “the consideration of direct jurisdiction rules could be further developed in a separate and subsequent project, subject to CGAP’s decision”.

The work of the Expert Group on Central Bank Digital Currencies is also set to continue in the coming months.

New Normative Projects

CGAP decided to establish new expert groups to work on the private international law aspects of digital tokens and carbon credits. A more detailed background of the latter projects can be found here and here. A post published on this blog illustrated some of the private international law issues surrounding the operation of voluntary carbon markets

Post-Convention Work

Two Working Groups will be established to finalise, respectively, the Model Forms pertaining to Chapter II of the 1970 Evidence Convention and the Good Practices document relevant to the 1965 Service, 1970 Evidence, and 1980 Access to Justice Conventions. A Working Group will also be established to review and complete the work done by the Permanent Bureau on the application and interpretation of Article 2 of the 1985 Trusts Convention and on the institutions analogous to trusts, with a view to its publication.

Other Initiatives

CGAP welcomed, inter alia, the proposal of Morocco to host a Regional Office for Africa (ROAF). This is the third Regional Office of the Conference. The two others operate for Latin America and the Caribbean (ROLAC) and Asia and the Pacific (ROAP), respectively.

Briefing on Surrogacy Prepared for the European Parliament

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Marta Requejo Isidro
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On 27 February 2025, the research services of the European Parliament published on line a briefing authored by David de Groot, entitled Surrogacy: The legal situation in the EU, setting out the legal situation in the EU regarding surrogacy.

The document provides a good, well-researched and easy-to-follow introduction to the topic. In 17 pages, it explains in some detail the approaches of the Member States having introduced laws for altruistic surrogacy (Ireland, Greece, Cyprus and Portugal; a similar move is under discussion in the Netherlands), and of those banning, either explicitly or implicitly, domestic agreements on surrogacy (Austria, Bulgaria, Croatia, Estonia, Finland, France, Germany, Hungary, Lithuania Malta, Slovenia, Spain, Sweden), or both domestic and cross-border arrangements to the purpose (Italy).

It also addresses the issue of recognition of parenthood involving surrogacy abroad, examining the case law of the ECHR and its Advisory Opinion of 10 April 2019, on the recognition in domestic law of a legal parent-child relationship between a child born through a gestational surrogacy arrangement abroad and the intended mother.

The final part of the document focuses on the EU action on the matter: the parenthood regulation proposal (NoA: negotiations ongoing, awaiting decision, and addressed by Justice and Home Affairs Council, of June 14, 2024, where exchange in particular dealt with cases of parenthood following surrogacy), and Directive 2024/1712, which identifies the exploitation of surrogacy explicitly as a form of human trafficking (although, if my understanding is correct, not punishable as an offence of trafficking in human beings except in case the surrogate mother is a child: see recital 6 and Article 1 amending Article 2, paragraphs 3 and 5 of Directive 2011/36, on preventing and combating trafficking in human beings and protecting its victims, and replacing Council Framework Decision 2002/629/JHA).

Reference is of course also made to the Hague Expert Group and the Working Group on surrogacy, with a link to the 2022 final report of the former (the said report, and more, can be found here).

 

Commission Proposes to Ease Corporate Sustainability Reporting and Due Diligence Requirements

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Marco Pasqua
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The European Commission has published on 26 February 2026 a proposal for a directive amending Directives 2006/43, 2013/34, 2022/2464 and 2024/1760 concerning certain corporate sustainability reporting and due diligence requirements, as part of its Omnibus Simplification Package.

The explanatory memorandum highlights that business associations have raised concerns about the regulatory burden resulting, inter alia, from due diligence obligations under Directive 2024/1760 (the Corporate Sustainability Due Diligence Directive or CSDDD), especially for companies operating within large and complex value chains. Similar concerns, the memorandum notes, have been voiced by SMEs, as they could face unintended trickle-down effects.

Concerns have also been raised regarding potential increases in liability risks. Although the CSDDD includes proportionality mechanisms aimed at ensuring that companies in scope benefit from reputational and resilience advantages through sustainable value-chain management, the Commission has addressed these concerns. The proposal aims to clarify and simplify the existing framework, reducing compliance costs — both one-off and recurring — and making the directive more business-friendly in the short term.

Key Amendments

Article 4 of the proposed directive contemplates several amendments. These involve expanding the scope of maximum harmonization, making due diligence primarily focused on direct business partners as a general rule and removing the obligation to terminate business relationships as a last resort.

The definition of ‘stakeholder’ is narrowed and the due diligence stages requiring stakeholder engagement are further limited.

The proposal also increases the intervals at which companies must assess the adequacy and effectiveness of their due diligence measures.

Additionally, the Commission proposes to clarify the principles governing pecuniary penalties, remove the ‘minimum cap’ for fines, eliminate certain provisions of the civil liability clause and rules on representative actions, modify the provisions related to implementing climate transition plans, delete the review clause concerning financial services and accelerate the adoption of the first set of general implementing guidelines by the Commission.

Civil Liability

Article 4(12) of the proposal aims to amend Article 29 of the CSDDD in relation to civil liability by deleting paragraph (1), which currently states that a company can be held liable for damage to a natural or legal person if it intentionally or negligently fails to comply with the obligations in Articles 10 and 11 (i.e., obligations to prevent potential adverse impacts and address actual ones), leading to harm to the person’s legal interests protected under national law, where the right, prohibition or obligation in the Annex is designed to protect them.

The Commission Staff Working document accompanying the proposal underscores that the harmonized liability framework under Article 29(1) CSDDD was originally established in response to legal actions taken against companies under national laws for failing to mitigate human rights and environmental violations in their value chains. While the CSDDD introduced constraints on liability— such as the necessity of proving fault and excluding responsibility for harm solely caused by business partners — the proposed removal of this EU-wide framework seeks to defer the regulation of liability conditions, including causality and fault, to national laws.

This shift may lower liability risks for companies operating in Member States with more restrictive regimes than Article 29(1) but could simultaneously heighten risks in jurisdictions with more claimant-favorable provisions, such as strict liability without a fault requirement.

Furthermore, the proposed new legislation amends Article 29 by removing paragraph (3), point (d), which require that Member States ensure conditions for allowing trade unions, NGOs and national human rights institutions to bring actions on behalf of an alleged injured party, in accordance with national civil procedure rules.

The access to justice provision has been designed to ensure that victims, especially those in disadvantaged positions (e.g., distant, facing complex legal issues, lacking expertise), can effectively access justice. The aforementioned document accompanying the proposal highlights that removing this obligation may lessen companies’ exposure to collective claims, reducing litigation risks. However, it could also lead to a more fragmented legal landscape, with individual victims filing separate lawsuits rather than pursuing claims collectively.

The proposal further envisages the deletion of Article 29(7), under which Member States must ensure that the provisions of national law transposing this Article are of overriding mandatory application in cases where the law applicable to claims to that effect is not the national law of a Member State. However, the Commission Staff Working document notes that this deletion does not prevent Member States from independently deciding to impose mandatory application at the national level.

Finally, Article 4(12) contemplates modifying Article 29(2), (4) and (5). Paragraph (2) stipulates that when a company is held liable under national law for damage caused to a natural or legal person due to non-compliance with the due diligence requirements, Member States must ensure that these persons are entitled to full compensation. Safeguards are introduced to prevent over-compensation, such as prohibiting punitive, multiple or other excessive damages. Then, the revision of paragraph (4) establishes that companies involved in industry or multi-stakeholder initiatives, or that have used independent third-party verification or contractual clauses to support due diligence obligations, can still be held liable under national law. Lastly, the modification of paragraph (5) clarifies that the civil liability of a company for damages as referred to in this Article shall be without prejudice to the civil liability of its subsidiaries or of any direct and indirect business partners in the chain of activities of the company.

The Jurisdiction Project at the HCCH: Latest Developments and Steps Forward

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Pietro Franzina
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The legislative work of the Hague Conference on Private International Law (HCCH) currently revolves around eight projects. The Jurisdiction Project occupies a prominent position in this context.

With the conclusion of the Judgments Convention, in 2019, the focus of the normative work of the HCCH in the area of civil and commercial law turned to the question of jurisdiction, meaning, in principle, direct jurisdiction and parallel litigation.

In 2021, the Council on General Affairs and Policy of the HCCH (CGAP) mandated the establishment of a Working Group on matters related to jurisdiction in transnational civil or commercial litigation. The Working Group was then tasked to proceed, in an inclusive and holistic manner, with an initial focus on developing binding rules for parallel proceedings and related actions, acknowledging the primary role of both jurisdictional rules and the doctrine of forum non conveniens in developing such rules.

The Working Group on Jurisdiction has since met eight times.

A report has recently been prepared by the Permanent Bureau of the HCCH in view of the upcoming CGAP meeting, due to take place on 4-7 March 2025. The report presents the progress made by the Working Group and the Working Group’s own recommendations directed at CGAP.

As stated in the report, the Working Group has made “solid progress” since the last CGAP meeting. Such progress is illustrated in a report of the seventh and eight meetings of the Working Group drawn up by Chair of the Group, Keisuke Takeshita, attached to the report of the Permanent Bureau.

A revised version of the draft text of a possible future instrument in this field is annexed, in turn, to the Chair’s report. The draft text, as it currently stands, consists of 23 articles, divided into five chapters. These deal, respectively, with: the scope of the possible future instrument (Chapter I); parallel proceedings (Chapter II); related actions (Chapter III); cooperation and communication among the authorities of Contracting States, as relevant both to parallel proceedings and related actions (Chapter IV); and general concerns, such as the concern for avoiding denial of justice, or ensuring the uniform interpretation of the future instrument (Chapter V).

In relation to parallel proceedings, the Working Group discussed in its most recent meetings the core framework for determining the more appropriate court when parallel proceedings are pending in the courts of two or more Contracting States. However, further work, the report notes, is necessary to finalise the ongoing discussion. The Working Group was also concerned with the definition and treatment of related actions.

Different views have been expressed within the Working Group concerning Article 8. Article 8(1) provides that, where parallel proceedings are pending before the courts of Contracting States, a court of a Contracting State shall suspend or dismiss the proceedings if, among other conditions, “it does not have jurisdiction / connection … and one or more of the other courts has or have such jurisdiction / connection”. Whether a court has jurisdiction over the matter (or has a connection with it) for the purposes of Article 8(1) depends on the requirements set out in Article 8(2), such as, among others, that the defendant was habitually resident in that State at the time that person became party to the proceedings.

As noted by the Chair in his report, the Working Group discussed in its eighth meeting a proposal seeking to delete Article 8 of the draft text, with some expressing serious concerns about the purpose, scope, implications and application of Article 8. Additionally, it was noted that Article 8(2) provisions of the draft text operate differently from the jurisdictional filters contained in Article 5 of the Judgments Convention. However, other members of the Working Group did not support this proposal noting that Article 8 is a core mechanism necessary to realize the appropriate operation of a future Convention and its deletion would affect the balance between the jurisdictional rules and the doctrine of forum non conveniens in the draft text. The point was also made that Article 8 offered predictability and was a compromise for accepting Article 9, the purpose of which is to identify the more appropriate court “where parallel proceedings are pending in the courts of two or more Contracting States that have jurisdiction / connection under Article 8”.

Against this background, the Working Group has recommended, to begin with, that CGAP invite the PB to convene one additional meeting of the WG. This would have a targeted agenda specifically focused on Article 8(2) of the draft text of the possible future instrument, without reopening or introducing discussion on policy issues.

The Workig Group has further recommended that the draft text resulting from the proposed additional meeting be the subject of an open and inclusive written consultation process, aimed to gather feedback from future operators of the envisaged Convention, particularly practitioners and judges. The Permanent Bureau, the Chair’s report also suggests, should compile the responses received into a document to be submitted to all HCCH Members in advance of the 2026 meeting of CGAP.

According to the Working Group, CGAP should then be able to decide at its 2026 meeting whether the Secretary General of the Conference should convene a Special Commission meeting before the end of June 2026 or at a later time.

The Working Group finally observed that, in light of the diverging views on the development of direct jurisdiction rules, following the completion of the work on the future instrument, the consideration of direct jurisdiction rules could be further developed in a “separate and subsequent project”.

Norwegian Supreme Court on the Law Applicable to Emission Scandal Obligations

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Erik Sinander
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German law shall be applied to a non-contractual obligations arising out of wrongful components in ship engines built in Germany, the Norwegian Supreme Court held in a  judgment rendered on 17 December 2024. Regardless of the fact that the Rome II Regulation is not binding for Norway and that it was not applicable in the EU at the time of the harmful event, the Norwegian Supreme Court paralleled its conclusions on analogous interpretations of the Regulation.

Background

In 2000, a Norwegian shipping company ordered six ships from a Chinese shipyard. In the contract with the Chinese shipyard, it was stated that the Norwegian shipping company had a right to choose what components that should be used. The Norwegian shipping company ordered the Chinese shipyard to use MAN engines. A contract for the delivery of the engines were entered into between MAN and the Chinese shipyard. Before the ships were delivered to Norway, the engines underwent testing at MAN’s factory in Germany. However, several years after the engines were delivered, it was discovered that these factory tests had been manipulated by MAN to show lower emission levels.

In 2012, MAN informed the Norwegian shipping company that the actual emission levels could be higher than originally promised. By this time, a criminal investigation had already been initiated against MAN in Germany. In a 2013 German court ruling, MAN was ordered to pay an administrative fine of 8.2 million Euros. Due to statutes of limitation under German law, the judgment only addressed events that had occurred after 2006.

In 2015, the Norwegian shipping company filed legal proceedings against MAN and its Norwegian subsidiary in the Oslo District Court. MAN lost the case in both the district court and the court of appeal. While both instances applied Norwegian law, they did so on different grounds. The district court found that the parties had agreed to apply Norwegian law, while the court of appeal reached the same conclusion by applying uncodified general conflict of law rules.

MAN appealed the decision to the Norwegian Supreme Court, which agreed to hear the case, focusing on the conflict of laws issue.

The Supreme Court’s Judgment

The Supreme Court began by observing that there was no agreement between the parties on the application of Norwegian law. It then turned to the issue whether the claim ought to be characterised as contractual or non-contractual. MAN had claimed that the plaint concerned precontractual liability and that the conflict of laws rules for contracts therefore should be applied. The argument was dismissed. The Supreme Court held that the matter did not relate to any contractual obligations as the Norwegian shipping company had not been a party to the contract for deliverance of the engines or to the contract for the construction of the ships.

Having concluded that the matter was non-contractual, the Supreme Court continued to seek to establish the applicable conflict of law rule. This was not an easy exercise under Norwegian private international law, as most conflict of law rules are uncodified and rather result from precedents and principles.

In the last decades, the Norwegian Supreme Court repeatedly held that the interest of keeping track with the conflict of law rules in the EU motivates a general presumption to take the choice of law solutions in the Rome I and the Rome II Regulations into consideration. A problem in the issue at stake was that the harmful event occurred long before the Rome II Regulation was applicable or even drafted. Hence, the Norwegian Supreme Court made an analysis of what conflict of law rules that were applicable in Norway in the early 2000s.

What Conflict of Laws Rules Were to Be Applied?

Recognizing that the main principle under the Rome II Regulation is that the law of the place where the damage occurs shall be applied (lex loci damni), the Supreme Court noted that older Norwegian case law rather relied on a centre of gravity test to determine the law applicable in non-contractual matters. Under the old Norwegian centre of gravity test, the place of damage was an important factor.

How the place of damage was to be determined in “distance delicts” (where the harmful event and the damage occurs in different states) was unsettled in old Norwegian case law. However, with reference to old Norwegian legal literature, the Supreme Court held that it was the place where the damage occurred that was decisive in such matters.

Noting that the place where the damage occurs is the main rule of the Rome II Regulation, the Supreme Court went on to remark that that rule in EU private international law makes a difference between direct and indirect damages. That issue had not been adjudicated in a choice of law context in Norwegian case law. Norway is however part to the 2007 Lugano Convention. In case law dealing with jurisdiction, the Norwegian Supreme Court had recognized the EU private international law difference between direct and indirect damages. Therefore, the Supreme Court concluded that, in similarity with contemporary EU law, also the place where the direct damage occurred was decisive to determine the law applicable in old Norwegian private international law.

Are German Rules on Limitation Compatible with Norwegian Public Policy?

Applying that conflict of law rule to the facts in the case, the Norwegian Supreme Court held that the direct damage took place in Germany as the urged damages were damages that had been inflicted to foreign companies after events fully taken place abroad. In such a situation the court held that it would be unpredictable to let Norwegian law apply only on the ground that a decision had been taken in Norway.

Having concluded that Norwegian choice of law rules pointed out German law as applicable, the Supreme Court continued to assess whether German rules on limitation was compatible with Norwegian public policy. According to German law, the matter was already precluded. Under Norwegian law it was not. The Norwegian Court concluded in this part that it was clear that the German limitation rules were shorter but held that it cannot be in conflict with “Norwegian sense of justice”. Consequently, German law was to be applied.

Comment

The judgment makes it clear that the Norwegian Supreme Court takes EU private international law seriously. By aligning its reasoning with the Rome II Regulation, the Supreme Court indeed affirmed its commitment to European harmonization of conflict of law rules. Such an approach is valuable from a predictability point of view and strengthens legal coherence.

However, a notable omission in the judgment is the lack of discussion on Article 5 of the Rome II Regulation. In this Article, the Rome II Regulation lays down lex specialis conflict of law rules for non-contractual product liability obligations. To me, it would have made sense to at least discuss those rules as the facts concerned some sort of product liability.

ILA Project on Conflict of Laws in Arbitration

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Matthias Lehmann
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A webinar of the International Law Association (ILA) Committee on Conflict of Laws Issues in International Arbitration will take place on 18 February 2025.

The webinar will be held in two sessions with identical content, to accommodate participants around the world. Here are the zoom links:

Session 1 (8 AM London, 9 AM Berlin, 4 PM Hong Kong, 7 PM Sydney)
Session 2 (8 AM US Pacific Coast, 11 AM US East Coast, 4 PM London, 5 PM Berlin)

The webinars aim to inform those who are interested in the Committee about the project’s content and how to become members.

Why This Topic Matters

Those working in international arbitration will not be surprised by the topic. Conflict-of-laws problems frequently surface in arbitration, causing head-scratching, sometimes headaches, and in the worst cases head-on collisions. Readers of this blog will remember the online symposium we organised on the law governing the arbitration agreement. This is just one of the many intricate conflicts problems that may plague arbitration proceedings. Here are some other issues:

  • Which law governs arbitrability, i.e. the question whether the dispute is amenable to private dispute resolution?
  • Which law governs the duty of document production?
  • Which law governs attorney–client or other forms of privilege?
  • How should an arbitrator deal with sanctions, moratoria, or other overriding mandatory rules?
Committee Leadership and Mandate

The ILA has decided to set up this new committee, chaired by Nikolaus Pitkowitz (Vienna) and Wendy Lin (Singapore). The rapporteurs are Mariel Dimsey (Hong Kong) and me. The full mandate can be found here.

In a first step, the Committee will run for four years, from 2025 to 2028. In this time, it will draft a questionnaire, disseminate it to ILA members, and analyse the responses. It will also elaborate a general methodology and principles for tackling conflicts problems in arbitration. Should the project be extended for a second phase, from 2029 to 2030, the Committee may also draft new rules in the form of treaties, model laws, or arbitration rules that will be suggested to international organisations and institutions.

Call for Support

The task of the Committee is broad, complex, and has potentially far-reaching consequences. We would welcome if members of EAPIL and readers of this blog support this committee with their expertise in private international law. Please be aware that only ILA members can participate in the Committee, and that they must be nominated by their national chapters. More information will be given in the webinars.

European Commission Work Programme 2025: A Bolder, Simpler, Faster Union

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Marco Pasqua
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On 11 February 2025, the European Commission adopted its 2025 work programme, titled Moving forward together: A Bolder, Simpler, Faster Union.

Consistent with the political priorities set out last year for the period 2024-2029, the programme contemplates measures aimed, inter alia, at strengthening economic competitiveness, responding to geopolitical instability, addressing migration and climate change and safeguarding European values and democracy.

The initiatives on which the Commission intends to focus in 2025 are listed in three annexes.

Annex I deals with new initiatives. No new measures based on Article 81 TFEU are indicated in the document. However, some of the initiatives considered – in particular those based on Article 114 TFEU – may have at least an indirect impact on private international law issues.

One notable proposal is the First Omnibus Package on Sustainability. On 30 January 2025 the European Commission presented its compass to boost Europe’s competitiveness over the next five years. In this context, the omnibus proposals aim to ease regulatory and administrative burdens on businesses, with a strong focus on simplifying requirements in sustainable finance reporting, sustainability due diligence and taxonomy. The first omnibus package would introduce amendments to Directive (EU) 2024/1760 on corporate sustainability due diligence. The general objective is simplification. Which aspects will be affected remains to be seen.

Another proposal is the EU Space Act, which aims to establish a common framework for sustainability, security and safety in space, ensuring a harmonized, EU-wide approach. Space activities, including those carried for commercial purposes, may raise a range of issues relating to private international law.

The protection of democracy and fundamental values is also addressed. Several non-legislative initiatives are contemplated, including a European Democracy Shield and an EU Strategy to Support, Protect, and Empower Civil Society.

Annex II is about the annual plan on evaluations and fitness checks. It refers to instruments such as Regulation (EU) 2018/302 (the Geo-blocking Regulation — GBR).

Pending legislative proposals are discussed in Annex III. The document refers, among others, to the Proposal for a Regulation on combating late payment in commercial transactions; the Proposal for a Directive on European cross-border associations; the Proposal for a Regulation on the establishment of the digital euro and related measures; the Proposal for a Directive harmonizing certain aspects of insolvency law; the Proposal for a Directive on alternative dispute resolution for consumer disputes; the Proposal for a Regulation on jurisdiction, applicable law, recognition of decisions, and acceptance of authentic instruments in matters of parenthood, including the creation of a European Certificate of Parenthood; and the Proposal for a Regulation on jurisdiction, applicable law, recognition, enforcement of measures, and cooperation in matters relating to the protection of adults.

Also interesting is Annex IV, on withdrawals.

The list of proposals that the Commission plans to withdraw includes the Proposal for a Regulation on the law applicable to the third-party effects of assignments of claims. The statedreason for the withdrawal is the absence of a foreseeable agreement, meaning the proposal is effectively blocked, and further progress appears unlikely.

Similarly, the Proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive) is also to be withdrawn. The stated reason is again the lack of a foreseeable agreement, but it is specified that the Commission intends to evaluate whether to introduce a revised proposal or explore an alternative approach.

European e-Justice Strategy 2024-2028

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Marco Pasqua
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On 16 January 2025 the European e-Justice Strategy 2024–2028 has been published in the Official Journal of the European Union. It provides a framework designed to enhance the digitalization of justice systems across the EU and is a continuation of the Union’s ongoing efforts to modernize judicial systems.

Context

The Strategy builds on several EU legislative instruments. Among these, Regulation (EU) 2022/850 on the e-CODEX system, which establishes a computerized framework for the secure cross-border exchange of judicial data. This system enables judicial authorities to communicate through secure services, streamlining judicial cooperation. For more details on Regulation (EU) 2022/850, see the earlier posts by Elena Alina Ontanu and Marta Requejo Isidro on this blog, available here and here. Complementing this, the Regulation (EU) 2020/1784 on service of documents and Regulation (EU) 2020/1783 on taking of evidence require the use of interoperable IT systems based on e-CODEX for digital communication in civil and commercial matters starting in May 2025.

The ‘Digitalisation Package’, comprising Regulation (EU) 2023/2844 and Directive (EU) 2023/2843 on the digitalization of cross-border judicial cooperation and access to justice, is central to the EU’s e-Justice initiatives.

These instruments enable natural and legal persons and their representatives to communicate electronically via a European electronic access point. They also allow authorities to securely exchange data in civil and commercial matters with cross-border implications. Implementation of these instruments will require the establishment of national access points and compliance with electronic communication principles. Further insights into Regulation (EU) 2023/2844 are found in Marion Ho-Dac’s post on this blog.

Non-legislative initiatives, such as the consolidation of the e-CODEX system under eu-LISA management, support these legislative measures. Member States play a critical role in connecting to e-CODEX and enabling interaction between authorities, legal professionals and individuals through secure digital channels.

The shift to mandatory compliance with digitalization initiatives highlights the EU’s dedication to legal certainty and operational efficiency in justice systems.

Guiding Principles, Operational Goals, Follow-up Mechanisms

The Strategy is founded on principles that prioritize respect for fundamental rights, access to justice, people centricity, bridging the digital divide, digital empowerment of users and sustainability. Operationally, the Strategy promotes efficiency through principles like the once-only, digital by default approach, interoperability and cybersecurity, dynamic justice, data-driven justice and open source.

The strategic and operational objectives of the e-Justice Strategy’s are then referred to and briefly described. Its overarching goal is to facilitate the right to effective judicial protection, focusing on four key strategic objectives: improving access to digital justice, strengthening judicial cooperation, increasing efficiency and fostering innovation.

To improve access, the Strategy emphasizes inclusivity, ensuring digital justice is accessible to all, with tools like the e-Justice Portal and tailored training for users and professionals. Efforts will focus on bridging the digital divide and enhancing the functionality of online platforms to deliver added value.

In terms of cooperation, the strategy prioritizes interoperability between Member States’ systems, supported by the implementation of the ‘Digitalisation Package’. Real-time tools, such as video conferencing and AI-driven interpretation, will further streamline cross-border judicial processes.

Efficiency is another critical focus, with data-oriented approaches driving transparency and innovation. Technologies like automated case allocation and online dispute resolution will optimize resources, while selective digitization of face-to-face processes ensures flexibility.

Finally, the Strategy promotes innovation by integrating new technologies and promoting the exchange of experiences and best practices across Member States. This approach aims to enhance the justice system’s functionality while safeguarding fundamental rights.

The Strategy’s action plan is outlined. The e-Justice domain focuses on several key working areas: e-CODEX, e-Justice Portal, electronic access points, real time (RT) applications, law data and case law, AI and other innovative IT services in the justice domain and, finally, other working areas.

The strategic objectives are further broken down into operational objectives, for which specific actions to be taken and the actors involved are identified.

A follow-up mechanism ensures effective implementation through annual monitoring reports, stakeholder consultations and a mid-term review in 2026 to adjust the Strategy as needed.

European Commission’s Report on Rome II Published

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Pietro Franzina
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The European Commission published on 31 January 2025 its long-awaited report (COM(2025) 20 final) on the application of Regulation No 864/2007 on the law applicable to non-contractual obligations (Rome II).

The report is based on Article 30 of the Regulation. The latter provision required the Commission to submit to the European Parliament, the Council and the European Economic and Social Committee a report focusing, among other issues, on “the effects of the way in which foreign law is treated in the different jurisdictions and on the extent to which courts in the Member States apply foreign law in practice pursuant to this Regulation”, and on the effects of Article 28 (on the relationship of the Regulation with international conventions in force for individual Member States) “with respect to the Hague Convention of 4 May 1971 on the law applicable to traffic accidents”. The Commission was equally expected to report on the “situation in the field of the law applicable to non-contractual obligations arising out of violations of privacy and rights relating to personality”.

Soon after the Regulation entered into force, three specific studies were carried out for this purpose, namely on road traffic accidents (2009), on privacy and rights relating to personality (2009) and on the application of foreign law (2011). Additional information concerning the practical experience with Rome II came, in particular, from an external study carried out in 2021 under the scientific coordination of the British Institute of International and Comparative Law.

The published report, which builds on these and other sources, consists of a general overview of the operation of the Regulation, followed by a focus on a specific areas, such as: (1) privacy, rights relating to personality, including defamation and SLAPP; (2) artificial intelligence; (3) financial market torts and prospectus liability; and (4) collective redress and cases involving multiple parties.

The Commission’s overall conclusion is that the Regulation “generally works well and is fit for purpose”. However, “several issues” exist that “merit further in-depth analysis with a view to assessing whether targeted legislative adjustments of Rome II are desirable and what options may exist to efficiently address them”, notably as concerns: (a) the current exclusion from the scope of the Regulation for privacy and personality rights, including defamation; (b) the application of the Regulation “in cases where the damage occurs simultaneously in many jurisdictions, leading to a possible application of multiple national laws”, such as cases of collective redress and torts committed online, including infringements of IP rights online, especially of copyright; and (c) torts causing purely economic losses, including financial market torts and prospectus liability.

With a view to assessing whether legislative change is needed, the Commission plans to “carry out further analysis in order to consider and potentially prepare a proposal to amend or recast the Regulation in accordance with the Better Regulation rules”, noting that “further analysis can also be carried out to assess the merits of other conceivable modifications or, in areas where the existing rules are fully appropriate, possible textual clarifications to facilitate their application”.

The report is accompanied by a Commission Staff Working Document (SWD(2025) 9 final). The latter provides, in particular, a more detailed analysis of the practical experience of the Regulation, chapter by chapter, a summary of the studies conducted for the purposes of the report, and a table summarizing the findings of the rulings of the Court of Justice concerning (or mentioning) the Regulation.

Hague Conference to Discuss Private International Law Aspects of Voluntary Carbon Markets

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Pietro Franzina
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The next meeting of the Council on General Affairs and Policy (CGAP) of the Hague Conference on Private International Law (HCCH) is scheduled to take place on 4-7 March 2025. According to the meeting’s draft agenda, the CGAP will deal, among other things, with the project on Voluntary Carbon Markets (VCMs), following last year’s meeting, when the CGAP, based on a proposal for exploratory work prepared by the Permanent Bureau (PB), invited the PB to monitor the ongoing developments in this area, notably in light of the work that UNIDROIT is carrying out since 2022 (see the meeting’s Conclusions and Decisions, para. 18). The CGAP also mandated on that occasion the CGAP to cooperate and coordinate with the Secretariats of UNCITRAL, UNIDROIT, the United Nations Framework Convention on Climate Change (UNFCCC) and other relevant international organisations on their projects in relation to VCMs.

The Voluntary Carbon Markets Project in a Nutshell

The 1997 Kyoto Protocol to the UNFCCC introduced the concept of carbon credit, with the objective of creating a mechanism by which the emission of greenhouse gases into the atmosphere could be reduced. The Paris Agreement included carbon trading as a crucial component in the initiative to reduce carbon emissions in international and domestic supply chains.

From a private international law perspective, the variety of participants and actors involved in a single carbon market transaction, as well as the origins and nature of the relevant carbon projects, may challenge the application of traditional connecting factors, as there may be a number of connecting factors to a number of jurisdictions. For example, where a unit is created as the result of a carbon project in one jurisdiction, it must be certified by a carbon standard, according to their particular methodology and pursuant to the contractual arrangement between the standard and the project developer.

Throughout the life cycle of carbon credits, private international law questions may arise, for example, in the creation, verification, registration, intermediation, trading and retirement or cancelling of the unit. Further complexities in the carbon markets that may give rise to private international law concerns include the digital or online certification of units, the tokenisation of units (including the interplay with decentralised or distributed storage mechanisms such as those based on distributed ledger technology), the revocation of the units, including the matter of authorisation under Article 6 of the Paris Agreement, and the extent to which the credits are potentially subject to insolvency proceedings.

Recent Developments Concerning the Project

A document has been prepared by the PB in November 2024 to report on the status of the work in cooperation with UNIDROIT and the other organisations mentioned above, outline the main private international law issues arising from the operation of VCMs, and make proposals about the next steps.

Input provided to the UNIDROIT Working Group dealing with carbon credits

Consultations between the PB and the UNDROIT Secretariat led to an invitation from the latter to the PB to form a joint informal subgroup of experts to provide input to an applicable law provision in the draft UNIDROIT Principles on the Legal Nature of Verified Carbon Credits (the UNIDROIT draft refers to “verified”, rather than “voluntary” carbon credits on the understanding that it is the purchase that is voluntary rather than the credit itself, and that reference to “verified” would potentially encompass credits verified by States as well as credits verified by independent carbon crediting programmes).

The UNIDROIT Working Group charged with dealing with the carbon credits project postponed consideration of matters regarding private international law at the full Working Group level, deferring these matters to the said informal subgroup.

The PB identified five volunteer subject-matter experts, sitting in their individual capacities, to support the PB in this informal subgroup: Amy Held, Mary Keyes, Alex Mills, Fabrício Bertini Pasquot Polido and the author of this post. The experts submitted to the UNIDROIT Secretariat a Preliminary Report concerning the Inclusion of an Applicable Law Provision in the draft UNIDROIT Principles on the Legal Nature of Verified Carbon Credits (the Preliminary Report: Annex I to the document of November 2024 mentioned above).

The experts expressed the view that, to ensure the effectiveness in practice of any applicable law rule, including in the draft UNIDROIT Principles, it is necessary to undertake a comprehensive analysis of the interconnected issues of jurisdiction, and recognition and enforcement; and to consider and multilaterally consult on the underlying policy that the rule is intended to further.

Specifically, as the carbon markets engage a range of diverse and complex interests, both public and private, solutions to private international law challenges should involve a broad multilateral consultation on the various policy issues engaged. This would better allow the different interests and potentially different perspectives to be ventilated, with the support of technical experts who can then find the best way to draft any solutions that are agreed upon.

According to the Preliminary Report,

[w]ithout multilateral consultation, there is a clear risk of adopting a rule which may not only fail to adequately consider and balance relevant policy considerations and different private interests, but which may indeed have harmful consequences for the functioning and impact of carbon markets, or for the likely adoption of the draft Principles as a means to facilitate their growth and the positive contribution they may make to climate change mitigation.

This led the experts to conclude that they were not in the position to endorse the approach in which an applicable law provision is drafted without multilateral consultation, in abstracto and in isolation from more holistic considerations of other private international law issues.

The recommendation made to UNIDROIT in the Preliminary Report was therefore that the UNIDROIT Working Group may wish to consider including a provision that the draft UNIDROIT Principles do not impact on private international law relating to carbon credits, and referring to the work being undertaken at the HCCH.

In the case that the UNIDROIT Working Group and the Members of UNIDROIT consider that the draft Principles would be incomplete without the inclusion of an applicable law provision, the recommendation made is that the provision be included after multilateral consultations, on a holistic approach to the issues of private international law, encompassing jurisdiction, applicable law, recognition and enforcement, and international cooperation mechanisms, are undertaken and completed at the HCCH, given the mandate of the HCCH.

Report and proposals in the Preliminary Document to CGAP

In its preliminary document of November 2024, the PB observes that each step of the carbon credit lifecycle raise private international law issues. Specifically, the variety of participants or actors potentially involved in a single carbon market transaction, as well as the origins and nature of the relevant carbon projects, may challenge the application of traditional connecting factors, as there may be a number of connecting factors to a number of jurisdictions, all of which may differ at each of the different stages of the lifecycle of a carbon credit.

Quoting the Preliminary Report, the document notes that private international law issues

arise, for instance, from the origins of the relevant carbon project, the issuance of the credit, the matter of revocations, retirement, and the different commercial transactions that may take place involving carbon credits (e.g., trading, granting of security rights, insolvency matters).

Given the complex and interconnected nature of the above questions, one particular private international law question arising on a specific moment / stage of the lifecycle cannot be examined in isolation. As stated in the Preliminary Report,

[i]f applicable law rules were to be developed with a focus on a particular moment or lifecycle stage, it would be necessary to consider not only the suitability of the rule for that moment / stage, but also how or whether that rule would affect the applicable law both before and after that moment / stage, and the implications of possible changes in applicable law during the lifecycle.

The PB further notes in its preliminary document that, while compliance carbon markets may be subject to greater direct public governance, voluntary markets also engage similar public interests, adding that there is widespread recognition of the increasing convergence between the two.

According to the PB, it is necessary to look into the private international law issues in the carbon markets in general (i.e., not only the VCMs) in order for the HCCH to support UNIDROIT’s work, considering that the work of the UNIDROIT Working Group could potentially include within its scope verified credits that are issued by governments. The document also states that it is not helpful, for private international law purposes, to classify the types of credits (i.e., verified or not verified) originating in the VCMs.

The different types of projects that originate the credits and their nature (e.g., forestry and land use, or REDD+, or renewable energy), for their part, may also result in different private international law challenges.

The preliminary document of the PB stresses that the nature of carbon markets raises specific public policy considerations, which may have a bearing on private international law considerations. Although VCMs are mostly based on contractual and other relationships which are regulated by private law, these markets are also understood as serving a broader public purpose, and potentially engage important national interests such as local environmental concerns, or in some cases competing claims over land rights.

The PB also underscores the important role of national or private registries to ensure transparency and accountability in carbon markets, adding that, given the inherent cross-border nature of carbon credits, cooperation between registries and / or between national authorities has been considered one of the possible ways to provide further integration and more reliability in the carbon market.

Possible Next Steps

In light of the above considerations, the CGAP will be invited to consider establishing an Expert Group to study the private international law issues relating to carbon markets.

According to the proposal put to CGAP, the Expert Group should be tasked with studying: (a) the private international law aspects of the carbon markets and the legal relationships within these markets, excluding aspects of substantive law; (b) the private international law questions that arise in the different phases of the carbon credits lifecycle holistically, as each phase is interconnected to the other; (c) the possible inclusion of an applicable law provision in the draft UNIDROIT Principles on carbon credits; (d) the feasibility and desirability of international cooperation mechanisms in this area.

‘Locating’ Digital Assets in PIL, Tax Law, Banking Regulation and the Financial Markets

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Ugljesa Grusic
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I have already reported on this blog that in 2024 the Law Commission of England and Wales published a call for evidence to help them identify the most challenging and prevalent issues of private international law that arise from the digital, online, and decentralised contexts in which modern digital assets and electronic trade documents are used. I also reported on this blog that later in 2024 the Law Commission published the first result of its call for evidence, an interim document relating to electronic trade documents (ETDs) in private international law.

On 14 January 2025, the Law Commission published the second result of its call for evidence – another interim document on the ‘location’ of digital assets in private international law, tax law, banking regulation and the financial markets. This 35-page document is structured as a ‘Frequently Asked Questions’ to respond directly to the most common concerns raised with the Law Commission so far.

The FAQs answered in the document are:

Q.1. What is the relationship between private international law and other areas of law such as tax law and financial services regulation?
Q.2. How is situs relevant for the purposes of private international law?
Q.2(a) What are the methods and objectives of private international law?
Q.2(b) What policy considerations underpin the private international law situs rules?
Q.3. Can the private international law situs rules be applied in the public law context?
Q.3(a) Can the private international law situs rules be applied in the tax context?
Q.3(b) Can the private international law situs rules be applied in the banking regulation context?
Q.3(c) How do financial services regulation and private international law interact?
Q.4. How does characterisation work in commercial and financial markets use cases of DLT?
Q.4(a) Why is it unhelpful to think in terms of “the law applicable to the digital asset”?
Q.4(b) How might characterisation work in the financial markets?
Q.4(c) How might characterisation work in the context of “linked assets”?

The Law Commission welcomes any follow up questions at conflictoflaws@lawcommission.gov.uk.

Strengthening Anti-SLAPPs Legal Protection in the Western Balkans

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Marco Pasqua
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While the implementation of Directive (EU) 2024/1069 is underway across EU Member States, and it will have to be done according to the timing already indicated in this blog, attention is increasingly turning to the pressing need to strengthen anti-SLAPPs protections in the Western Balkans. The issue of SLAPPs is a growing concern in this region, where robust legal frameworks and policy measures are essential to safeguard freedom of expression and democratic values.

In this context, the Council of Europe recently hosted a regional exchange on combatting SLAPPs, bringing together key stakeholders from the Western Balkans. The event highlighted the challenges faced by journalists and civil society organizations targeted by such lawsuits, which often exploit legal systems to intimidate and financially burden individuals and groups speaking truth to power.

One of the critical outcomes of this initiative is the publication of the Regional Baseline Assessment of Legislative and Policy Needs for Implementing Anti-SLAPP Standards in the Western Balkans. The regional assessment was prepared by Flutura Kusari and is based on domestic assessments which were prepared by Aulona Hazbiu (Albania), Svjetlana Milišić-Veličkovski (Bosnia and Herzegovina), Flutura Kusari (Kosovo), Aneta Spaic (Montenegro), Dragan Sekulovski (North Macedonia) and Gordana Konstantinović (Serbia).

The report examines the current legislative landscape in the region and identifies gaps that undermine effective protection against SLAPPs. It also offers tailored recommendations to align domestic laws with international standards, including those outlined in the European Court of Human Rights’ case law and the Council of Europe’s legal framework, such as the Recommendation CM/Rec(2024)2 of the Committee of Ministers to member States on countering the use of strategic lawsuits against public participation (SLAPPs). In addition to substantive and procedural law aspects, it also encompasses issues related to cross-border cases.

Chapter 3 of the report, which focuses on general recommendations, provides an in-depth exploration of measures needed to establish effective mechanisms for countering SLAPPs. It underscores the critical need for a lex specialis — specific legislation designed to directly address the unique nature of SLAPPs. This approach recognizes that existing legal frameworks are often insufficient to tackle the particular challenges these lawsuits present.

Additionally, the report extends its analysis by offering jurisdiction-specific recommendations tailored to the legal framework of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.

The report emphasizes the necessity for a holistic approach to effectively counter SLAPPs. It advocates for the implementation of robust legal safeguards that ensure the protection of individuals and organizations engaged in public participation. The main recommendations, aligned with the analytical sections of the report, encompass early dismissal mechanisms, burden of proof adjustments, security for procedural costs, compensatory damages and restitution of legal costs, acknowledgement of SLAPP victim status, capping of costs and damages for claimants and non-judicial remedies.

Finally, chapter 13 of the report discusses the added complexity of cross-border SLAPPs, where claimants file lawsuits in foreign jurisdictions to exploit more favourable legal environments. Defending such cases requires navigating multiple legal systems, significantly increasing costs, time and stress, and amplifying the chilling effect on public participation.

The report highlights the need to limit forum shopping — selecting jurisdictions that disadvantage defendants or undermine freedom of expression. It cites the relevant Council of Europe’s recommendations on the matter and the Directive (EU) 2024/1069, which both emphasize the refusal of recognition and enforcement of third-country judgments if the case is deemed manifestly abusive or unfounded. In addition, both instruments mandate that Member States provide individuals or entities who are subject to abusive legal actions from claimants outside the EU or Council of Europe the opportunity to seek compensation for any damages or costs incurred through these proceedings in their domestic courts.

National laws on private international law and civil procedure of the Western Balkans countries scrutinized govern whether foreign court decisions can be enforced. References to the grounds for refusal are provided on a State-by-State basis.

In the conclusions of the report, the assessment examines the legislative and policy gaps in Western Balkans countries concerning anti-SLAPP standards. It finds that, while existing procedural safeguards in civil matters could support anti-SLAPP implementation, significant gaps remain, particularly in victim recognition and specific rules for security for costs. Compensation for damages, including non-pecuniary harm, is available in all countries, but none explicitly recognize SLAPP victims or offer automatic rights to compensation. Media self-regulatory bodies exist but lack formal authority in legal proceedings. Recognition and enforcement of judgements in cross-border SLAPP cases are governed by national laws, with common grounds for refusal including jurisdictional issues, procedural irregularities and public policy.

The Polish Presidency’s Programme on Judicial Cooperation in Civil Matters

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Pietro Franzina
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On 1 January 2025, Poland assumed the presidency of the Council of the European Union, marking the start of a new trio of presidencies that also involves Denmark and Cyprus.

The Polish presidency’s programme for the semester ending on 30 June deals with a broad range of topics, including judicial cooperation in civil matters.

In this area, the Polish presidency will “aim at strengthening the legal protection of European Union citizens in cross-border situations”. It plan to do so by making “substantial progress on the draft Regulation on jurisdiction, applicable law, recognition and enforcement of measures and cooperation in matters relating to the protection of adults“, while continuing “work on the draft Council Regulation on jurisdiction, applicable law, recognition of decisions and acceptance of authentic instruments in matters of parenthood and on the creation of a European Certificate of Parenthood”.

To remove “barriers to the competitiveness of the EU economy, which at the same time hinder citizens from exercising fundamental freedoms, such as the free movement of capital and freedom of establishment, and put their legally protected interests at risk”, the Polish presidency intends to “further focus on the draft Directive harmonizing
certain aspects of insolvency law“. The presidency will also be “ready to continue work on a draft Directive on adapting non-contractual civil liability rules to artificial intelligence“, and support “cooperation of Member States in the digitalisation of justice, particularly in key areas arising from the European e-Justice Strategy 2024-2028”.

The programme includes a more general statement on the importance of “political guidance for future European
Union action in the field of justice”, and indicates that the Polish Presidency aims to “take an active role in this discussion, taking into account the positions of all stakeholders”. No indications are provided in the text as to the directions that future developments may take, or as regards any possible area of intervention.

Practical Handbook on the Hague Adults Convention Released

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Pietro Franzina
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The final version of the practical handbook on the Hague Convention of 13 January 2000 on the international protection of adults, marking the end of a process led by the Permanent Bureau of the HCCH and a dedicated Working Group, which started in 2021.

The Practical Handbook is intended to assist current and prospective Contracting Parties to the 2000 Protection of Adults Convention by providing practical guidance on the implementation and operation of the Convention, which provides for the protection in international situations of adults who, by reason of an impairment or insufficiency of their personal faculties, are not in a position to protect their interests. The Practical Handbook draws upon the experiences and practical examples provided by experts from Contracting Parties with experience in the implementation and operation of the Convention, as well as by experts from States which are considering becoming Parties to the Convention.

The 250-page-long document builds on a variety of sources, such as the explanatory report of the Convention, by Paul Lagarde, the experience of Central Authorities established under the Convention, court rulings and the opinions of scholars. The handbook covers a broad range of issues that may arise in connection with the protection of adults in cross-border cases through plain, yet detailed, explanations and several examples.

Several other freely accessible practical handbooks have been published by the Hague Conference on Private International Law regarding conventions adopted under its auspices, including the 1970 Evidence Convention, the 1965 Service Convention, the 1996 Child Protection Convention, the 2007 Child Support Convention and Maintenance Protocol, and the 1961 Apostille Convention (Apostille Handbook). The full list can be found here.

Improving the Settlement of (International) Commercial Disputes in Germany

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The Editors of the EAPIL blog
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This post was written by Prof. Dr. Giesela Rühl, LL.M. (Berkeley), Humboldt University of Berlin, and is also available via conflictoflaws.net.

 As reported earlier on this blog, Germany has been discussing for years how the framework conditions for the settlement of (international) commercial disputes can be improved. Triggered by increasing competition from international commercial arbitration as well as the creation of international commercial courts in other countries (as well as Brexit) these discussions have recently yielded a first success: Shortly before the German government coalition collapsed on November 6, the federal legislature adopted the Law on the Strengthening of Germany as a Place to Settle (Commercial) Disputes (Justizstandort-Stärkungsgesetz of 7 October 2024)[1]. The Law will enter into force on 1 April 2025 and amend both the Courts Constitution Act (Gerichtsverfassungsgesetz – GVG) and the Code of Civil Procedure (Zivilprozessodnung – ZPO)[2] with the aim of improving the position of Germany’s courts vis-à-vis recognized litigation and arbitration venues – notably London, Amsterdam, Paris and Singapore. Specifically, the new Law brings three innovations.

English as the Language of Proceedings

The first innovation relates to the language of court proceedings: To attract international disputes to German courts, the new Law allows the German federal states (Bundesländer)[3] to establish “commercial chambers” at the level of the regional courts (Landgerichte) that will offer to conduct proceedings in English from beginning to end if the parties so wish (cf. § 184a GVG). Before these chambers parties will, therefore, be allowed to file their briefs and all their statements in English, the oral hearings will be held in English and witnesses will be examined in English. In addition, commercial chambers will communicate with the parties in English and write all orders, decisions and the final judgment in English. Compared to the status quo, which limits the use of English to the oral hearing (cf. § 185(2) GVG) and the presentation of English-language documents (cf. § 142(3) ZPO) this will be a huge step forward.

The new Law, however, does not stop here. In addition to allowing the establishment of (full) English language commercial chambers at the regional court level it requires that federal states ensure that appeals against English-language decisions coming from commercial chambers will also be heard (completely) in English in second instance at the Higher Regional Courts (Oberlandesgerichte) (cf. § 184a(1) No. 1 GVG). The new Law also allows the Federal Supreme Court (Bundesgerichtshof) to conduct proceedings entirely in English (cf. § 184b(1) GVG). Unfortunately, however, the Federal Supreme Court is not mandated to hear cases in English (even if they started in English). Rather, it will be in the discretion of the Federal Supreme Court to decide on a case-by-case basis (and at the request of the parties) whether it will hold the proceedings in English – or switch to German (cf. § 184b GVG). The latter is, of course, unfortunate, as parties cannot be sure that a case that is filed in English (and heard in English at first and second instance) will also be heard in English by the Federal Supreme Court thus reducing incentives to commence proceedings in English in the first place. But be this as it may: it is to be welcomed that the German federal legislature, after long and heated debates, finally decided to open up the German civil justice system to English as the language of the proceedings.

Specialized “Commercial Courts” for High-volume Commercial Disputes

The second innovation that the new Law brings relates to the settlement of high-volume commercial cases (whether international or not). To prevent these cases from going to arbitration (or to get them back into the state court system) the new Law allows the German federal states to establish specialized senates at the Higher Regional Courts. Referred to as “commercial courts” these senates will be distinct from other senates in that they will be allowed to hear (certain) commercial cases in first instance if the parties so wish (cf. § 119b(1) GVG) thus deviating from the general rule that cases have to start either in the local courts (if the value in dispute is below € 5.000,00) or in the regional courts (if the value in dispute is € 5.000,00 or higher). In addition, commercial courts will conduct their proceedings in English (upon application of the parties) and in a more arbitration-style fashion. More specifically, they will hold a case management conference at the beginning of proceedings and prepare a verbatim record of the hearing upon application of the parties (cf. §§ 612, 613 ZPO). Commercial courts will, hence, be able to offer more specialized legal services as well as services that correspond to the needs and expectations of (international) commercial parties.

It is unfortunate, however, that the German legislature was afraid that the commercial courts would be flooded with (less complex) cases – and, therefore, decided to limit their jurisdiction to disputes with a value of more than € 500.000,00 (cf. § 119b(1) GVG). As a consequence, only parties with a high-volume case will have access to the commercial courts. This is problematic for several reasons: First, it is unclear whether a reference to the value of the dispute is actually able to distinguish complex from less complex cases. Second, any fixed threshold will create unfairness at the margin, as disputes with a value of slightly less than € 500.00,00 will not be allowed to go to the commercial courts. Third, requiring a minimum value can lead to uncertainty because the value of a dispute may not always be clear ex ante when the contract is concluded. Fourth, a fixed threshold may create the impression of a two-tier justice system, in which there are “luxury” courts for the rich and “ordinary” courts for the poor. And, finally, there is a risk that the commercial courts will not receive enough cases to build up expertise and thus reputation. Against this background, it would have been better to follow the example of France, Singapore, and London and to open commercial courts for all commercial cases regardless of the amount in dispute. At the very least, the legislature should have set the limit much lower. The Netherlands Commercial Court, for example, can be used for any disputes with a value higher than € 25,000.00.

Better Protection of Trade Secrets

The third innovation, finally, concerns the protection of trade secrets. However, unlike the other innovations the relevant provisions are not limited to certain chambers or senates (to be established by the federal states on the basis of the new Law), but apply to all civil courts and all civil proceedings (cf. § 273a ZPO). They allow the parties to apply for protection of information that qualifies as a trade secret within the meaning of the German Act on the Protection of Trade Secrets (Gesetz zum Schutz von Geschäftsgeheimnissen – GeschGehG). If the court grants the application, all information classified as a trade secret must be kept confidential during and after the proceedings (cf. §§ 16 Abs. 2, 18 GeschGehG). In addition, the court may restrict access to confidential information at the request of a party and exclude the public from the oral hearing (§ 19 GeschGehG). The third innovation, thus, account for the parties’ legitimate interests in protecting their business secrets without unduly restricting the public nature of civil proceedings, which is one of the fundamental pillars of German civil justice. At the same time, it borrows an important feature from arbitration. However, since the new rules are concerned with the protection of trade secrets only, they do not guarantee the confidentiality of the proceedings as such. As a result, the parties cannot request that the fact that there is a court case at all be kept secret.

Success Depends on the Federal States

Overall, there is no doubt that the new Law is to be welcomed. Despite the criticism that can and must be levelled against some provisions, it will improve the framework for the resolution of high-volume (international) commercial disputes in German courts. However, there are two caveats:

The first caveat has its root in the Law itself. As it places the burden to establish commercial chambers and commercial courts on the federal states, the extent to which it will be possible for civil court proceedings to be conducted entirely in English and the extent to which there will be specialized senates for high-volume commercial disputes will depend on whether the federal states will exercise their powers. In addition, the practical success of the Law will also depend on whether the federal states will make the necessary investments that will allow commercial chambers and commercial courts to strive. For example, they will need to make sure that commercial chambers and commercial courts are staffed with qualified judges who have the necessary professional and linguistic qualifications and ideally also practical experience to settle high-volume (international) commercial disputes. In addition, they will have to ensure that judges have sufficient time to deal with complex (national and international) cases. And, finally, federal states will have to ensure that sufficiently large and technically well-equipped hearing rooms are available for the kind of high-volume disputes that they seek to attract. Should federal states not be willing to make these kinds of investments commercial chambers and commercial courts will most likely be of limited use.

The second caveat concerns the likely success of the new Law with regards to international disputes. In fact, even if the federal states implement the new Law in a perfect manner, i.e. even if they establish a sufficient number of commercial chambers and commercial courts and even if they make the investments described above, it seems unlikely that German courts will become sought-after venues for the settlement of international commercial disputes. This is because the German civil justice system has numerous disadvantages when compared with international commercial arbitration. In addition, the attractiveness of German courts suffers from the moderate reputation and poor accessibility of German substantive law. Both problems will not disappear with the implementation of the new Law.

Against this background, the new Law holds the greatest potential for national high-volume commercial disputes. However, it should not be forgotten that these kinds of disputes represent only a small fraction of the disputes that end up before German courts each year. In order to really strengthen Germany as a place to settle dispute, it would, therefore, be necessary to address the problems that these cases are facing. However, while the (now former) Federal Minister of Justice made promising proposals to this effect in recent months, the collapse of the German government coalition in early November makes it unlikely, that these proposals will be adopted anytime soon. In the interest of the German civil justice system as a whole, it is, therefore, to be hoped that the proposals will be reintroduced after the general election in early 2025.

[1] Gesetz zur Stärkung des Justizstandortes Deutschland durch Einführung von Commercial Courts und der Gerichtssprache Englisch in die Zivilgerichtsbarkeit (Justizstandort-Stärkungsgesetz) vom 7. Oktober 2024, Bundesgesetzblatt (Federal Law Gazette) 2024 I Nr. 302.

[2] Note that both the translations of the GVG and the ZPO do not yet include the amendments introduced through the new Law discussed in this post.

[3] The German civil justice system divides responsibilities between the federal state (Bund) and the 16 federal states (Bundesländer). While the federal state is responsible for adopting unified rules relating to the organization of courts as well as the law of civil procedure (Art. 74 No. 1 of the Basic Law), the federal states are responsible for administering (most) civil courts on a daily basis (Art. 30 of the Basic Law). It is, therefore, the federal states that organize and fund most civil courts, appoint judges, and manage the court infrastructure.

The CJEU on Subsidiary Jurisdiction in Succession Matters

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Anna Wysocka-Bar
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On 7 November 2024 the Court of Justice handed down its judgement in Hantoch case (C‑291/23) in which it interpreted jurisdictional rules of Article 10 of the Succession Regulation. The preliminary question originated from Germany, from Landgericht Düsseldorf.

Background of the Case and the Doubt of the Referring Court

The deceased lived and worked for many years in Germany. Since the retirement the deceased resided principally in Egypt. As he was entitled to a German retirement pension he maintained a German bank account solely for the purpose of transferring the payments from his pension scheme to the bank account in Egypt, by way of a standing order. On the date of his death in Egypt, in  2017, he had both German and Egyptian nationality. LS and PL are descendants of the deceased, whereas PL is the sole testamentary heir. LS brought an action before the referring court, requesting certain information from PL and claiming a right to a reserved share. In LS view the court has jurisdiction as at the time of death of the deceased, he did held assets in Germany consisting of, inter alia, a sum in the bank account.

As the deceased was found to be habitually resident in Egypt at the time of death and held German nationality, the referring court contemplated establishing its jurisdiction based on Article 10(1)(a) of the Succession Regulation. The referring court noticed that legal literature is divided as to the point in time, at which assets should be present in the Member State of the forum. The solution to this doubt is crucial in the case at hand, as ‘at the time of death’ of the deceased there was a credit balance in his bank account, but the account had already been closed at the time the proceedings were initiated. Hence, the referring court turned to the Court of Justice.

Judgment of the Court of Justice

The Court of Justice answered in a straightforward way that in order to establish subsidiary jurisdiction of the courts of the Member State based on Article 10 ‘it is necessary to examine whether those assets were located in that Member State not at the time those courts were seised, but rather at the time of death.’

Comments on the Jurisdictional Rules of the Succession Regulation and the Judgment

Succession Regulation, as opposed to the Brussels I bis or Brussels II ter Regulations, does not provide for residual jurisdiction of the court of the Member States, which might be derived from domestic laws of the Member States. The jurisdictional rules of the Succession Regulation are of exclusive nature, as long as the given succession proceedings falls within the material (Article 1), temporal (Article 83(1)) and territorial scope of the Succession Regulation (Recitals 82, 83); and no international agreement concluded by a given Member State with a third state comes into play (see with that respect: OP case, C-21/22, commented on this blog here).

The jurisdictional rules of the Succession Regulation are built on two pillars: Article 4 and Article 10 (and supplemented by mechanisms, regulated in Articles 5-9, allowing for ‘transfers’ of jurisdiction from one Member State to another, solely in case the deceased has chosen his/her national law as applicable pursuant to Article 22 of the Succession Regulation). Already in VA, ZA v. TP case (C-645/20, commented on this blog here). Court of Justice underlined that there is no hierarchical relationship between Article 4 and Article 10 Succession Regulation, even though the latter is referred to as ‘subsidiary jurisdiction’. As nicely put in the opinion of the AG Sànchez-Bardona to the above case: ‘each caters for a different factual situation: either the deceased was last habitually resident in a Member State of the European Union (the assumption informing Article 4) or he or she wasn’t (the assumption informing Article 10)’.

In its order in Jurtukała case (C‑55/23), the Court of Justice had to explain that Article 10 comes into play only in scenarios, where the deceased at the time of death was habitually resident in a third state. In its judgment in VA, ZA v TP. the Court of Justice reminded that a Member State, which do not apply the Succession Regulation (now Denmark and Ireland; and the UK before its withdrawal from the EU) is not ‘a Member State’ within the meaning of the Regulation, but consequently a third state.

So, if the deceased at the time of death was habitually resident in a third state (including in Denmark or Ireland), the jurisdiction of an EU Member State might be derived from the location of assets of the estate and nationality of the deceased (Article 10(1)(a)) or ‘previous’ habitual residence of the deceased (Article 10(1)(b)); or location of assets only (Article 10(2)). Depending on the strength of the connection with a Member State – including both assets and personal connection of nationality or previous habitual residence; or assets only – the extent of jurisdiction is different. In the former case it extends to ‘the succession as a whole’, meaning all assets of the estate irrespctive their location, including assets located outside of the EU, or in the latter case covers only the assets located in the Member State of the forum.

 In Hantoch case the Court of Justice had to look closer on the requirement of the presence of assets within the territory of the Member State of the forum, and more precisely the point in time, where the assets have to be present in order to trigger the existence of jurisdiction in succession matters. The Court of Justice rightly underlined that the Succession Regulation generally refers to ‘the time of death’ for the purposes of assessing whether the criteria for establishing general jurisdiction or subsidiary jurisdiction are met (para. 21). In view of the Court of Justice, this interpretation is supported by the objectives of the Succession Regulation, which is ensuring that citizens are able to organise their succession in advance, which requires legal certainty and predictability for all interested parties: heirs, legatees or creditors. This certainty and predictability would be jeopardised if jurisdiction could be dependand on circumstances arising after the death of the deceased (paras 24-25). This argument is very convincing.

Another interesting aspect revealed by the case but not specifically discussed in the preliminary question and the judgment, is how substantial these assets located on the territory of a Member State should be in order to justify the jurisdiction based on Article 10 of the Succession Regulation. It seems that when it comes to bank account held in the bank in a Member State, even small amount should justify the existence of the jurisdiction of the courts of a Member State. When coupled with nationality or ‘previous’ habitual residence, these immaterial assets give quite a power to the court of the Member State to rule on the ‘succession as a whole’. Would this be also the case if the assets consisted of a suitcase in a hotel where the deceased unexpectedly died during a business trip?

Conference on the Reform of Belgian Property Law and Law of Obligations

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The Editors of the EAPIL blog
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This post was written by Verena Wodniansky-Wildenfeld.

On 28 November 2024, the University of Vienna, in cooperation with the Association Henri Capitant (German and Belgian branches) and the Interdisciplinary Association of Comparative and Private International Law (IACPIL), will host a conference on The Reform of Belgian Property Law and Law of Obligations.

The event will take place from 14:00 to 18:00 in the Roman Law Seminar Room (3rd floor, Schenkenstrasse 8-10, University of Vienna) and offers participants the chance to explore the significant changes that are transforming the Belgian legal landscape. Renowned academics from leading Belgian universities will discuss the modernisation of property law and the reform of the law of obligations.

The programme includes a presentation by Professor Vincent Sagaert (University of Leuven) and Professor Pascale Lecocq (University of Liège) on the new Belgian property law and its approach to balancing tradition and innovation, followed by an in-depth analysis of the reform of the Belgian law of obligations by Professor Rafael Jafferali (Université Libre de Bruxelles).

After the “beer and waffles break”, Professor Benoît Kohl (University of Liège) will discuss the draft of Book 7 of the Belgian Civil Code on special contracts and its potential impact on legal practice. The final session, led by Professor Michèle Gregoire (Université Libre de Bruxelles) and Professor Christine Biquet (Université de Liège), will focus on personal and real securities, exploring their rationalisation and the search for a better balance between the interests of the parties.

The full programme can be accessed here.

The participation is free and possible in person or via Zoom. Please register by 22 November 2024 at service.rechtsvergleichung@univie.ac.at.

Zoom Link for online participation: https://univienna.zoom.us/j/65368226995?pwd=9W5PdpUQvTZI3wT0cMvNRbRnaY1SQa.1

Or scan the QR-Code:

 

 

 

Adoption of a New ICCS Convention to Facilitate Cross-Border Unions

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Marion Ho-Dac
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A Convention on the issue of certificates of matrimonial capacity and capacity to enter into a registered partnership was adopted on 13 September 2024 under the International Commission on Civil Status (ICCS). This is in fact the 35th instrument elaborated in the framework of ICCS.

As explained by its Explanatory Report, the Convention builds on Convention (No.20) on the issue of a certificate of legal capacity to marry, signed in Munich on 5 September 1980. As a continuum of the Munich Convention, it aims to facilitate the proof that persons wishing to enter into a (marital or partnership) union abroad fulfil the conditions for doing so.

The text is now open to signature and has already been signed by Switzerland.

I interviewed the Secretary General of the ICCS, Nicolas Nord, to find out more about this new Convention, its ratio legis, its main provisions and the ICCS’s ambitions in this context.

What is the central purpose of Convention No. 35? And more specifically, what is the legal methodology adopted for the circulation of the matrimonial and registered partnership certificates?

Convention No. 20 dates back to 1980. It is of course no longer adapted to today’s realities. That is why it seemed relevant to adopt a more modern text tailored to contemporary needs. There are several key new features.

First, the material scope of the certificates has been extended. Not only certificates of matrimonial capacity but also certificates of capacity to enter into a registered partnership, an institution that did not exist at the time of the adoption of the Munich Convention, may be issued on the basis of this text. Certificates can also be issued for same-sex marriages. Moreover, the application of Convention No. 35 is extended to foreigners residing on the territory of the States Parties and is no longer restricted to nationals only.

Second, as regards the methodology, Contracting States shall issue the certificate based on the ICCS models (see Appendix 1 to this Convention, Forms 1A, 1B, 2A, 2B). These models contain standard entries that must be completed with codes numbers (see Appendix 2) according to the personal situation in question. Then, the certificates shall be accepted without legalisation or equivalent formality in each of the Contracting States (Art. 6). This provision is obviously very favourable to the cross-border circulation of personal status. However, some possible ways of control by Receiving States have been introduced.

How does Convention No. 35 deal with cultural differences between States in an area as sensitive as the regulation of forms of unions? The legal conditions governing the union of couples vary strongly worldwide; same-sex marriage and registered partnerships are only allowed in some jurisdictions.

There were indeed many discussions because of the different conceptions between States regarding marriage and registered partnership. As always, the ICCS’ objective is to enable harmonious cohabitation, without intervening in the substance of the law. The Convention therefore has a general vocation, but States may make reservations. In particular, they may decide not to apply the text to marriages between persons of the same sex or to registered partnerships in general or to one or more of their forms.

Likewise, the above-mentioned ICCS models are the result of compromises. This is the case, for example, when it comes to specifying a person’s gender. For people who do not recognise themselves as either male or female, the X symbol may be used.

How should Convention No. 35 interplay and/or be articulated with the Hague Conventions on the circulation of public documents and the EU Regulation on public documents? 

Certificates issued on the basis of Convention No. 35 are exempt from legalisation and all similar formalities. They do not therefore have to be apostilled, which facilitates their circulation. As regards, the Public Documents Regulation, it provides for a form of coexistence with ICCS instruments, without any real interaction. On the one hand, the Regulation allows other international cooperation frameworks to apply, enabling the circulation of public documents, such as the ICCS Conventions. Secondly, the issue addressed by the new Convention is not covered by the Regulation in the same way. Here, the Convention goes beyond mere acceptance of a public document to create a probative value for certificates. This means that Convention No. 35 could be applied in relations between Member States of the European Union.

The number of States that are members of the ICCS has decreased in recent years. Which States took part in the negotiation of Convention No. 35, and which States might join it in the future? 

A large number of States, well beyond the ICCS members, have been involved in the working group. More than twenty of them took part in the various meetings. The ICCS’s partners also contributed to the drafting of the Convention (i.e. European Commission, Council of Europe, Hague Conference on Private International Law).

Professional organisations were also involved, enabling us to benefit from the expertise of practitioners who will be using the text in the future (Association du Notariat francophone, EVS – European Association of Registars). Finally, the European Law Institute has also actively contributed to our work.

Eleven States are currently bound by Convention No. 20. It would seem logical for them to accede to the new convention. More generally, the solutions currently used in some States are unsatisfactory, as a “certificate of custom” (certificats de coutume) is required from the persons concerned by the future union. It is often difficult for them to obtain it and the cost can be high. Moreover, such a document provides no real guarantee. Using Convention No. 35 and the forms it creates would be easier and more effective.

I would like to thank Nicolas for the very interesting light he has shed on this new legal achievement of ICCS and wish success to Convention No. 35. It sends a strong signal to the international community about the need to continue working together, in a highly operational way, to facilitate the international movement of couples. It is a “helping hand” to States and regional organisations such as the European Union in favour of the permanence of personal status.

Law Commission of England and Wales on Electronic Trade Documents in Private International Law

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Ugljesa Grusic
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I have already reported on this blog that earlier this year the Law Commission of England and Wales published a call for evidence to help them identify the most challenging and prevalent issues of private international law that arise from the digital, online, and decentralised contexts in which modern digital assets and electronic trade documents are used.

The first result of that call for evidence is an interim document relating to electronic trade documents (ETDs) in private international law. This 22-page document explains how the UK Electronic Trade Documents Act 2023 and other legislation inspired by the UN Model Law on Electronic Transferrable Records interact with private international law. It is structured as a ‘Frequently Asked Questions’ to respond directly to the most common concerns raised with the Law Commission so far.

The FAQs answered in the document are:

Q.1. When will ETDs engage private international law?
Q.1(a) What is private international law?
Q.1(b) How do private international law and trade documents interact in the cross-border context?
Q.1(c) How do the courts of England and Wales approach private international law?
Q.1(d) If an applicable law rule points to the law of England and Wales, does this include the private international law rules of England and Wales?
Q.2. What law applies to/governs an electronic trade document and electronic validity?
Q.2(a) What law “governs” or “applies to” a trade document”?
Q.2(b) What law “governs an electronic trade document” or “electronic validity”?
Q.3. When does the Electronic Trade Documents Act 2023 apply?
Q.4. Can I choose the Electronic Trade Documents Act 2023 as the law applicable to my trade document?
Q.5. Is section 72 of the Bills of Exchange Act 1882 problematic in the electronic context?
Q.6. Can section 72 of the Bills of Exchange Act 1882 “invalidate” an electronic trade document?
Q.6(a) When do issues of “electronic validity” arise under section 72?
Q.7. Is Section 72 out of date?

The Law Commission welcomes any follow up questions at conflictoflaws@lawcommission.gov.uk with the subject “ETDs in PIL: FAQs”.

The EU AI Act and Private International Law: A First Look

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Marion Ho-Dac
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Regulation 2024/1689 laying down harmonised rules on artificial intelligence, commonly known as the EU AI Act, has entered into force on 1 August 2024 and will progressively be applicable to several (private and public) organisations within transnational AI value chains connected to the EU internal market.

This Regulation is remarkable for two main reasons. First, it has a horizontal dimension covering in principle (all) hazardous AI systems and models. Second, it is of a binding legal nature going beyond classical AI  ethical principles such as those developed by UNESCO, the OECD or the HLEG on AI.

As the AI Act is based on the New Legislative Framework (NLF) established for EU product safety policy, readers of the blog may wonder how it could have any private international law (PIL) aspect or even any impact on the field. Here are some first answers.

The AI Act in a Nutshell
Main Regulatory Blocks

The AI Act lays down three main regulatory blocks (see in details here). First, it provides for harmonised rules concerning the placing on the market, putting into service and use of AI systems in the Union. It includes, at a higher level of granularity, provisions prohibiting certain AI practices (such as social scoring or crime prediction under certain conditions) as well as specific requirements for high-risk systems and AI models. The second block consists of a dense public enforcement scheme covering, on the one hand, market surveillance rules to be implemented by national authorities. On the other hand, these rules are reinforced by a federal/EU-level governance framework – inspired by other regulatory instruments of the digital single market – and embodied by the AI Office. The third set of rules provides for measures to promote innovation, notably in the form of regulatory sandboxes, support measures and regulatory exemptions for SMEs and start-ups.

Conformity Regimes for AI Systems and Models

Under the AI Act, an AI system is “a machine-based system”, autonomous and adaptive, “[inferring] from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments” (AI Act, Article 3 point 1). Based on this broad definition, the Act provides for a taxonomy of AI systems and models, anchored in the “risk-based approach”. The more the AI system or model presents potential risks to the health, safety or fundamental rights of citizens, the more stringent the legislative requirements are.

The main regulated category in the Act is high-risk AI systems. It includes systems in the field of biometrics, critical infrastructure, law enforcement, education and employment, essential services, migration and the administration of justice. The regulation provides for numerous requirements relating to the safety and trustworthiness of AI (e.g. provisions on risk management, data governance, transparency, human oversight, etc.). These requirements and complemented obligations are mainly intended for AI providers (who develop and market the systems in the EU) and deployers (who use these systems in the course of their professional activity in the EU).

A lighter regulatory regime is established for general-purpose AI (GPAI) models presenting systematic risk – such as the Large Language Model GPT-4 used by the famous chatbot Chat-GPT –. It is surprising that GPAI models with high-impact capabilities fall under a less restrictive regulatory framework (than high risk AI systems), although they are expected to have “a significant impact on the Union market […] due to actual or reasonably foreseeable negative effects on […] fundamental rights, or the society as a whole” (AI Act, Article 3 point 65). They are already used for instance – once integrated into AI systems – in the judicial domain, notably for the development of legal tech services for lawyers, of robot-judges or, at least, as a tool to support court proceedings (as recently illustrated in a Dutch decision).

Private International Law Issues

Despite the absence of reference to PIL rules or instruments in the AI Act, including to regulate the interplay between the Act and EU regulations on PIL, there are some important points of contact between the two fields. They may be identified both at the implementation and enforcement stages of the AI Act’s regulatory framework.

PIL Issues in the AI Act Implementation
A. The Global Reach of the AI Act

First, the AI Act has a broad geographical scope of application. It replicates the broad understanding and legal treatment of transnational supply chains for products followed by EU law on product safety. Since the vast majority of the AI industry is established outside the Union, the AI Act must ensure a cross-border level playing field among all AI players and the protection of EU values including the safeguard of fundamental rights for European citizens. Article 2, 1 of the AI Act provides for the geographical delineation of the regulatory framework and consists of a rule of applicability, in the same vein as Article 2, 1 of the DSA or Article 3 of the GDPR. Organisations are subject to the EU regulation even when they are established outside the Union, as soon as the AI system has an impact on individuals in the Union. More precisely, even when both the provider and the deployer of an AI system are established in a third country, but “the output produced by the AI system is used in the Union”, the regulation is applicable. The difficulties here will be the predictability as well as the practicability of this broad delimitation, especially for providers. The latter should anticipate the jurisdictions – here the EU – in which their AI systems may be deployed but also in which the outputs of the system’s deployment may be used.

From a PIL perspective, this provision of the AI Act is a strong expression of EU unilateralism. The Union intends to impose its regulatory leadership in the field of AI technologies internationally to ensure the protection of its citizens. It gives the AI Act an international mandatory nature and this could have further conflict of laws implication at the Act’s enforcement stage.

B. AI Systems in the Field of (Cross-Border) Justice and Dispute Resolution

Second, among the various AI systems covered by the AI Act, those used in the administration of justice are considered high-risk. One specific use-case deals with AI assisting a judicial authority in different tasks: researching and interpretating facts and the law; and applying the law to a concrete set of facts. This applies to the Judiciary and the “judicial function” (i.e. juris dictio stage), beyond mere PIL issues. However, two aspects concerning PIL in particular can be highlighted.

On the one hand, the (above-mentioned) functions of judicial assistance particularly reflect PIL reasoning which, by its very nature, encompasses the entire dispute resolution process through an international focal point (i.e. determination of the competent jurisdiction, of the applicable law and of the foreign law’s content). It is good news that AI systems that may be used in the future to resolve PIL issues by courts are qualified as high-risk. PIL is a complex field of law indeed!

On the other hand, the said use-case is extended to arbitration, which therefore includes international arbitration. The use of AI has developed considerably in the context of alternative dispute resolution. Those involved in the ecosystem of international commercial or investment arbitration therefore need to be extremely cautious. The AI Act applied both to the provider and the deployer – it means, for the latter, the arbitrator – of an AI system.

PIL Issues in the AI Act Enforcement

During the legislative process, the draft AI Act was severely criticized by civil society representatives for not establishing a private enforcement scheme (see here and here). Given the serious risks to fundamental rights posed by AI, how can affected citizens obtain compensation in case of harm? This question obviously concerns PIL rules since the AI systems used in the EU are marketed, for the most part, by non-European operators. In addition, numerous AI systems are digital in nature and used via a computer interface. Thus, here again, the legal relationships will often be of international nature.

The AI Act at least provides for a complaint mechanism, including for individuals, before the market supervisory authority concerned in the event of a breach of the provisions of the Regulation. Moreover, in case of deployment of automated or support decision-making systems, qualified high risk, end-users have a right of information and a right to explanation of the role of the AI system in the decision-making procedure. However, there is no legal basis for plaintiffs to access to the courts. Plus, these international substantive rules may require the support of private international law to clarify their implementation in a particular EU member State. In parallel to the AI Act, EU law has developed a specific framework for civil liability for defective products, recently modernised and a proposal for a directive introducing a special liability regime for AI is under discussion in the European legislative arena. However, private international law aspects are not directly considered by these texts.

In this highly complex and dense context, legal practitioners will have to learn thinking in terms of cross-border civil justice in the AI ecosystem. The latter is not necessarily equivalent to the more general digital ecosystem, as AI is a multifaceted technology.

Political Agreement in Denmark on International Surrogacy Agreements

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Erik Sinander
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On 5 February 2024, the Danish government, along with most opposition parties, reached an agreement regarding children born through surrogacy agreements. This political accord aims to address and improve the legal status of children born through surrogacy, particularly in the context of foreign surrogacy arrangements, ensuring their right to legal parents, without the requirement of a stepparent adoption.

Context and Motivation for the Agreement

The agreement recalls that surrogacy agreements are complex, both ethically and legally. Denmark does not have influence over surrogacy arrangements entered into in other countries. Thus, Denmark cannot regulate or monitor whether these agreements involve exploitation of women or other ethical concerns. However, recognizing the challenges and legal gaps that arise from these arrangements, the Danish political agreement has chosen to focus on the children who are born as a result of such agreements, rather than trying to prevent or promote surrogacy abroad.

Currently, Danish law does not recognize surrogacy agreements, meaning that the woman who gives birth to the child is considered the legal mother, even if she has no genetic connection to the child. This legal framework has created a “legal void” for children born to intended parents who use surrogacy, often leading to uncertainty regarding the legal relationship between the child and at least one of its intended parents. In a judgment of December 2022 (reported for the blog here), the European Court of Human Rights held that this Danish solution was incompatible with the right to family life.

The Treatment of Foreign Surrogacy Arrangements

The agreement is mainly concerned with children born abroad via commercial surrogacy. It is estimated that, each year, around 100 children are born through foreign surrogacy agreements and later brought to Denmark. The agreement proposes that the Familieretshuset (The Agency of Family Law) should be able to make swift decisions regarding parenthood for these children upon their arrival in Denmark.

This would replace the current procedure, where the non-biological parent must go through a stepparent adoption process, which cannot be initiated until at least three months after the birth. This adoption process has created a period of legal uncertainty for children and families, leaving them in a “legal void” until the adoption is formalized. Under the new system, intended parents can apply for legal parenthood from abroad before the child arrives in Denmark, ensuring that the child’s legal relationship with both parents is established from birth.

The agreement stipulates several conditions to prevent exploitation and ensure ethical standards. In the case of international surrogacy, at least one of the intended parents must have a genetic connection to the child. Additionally, the surrogate mother must confirm her consent to transfer parenthood after the birth through a notarized declaration from the child’s country of birth.

By allowing legal parenthood to be recognized retroactively from the child’s birth, the agreement respects the child’s right to know their background, with the surrogacy agreement and notarized declaration forming part of the legal record.

Impact on Domestic Surrogacy Arrangements

Although commercial surrogacy remains illegal in Denmark, altruistic surrogacy (where no payment is involved) is permitted, though rarely practiced. The agreement extends the same legal protections to children born through altruistic surrogacy within Denmark. Currently, these children also face a period of legal uncertainty because the non-biological parent must adopt the child after birth.

With this agreement, altruistic surrogacy agreements can be pre-approved and registered with Familieretshuset before pregnancy occurs. This allows the intended parents to be recognized as the legal parents from birth, thus removing the need for a stepparent adoption and providing immediate legal security for the child.

In altruistic surrogacy within Denmark, several requirements are outlined, including that the surrogate mother is at least 25 years old, has given birth to at least one child previously, and is not under guardianship. Furthermore, no payment may be made to the surrogate mother, and she must retain full autonomy over her body during the pregnancy, including the right to withdraw from the agreement.

Implementation and financial considerations

The new framework will take effect on 1 January 2025, with associated costs funded through the 2024 Finance Act. These funds will cover the processing of parenthood applications, parental leave payments, and the administration of these new rights. Familieretshuset will monitor the development of surrogacy cases and provide updates on the number of applications received during the first year after the agreement’s implementation.

Conclusion

This political agreement represents a step forward for Denmark in terms of ensuring the rights of children born through surrogacy. By providing a clear legal path to parenthood for children born either internationally or through altruistic surrogacy in Denmark, the government and the involved parties are addressing a legal gap.

Hague Judgments Convention in Force for Uruguay

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Pietro Franzina
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The Hague Judgments Convention of 2 July 2019 entered into force for Uruguay on 1 October 2024. Uruguay had ratified it on 1 September 2023.

As a result, the Judgments Convention is currently in force for 28 States and one Regional Organization of Economic Integration, namely the European Union. Specifically, the States bound by the Convention are the Member States of the EU (with the exception of Denmark), by virtue of the fact that the EU itself became a party (under a decision that has no effects on Denmark), Ukraine and now, as said, Uruguay.

The United Kingdom, too, ratified the Convention, albeit only with respect to England and Wales (as permitted by Article 25). The Convention, however, will only enter into force for the UK on 1 July 2025, that is, as specified by Article 28(2), on the first day of the month following the expiration of the period during which notifications may be made in accordance with Article 29(2) with respect to the UK (the notifications in question are statements whereby a Contracting State may inform the depositary that the ratification of another State “shall not have the effect of establishing relations between the two States pursuant to this Convention”). For a broader analysis of the decision of the UK to join the Convention, see the posts by Ugliesa Grusic on this blog, here and here.

Various States have signed the Convention, but have failed, so far, to express their consent to be bound by it. These include Albania (the latest to sign, on 12 September 2024), Costa Rica, Israel, Kosovo, Montenegro, North Macedonia, Russia and the US.

French Think Tank Issues Report on Law Applicable to Assets Registered in Distributed Ledgers

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Gilles Cuniberti
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The Legal High Committee for Financial Markets of Paris has recently published an English version of its report issued in May 2024 on The determination of the law applicable to assets registered in distributed ledgers. The report was produced by a working group chaired by Jérôme Chacornac (Paris II University) and Hubert de Vauplane (Kramer Levin Naftalis & Frankel).

The introduction of the report presents the background and purpose of the report as follows:

In connection with the adaptation of French law to the entry into force of a European
framework for distributed registry technologies, the Financial Markets Authority (AMF) asked the Legal High Commitee for Financial Markets of Paris (HCJP) to prepare a report on the state of solutions in French private international law to conflicts of laws relating to the proprietary effects of assets registered in a distributed ledger.

The issues to be addressed under French law are part of a rapidly changing context. Several countries, including the United States, Switzerland, Germany, Monaco and Liechtenstein, have adopted specific substantive law and conflict-of-laws rules concerning certain types of assets registered in “distributed” or “decentralized” ledgers.

A draft set of Principles on Digital Assets and Private Law (“DAPL”) was adopted in May 2023 by the Unidroit General Assembly, consisting of substantive law principles and a specific conflict-of-laws rule (hereinafter, the “Unidroit Principles”). The work carried out by Unidroit was envisaged as a possible starting point for the development of an international instrument on the subject by the Hague Conference on International Law, as part of a “joint initiative” between the two organizations. However, this joint initiative was halted in view of France’s reservations about its premises, which were shared by other member states of the HCCH.

In France, the entry into force of the “pilot regime” regulation has led to several adapta ons to securities law, while the adoption of the “MiCA” regulation has recently been the subject of further work in the marketplace. This report has endeavored to integrate this evolving framework into its presentation and proposals, making a clear dis nc on between de lege lata and de lege ferenda elements, in particular as regards the avenues for adapting French law to the MiCA regulation recommended in a HCJP report published during its preparation.

It was in this context that the undersigned were asked to set up a working group to identify any gaps or shortcomings in French conflict-of-laws rules, and to consider the relevant connecting factors for the purposes of drawing up any specific rule. The working group met six times between November 2023 and May 2024, to decide on the method to be used, then to examine the determination of the relevant connecting factor for transferable securities registered in a distributed ledger technology, before considering the characterization and possible connecting factors for assets other than transferable securities.

This report is therefore concerned with determining the law applicable to the proprietary effects of assets registered in distributed ledgers. 

The report can be downloaded here.

Corporate Sustainability Due Diligence Directive Published in the Official Journal

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Marco Pasqua
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On 5 July 2024, Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (Text with EEA relevance) was published in the Official Journal of the European Union.

Pursuant to Article 38 of the Directive, it will enter into force on 25 July 2024.

Member States shall adopt and publish, by 26 July 2026, the laws, regulations and administrative provisions necessary to comply with the Directive.

They shall apply those measures:

(a) from 26 July 2027 as regards companies formed in accordance with the legislation of the Member State and that had more than 5 000 employees on average and generated a net worldwide turnover of more than EUR 1 500 000 000 in the last financial year preceding 26 July 2027;

(b) from 26 July 2028 as regards companies formed in accordance with the legislation of the Member State and that had more than 3 000 employees on average and generated a net worldwide turnover of more than EUR 900 000 000 in the last financial year preceding 26 July 2028;

(c) from 26 July 2027 as regards companies formed in accordance with the legislation of a third country and that generated a net turnover of more than EUR 1 500 000 000 in the Union, in the financial year preceding the last financial year preceding 26 July 2027;

(d) from 26 July 2028 as regards companies formed in accordance with the legislation of a third country and that generated a net turnover of more than EUR 900 000 000 in the Union, in the financial year preceding the last financial year preceding 26 July 2028;

(e) from 26 July 2029 as regards all other companies referred to in the Directive.

Last Paris Seminar on the Recast of the Brussels I bis Regulation

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Gilles Cuniberti
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The last seminar in the series organised by Marie-Elodie Ancel (University of Paris-Panthéon-Assas) and Pascal de Vareilles-Sommières (University of Paris 1 Panthéon-Sorbonne) and hosted by the Cour de cassation on the recast of the Brussels I bis Regulation was held on 24 June 2024.

The general topic of the seminar was recognition and enforcement of judgments. Speakers included Fabien Marchadier, Christelle Chalas, Claudia Cavicchioli and Jean Sébastien Quéguiner.

The video of the full seminar is freely available on the website of the Cour de cassation and below.

Norwegian Supreme Court on the Law Applicable to Traffic Accidents

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Erik Sinander
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Norway is not bound by the EU choice of law regulations. Still, Article 7 of the Rome I Regulation applies fully in Norway and the Rome II Regulation governs what law that applies in any non-contractual matter between an insurance company and a person claiming compensation after a traffic accident. This was the view expressed by the Norwegian Supreme Court in a judgment on 21 June 2024, concluding that Danish law should be applied in a non-contractual matter between a Danish plaintiff and a Danish defendant insurance company regarding damages that occurred in Norway.

Background

A crane truck driver was severely injured when the vehicle he drove overturned during the construction of a wind turbine park in Norway. The crane truck driver was a Danish citizen, habitually residing in Denmark and employed by a Danish company that was contracted to build the windmill park. The crane truck was registered in Denmark, owned by the employer company and insured through a Danish insurance company.

As a result of the accident, the crane truck driver was on sick leave for about eight months. He received compensation in accordance with Danish occupational injury rules, but that compensation did not cover his entire loss. Therefore, he made a claim for payment against the Danish insurance company in a Norwegian court. According to the insurance certificate, it did not cover compensation to the driver of the vehicle in case of an accident. Such an exclusion is allowed under Danish law, but not under Norwegian law. Consequently, a decisive aspect of the claim was whether Danish or Norwegian law should be applied.

The courts of first and second instance both held that Norwegian law should be applicable. The defendant Danish insurance company appealed to the Supreme Court, arguing that the courts of lower instances had characterized the issue incorrectly. In the judgment of the court of appeal, the Norwegian Act on Choice of Law in Insurance (Lov om lovvalg i forsikring) was applied when concluding that Norwegian law was applicable. The insurance company argued that the choice of law rule applied was applicable to contractual matters only and that the case at hand was a non-contractual matter, to which Norway should apply the choice of law rules in the Rome II Regulation (864/2007).

Judgment

First, the Norwegian Supreme Court held that the application of the substantive claim made by the plaintiff under the Norwegian Act Relating to Compensation for Injury Caused by a Motor Vehicle (Lov om ansvar for skade som motorvogner gjer) was subject to private international law choice of law rules for matters with international connecting factors.

Thereafter, the Supreme Court assessed what choice of law rules should be applied to the matter. In line with the defendant insurance company’s argumentation, the Supreme Court concluded that the Act on Choice of Law in Insurance applies to contractual matters only. Here, the court noted that that act was enacted to implement Norway’s obligations under the EEC treaty. The EEC rules that the Norwegian choice of law act implemented correspond to those in the contemporary Solvency II Directive (2009/138). Article 178 in this directive states that the choice of law rules in Article 7 of the Rome I Regulation (593/2008) shall apply. The Supreme Court concluded that this means that Article 7 of the Rome I Regulation applies in Norway, even though Norway is not bound by the rest of that regulation.

Having established that Norway is bound by Article 7 of the Rome I Regulation, the Supreme Court turned to the issue of whether the matter at hand was contractual. To draw the line between contractual and non-contractual obligations stemming from traffic accidents, the Norwegian Supreme Court referred to paragraph 48 of the CJEU’s judgment ERGO Insurance and Gjensidige Baltic, C-359/14 and C-475-14, ECLI:EU:C:2016:40. Here, the CJEU expressed that whether or not there is an obligation to compensate someone must be determined by the law applicable to the tort, not the law applicable to the insurance contract. The Supreme Court also held that the possibility to make direct claims against the insurer of the person liable under Article 18 of the Rome II Regulation is based on the logic that non-contractual obligations can exist in an insurance relation. Holding that the choice of law rules for non-contractual matters apply in determining the liability to pay compensation and that the contractual obligations determine the insurance compensation, the Supreme Court concluded that the matter at hand was non-contractual. Hence, the Norwegian choice of law rules implementing Article 7 of the Rome I Regulation were not applicable.

Where there are no explicit Norwegian choice of law rules, Norwegian private international law generally relies on EU private international law rules. Holding that this principle applied also in this case, the Supreme Court concluded that the choice of law rules of the Rome II Regulation should apply. Even if the general rule in Article 4 p. 1 of the Rome II Regulation states that the law in the state where the damage occurs shall apply, Article 4 p. 2 gives precedence to the law of the common habitual residence of the parties. As both the plaintiff and the defendant were habitually residing in Denmark, the Norwegian Supreme Court held that Danish law should apply.

Comment

A rationale for the Norwegian shadow application of EU choice of law rules is the striving for uniform choice of law rules. Adherence to this purpose is certainly desirable, especially as Norwegian judgments enjoy free circulation in the legal community that applies either the Brussels I bis Regulation (1215/2012) or the Lugano Convention.

As regards the law applicable to traffic accidents, the uniformity created by the Rome II Regulation is less obvious. In fact, the EU member states are split on what choice of law rules should apply. Instead of applying the Rome II Regulation, around half of the EU member states (13 of 27) apply the 1971 Hague Convention on the Law Applicable to Traffic Accidents.

Although the default choice of law rule in Article 3 of the 1971 Hague Convention relies on applying the law of the state where the accident occurred (lex loci delicti), instead of the law of the state where the damage occurred (lex loci damni), as set out in Article 4 of the Rome II Regulation, this generally has little effect in the case of traffic accidents. Damage from a traffic accident will usually occur at the same place as the accident (especially as indirect damages are not recognized in this regard in the Rome II Regulation). In other words, the basic rules of the 1971 Hague Convention and the Rome II Regulation will result in application of the same law.

However, the exceptions to the general rules of the 1971 Hague Convention and the Rome II Regulation differ. Whereas the exceptional rule in Article 4 p. 2 of the Rome II Regulation, which the Norwegian Supreme Court applied, states that it is the common habitual residence of the parties that is relevant, the 1971 Hague Convention has several exceptions that rely on the application of the law in the state where the vehicle involved was registered. In the Norwegian Supreme Court case, the vehicle involved was registered in Denmark. It is therefore likely that the choice-of-law rules of the 1971 Hague Convention would also lead to the application of Danish law. Still, the uniformity between the two instruments in this case is sheer coincidence. It could just as well have been that the vehicle driven was registered in Norway or that the injured person and the insurance company habitually resided in different states.

In my opinion, it is quite unsatisfactory that there is no EU consensus for the application of the choice of law rules to such a common type of torts as traffic accidents. This creates incentives for forum shopping for those who have been injured in traffic accidents. When doing a forum shopping analysis, potential parties will now know that Norway is part of the Rome II team instead of the 1971 Hague team.

Working Group on the Reform of the Brussels Ibis Regulation Issues New Position Paper

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Anna Wysocka-Bar
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This post was prepared by Tess Bens from University of Vienna.

Burkhard Hess and his team at the University of Vienna have finalised an updated version of the Position Paper on the Reform on the Brussels Ibis Regulation of the association.

Establishment of the EAPIL Working Group

The Brussels Ibis Reform project leading up the Academic Position Paper commenced with the formation of a Working Group within the European Association for Private International Law (EAPIL) in 2021, spearheaded by Burkhard Hess and Geert Van Calster. This Working Group consisted of 42 academics from 22 EU Member States plus Iceland, Norway, Switzerland and the UK. The Members of the Working Group provided information on the application of the Brussels Ibis Regulation in their respective jurisdictions by means of a questionnaire, after which a Members Consultative Committee of the EAPIL produced a report. Based on this input, the former MPI Luxembourg and the KU Leuven organised a conference in Luxembourg on 9 September 2022.

Reform Proposals

After the Luxembourg conference, Burkhard Hess and a team of researchers of the former MPI Luxembourg prepared a Working Paper with 32 reform proposals. The Members of the EAPIL Working Group and the academic public were invited to express their opinion on these proposals through online surveys. The results of these surveys were processed by Burkhard Hess and his team , which led to amendments to the original proposals. These amended proposals were presented discussed at a conference in Vienna on 12 April 2024. The findings of this conference were integrated into the Academic Position Paper that, after consulting the Members of the EAPIL Working Group, received a final update before being uploaded on SSRN

The Academic Position Paper

The five parts of the Academic Position Paper cover the role and scope of the Brussels Ibis Regulation, collective redress, third-state relations, jurisdiction and pendency, as well as recognition and enforcement. Each part covers distinct issues identified at the 2022 Luxembourg conference and formulates specific proposals to resolve them. The background of each proposal is briefly explained and the charts indicating the responses to the surveys are presented, before discussing the feedback received through the surveys and during the 2024 Vienna Conference.

Thanks to Participants

Burkhard Hess and his team would like to thank everyone that has taken the time to answer the surveys and/or attend the conferences. Your input was invaluable, and we have sought to take your views into account as much as possible. We believe that the proposals in the Academic Position Paper provide a solid set of recommendations to consider in recasting the Brussels Ibis Regulation, which will be presented to the European Commission as a meaningful contribution of academia in the upcoming law-making process.

UK Third Party Costs Orders Enforceable in Greece

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Apostolos Anthimos
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INTRODUCTION

A UK third-party costs order [henceforth: TPCO] is a totally unknown procedural concept in Greece.  In the course of exequatur proceedings, the Piraeus first instance court and the Piraeus court of appeal were called to examine the issue for the first time in Greece, both declaring that no obstacles, especially those intertwined with procedural public policy, are barricading the path towards the declaration of enforcement of a TPCO issued by a judge in the UK. [Piraeus Court of Appeal nr 183/2024, unreported].

FACTS

The case involved three parties: the claimants, who initiated proceedings before English courts, and sought recognition and enforcement in Greece [henceforth: C]; the defendants, who were the respondents in the first, and appellants in the second instance proceedings in England [henceforth: D]; the appellant, who was ordered to pay the costs of the English proceedings, and challenged the declaration of enforceability of the TPCO in Greece [henceforth: A].

ENGLISH PROCEEDINGS

The Claimants, owners of two chartered vessels, notified events of default and termination when the individual beneficially owning the defendant charterers, i.e., A, was declared by the U.S.A. a “Special Designated Global Terrorist”. A. was born in Syria, and resided in Greece. In the context of the exercise of his business activities, he founded four companies [i.e., D] as special purpose vehicles, for chartering ships by the claimants.

On August 2021, C. brought an action before the English High Court, to which, pursuant to the charter-party terms, exclusive jurisdiction to hear the disputes arising between the parties was granted. C. sought the following remedies:

(a) the recognition of the validity of the termination of the employment contracts, entitling them to the recovery of their ships;

(b) damages for the breach of the charter-party;

(c) compensation for the loss of their ships, and

(d) the issuance of delivery orders for the ships.

In a judgment of 4 March 2022 ([2022] EWHC 452), the High Court held that C. had given notice of the above-mentioned charter parties and that they were entitled to take over the possession of their ships. This decision was upheld by a judgment of the Court of Appeal of England and Wales in July 2022.

Due to non-compliance of the defendants with the Order of costs, C. submitted pursuant to Rule 48.2 Civil Procedure Rules (CPR), and Section 51 of the Supreme Court Act 1981 permission to amend the claim form (original claim), in order to include a request for an Order for Costs against A., as the ‘actual beneficiary’ of D. Permission was granted to amend the claim and to include A. in the proceedings.

The request was heard in absentia, and was granted by the Court, making A. a party to the main proceedings only in respect of the payment of costs. According to the reasoning of the judgment, A. was and remains the beneficial owner of the defendants before the English courts, being the person who financed the litigation process, and is furthermore responsible for the improper procedural conduct of the defendant companies, showing contempt for orders of the Court (world-wide freezing orders). The court issued an Order pursuant to which A. was ordered to pay to C. an advance payment of costs in the total sum of £ 1,200,000.

GREEK PROCEEDINGS

Following inaction by the judgment debtors and A., C. filed an application before the Piraeus Court of First Instance, requesting that the Judgment and the Order of the High Court be declared enforceable in Greece against the foreign companies, of which A. is the sole shareholder and manager.

The Piraeus Court of First Instance [decision nr 2578/2023, unreported] granted the application and declared the English Order enforceable in the Greek territory, pursuant to which A. was ordered to pay to the applicants an advance payment of costs aforementioned.

A. lodged an appeal against that decision, invoking misinterpretation and misapplication of the law, and misappraisal of the evidence, seeking its annulment. The Greek courts applied the Greek law of foreign judgments, i.e., Articles 323 and 905 Code of Civil Procedure, given that the Judgment and the Order were issued after the 31st of January 2020.

International jurisdiction.

The Greek court ruled that foreign court had jurisdiction to hear the application for a TPCO, in so far as it is a claim related to the main proceedings, which was submitted before the Court having jurisdiction to hear and determine the main proceedings. In any event, the English court had international jurisdiction by reason of implied estoppel, manifested by the unreserved appearance of D. and A. before the English Courts.

The Greek court noted that, as a general rule, the jurisdiction of the court of origin presupposes the existence of a pending case. Still, it is possible that the existence of pending proceedings extends to ancillary proceedings, even after the main proceedings have been concluded, e.g., in the case of the settlement of costs according to Article 191 Greek Code of Civil Procedure.

Consequently, the first ground of appeal, by which A. complained that the Court of First Instance, by accepting that the English Court had jurisdiction to hear the application of C. for the imposition of costs of the original proceedings, was dismissed as unfounded.

Due process.

Further, A. was summoned by the foreign court in order to become a party to the proceedings, and to put forward his views on the matter. The Greek court ruled that it was not shown that his right to be heard was affected, nor that he was deprived of the right to defend himself, and to participate in the proceedings before the foreign court, since he was duly summoned to appear in accordance with Rule 6.20 (1) (d) CPR 1998, namely by electronic service of documents on the registered English lawyers of the firm representing him.

Public policy.

The declaration of enforceability of the foreign Order, condemning A. as a third party to pay the costs, was found not to infringe Greek public policy. The procedure followed in England did not infringe fundamental procedural principles of law in the field of civil justice, having regard, in particular, to the fact that A. was not deprived at any stage of the proceedings before the English courts of his right to participate and to defend himself, while he was also able to exercise the remedy of stay of execution in the proceedings before the English Court of first Instance. The exceptional English procedural rule (Article 51 Senior Courts Act 1981) on the enforcement of the costs to a non-party to the main proceedings (Third Party Cost Order) was obviously intended to guarantee the effectiveness of the administration of civil justice, by ensuring payment of costs to the successful party. Otherwise, each party would probably be deterred from taking legal action, a situation which is unacceptable in the light of Article 6(1) ECHR.

In addition, a TPCO is issued only after certain criteria are found to be met (the non-party to the main proceedings was considered to be the ‘real party’ in control, i.e., it acted as an active subject capable of influencing the development of the proceedings).

The Piraeus Court of Appeal concluded that a TPCO is not, at least in principle, fully unknown in Greek law, as is evidenced in Articles 186 and 746 Greek Code of Civil Procedure. However, the principle of fault in the payment of court costs is based on a different ratio. Nevertheless, following the prevalent view in Greek case law, the CA underlined that, the fact that Greek provisions which, in terms of their reasoning, are different from those of English law, does not mean that the foreign judgment is contrary to international public policy.

Finally, the Piraeus CoA ruled that it had no jurisdiction to put the costs order to the public policy test with respect to the sum ordered to be paid by A. That would be equal to a revision on the merits. As long as the sum ordered does not amount to punitive damages, the path to recognition and enforcement is open, even if it is considered as excessive and disproportionate in the eyes of a Greek judge.

Corporate Sustainability Due Diligence Directive Adopted

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Marco Pasqua
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On 24 May 2024, the Council of the European Union approved the position of the European Parliament at first reading on the proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence and amending Directive (EU) 2019/1937 (and subsequently also Regulation (EU) 2023/2859).

The directive has thereby been formally adopted (the final text can be read here) and should be published shortly on the Official Journal of the European Union.

It will enter into force on the twentieth day following that of its publication in the Official Journal. Member States will then have two years to transpose the directive into national legislation.

The implementing measures enacted by Member States will become applicable according to timeframes that vary depending on the size and origin of the companies concerned, ranging from three to five years following the entry into force of the directive, as specified in Article 37.

A presentation of the key provisions of the directive can be found here.

The directive formed the object of several posts on this blog, by Giesela Rühl (Human Rights in Global Supply Chains: Do We Need to Amend the Rome II Regulation?’, 9 October 2020), Marion Ho-Dac (Brief Overview of the Directive Proposal on Corporate Due Diligence and PIL, 27 April 2022), Hans van Loon Hans (GEDIP’s Reccommendation on the Proposal for a Directive on Corporate Sustainability Due Diligence, 25 October 2022), Ralf Michaels and Antonia Sommerfeld (The EU Sustainability Directive and Jurisdiction, 3 August 2023), and Marco Pasqua (Deal on the Corporate Sustainability Due Diligence Directive, 20 March 2024).

Other blogs hosted contributions relating to the private international law aspects of the directive. These notably include a recent post by Eduardo Silva de Freitas and Sandra Kramer Xandra, titled The Corporate Sustainability Due Diligence Directive: PIL and Litigation Aspects, published on Conflict of Laws.

During the legislative process that resulted in the directive, several contributions regarding the issues of private international law surrounding the new text have also appeared in journals and collective works. Some of them are listed below:

– Angelica Bonfanti, ‘Catene globali del valore, diritti umani e ambiente, nella prospettiva del diritto internazionale privato: verso una direttiva europea sull’obbligo di diligenza delle imprese in materia di sostenibilità’ (2022) 3 JUS 295-329

– Nerina Boschiero, ‘L’extraterritorialità della futura direttiva europea sul dovere di diligenza delle imprese ai fini della sostenibilità, tra diritto internazionale pubblico e privato’ (2023) 3 Diritti umani e diritto internazionale 661-706

– Olivera Boskovic, ‘Extraterritoriality and the proposed directive on corporate sustainability due diligence, a recap‘ (2024) 20 Journal of Private International Law 117-128

– Antonia Duran Ayago, ‘Human Rights, Due Diligence and Corporate Sustainability: Implications for European Private International Law regarding a Proposal for a Directive in the Air‘ (2022) 22 Anuario Espanol Derecho Internacional Privado 329-358

– Nadia Perrone, ‘Perspectives of Extraterritorial Jurisdiction for Environmental Damage in the Proposal of the European Directive on Corporate Sustainability Due Diligence’ (2023) 3.2 The Italian Review of International and Comparative Law 389-408

– Chiara Enrica Tuo, ‘Rimedi per abusi di diritti umani da parte delle imprese: profili di diritto internazionale privato’ in Fabrizio Marrella, Carlo Mastellone (eds), International Business Contracts and Sustainability (Pacini 2024) 101-142.

The European Digital Identity Wallet: Towards One-Click Recognition of Personal Status and Beyond

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Marion Ho-Dac
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Regulation (EU) 2024/1183 establishing the European Digital Identity Framework entered into force on 20 May 2024.

As reported on this blog (at the time of the Commission’s proposal), the major contribution of this Regulation is the creation of a “European Digital Identity Wallet” (EUDIW). It aims to allow citizens and companies based in the European Union, to store person identification data (e.g. name, address, gender, civil status) and electronic attestations of attributes (e.g. bank account, birth certificate, diploma, company statute) for cross-border use (see Article 5a of the Regulation). It should also allow users to authenticate and access online public or private services.

Compared to the Commission’s proposal, the final version of the EUDI Regulation reinforces and expands the provisions on the European digital identity wallet to make it more secure, trustworthy and pratical for users. In particular, numerous provisions now deal with personal data protection issues based on GDPR.

Main Provisions of the EUDI Regulation

As summarised in the updated version of the Briefing paper from the EP Research Services on European Digital Identity, the main provisions of the Regulation are as follows:

Member States have to provide citizens and businesses with a European digital identity wallet that allows users to digitally identify themselves, store and manage identity data and official documents (such as driving licences, university diplomas, medical prescriptions) in digital form in all EU countries. The wallet can also be used to digitally sign documents. The European digital identity wallets can be provided either by the Member State itself or by a private-sector provider.

The wallet is voluntary and free of charge for individuals, while businesses may incur costs. It does not replace existing identification and authentication means but complements them.

The wallet contains a dashboard of all transactions and offers the possibility to report alleged violations of data protection. Users can also request that their data be deleted.

The wallet should ensure the highest level of data protection and implement advanced security features such as state-of-the-art encryption and storage methods.

Whenever there is no legal requirement for users to have a legal identity for authentication, they will be able to use freely chosen pseudonyms.

Very large online platforms will have to accept the European digital identity wallet when users wish to log in on them.

Member States have to disclose the source code of the user application software components of the wallet to enable members of the public to understand its operation and to be able to audit and review its code. The disclosure of the source code may be limited for public security purposes.

The Commission has to establish a European Digital Identity Cooperation Group to support and facilitate cooperation among EU Member States.

Web browsers are required to recognise QWACs, so that users can verify the identity of persons or legal entities behind a website. This identity data has to be displayed in a user-friendly manner. In case of substantiated security concerns, web browsers are still allowed to take precautionary measures related to these certificates.

Private International Law Perspective

I propose to breifly present two provisions of the new Regulation in the light of private international law.

Article 5 f on Cross-border Reliance on European Digital Identity Wallets

This provision lays down the equivalent effect of European Digital Identity Wallets based on the Regulation with other means of electronic identification and authentication to access an online service provided by a public sector body in the Member States. The same applies for access to essential services (such as energy, banking, financial services, social security, health, drinking water, digital infrastructure or education) provided by private relying parties, and also for online services provided by very large online platforms and search engines (as defined by the Digital Services Act, Article 33).

This gives rise to two main comments. First, European digital identity based on the European Digital Identity Wallet is meant as a “renewed sovereign identity”, towards the “privatisation” of digital identity by major economic operators. In that respect, the European digital identity must be cross-border (i.e. across national borders) and even transnational (i.e. beyond states borders). In that respect, the European wallet will have to be accepted by private tech operators as an identifier for access to their service. On the other hand, the boundaries between domestic identity and European identity will necessarily blur. The European digital  wallet is, according to the Union’s competences, of a cross-border nature (cf. Article 114 TFEU); it aims at establishing equal access to cross-border services within the Member States. But when services are accessible online or digital per se, the difference between national and cross-border is much less clear. In this sense, the Regulation encourages Member States to integrate European Digital Wallets “with the ecosystem of public and private digital services already implemented at national, local or regional level […] including by enhanced interoperability with existing national electronic identification means” (Rec. 21). The development of a digital ecosystem at Union’s level plays a major role in European legal integration based on an area without internal borders. The same observation was recently made in the context of digitalisation of the European judicial cooperation in civil and penal matters.

Article 45 b on Legal Effects of Electronic Attestation of Attributes

Electronic attestations of attributes (e.g. bank account, birth certificate, diploma, company statutes) may be stored and managed within the European Digital Identity Wallet. These attestations cannot be deprived of legal effect simply because they are in electronic format. Furthermore, qualified electronic attestation of attributes (i.e. attributes provided by the qualified trust service providers, see Rec. 61 and Annex V of the Regulation) and attestations of attributes issued by (or on behalf of) a public sector body responsible for an authentic source (see Article 45 f and Annex VII; e.g. the civil registrar or the clerck of the commercial register) have the same legal effect as equivalent paper documents. Finally, attestations of attributes issued by (or on behalf of) a public sector body responsible for an authentic source (such as civil status documents or company statutes) benefit from the principle of mutual recognition within all Member States.

There is therefore a gradation of normative effects for the attributes contained in the European Digital Identity Wallet. In a cross-border context, these effects will have to be analysed through the lens of private international law. This is what my previous post on the draft regulation began to do. To limit myself here to the mutual recognition of electronic attestations of public documents (as mentionned above), this recognition should be equivalent to that applied to the documents themselves when they circulate from one Member States to another. The European Digital Identity Wallet will therefore have to be coordinated with the Public Document Regulation and the ICCS Conventions (and the circulation of digital public documents organised by these texts).

Fascinating work ahead!

UK Government Prepares to Ratify the 2019 Hague Judgments Convention

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Ugljesa Grusic
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It was widely reported (including on this blog) that the UK Government signed the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters on 12 January 2024.

The Government is now preparing to ratify the convention. On 15 and 16 January, it made ministerial statements to the House of Commons and the House of Lords announcing the signing of the convention. On 25 March 2024, it laid the convention before Parliament (see here and here), which is, pursuant to the Constitutional Reform and Governance Act 2010, a necessary step before ratification can occur. The period for Parliament to object to the ratification of the convention expires on 16 May.

The Government also prepared a draft statutory instrument and the Civil Procedure Rule Committee amended the Civil Procedure Rules to facilitate the implementation of the convention into UK law. It is not expected that Parliament will object to the ratification of the convention. Therefore, the UK is likely to become the 30th contracting party (ie after the EU, EU Member States (with the exclusion of Denmark), Ukraine and Uruguay) bound by the convention in the very near future.

Final Vote at the European Parliament on the Corporate Sustainability Due Diligence Directive

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Marco Pasqua
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On 24 April 2024, the European Parliament adopted a legislative resolution on the proposal for a directive on corporate sustainability due diligence, in light of the positive outcome of the negotiations with the Council (see this post on the deal struck in March 2024 at Council level).

The adoption of the resolution marks the end of the Parliament’s first reading of the proposal.

The text, once formally endorsed by the Council of the European Union, will be signed and published in the Official Journal of the European Union. It will enter into force twenty days later. Member States will then have two years to transpose the directive into their national laws.

The harmonised rules will apply gradually: from 2027 to companies with over 5000 employees and net worldwide turnover higher than 1500 million euro; from 2028 to firms with over 3000 employees and a 900 million euro of net worldwide turnover; from 2029 to all the remaining companies within the scope of the directive (including those over 1000 employees and net worldwide turnover higher than 450 million euro.

SLAPPs Directive Published in the Official Journal

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Marco Pasqua
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On 16 April 2024, Directive (EU) 2024/1069 of the European Parliament and of the Council of 11 April 2024 on protecting persons who engage in public participation from manifestly unfounded claims or abusive court proceedings (‘Strategic lawsuits against public participation’) has been published in the Official Journal of the European Union.

Pursuant to Article 21, it will enter into force on 6 May 2024.

Member States have until 7 May 2026 to adopt such laws, regulations and administrative provisions as are necessary to comply with the Directive.

Study on Child Abductions to Third Countries Prepared for the JURI Committee

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The Editors of the EAPIL blog
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The author of this post is Costanza Honorati, professor of EU Law at the University of Milan Bicocca.

The JURI Committee of the European Parliament has commissioned and recently published an interesting Study on Parental Child Abductions to Third Countries. The Study is delivered by long-term expert Marilyn Freeman (University of Westminster), and builds on a number of desk or evidence-based research studies and handbooks she and her colleague and friend Nicola Taylor (University of Otago) have run over recent years.

As stated in the title, the focus is on abduction from the EU to non-EU Countries, both when such a Country is a Contracting Party to the 1980 Hague Convention, as well as when such Country is not bound by the Convention. The Study instead does not cover abduction within the EU – which is dealt with by the Brussels II ter Regulation which complements the 1980 Hague Convention – nor abductions from third Countries to the EU. The author points out the need for further research in this latter direction, where very little legal research is to be found.

The study sets off briefly recalling why international abduction is so detrimental to children and highlighting consequences and long-term effects of such event on their lives. Though this is generally well-known, it is not inappropriate to refresh the reasons for the drafting of the 1980 Hague Convention through the personal experience of affected children, who have become adults.

The 1980 Hague Convention applies when the abducted child is habitually resident in a Contracting State and is removed or retained to another State which is also a Contracting Party to the Convention. This situation sets the scene for a general assessment of the Convention itself and to clarify a position which is strongly felt by the author: though this is a powerful and successful instrument, there is a strong need to ‘nurture’ the Convention in order to keep it serving the best interests of children in a contemporary society. The Hague Convention is now 40 years old and is facing critical challenges. Building on empirical data collected through several research projects conducted in recent years by both the above mentioned academics, some topics are selected which require further study and, possibly, some kind of review and update.

These cover:

  • re-balancing of an uneven playing field for the competing parents, based on the different access to public funding and level of skill and specialization of judicial and non-judicial experts existing in different countries;
  • better management of abductions which occur against a background of domestic violence – an issue that was widely discussed also in the context of the 8th Special Commission in October 2023;
  • ensuring speed and efficiency of return proceedings;
  • promoting and strengthening the role and participation of children in return proceedings, in view of the wide divergence in practice within Contracting States;
  • managing the delicate issue of enforcement – expanding on how to secure a more holistic solution through international mediation and how to make more stable voluntary arrangements by incorporating the agreement in a judicial decision.

It is in Chapter 4 that the Study briefly explains how abduction to a country which is not a Contracting Party to the Convention can be dealt with. Not surprisingly, the focus is on what happens in Islamic Law countries, given that only a few of them (eleven, among which Morocco, South Africa and Tunisia) have ratified the 1980 Hague Convention and that some of these are perceived as safe-heavens by abductors.

A brief analysis shows how neither recurring to local laws (often based on Sharia principles that have a build-in bias in respect of foreign parents), nor relying on the very few and often inadequate bilateral international agreements (a summary list of which is provided) can provide for a satisfactory solution. Along the same lines, diplomatic effort, often the only route to assist if not solve in more delicate cases, is judged ineffective. Interestingly, this conclusion is based on a US-German case of the late Nineties. Finally, it is warned that re-abduction is also not a viable route, as is shown with a case example from Lebanon.

In such a legal framework, a positive note is played by the Malta process – an international exercise started in 2004 with the aim of improving co-operation in cross-border disputes involving children where the relevant international legal framework is not applicable – and by the use of mediation, as long as this is run by mediators specialized in international abduction cases. Because of the long-standing tradition of sulh (Alternative Dispute Resolution) in the Muslim world, an appropriately led and run mediation may prove the most effective path in abduction cases in Islamic Law countries which are not Contracting Parties to the 1980 Hague Convention.

On a more general note, the Study clearly supports and speaks in favor of the 1980 Hague Convention, which is seen as the most effective and powerful instrument to prevent and solve this unlawful and highly detrimental unilateral practice.

This belief is however not blind of the inconsistencies and needs that a long-standing instrument shows in current times. Instead, the Study advocates for further action to be taken in order to up-date the convention .

As the Author puts it:

The Convention’ offers the best available protection against abduction in that it deters some abductions and provides an agreed mechanism for the prompt return of abducted children. Both these outcomes help to avoid some of the trauma associated with abduction. The high number of Contracting States to ‘the Convention’ demonstrates its widespread appeal which is critical for its success.

However, ‘more’ needs to be done to help ‘the Convention’ meet the challenges it faces and to avoid it slipping from being a successful instrument of protection into an instrument of harm to those it seeks to protect. This study suggests ways in which that ‘more’ may be achieved, highlights the positive role which the European Parliament has played to date, and advocates its continued involvement to maintain its leadership in this field.

A list of  recommendations is provided at the end of the paper. These include:

  • more evidence-based research on several topics, including: i) effects of abduction occurred against the background of domestic violence; ii) prevention and iii) support for abducted children and their families;
  • more collaboration among key actors (such as the HCCH, the EP Coordinator on Children’s Rights, specialist academics/researchers, mediators, and NGOs) to ‘address, consider and report on issues relating to the required nurturing of the Convention’. Interestingly the author suggest that the EP Coordinator on Children’s Rights could be an appropriate forum to coordinate these efforts;
  • Continued efforts by the HCCH to expand membership of the 1980 Hague Convention;
  • continued efforts, including through the Malta Process, to engage with countries which remain outside of the 1980 Hague Convention and to the use of specialist mediation in appropriate cases.

The 1980 Hague Convention is a powerful instrument and a great success. The family and society pattern that was at its background when it was drafted has however greatly changed and, in some respect, the convention appears to be at odds with todays needs. A revision of the international treaty may appear unrealistic, but something should be done. It will be a long way, but the journey should be started somewhere. The wise and balanced views expressed in this Study should be given careful consideration.

SLAPPs Directive Adopted

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Pietro Franzina
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On 19 March 2024, the Council of the European Union approved the position of the European Parliament at first reading on the proposal for a directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as Strategic lawsuits against public participation, or SLAPPs. The directive has thereby been formally adopted (the final text can be read here) and will be published shortly on the Official Journal of the European Union.

It will enter into force on the twentieth day following that of its publication in the Official Journal. Member States will then have two years to transpose the directive into national legislation.

The directive is addressed to all Member States with the usual exception of Denmark. Ireland, for its part, made known, back in 2022, its wish to take part in the adoption and application of the directive.

Object and Scope

The directive, as stated in Article 1, provides safeguards against manifestly unfounded claims or abusive court proceedings in civil matters brought against natural and legal persons – typically journalists, activists, human rights defenders, etc. – on account of their engagement in public participation.

The legal basis being Article 81(2)(f) of the Treaty on the Functioning of the European Union (“the European Parliament and the Council … shall adopt measures … aimed at ensuring … (f) the elimination of obstacles to the proper functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States”), the directive only applies to claims and proceedings (including procedures for interim and precautionary measures and counteractions, whatever the nature of the court or tribunal) with cross-border implications.

As clarified in Article 5, a matter is considered to have cross-border implications for the purposes of the directive “unless both parties are domiciled in the same Member State as the court seised and all other elements relevant to the situation concerned are located only in that Member State”.

Pursuant to Article 4(3), the term “abusive court proceedings against public participation” refers to proceedings “which are not brought to genuinely assert or exercise a right, but have as their main purpose the prevention, restriction or penalisation of public participation … and which pursue unfounded claims”. Under the directive, as clarified in Article 4(2), “public participation” means “the making of any statement or the carrying out of any activity by a natural or legal person in the exercise of the right to freedom of expression and information, freedom of the arts and sciences, or freedom of assembly and association, and any preparatory, supporting or assisting action directly linked thereto, and which concerns a matter of public interest”.

A matter is to be considered of public interest for the purposes of the directive if it “affects the public to such an extent that the public may legitimately take an interest in it”, and relates to areas such as (a) fundamental rights, public health, safety, the environment or the climate; (b) activities of a natural or legal person that is a public figure in the public or private sector; (c) matters under consideration by a legislative, executive, or judicial body, or any other official proceedings; (d) allegations of corruption, fraud, or of any other criminal offence, or of administrative offences in relation to such matters; (e) activities aimed at protecting the values enshrined in Article 2 of the Treaty on European Union, including the protection of democratic processes against undue interference, in particular by fighting disinformation;

According to Article 4(3), in assessing whether the claimant purports to prevent, restrict or penalise public participation the following elements may be considered, by way of example: (a) the disproportionate, excessive or unreasonable nature of the claim or part thereof, including the excessive dispute value; (b) the existence of multiple proceedings initiated by the claimant or associated parties in relation to similar matters; (c) intimidation, harassment or threats on the part of the claimant or the claimant’s representatives, before or during the proceedings, as well as similar conduct by the claimant in similar or concurrent cases; (d) the use in bad faith of procedural tactics, such as delaying proceedings, fraudulent or abusive forum shopping or the discontinuation of cases at a later stage of the proceedings in bad faith.

Procedural Safeguards

Article 6 stipulates that Member States shall ensure that persons targeted by a SLAPP can apply, in accordance with national law, for: (a) a security; (b) an early dismissal of the claim; (c) additional remedies such as the award of costs and the issuance of penalties. The mentioned safeguards remain available notwithstanding any subsequent amendment of the pleadings made by the claimant, including the withdrawal of the claim itself.

Security

Article 10 asks Member States to ensure that the court seised of a SLAPP “may require, without prejudice to the right of access to justice, that the claimant provide security for the estimated costs of the proceedings, which may include the costs of legal representation incurred by the defendant, and, if provided for in national law, damages”.

Early Dismissal

Individuals targeted by a SLAPP can ask the court to dismiss the claim at the earliest possible stage, pursuant to Article 11. In addition, Article 12(2) requires that Member States ensure that “where a defendant has applied for early dismissal, it shall be for the claimant to substantiate the claim in order to enable the court to assess whether it is not manifestly unfounded”. Article 13 provides that decision granting early dismissal must be subject to an appeal.

Costs and penalties

As stated in Article 14, claimants, if they are found to have brought abusive court proceedings against public participation can be ordered to bear “all types of costs of the proceedings that can be awarded under national law, including the full costs of legal representation incurred by the defendant unless such costs are excessive”. Where national law does not guarantee the award in full of the costs of legal representation
beyond what is set out in statutory fee tables, Member States shall ensure that such costs are fully covered, unless they are excessive, by other means available under national law.

Article 15 requires that Member States must ensure that courts or tribunals seised of a SLAPP may impose “effective, proportionate and dissuasive penalties or other equally effective appropriate measures, including the payment of compensation for damage or the publication of the court decision, where provided for in national law, on the party who brought those proceedings”.

Protection from SLAPPs Brought in a Third Country

The directive includes two provisions the aim of which is to protect persons domiciled in the Union from SLAPPs initiated in a State outside the Union.

Article 16, titled “Grounds for refusal of recognition and enforcement of a third-country judgment”, requires that Member States ensure that the recognition and enforcement of a third-country judgment given in the framework of court proceedings against public participation targeting a natural or legal person domiciled in a
Member State is refused “if those proceedings are considered manifestly unfounded or abusive
under the law of the Member State in which such recognition or enforcement is sought”.

According to Article 17 (“Jurisdiction for actions related to third-country proceedings”), Member States must ensure that, where abusive court proceedings against public participation have been brought by a claimant domiciled outside the Union in a third-country against a natural or legal person domiciled in the Union, the latter person “may seek, in the courts or tribunals of the place where that person is domiciled,
compensation for the damage and the costs incurred in connection with the proceedings before the court or tribunal of the third-country”. It is provided, however, that Member States may limit the exercise of jurisdiction under the previous provision for as long as proceedings are pending in the third-country.

Other Provisions

The directive further asks Member states to put in place rules that would allow associations, organisations and trade unions to support the defendant. Specifically, Article 9 requires that a court seised of a SLAPP “may accept that associations, organisations, trade unions and other entities which have, in accordance with the criteria laid down by their national law, a legitimate interest in safeguarding or promoting the rights of persons engaging in public participation, may support the defendant, where the defendant so approves, or provide information in those proceedings in accordance with national law”.

Deal on the Corporate Sustainability Due Diligence Directive

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Marco Pasqua
by

The Council of the European Union on 15 March 2024 reached a final deal on the proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence (see here and here for previous analysis on the proposal hosted on this blog).

The deal comes after a series of meetings following a provisional political agreement reached at Council level and the European Parliament’s negotiating position, both reported here.

After the approval by the Permanent Representative Committee, the Presidency of the Council has transmitted the final compromise text to the Chair of the European Parliament Committee on Legal Affairs (JURI). On 19 March 2024, the Legal Affairs Committee of the European Parliament adopted the text, agreed with the Council.

The draft agenda for the plenary sittings of the European Parliament schedules the vote on the corporate sustainability due diligence directive for 24 April 2024.

The key provisions of the directive, as it results from the latest changes, are summarized below.

Subject Matter

The directive deals with obligations for companies regarding human rights and environmental impacts, including those of subsidiaries and business partners, and the operations carried out by their business partners in companies’ chains of activities, as well as liability for violations and the requirement to adopt a transition plan for climate change mitigation.

While doing so, the text ensures that it does not lower the existing level of protection for human, employment, and social rights, environmental protection, or climate protection provided by Member States’ laws or applicable collective agreements.

Finally, the directive does not override obligations under other EU laws in areas such as human rights, employment, social rights, environmental protection, and climate change. If there is a conflict between the directive and another EU law pursuing similar objectives with more extensive obligations, the latter prevails.

Scope

The proposed directive applies to (a) companies formed in accordance with the law of a Member State, where they meet certain criteria; these include having over 1000 employees on average and a net worldwide turnover exceeding EUR 450 million in the last financial year; the directive also applies to to ultimate parent companies whose subsidiaries meet these thresholds and those engaged in franchising or licensing agreements within the EU, provided certain conditions regarding royalties and turnover are met; (b) companies governed by the law of a third country, whenever specific conditions are fulfilled; among other things, they must have generated a net turnover exceeding EUR 450 million in the Union in the preceding financial year or being the ultimate parent company of a group meeting this threshold; additionally, companies engaged in franchising or licensing agreements within the Union, with royalties exceeding EUR 22.5 million, fall within the scope if the directive if their net turnover in the Union exceeds EUR 80 million in the preceding financial year.

An exemption is provided for ultimate parent companies primarily engaged in holding shares in operational subsidiaries without making management decisions.

It is specified that the number of part-time employees must be calculated on a full-time equivalent basis for the purposes of determining company eligibility. Additionally, temporary agency workers and other non-standard workers meeting the criteria established by the Court of Justice must be included in the calculation as if they were directly employed by the company. Furthermore, if a company meets the eligibility conditions outlined before, the proposed directive applies only if these conditions persist for two consecutive financial years. However, the directive ceases to apply to a company if it no longer meets the eligibility criteria for each of the last two relevant financial years.

Definitions

The directive comes with several definitions, including the following.

The term ‘company’ is understood to refer to any entity falling under the following categories: (i) a legal entity established in one of the legal structures outlined in Annex I and Annex II of Directive 2013/34/EU; (ii) a legal entity established under the legislation of a third country in a structure similar to those listed in Annex I and II of Directive 2013/34/EU.

An ‘adverse human rights impact’ denotes a detrimental effect on individuals stemming from: (i) the violation of any of the human rights delineated in Annex I, Part I Section 1, as outlined in the international agreements referenced in Annex I, Part I Section 2; (ii) the infringement of a human right not specified in Annex I, Part I Section 1, but covered by the human rights agreements listed in Annex I, Part I Section 2, provided some criteria are met. An ‘adverse impact’ encompasses adverse environmental effects and adverse human rights impacts. The impact is understood to be ‘severe’ when it is significant due to its nature, such as causing harm to human life, health, or liberty, or due to its scale, scope, or irreversibility.

A ‘business partner’ refers to an entity: (i) engaged in a commercial agreement with the company concerning its operations, products, or services, or to which the company offers services (‘direct business partner’); (ii) involved in business activities related to the operations, products, or services of the company, even if not directly engaged in a commercial agreement (‘indirect business partner’).

The ‘chain of activities’ encompasses: (i) the activities of a company’s upstream business partners involved in producing goods or providing services, including design, extraction, sourcing, manufacturing, transportation, storage, and supply of raw materials, products, or components, as well as product or service development.; and (ii) the activities of a company’s downstream business partners related to product distribution, transportation, and storage, conducted for or on behalf of the company, excluding distribution, transportation, and storage subject to export control regulations under Regulation (EU) 2021/821 or export controls pertaining to weapons, ammunition, or war materials post-authorization of product export.

Level of Harmonisation

Member States may not introduce provisions within the scope of the directive that lay down human rights and environmental due diligence obligations diverging from those resulting in specified provisions of the directive. An example illustrating this concept is Article 7(1) of the directive stating that Member States are responsible for ensuring that companies adopt suitable measures to either prevent or, if immediate prevention is not feasible, effectively mitigate potential adverse impacts. This provision mandates the consideration of specific factors to assess the adequacy of these measures. Member States, instead, are free from introducing, in their national law, more stringent provisions. Drawing from the precedent set by this provision, Member States could provide for such an obligation, or factors to assess the adequacy of the preventive measures, more specific in terms of the objective or the field covered, in order to achieve a different level of protection of human, employment and social rights, the environment or the climate.

Due Diligence and Related Obligations

Member States must ensure that companies undertake risk-based human rights and environmental due diligence. This includes integrating due diligence into policies and risk management systems, identifying and prioritizing adverse impacts, preventing and mitigating impacts, providing remediation, engaging stakeholders, establishing notification mechanisms and complaints procedures, monitoring effectiveness, and publicly communicating on due diligence.

Companies are allowed to share resources and information within their groups and with other legal entities for due diligence purposes. Business partners are not required to disclose trade secrets to compliant companies but must disclose information necessary to identify potential adverse impacts. Companies must retain documentation demonstrating compliance for at least 5 years or until the conclusion of any ongoing proceedings.

Parent companies falling under the proposed directive can fulfil due diligence obligations on behalf of subsidiaries if this ensures effective compliance. Subsidiaries must cooperate with the parent company, integrate due diligence into their policies, continue appropriate measures, seek contractual assurances, and comply with transition plans for climate change mitigation.

Due diligence requirements must be integrated into the concerned companies’ policies and risk management systems.

Supervisory Authorities

Member States must designate one or more supervisory authorities to oversee compliance with national provisions. The competent supervisory authority for companies formed under Member States legislation is that of the State of registration. For third-country companies, the competent authority is that of the Member State where the company in question has a branch or, if not applicable, where it generated most of its net turnover in the EU.

Supervisory authorities must publish annual reports on their activities and have adequate powers and resources to carry out investigations and inspections related to compliance with the directive. Supervisory authorities may initiate investigations and inspections, order corrective actions, impose penalties, and adopt interim measures to address non-compliance. These powers can be exercised directly, cooperatively, or through judicial authorities, ensuring effective legal remedies for affected parties. Decisions by supervisory authorities do not affect a company’s civil liability under the directive.

Penalties

Member States must establish rules on penalties, including pecuniary penalties, for breaches of national provisions derived from the proposed directive, ensuring they are effective, proportionate, and dissuasive. When determining penalties, factors considered include the nature, gravity, and duration of the breach, impacts resulting from it, investments made, collaboration efforts, previous infringements, remedial actions, financial gains or losses, and other relevant circumstances.

Penalties must include pecuniary penalties and, if the company fails to comply, public statements about the infringement. Pecuniary penalties are based on the company’s net worldwide turnover, with a maximum limit set at not less than 5% of the company’s net worldwide turnover in the preceding financial year.

Member States ensure that decisions containing penalties are published, publicly available for at least 5 years, and shared with the European Network of Supervisory Authorities, without including personal data.

Civil Liability of Companies and a Right to Full Compensation

Companies can be held liable for damages caused to natural or legal persons if: (a) they intentionally or negligently failed to comply with the obligations under the proposed directive; (b) and, as a result, a damage to the person’s legal interests protected under national law was caused. A company cannot be held liable if the damage was caused only by its business partners in its chain of activities.

If held liable, natural or legal persons have the right to full compensation for damages under national law, ensuring no overcompensation.

Member States must ensure: (a) limitation periods for damages actions are reasonable, starting after the infringement ceases and the claimant becomes aware of it; (b) costs of proceedings are not prohibitively expensive for claimants; (c) claimants can seek injunctive measures and authorize certain organizations to bring actions; (d) courts can order disclosure of evidence by companies when necessary for a claim, ensuring proportionality and protection of confidential information.

Participation in industry or multi-stakeholder initiatives or third-party verification does not exempt companies from liability.

Civil liability of companies does not affect subsidiaries or business partners’ liability, and joint liability applies when damage is caused jointly.

These rules do not limit companies’ liability under other legal systems and are of overriding mandatory application if applicable law is not that of a Member State.

Entry into Force and Transposition

The proposed directive will come into force on the twentieth day after its publication in the Official Journal of the European Union.

Member States must enact regulations and administrative provisions to comply with the directive within two years of its entry into force.

The application of these provisions varies based on company size and origin: (a) for companies formed in accordance with Member State legislation with over 5000 employees and a net worldwide turnover exceeding EUR 1500 million, measures must be applied within three years; (b) as regards companies with over 3000 employees and a net worldwide turnover exceeding EUR 900 million, within a four-year timeframe; (c) for companies formed under third-country legislation with a net turnover over EUR 1500 million in the Union, within three years; (d) for third-country companies with a turnover over EUR 900 million, within a four-year timeframe. All other companies must comply within five years.

Annex I

The lists contained in the Annex specify the adverse environmental and human rights impacts relevant for the directive, to cover (the violation of) rights and prohibitions included in international human rights instruments (Part I Section 1), human rights and fundamental freedoms instruments (Part I Section 2), and prohibitions and obligations included in environmental instruments (Part II).

Rail Protocol Enters into Force

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Gilles Cuniberti
by

Pin on Trains & TracksThe Rail Protocol to the Cape Town Convention on International Interests in Mobile Equipment entered into force on 8 March 2024.

Resolving Conflit Mobile

One of the main goals of the Cape Town Convention was to resolve the perennial problem of change of applicable law governing security interests over tangible moveable assets (conflit mobile).

The application of the lex situs to in rem rights in general and security interests in particular creates a problem when the asset is mobile and moved across borders. A security interest constituted under the law of a first situs may then be enforced in a second situs if the asset was moved between the time of constitution and the time of enforcement. Security interests may be subject to different publicity requirements, however, and a security interest validly constituted under the law of the first situs might then be denied enforcement under the law of the second situs.  The French surpreme court, for instance, has (in)famously held so in a series of judgments rendered in 1933, 1969 and 1974.

The issue gets even more acute where the value of the asset is high and the asset routinely crosses borders. This is the case of planes, for instance.

In order to resolve the issue for similar mobile equipement, the Cape Town Convention has established an international security interests over mobile equipments. The Convention offers the possibility to create an asset which will not be national, but international, and which will thus not create any conflit mobile where the asset is moved from one contracting state to another, as all contracting states recognise the international security interest established under the Convention, and registered in an international registry established for that purpose.

The Cape Town Convention is implemented for particular categories of assets through protocols. The Aircraft Protocol implements the Convention for aircrafts and other aircraft objects (including engines and helicopters). It has been in force since 2006, and currently has 86 Contracting States.

Trains

The second protocol is concerned with trains and other “railway rolling stock”. It similarly aims at establishing an international security interest which creditors could take over trains. The international registry where such international interests should be registered is located in Luxembourg, which explains that the protocol is also known as the Luxembourg Protocol.

A international interest granted under the Protocol will be recognised in all the contracting states.

Contracting States

There are, at the present time, four contracting parties to the Rail Protocol: Gabon, Luxembourg, Spain and Sweden. The European Union (except Denmark) is also a party. Yet, it is unclear whether the Protocol has entered into force only in the four contracting states, or also in the entire EU. The website of UNIDROIT explains that the protocol is in force in the EU, but other reports only mention the four states. Needless to say, there are not so many trains circulating from Sweden to Spain, and even less from Luxembourg to Gabon.

Time

The Rail Protocol entered into force on 8 March 2024. This does not flow from the provision in the protocol on entry into force, but rather from an agreement in the Ratification Task Force of the Preparatory Commission, the intergovernmental group mandated to pilot through the implementation.

The 2024 Meeting of the Council on General Affairs and Policy of the HCCH

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Pietro Franzina
by

The Conclusions and Decisions of the latest annual meeting of the Council on General Affairs and Policy of theHague Conference on Private International Law, which was held from 5 to 8 March 2024, have recently been published.

The most significant developments arising from the document include the following.

Legislative Work

The Council noted the progress made in the framework of the on-going Parentage / Surrogacy and Jurisdiction projects, and made provision for the continuation of both. The current state of affairs of the projects is described, respectively, in an Aide-mémoire prepared by the Chair of the Working Group on Parentage / Surrogacy, and in a Report of the Chair of the Working Group on Jurisdiction, which includes a revised draft of the provisions on parallel proceedings, prepared for future discussion.

New legislative projects have also been discussed. To begin with, an Experts’ Group has been established to study the issues relating to jurisdiction and applicable law that surround the cross-border use and transfer of Central Bank Digital Currencies (CBDCs), based on exploratory work reflected in a rich report prepared by the Permanent Bureau and, generally, the preparatory work carried over the last few years.

Secondly, the Council asked the Permanent Bureau to continue to monitor developments in the digital economy with respect to digital platforms, artificial intelligence and automated contracting, and immersive technologies, including in partnership with UNCITRAL.

While expressing a concern for avoiding fragmentation among legal instruments developed by different organisations on related matters (including the work of UNIDROIT on digital assets), the Council also mandated the Permanent Bureau to study the private international law issues relating to digital tokens. 

The Council mandated the Permanent Bureau to monitor developments of the private international law aspects of voluntary carbon markets, having regard to exploratory work summarized in a report by the Permanent Bureau itself.

Post-Convention Work

The Council endorsed the Conclusions and Recommendations of the Eighth Meeting of the Special Commission on the 1980 Child Abduction and 1996 Child Protection Conventions, and welcomed preparations for the upcoming meeting of the SC on the 1965 Service, 1970 Evidence and 1980 Access to Justice Conventions.

In the area of family and child protection law, the Council invited the Permanent to convene further meetings of the Working Group on the Financial Aspects of Intercountry Adoption (the latest report on the activities of the Group is found here). The creation of two Working Groups in relation to the 1996 Child Protection Convention was also decided. One Group will complete the 1996 Country Profile and progress work on the draft Cooperation Request Recommended Model Form, while the other will focus on the operation of Article 33 of the Convention, according to which the authorities of a Contracting State, where they contemplate the placement of a child in a foster family or institutional care, and such placement is to take place in another Contracting State, must first consult with the Central Authority or other competent authority of the latter State.

Regarding transnational litigation, the Council approved the establishment of Working Groups charged with reviewing and refining updates to the Handbooks and Country Profiles relevant to the 1965 Service and 1970 Evidence Conventions, respectively.

As to international commercial, digital, and financial law, the Council mandated the Permanent Bureau to continue to study digital developments in respect of securities markets; the interpretation of analogous institutions for the purpose of Article 2 of the 1985 Trusts Convention; and the feasibility, desirability, and necessity of developing guidance on applicable law in international contracts providing protection to weaker parties.

Corrigendum to the Recast Service Regulation on Information Provided by Member States

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Marta Requejo Isidro
by

A corrigendum to Regulation (EU) 2020/1784 of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (the Recast Service Regulation) has been published on the Official Journal of the European Union of 2 February 2023 (L 405).

It concerns Article 33, which is about the information that Member States must share with the Commission so that the latter can make it available to the public at large.

Article 33(1) refers to such information as is required under Articles 3, 7, 12, 14, 17, 19, 20 and 22 of the Regulation. This includes, for example, the names and addresses of receiving agencies, the professions or competent persons that are permitted under national law to effect the direct service of documents, whether national law requires a document to be served within a particular period, etc.

The correction is, specifically, about Article 33(3). As originally published, the latter provision read as follows:

The Commission shall publish the information communicated in accordance with paragraph 1 in the Official Journal of the European Union, with the exception of the addresses and other contact details of the agencies and of the central bodies and the geographical areas in which they have jurisdiction.

According to the corrigendum, Article 33(3) should read instead:

The Commission shall publish the information communicated in accordance with paragraph 1 through appropriate means, including through the European e-Justice Portal.

As this is presented as a corrigendum, rather than an amendment to the Regulation, the revised text is meant to apply as of the date of application of the Regulation, that is, 1 July 2022. In fact, the information referred to in Article 33(3) has never been published on the Official Journal, and appears to be already available on the European Judicial Atlas in Civil Matters, which can be reached through the e-Justice Portal.

Digitalisation of Justice Systems in the European Union: Towards a European Judicial Area 2.0

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Marion Ho-Dac
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Regulation (EU) 2023/2844 on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters, and amending certain acts in the field of judicial cooperation, also knowns as the “Digital Justice” Regulation, was adopted on 13 December 2023 (see already here on the Regulation proposal, here on the text negotiations and here on the new text).

General Background

This Regulation constitutes an important step in the EU commitment to modernise cross-border proceedings in the European judicial area, in accordance with the “digital by default” principle. For the record, this principle means that delivering services digitally is the preferred option through a single contact point. In the judicial context, it applies to digital communication between authorities and litigants. It aims to improve the efficiency of exchanges and reduce costs and administrative burden. At the same time, this digital shift implies that all the necessary safeguards must be put in place to prevent social exclusion of certain litigants, while ensuring mutual trust between authorities, interoperability and the security of processes and data.

The “Digital Justice” Regulation seeks to find this difficult balance by establishing a uniform legal framework for the use of electronic communications between, on the one hand, the competent authorities in cross-border legal proceedings and, on the other, between these authorities and the parties. The Regulation also provides for harmonised provisions relating to the use of videoconferencing, the application of electronic signatures, the legal effects of electronic documents and the electronic payment of fees.

The Regulation builds on the increasingly  dense “digital acquis” in EU law, starting with the protection of personal data (i.e. GDPR and its extension to EU bodies), the eDIAS Regulation on electronic identification and trust services for electronic transactions and, more specifically in the area of judicial cooperation, the deployment of the e-CODEX system in the field of judicial cooperation in civil and criminal matters, the management of which has just been transferred to eu-LISA. This complex “regulatory web” dealing with the digitalisation of human and economic exchanges in the Union can no longer be ignored by legal practitioners and will have to be articulated with the e-Justice Regulation.

Scope of the Regulation
Cross-border Cooperation in Civil and Criminal Matters

The Regulation lays down provisions on the digital exchanges of information which are intended to apply to cross-border proceedings in civil, commercial and criminal matters.

This material scope is quite remarkable, since until now the regulatory framework of judicial cooperation in the Union has developed in a differentiated and even hermetic manner between its civil component (Article 81 TFEU) and its criminal component (Article 82 seq. TFEU). Digitalisation marks a turning point in favour of the unification of the European judicial area, initiated with the e-CODEX Regulation, which is meant to constitute one of its structural (digital) dimensions. Indeed, digitalisation is a common issue relevant for the various forms of justice (and, more broadly, for public services and administrations). It is therefore welcome that the EU legislator has adopted a unified regulatory framework in this area. From an academic perspective, it should encourage scholars to look beyond their discipline – (EU) civil or criminal justice – to enhance cross-cutting analyses of the EU judicial area as a whole.

As far as private international law is concerned, Annex I of the Regulation includes most of the instruments adopted in the field of judicial cooperation in civil matters, with the exception of the “Rome” (I, II, III) Regulations dedicated to conflicts of laws and the Service of Documents and Taking of Evidence Regulations, which were already modernised in 2020 to incorporate the digital procedural dimension (see here and here).

Interplay Between EU Judicial Cooperation Acquis and e-Justice Regulation

The “Digital Justice” Regulation shall be understood as an instrument for “upgrading” the legal framework of EU judicial cooperation in its digital dimension. How does it work? Among all instruments adopted as part of EU policy on judicial cooperation in civil and in criminal matters, the implementation of those relating to cross-border proceedings triggers the “complementary” application of the new Regulation. In that respect, the Annex to the Regulation contains a list of the instruments concerned (Annex I in civil matters and Annex II in criminal matters). This means that the tools and channels for digitalising judicial cooperation provided for in the Regulation are intended to apply in the context of cross-border proceedings based on one or more of these listed instruments. The internationality criterion of the judicial proceedings in question will thus depend on the definition adopted by each instrument concerned.

By contrast, more recent (and future) EU instruments in civil and criminal matters do not (will not) fall within the scope of the e-Justice Regulation since they (will) develop their own digital-related provisions – as illustrated by the Taking of Evidence Regulations in civil matters and in criminal matters or de lege ferenda by the Regulation Proposal on the Protection of Adults –Eventually, the long-term objective of the EU legislator is to establish a judicial cooperation digitalised “by design” in the European area; and that will require strong commitment and concrete changes – in particular at the technical and administrative level – for the judicial systems of Member States.

Temporal implementation

It will certainly comfort legal practitioners and judicial actors to briefly mention the timeframe for implementing the new Regulation: this will be very gradual and will take several years. In principle, the Regulation will be applicable in spring 2025. However, as far as the provisions on electronic communications are concerned, the date of application of the new provisions depends on the implementing Acts that the European Commission will adopt to organise the future structural channels of digital interactivity between authorities and between authorities and litigants. To this end, a staggered timetable (from n+2 years to n+5 years) has been set for the adoption of several successive implementing Acts aimed respectively at one or other of the texts listed in the Annex. All in all, it will take until 2031 (according to a rough calculation) for the entire legal framework to be fully operational.

Main Innovations for Cross-border e-Justice
Electronic Communication Networks

In terms of technical innovations, the Regulation sets up a uniform legal framework for digital exchanges of information via the Internet or another electronic communications network. The Regulation establishes two information channels for such electronic communications: first, a decentralised IT system to handle exchanges between the competent authorities (including relevant EU bodies) and, second, a European electronic access point for litigants to interact with the competent authorities. It is for the European Commission to specify, through implementing acts, the content of these two information channels. In addition, the Commission is in charge of developing “reference implementation software” so that Member States can adopt it, on a voluntary basis, as their back-end system, in place of a national IT system. It will also be responsible for maintaining the software as well as the European electronic access point. These are major technical and legal responsibilities for the Commission vis-à-vis national judicial systems; they may invite to reflect on the strategic positioning of this institution in the EU institutional architecture.

Decentralised IT system — The first channel for electronic communications will consist of national IT systems with interoperable access points, interconnected via the pan-European computerised communication system e-CODEX. The decentralised IT system should be used “as a matter of principle” for all exchanges between competent authorities in different Member States and between a competent national authority and an EU body or agency. This could be a court (e.g. for small claims procedures), a central authority (e.g. under the Brussels II ter Regulation) or an EU body or agency involved in judicial cooperation procedures in criminal matters, such as Eurojust. The decentralised computer system will in particular have to be used for the exchange of standard forms established by the instruments listed in the Annex.

Other means of electronic communication may be used by way of derogation only, in the event of disruption of the decentralised system, force majeure or because of the nature of the documents to be transmitted.

European electronic access point — The second digital communication channel is an innovation for civil litigants: the European electronic access point. It will be accessible from the European e-Justice portal and may be seen as a counterpart to the Single Digital Gateway for cross-border administrative procedures (including the cross-border circulation of public documents). It should in theory govern electronic exchanges between litigants and the competent authorities in all the cases provided for by the instruments listed in Annex I to the Regulation. This could involve making requests, sending and receiving information relevant to proceedings or being served with procedural documents. In that respect, Article 4 of the Regulation should be of particular interest to legal practitioners, as it offers a “systematic mapping” of the different scenarios for cross-border communication in the light of the instruments of judicial cooperation in civil matters listed in Annex I. In those scenarios, the competent authorities may have to accept electronic communication.

In order to make this work in practice, the Regulation requires Member States to train legal staff in these new digital channels. This is essential and will require an excellent understanding of the issues of accessibility, personal data protection and cyber security, both by practitioners and, more broadly, by public authorities.

Unlike the decentralised IT system, which responds to the digital by default principle, litigants will have to give their prior consent to enter into a dematerialised communication exchange with the national authorities of a Member State. In case of refusal, this should mean that the exchange will take place via “traditional” communication channels. Nothing is specified by the Regulation, as this is a matter for national law. In the long term, however, it is questionable whether this choice will always be possible, particularly in those Member States that have already made or well advanced the digital transition of their justice system. As a matter of fact, there are major disparities between Member States, including in terms of local territories and population, which could create gaps between the (requesting and requested) authorities for cross-border judicial cooperation.

Legal Effects of Electronic Communications and Documents

The Regulation makes several references on the legal effects of the digitalisation of judicial cooperation and, more specifically, of its communications aspect. The sensitive point here relates to the potential influence of the digital format on the legal value of the document as “data flow”. The Regulation recalls that the rules governing cross-border judicial procedures established by the legal acts listed in the Annex are not affected, apart from the digital communication dimension of the new framework. In particular, the national law of the Member States continues to govern questions relating to the authenticity, accuracy and appropriate legal form of documents or information that will transit through the new digital channels.

A contrario, digitised exchanges must not deprive electronic documents of legal effects. This is provided for in Article 8 of the Regulation, which is a well-known provision as it already appears in other European instruments in digital matters: “Documents transmitted by electronic means shall not be deprived of legal effect and shall not be considered inadmissible in cross-border legal proceedings concerning the legal acts listed in Annexes I and II solely on the ground that they are in electronic form”.

Cross-border Justice by Videoconference

The Regulation also organises the use of videoconferencing for hearings of persons in cross-border judicial proceedings listed in the Annex. The European legal acquis already contains provisions on the use of videoconferencing on an optional basis or subject to the existence of technical tools within the authorities concerned. The same rationale is followed by the Regulation, so there is no obligation. The promoters of digital justice may regret this, but the Regulation nevertheless provides that the use of videoconferencing may not be refused by the authorities of a Member State “solely on account of the non-existence of national rules governing the use of distance communication technology. In such a case, the most appropriate rules applicable under national law, such as rules on the taking of evidence, should apply mutatis mutandis” (Rec. 33). This voluntary and incentive-based approach is certainly justified, in order to take account of the disparities between national legal systems in terms of their level of digitalisation and, in the case of criminal proceedings, because of the great vulnerability of the individuals concerned by the proceedings, which digital communications may increase.

Concluding Remarks

 The “Digital Justice” Regulation is an important step in the structuring of cross-border digital justice in the Union and paves the way for a (new) European “digital judicial culture”. In that respect, the Regulation leaves the Member States room for manoeuvre by allowing them to extend its scope to purely domestic judicial procedures – i.e. outside the EU competence based on Articles 81 and 82 TFEU –. This is of great significance since digitalisation blurs the boundaries between internal and international proceedings. The EU cross-border digital Justice should therefore have a long-term impact on national judicial systems of the Member States. But to succeed, major changes will be needed in national justice systems (as recently highlighted by the new e-Justice Strategy). In this context, a solid dialogue with legal and judicial practitioners will be central as well as keeping the “big picture” of digitalisation in mind, starting with the crucial issues of the digital divide, the protection of personal data and cybersecurity in relation to Article 47 of the EU Charter.

Hague Judgments Convention Signed by the United Kingdom

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Pietro Franzina
by

On 12 January 2024, the United Kingdom signed the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters. As reported by Ugljesa Grusic on this blog, the UK government had announced some weeks ago its intention to move towards joining the Convention.

The next step will consist for the UK in ratifying the Convention.

The Convention will then enter into force for the UK pursuant to Article 28(2), that is, “on the first day of the month following the expiration of the period during which notifications may be made in accordance with Article 29(2)” with respect to the UK.

The notifications referred to in Article 29(2) are statements whereby a Contracting State may inform the depositary, within twelve months, that the ratification of another State (the UK, in the circumstances) “shall not have the effect of establishing relations between the two States pursuant to this Convention”. In practice, Contracting States may decide that they will not be bound by the Convention vis-à-vis any State that would later join the Convention. The Convention is currently in force for the European Union and Ukraine (since 1 September 2023), and is set to enter into force for Uruguay on 1 October 2024. None of the latter States is expected to make use of this opportunity as regards the UK.

Reform of the Statute of the Court of Justice of the European Union

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Marta Requejo Isidro
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On 7 December 2023, The Council presidency and European Parliament representatives reached a provisional agreement on a reform of the Statute of the Court of Justice (last version available here).

Among other things, the reform will permit the transfer of jurisdiction over preliminary rulings to the General Court in specific areas, while the Court of Justice will retain jurisdiction over questions of principle, like those that involve interpretation of the Treaties or the Charter of Fundamental Rights.

The amendment, which is meant to reduce the workload of the Court of Justice and, therefore, to help her work more efficient, represents an essential step in the history of the institution as we know it.

The possibility of the handover is formally established by Article 256 TFEU, according to which:

  1. The General Court shall have jurisdiction to hear and determine questions referred for a preliminary ruling under Article 267, in specific areas laid down by the Statute.

Where the General Court considers that the case requires a decision of principle likely to affect the unity or consistency of Union law, it may refer the case to the Court of Justice for a ruling.

Decisions given by the General Court on questions referred for a preliminary ruling may exceptionally be subject to review by the Court of Justice, under the conditions and within the limits laid down by the Statute, where there is a serious risk of the unity or consistency of Union law being affected.

It should be noted that the provision is not a novelty in EU law; it corresponds to former Article 225 TEC. In fact, the transfer to the General Court of partial jurisdiction to give preliminary rulings had already been considered in the past: at the end of last century, first, against the background of the Treaty of Amsterdam and the foreseen enlargement of the Union; and later, around 2015, in view of the increasing number of requests for preliminary rulings. However, in 2017, in a report submitted pursuant to Article 3(2) of Regulation (EU, Euratom) 2015/2422 of the European Parliament and of the Council amending Protocol No 3 on the Statute of the Court of Justice of the European Union, the Court of Justice had denied the need of a transfer at the time. On the other hand, it  simultaneously stressed that such standpoint “should not at all be understood as a definitive position on the question of the distribution of jurisdiction to give preliminary rulings between the Court of Justice and the General Court”. And, indeed, it has not been a definitive position.

For the readers of this blog the essential question is, of course, what the impact of the competences adjustment will be on preliminary rulings conerning PIL instruments.

The simple answer would be that, in principle, none is to be expected. The specific areas in which the General Court will be competent over preliminary rulings are: the common system of value added tax; excise duties; the Customs Code; the tariff classification of goods under the Combined Nomenclature; compensation and assistance to passengers in case of delay or cancellation of transport services or denied boarding; the scheme for greenhouse gas emission allowance trading. In other words, as of today requests on the instruments for judicial cooperation in civil and commercial matters are not affected, i.e., they fall under the scope of exclusive competence of the Court of Justice.

But this, of course, can change any moment in the future. More importantly, already now it is legitimate to have doubts as to the operation of the assignments to, respectively, the Court of Justice and the General Court: one single request for a preliminary ruling may concern at the same time one of the above-mentioned areas and another one; besides, requests related to one of those matters may as well entail questions of principle or of a cross-cutting nature.

More concretely, with an example: should the request for a preliminary ruling in, let’s say, case C‑213/18, or in case C-20/21, had been referred to Luxembourg after the transfer has been accomplished, who would have taken care?

In the Council’s press release of 7 December 2023 (the same date as the agreement’s) not much is said to shed light on this and similar questions. It is explained, though, that, ‘On the procedural aspects, the reform provides for a “one-stop-shop” mechanism, under which national judges will continue to address requests for preliminary rulings to the Court of Justice, which will in turn forward to the General Court the questions under its jurisdiction’.

This possibly means that a screening will take place at the level of the Court of Justice, and that a substantiated decision will be made there on the allocation of requests not squarely corresponding to one of the categories listed above. No doubt, for the sake of transparency the criteria for such allocation will also be communicated to the public at some point, likely soon. It is also to be expected (and it is hoped) that resources of the Court will be invested in making sure that, from the very beginning, they are consistently applied.

Deal on the SLAPPs Directive

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Marco Pasqua
by

The readers of the blog are aware of the proposal for a Directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

After the political agreement reached at Council level and the European Parliament’s negotiating position, the negotiators of the Parliament and of the Council reached on 30 November 2023 a provisional political agreement on the text to be adopted. The agreement is expected to be formally approved by the Council and the European Parliament at a later stage.

The text of the deal, made accessible here, features various innovations, including the following.

Minimum Requirements

The text resulting from the political agreement now makes clear that the Directive lays down minimum rules, thus enabling the Member States to adopt or maintain provisions that are more favourable to persons engaging in public participation, including national provisions that establish more effective procedural safeguards. The implementation of the Directive should not serve to justify any regression in relation to the level of protection that already exists in each Member State.

Public Participation

Public participation is more broadly defined.

It should mean any statement, activity or preparatory, supporting or assisting action directly linked thereto, by a natural or legal person expressed or carried out in the exercise of fundamental rights.

Future public interest is included, referring to the fact that a matter might not yet be of public interest, but could become so, once the public becomes aware of it, for example by means of a publication.

Such activities should directly concern a specific act of public participation or be based on a contractual link between the actual target of SLAPP and the person providing the preparatory, supporting or assisting activity. Bringing claims not against a journalist or a human rights defender but against the internet platform on which they publish their work or against the company that prints a text or a shop that sells the text can be an effective way of silencing public participation, as without such services opinions cannot be published and thus cannot influence public debate.

Matter of Public Interest

The notion of a matter of public interest is clarified in more detail.

It should include matters relevant to the enjoyment of fundamental rights.

Activities of a natural or legal person who is a public figure should also be considered as matters of public interest since the public may legitimately take an interest in them.

In addition, matters under consideration by a legislative, executive or judicial body or any other official proceedings can be examples of matters of public interest.

Finally, the Directive text provides under Recital 19b for many cases where a matter of public interest is at stake.

Abusive Court Proceedings

The description of when court proceedings can be considered abusive is reworked and better described.

They typically involve litigation tactics deployed by the claimant and used in bad faith including but not limited to the choice of jurisdiction, relying on one or more fully or partially unfounded claims, making excessive claims, the use of delaying strategies or discontinuing cases at a later stage of the proceedings, initiating multiple proceedings on similar matters, incurring disproportionate costs for the defendant in the proceedings. The past conduct of the claimant and, in particular, any history of legal intimidation should also be considered when determining whether the court proceedings are abusive in nature. Those litigation tactics, which are often combined with various forms of intimidation, harassment or threats before or during the proceedings, are used by the claimant for purposes other than gaining access to justice or genuinely exercising a right and aim to achieve a chilling effect on public participation in the matter at stake.

Claims made in abusive court proceedings can be either fully or partially unfounded. This means that a claim does not necessarily have to be completely unfounded for the proceedings to be considered abusive. For example, even a minor violation of personality rights that could give rise to a modest claim for compensation under the applicable law can still be abusive, if a manifestly excessive amount or remedy is claimed. On the other hand, if the claimant in court proceedings pursues claims that are founded, such proceedings should not be regarded as abusive for the purposes of the Directive.

Scope

Few express indications have been added.

The Directive shall apply to matters of a civil or commercial nature with cross-border implications entertained in civil proceedings, including interim and precautionary measures and counteractions, entertained in civil proceedings, whatever the nature of the court or tribunal.

Then, it shall not apply to criminal matters or arbitration and shall be without prejudice to criminal procedural law.

Matters with Cross-border Implications

The cross-border implications element has been revised.

According to the text, a matter is considered to have cross-border implications unless both parties are domiciled in the same Member State as the court seised and all other elements relevant to the situation are located only in that Member State. Domicile shall be determined in accordance with the Brussels I bis Regulation.

Common Rules on Procedural Safeguards

Article 5a, devoted to the accelerated treatment of applications for safeguards, has been added.

Member States shall ensure that applications for security and early dismissal of manifestly unfounded claims are treated in an accelerated manner in accordance with national law, taking into account the circumstances of the case, the right to an effective remedy and the right to a fair trial.

Member States shall ensure that applications for remedies against abusive court proceedings may also be treated in an accelerated manner, where possible, in accordance with national law, taking into account the circumstances of the case, the right to an effective remedy and the right to a fair trial.

Early Dismissal of Manifestly Unfounded Claims

In relation to the early dismissal, Member States shall ensure that courts and tribunals may dismiss, after appropriate examination, claims against public participation as manifestly unfounded at the earliest possible stage, in accordance with national law. In addition, Member States shall ensure that an application for early dismissal is treated in an accelerated manner in accordance with national law, taking into account the circumstances of the case and the right to an effective remedy and the right to a fair trial.

The burden of proof and substantiation of claims, under Article 12, have been specified. The burden of proving that the claim is well founded rests on the claimant who brought the action. Member States shall ensure that where a defendant has applied for early dismissal, it shall be for the claimant to substantiate the claim in order to enable the court to assess whether it is not manifestly unfounded.

Finally, Member States shall ensure that a decision granting early dismissal is subject to an appeal.

Remedies Against Abusive Court Proceedings

The award of costs, under Article 14, is clarified. Member States shall ensure that a claimant who has brought abusive court proceedings against public participation can be ordered to bear all types of costs of the proceedings, available under national law including the full costs of legal representation incurred by the defendant, unless such costs are excessive. Where national law does not guarantee the award in full of the costs of legal representation beyond statutory fee tables, Member States shall ensure that such costs are fully covered, unless they are excessive, by other means available under national law.

Article 15, specifically devoted to compensation of damages, has been deleted. It provided a natural or legal person who has suffered harm as a result of a SLAPP case to be capable of claim and to obtain full compensation for that harm. The text resulting from the political agreement loses this (express) provision.

Article 16, dedicated to penalties, has been amended including other equally effective appropriate measures. Member States shall ensure that courts or tribunals seised of SLAPPs cases may impose effective, proportionate and dissuasive penalties or other equally effective appropriate measures, including the payment of compensation for damages or the publication of the court decision, where provided for in national law, on the party who brought those proceedings.

Protection against Third-country Judgments

This chapter has been affected by significant changes relevant from a private international law perspective.

In relation to grounds for refusal of recognition and enforcement of a third-country judgment, the reference to public policy, which was used in the original text version proposed by the Commission, has been deleted. According to the current text version, Member States shall ensure that the recognition and enforcement of a third-country judgment in court proceedings against public participation by a natural or legal person domiciled in a Member State is refused if those proceedings are considered manifestly unfounded or abusive according to the law of the Member State in which recognition or enforcement is sought.

Article 18, on jurisdiction for actions related to third-country proceedings, provides as follows. Member States shall ensure that, where abusive court proceedings against public participation have been brought by a claimant domiciled outside the Union in a court or tribunal of a third country against a natural or legal person domiciled in a Member State, that person may seek, in the courts or tribunals of the place where he is domiciled, compensation for the damages and the costs incurred in connection with the proceedings before the court or tribunal of the third country.

A paragraph 2 has been added, providing that Member States may limit the exercise of the jurisdiction while proceedings are still pending in the third country.

Relations with other Private International Law Instruments

In final provisions, under Article 19, the Directive shall not affect the application of bilateral and multilateral conventions and agreements between a third State and the Union or a Member State concluded before the date of entry into force of the Directive. Recital 33a refers, as example, to the 2007 Lugano Convention, in line with Article 351 of the TFEU.

Under Recital 33b it is specified that any future review of the rules under the Brussels I bis and the Rome II Regulations should assess also the SLAPP-specific aspects of the rules on jurisdiction and applicable law.

GEDIP Adopts Position Paper on the Proposed Regulation on Parenthood

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The Editors of the EAPIL blog
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The European Group for Private International Law (GEDIP) has recently adopted a position paper on the proposal for a Council Regulation in matters of Parenthood.

The Group welcomes that the EU intends to legislate in this field, since parenthood is a status from which persons derive numerous rights and obligations.

However, the Group is of the opinion that there are important shortcomings in the proposal due to the narrow perspective taken and an insufficient consideration of the legal complexities concerning parenthood in cross-border situations. It therefore encourages a reconsideration of the proposal in the light of its observations.

European Commission 2024 Work Programme: Delivering Today and Preparing for Tomorrow

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Marco Pasqua
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On 17 October 2023, the European Commission adopted its 2024 work programme. As explained in a press release, the programme aims at simplifying the rules for citizens and businesses across the Union.

The initiatives that the Commission plans to take, or pursue with particular interest, in the course of 2024 are listed in three annexes.

Annex I is concerned with new policy and legislative initiatives. None of the initiatives in question relates to judicial cooperation in civil matters.

Annex II, on REFIT initiatives (i.e., initiatives aimed at making EU law simpler, less costly and future proof), contemplates, among other things, a revision of online dispute resolution for consumer disputes.

The repeal of the online dispute resolution for consumer disputes Regulation (Regulation (EU) No 524/2013) will remove associated reporting requirements, which are no considered to be longer needed. In addition, a proposal for a directive amending Directive 2013/11 on alternative dispute resolution for consumer disputes is addressed. The goal is, generally, to simplify and reduce current reporting requirements.

Various procedures with possible implications for private international law are featured in Annex III, which lists the pending procedures that the Commission regards as a priority. Although they are based on Article 114 TFEU rather than Article 81 TFEU, they are also relevant to private international law, notably insofar as they lay down provisions which are meant to apply whatever the applicable law, as determined under conflict-of-law rules, and accordingly interfere with the latter.

The list features the proposed Regulation on combating late payment in commercial transactions. The text is meant to address the inadequacy of the current legal framework, as shaped by Directive 2011/7 (the Late Payment Directive).

The proposed Directive on liability for defective products, repealing Directive 85/374 (Product Liability Directive) is also among the listed priorities, as is the proposed Directive on adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive). The objective of the latter is to promote the rollout of trustworthy AI to harvest its full benefits for the internal market. It does so by ensuring victims of damage caused by AI obtain equivalent protection to victims of damage caused by products in general. It also reduces legal uncertainty of businesses developing or using AI regarding their possible exposure to liability and prevents the emergence of fragmented AI-specific adaptations of national civil liability rules.

The proposed Directive on improving working conditions in platform work is equally on the list. Its rules may have a bearing on the operation of the rules of Rome I on the law applicable to employment contracts.

Annex III goes on by mentioning the proposed Directive on European cross-border associations, and the connected proposed Regulation as regards the use of the Internal Market Information System and the Single Digital Gateway, which aim at facilitating the effective exercise of freedom of movement of non-profit associations operating in the internal market.

The list further includes the proposals on the digital euro (see further this post) and the proposed Directive harmonising certain aspects of insolvency law. According to the Commission, action at EU level is needed in the field of insolvency to substantially reduce the fragmentation of insolvency regimes. The future instrument would support the convergence of targeted elements of Member States’ insolvency rules and create common standards across all Member States, thus facilitating cross-border investment. Measures at EU level would ensure a level playing field and avoid distortions of cross-border investment decisions caused by lack of information about and differences in the designs of insolvency regimes. This would help to facilitate cross-border investments and competition while protecting the orderly functioning of the single market. Since divergences in insolvency regimes are a key obstacle to cross-border investment, addressing this obstacle is crucial to realising a single market for capital in the EU.

United Kingdom to Join Hague 2019

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Ugljesa Grusic
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On 23 November 2023, the UK Ministry of Justice published its response to the consultation on whether the UK should sign and ratify the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. The Government has concluded that it is the right time for the UK to join Hague 2019 and will seek to do so as soon as practicable.

The Convention will have UK-wide extent, that is apply in all three jurisdictions of the UK. It will be implemented using a registration model, similar to the one used for the 2005 Hague Choice of Court Convention. The UK will not make a declaration under Articles 14, 16 or 19.

Conclusions and Recommendations of the HCCH Special Commission on Child Abduction and Child Protection Conventions

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The Editors of the EAPIL blog
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The author of this post is Costanza Honorati, professor of EU law and private international law at the University of Milan Bicocca. She chaired the working group that prepared a position paper on behalf of the  European Association of Private International Law in view of the eight meeting of the Special Commission on the practical operation on the 1980 Child Abduction and the 1996 Child Protection Conventions, and attended the meeting on behalf of EAPIL.

The Special Commission (SC) charged by the Hague Conference on Private International to discuss  the practical operation of the 1980 Child Abduction Convention and the 1996 Child Protection Convention met for the eighth time from 10 to 17 October 2023. The meeting was attended by 471 delegates, in person and online, representing 66 HCCH Members, 13 non-Member Contracting Parties, 27 observers from inter-governmental and non-governmental organisations, including the European Association of Private International Law (see its position paper as Info. Doc. No 18 of October 2023)

As usual, at the end of the meeting the SC adopted a set of Conclusions & Recommendations (C&R), whose content is briefly summarized below, with a focus on a selection of issues. To the reader’s benefit the two Conventions are addressed here separately.

The 1980 Child Abduction Convention

The SC took note that, since the Seventh Meeting of the SC in 2017, five States have become Contracting Parties to the 1980 Child Abduction Convention (Barbados, Botswana, Cabo Verde, Cuba, and Guyana), bringing the total number of Contracting Parties to the Convention to 103.

Interesting information were drawn from the fifth Statistical Study drawn by prof. Nigel Lowe and Victoria Stephens for the year 2021 (Prel. Doc. No 19A ). While the data in that year are likely to have been affected by the COVID-19 pandemic, a few relevant findings are worth mentioning. Among these, the increase in the average number of days it took to reach a final decision; the increase of refusals to return; the almost double increase of proportion of refusals to return on the basis of the Article 13(1)(b) exception, compared with the results of the 2015 statistical study; the small decrease in cases going to court; the increase of cases being settled outside court .

While the SC has reaffirmed and reiterated some of the conclusions adopted in previous meetings, a few specific topics have been discussed in greater detail.

Under the heading Addressing delays under the 1980 Child Abduction Convention, the SC found that delays continue to be a significant obstacle in the operation of the 1980 Child Abduction Convention and the SC strongly recommended Contracting Parties experiencing delays to review their existing processes in order to identify potential causes of delays.

With this in mind the SC reiterated

the effectiveness and value of the use of information technology for efficient communication between authorities, sharing of data, and to assist in reducing delays and expedite return proceedings.

The SC thus encouraged States to continue implementing and enhancing the use of information technology and to make use of the Guide to Good Practice on the Use of Video-Link under the 1970 Evidence Convention as a helpful resource (para 5-9).

The SC then addressed the Relationship of the 1980 Child Abduction Convention with other international instruments – 1989 UN Convention on the Rights of the Child (UNCRC). Having recalled the rationale for the return of the child and the scope of the return proceedings, the SC emphasized how return proceedings should not include a comprehensive ‘best interests assessment’. In particular the SC stated, at para 14 e 15 that

[w]hile the exceptions derive from a consideration of the interests of the child, they do not turn the return proceedings into custody proceedings. Exceptions are focussed on the (possible non-) return of the child. They should neither deal with issues of custody nor mandate a full “best interests assessment” for a child within return proceedings.

Similar findings are featured in the communication No 121/2020 of the UN Committee on the Rights of the Child under the Optional Protocol on a Communications Procedure.

The SC had a lively discussion on the Application of Article 13(1)(b) of the 1980 Child Abduction Convention in a contest of Domestic violence. The C&R reflect the discussion summarizing some of the results as following. It firstly makes reference to the Guide to Good Practices on Article 13, noting that, according to paragraph 33,

harm to a parent, whether physical or psychological, could, in some exceptional circumstances, create a grave risk that the return would expose the child to physical or psychological harm or otherwise place the child in an intolerable situation. The Article 13(1)(b) exception does not require, for example, that the child be the direct or primary victim of physical harm if there is sufficient evidence that, because of a risk of harm directed to a taking parent, there is a grave risk to the child.

In light of the ongoing discussions and initiatives promoted by advocates for victims of domestic violence, the SC supported the proposal to hold a international open forum allowing for discussions amongst organisations representing parents and children and those applying the Convention. The Philippines offered to assess hosting the forum in Manila in 2024 and States have been invited to contribute in the organisation and funding of such a forum (para 26)

Closely connected to domestic violence is the related issue of Safe return and measures of protection. Interestingly, the SC made it clear that a court may also order protective measures to protect the accompanying parent in order to address the grave risk to the child (para 28). As regards undertakings, the SC reiterated that the efficacy of the measures of protection will depend on whether they are enforceable in the State of habitual residence of the child. Insofar, voluntary undertakings are not easily or always enforceable and, because they may not be effective in many cases, they should be used with greatest caution. It was also suggested that, when undertakings are made to the court of the requested State, they should be included in the return order in order to help facilitate enforcement in the State of habitual residence of the child. This is a new practice that could come result interesting.

The issue of hearing of the child again attracted much interest. Based on the fact that States follow very different approaches when hearing the child, C&R aim to circulate some good practices, such as (para 37)

a) the person who hears the child, be it the judge, an independent expert or any other person, should have appropriate training to carry out this task in a child-friendly manner and training on international child abduction; b) if the person hearing the child speaks to one parent, they should speak to the other; c) the person hearing the child should not express any view on questions of custody and access as the child abduction application deals only with return.

It was also emphasised that when hearing the child for the purposes of Article 13(2), this should be done only for such purpose and not in respect of broader questions concerning the welfare of the child, which are for the court of the child’s habitual residence. In other terms, the hearing of the child should be kept in the framework of an exception to return and not embrace a wider scope.

The very topical issue of asylum claim lodged in abduction cases was also shortly discussed, on the basis of Prel. Doc. No 16 . The C&R only indicate that such proceedings should be examined expeditiously (para 40).

The 1996 Hague Convention

Eight new States have become Contracting Parties to the 1996 Child Protection Convention since the 2017 SC, namely Barbados, Cabo Verde, Costa Rica, Fiji, Guyana, Honduras, Nicaragua and Paraguay, thus bringing the total number of Contracting Parties to the Convention to 54 (27 of which are EU Member States).

Some interesting clarifications were given in relation to recognition and enforcement of protection measures. First, in relation to the scope of application of Article 26(1) – a rule which provides that, where measures taken in one Contracting Party require enforcement in another Contracting Party, such measures shall be declared enforceable or registered for the purpose of enforcement in that other Contracting Party – the SC made it clear that not all measures of protection require enforcement under Article 26. Enforcement shall be required, for example, for the forced sale of property; or in relation to a parent refusing to abide by the orders made by the competent authority in another State. Because not all cases fall under Article 26, the SC invited Contracting Parties (in relation to their laws) and competent authorities (in relation to their procedures) to differentiate between those measures that require enforcement and those that do not (para 74-75).

Second, it was noted that, in order to facilitate the recognition and enforcement of measures of protection, the competent authority should carefully describe those measures in the decision and the grounds upon which it based its jurisdiction, including when jurisdiction is based on Article 11(1) (para 77-78).

Another interesting topic on which the SC focused is the placement of children. In this regard the SC endeavored to clarify what should be regarded as placement under Article 3(e) and Article 33 (i.e. any placement of the child in a foster family or in institutional care, or the provision of care by kafala or an analogous institution) ) and also what should not be regarded as a placement (i.e. purely private arrangements, including the ones in the form of an agreement or unilateral act, including a notarial kafala; a child travelling abroad for tourism purposes with their foster parent) (para. 83 et seq).

It then offered a useful guidance on minimum steps for the procedure under Article 33. These include the following:

1. The competent authority of the State which is contemplating the measure of alternative care must consult the Central Authority or competent authority in the State where it is proposed that the measure will be exercised by: (1) discussing the possibility of such a placement in the receiving State; (2) transmitting a report on the child; (3) explaining the reasons for the proposed placement or provision of care outside the requesting State and in the requested State.

2. The Central Authority or competent authority of the State where it is proposed that the measure will be exercised gives its consent to the proposed placement or provision of care.

3. If the requested State has consented to the placement or provision of care, taking into account the child’s best interests, the competent authority of the requesting State then issues its decision.

 Call for Further Action

Finally, as a result of the lively debate in the course of the SC, the need for further future action of both the Permanent Bureau (PB) and Contracting States was recommended. This was further reflected in the C&R with respect to the following topics.

In relation to direct judicial communications and the International Hague Network of Judges (IHNJ), the proposal was advanced to develop a short model guide to court practice and further initiatives to hold a regional in-person meeting of the IHNJ in Brazil (May 2024) and a global in-person meeting of the IHNJ in Singapore (May 2025) (para 19).

Regarding the determination of wrongful removal pursuant Articles 8, 14 and 15, the SC invited the PB to draw up a note containing information on the use of such rules, drawing from the contents of Prel. Doc. No 14. (para 46).

As to the revised Request for Return Recommended Model Form and the new Request for Access Recommended Model Form, the SC concluded that further work needed. A Group of interested delegates will assist the PB in finalising both revised Forms (para 50).

Concerning relocation, after noting the strong impact on international abduction and the diversity of approaches of States in this matter, the SC proposed the development of a questionnaire by the PB directed to States to gather information about procedures that States have in place to facilitate lawful relocation (para 54);

With regard to transfer of proceedings under Article 8 and 9 of the 1996 Child Protection Convention, besides recalling the general duty to cooperate among Central Authorities and direct judicial communications between judges involved in a transfer of jurisdiction, the PB was asked to circulate the questionnaire annexed to to all Contracting Parties to the 1996 Child Protection Convention, with a view to collecting information from judges and Central Authorities regarding requests under Article 8 or 9 and to then review such document in light of the responses from Contracting Parties (para 69).

Finally, on the placement of children, the PB was asked to start collecting information on the operation of Article 33 from Contracting Parties in addition to that set out in Doc. No 20 and that a Working Group be established to develop: (a) a model form for cooperation under Article 33; and (b) a guide on the operation of Article 33.

Views Diverge Among Member States as to EU External Competence Regarding Service of Documents

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Pietro Franzina
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The Hague Convention of 15 November 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters is currently in force for more than 80 States.

All the Member States of the European Union are bound by the Convention. Most of them were parties to the Convention well before the Union was given the power to adopt measures concerning judicial cooperation in civil matters. Others joined afterwards.

Austria and Malta were the latest to do so. They respectively ratified and acceded to the Convention based on a Council Decision of 10 March 2016 whereby they were authorised (and in fact requested) to do so “in the interest of the Union”. The latter expression is used in cases where the Union considers it has the power to conclude an international agreement, but the agreement in question fails to include a REIO clause or is otherwise only open to States, meaning that the Union has no other option than to join the agreement through its Member States.

The Council Decision of 2016 was adopted on the assumption that the Union has external competence with regard to the Convention “in so far as its provisions affect the rules laid down in certain provisions of Union legislation or in so far as the accession of additional Member States to the Convention alters the scope of certain provisions of Union legislation”.

One such provision is Article 28 of the Brussels I bis Regulation. Article 28(2) stipulates that the court seised “shall stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end”. It is added in (3) that Article 19 of the 2007 Service Regulation (bow Article 22 of the Recast Service Regulation) applies instead of (2) where service occurred under the latter Regulation, and, in (4), that were the Union’s rules are not applicable, then Article 15 of the Hague Service Convention shall apply, “if the document instituting the proceedings or an equivalent document had to be transmitted abroad pursuant to that Convention”.

The stated existence of a Union’s external competence in this area has not prevented other uncertainties from arising. Specifically, the question arose of whether it is for the Union (and the Union alone) to take a stance on subsequent accessions to the Convention by third States.

Pursuant to Article 28 of the Convention, any State not represented at the Tenth Session of the Hague Conference on Private International Law (which took place in 1964) may accede to the Convention after the latter’s entry into force on the international plane. The Convention will then enter into force for such a State “in the absence of any objection from a State, which has ratified the Convention before such deposit, notified to the Ministry of Foreign Affairs of the Netherlands within a period of six months after the date on which the said Ministry has notified it of such accession”.

Put in another way, the Hague Service Convention offers the States that are already bound by it to veto the establishment of relations under the Convention between any acceding State and all of the Contracting States. So far, this “right of veto” has never been used in practice.

The Council of the European Union has recently discussed whether it is for the Union, or rather its Member States, individually, to decide about the line to take regarding the accession of Singapore to the Convention, which occurred on 16 May 2023.

Member States had apparently no difficulties in agreeing that there were no grounds, in substance, to issue such an objection. However, procedurally, while the majority took the view that the decision belonged to the Union, two States – France and the Czech Republic – expressed doubts in this regard, and abstained from the vote.

In a joint statement, France and Czechia noted that the other Member States agree that the Hague Service Convention falls under EU exclusive external competence, pursuant to Article 3(2) TFEU, but argued, for their part, that, “since the provisions of the Hague Convention on service do not apply in relations between Member States but only when a third State is involved, the possibility of affecting or modifying the common EU rules is doubtful”.

France and Czechia did not intend to prevent the Council from adopting an EU-wide approach to the accession of Singapore, but stressed they would not consider such a decision “as a precedent for any other accessions to the Hague Service Convention and other measures of the European Union that aim to regulate comparable subject matters, where exclusive external competence of the European Union could play a role but has not been agreed upon by the Member States”.

On 13 October 2023, Coreper issued a recommendation to approve the line to be taken regarding the accession of Singapore (the recommendation being that no objection should be raised), while acknowledging that the recommendation “is without prejudice to the procedure to be followed in the future to establish the European Union’s position concerning the accession of third States to such Hague Conventions which have the same accession mechanism as the 1965 Hague Convention”.

The issue, it is believed, may resurface, in particular, with respect to the Hague Convention of 18 March 1970 on the taking of evidence abroad in civil or commercial matters. The latter Convention, too, has special rules on the acceptance of accessions (Article 39), although their design and practical implications depart from the corresponding provisions of the Hague Service Convention.

EAPIL Takes Part in the Special Commission on the Child Abduction and Child Protection Conventions and Issues Position Paper

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Pietro Franzina
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The eighth meeting of the Special Commission set up in the framework of the Hague Conference on Private International Law to discuss the practical operation of the 1980 Child Abduction Convention and the 1996 Child Protection Convention kicked off on 10 October 2023.

As reported by Mayela Celis on Conflict of Laws, a broad range of issues will be addressed during the meeting, such as delays in return process under the 1980 Convention, the relationship of the 1980 Convention with other international instruments, in particular the 1989 UN Convention on the Rights of the Child, exceptions to the return of the child under the 1980 Convention and protective measures upon return, including with respect to domestic and family violence, child abduction and asylum claims, mediation as relevant to the 1980 and 1996 Conventions, and transfer of jurisdiction under the 1996 Convention, to name just a few (the draft agenda of the meeting can be found here).

The European Association of Private International Law was invited to take part in the meeting as an observer, as it occurred on the occasion of the first meeting of the Special Commission on the practical operation of the 2007 Child Support Convention and on the 2007 Maintenance Obligations Protocol, and the first meeting of the Special Commission on the practical operation of the 2000 Adults Convention.

An EAPIL Working Group was set up for the purposes of contributing to the meeting on the 1980 and 1996 Conventions. The Group, chaired by Costanza Honorati and consisting of Sabine Corneloup, Mónica Herranz Ballesteros, Katarina Trimmings, and Mirela Zupan, prepared a position paper focused on protective measures, which the Scientific Council of the Association endorsed on 10 October 2023.

The conclusions reached by the Working Group are as follows:

I. Protective measures amount to a fundamental tool to achieve compliance with the Convention’s obligation, while guaranteeing physical and psychological safety of the child and thus ensuring respect of the child’s fundamental rights. 

II. The Treaty’s main obligation to return the child is only discharged when such court is convinced that the return is safe and that the return shall not cause any harm, either physical or psychological, to the child. 

III. Ensuring the child’s safe return must be construed as a treaty obligation set on all Contracting States. This requires that all States, i.e. the State of the child’s habitual residence and the State of refuge, shall cooperate one with each other to ensure the physical and psychological safety of the child when implementing the main obligation of returning the child. 

IV. In the context of abduction proceedings the best interests of the child implies that, when pursuing the aim of returning the abducted child to the place of his/her habitual residence, the court in the State of refuge should pay particular attention to safeguarding the overall physical and psychological safety of the child. 

V. A protection measure in the light of the above is only a court order which is capable of being enforced in the State of habitual residence. The requirement of enforceability in the State where protection is sought, i.e. in the State of habitual residence, thus becomes a constitutive element of any measure which aims to effectively protect the child’s on his or her return. 

VI. Even where protective measures are enforceable in the State of habitual residence, caution is needed when determining whether a civil protection order would be appropriate in an individual child abduction case. In the light of concerns over the effectiveness of protective measures, protective measures should not be employed where credible allegations of severe violence have been made and there is a future risk of violence of such severity.

VII. There are several ways which can guarantee the enforceability of a protective measure. It is for the court in the State of refuge, in cooperation with the court in the State of habitual residence, to choose and implement the most appropriate measures.

VIII. Protective measures, if not triggered ex parte, should be considered by the court on its own motion, ex officio. 

IX. A genuine consideration of adopting or requiring protective measures should be strongly encouraged every time the court is satisfied there is a grave risk of harm, and provide an explanation on facts, risks and measures that were considered should be provided. 

A report on the conclusions and recommendations of the eighth meeting of the Special Commission will appear on this blog in due course.

ELI Project on Recognition of Foreign Filiations and Its First Webinar

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Anna Wysocka-Bar
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European Law Institute (ELI) has recently launched a new project devoted to the proposal of the EU Regulation on the Recognition of Foreign Filiations.

The ELI Project Team wants to scrutinise the rules of the proposal  from four specific perspectives: children’s, LGBTI persons’ and women’s fundamental rights, and the underlying EU primary law, especially concerning the free movement of citizens.

The works within the project will be conducted under the accelerated procedure, with the aim of having results by February 2024. Based on its analysis, the Project Team wants to develop a Position Paper, in which provisions of the proposal will be scrutinized and alternative formulations proposed. Additionally, the Position Paper will be supplemented with explanations and comments. Model Rules in the form of desirable amendments to the proposal will also be drafted.

The ELI Project Team consists of Claire Fenton-Glynn, Cristina Gonzalez Beilfuss, Fabienne Jault-Seseke, Martina Melcher, Sharon Shakargy, Patrick Wautelet, Laima Vaige with Susanne Gössl and Ilaria Pretelli acting as Reporters.

On 2 October 2023 the Kick-Off Webinar of the Project was held. Here is a summary of discussions and a recording of the whole meeting.

Posts on this blog devoted to the same proposal and academia’s reactions to it may be found here, here and here.

Fifth Meeting of the HCCH Working Group on Jurisdiction

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Pietro Franzina
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The Working Group charged by the Hague Conference on Private International Law with advancing the Jurisdiction Project met in Buenos Aires from 18 to 22 September 2023. This was the fifth meeting of the Working Group since its establishment, in 2021.

The Jurisdiction Project builds on the conclusion of the 2019 Judgments Convention and explore the possibility of drafting a harmonised set of rules dealing with jurisdiction and parallel proceedings.

In establishing the Group, the Council on General Affairs and Policy of the Conference tasked it to proceed, in an inclusive and holistic manner, with an initial focus on developing binding rules for parallel proceedings and related actions, while acknowledging the primary role of both jurisdictional rules and the doctrine of forum non conveniens, notwithstanding other possible factors, in developing such rules.

No detailed report of the recent Buenos Aires meeting was publicly available at this stage at the time of writing this post. As stated in the news section of the website of the Hague Conference, the Working Group “made further progress on the development of draft provisions on parallel proceedings and related actions or claims”.

The detailed reports of previous meetings, with the draft texts resulting therefrom, can be found here (February 2022) and here (February 2023).

The sixth meeting of the Working Group will take place in January 2024. The Group will then report on the progress of its work to the Council on General Affairs and Policy. The Council is expected to address the topic (and decide about the next steps) at its next meeting, in March 2024.

Those interested in the Project may refer to the scholarly works listed in the useful bibliography prepared by the Permanent Bureau of the Conference.

UN Experts Say the EU Should Do More to Ensure that Proposed PIL Rules on the Protection of Adults Comply with the UNCRPD

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Pietro Franzina
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On 2 August 2023, Gerard Quinn, the UN Special Rapporteur on the rights of persons with disabilities, and Claudia Mahler, the Independent Expert on the enjoyment of all human rights by older persons, issued a joint statement regarding the European Commission’s proposals of 31 May 2023 on the protection of adults in cross-border situations.

As explained in a post on this blog, the latter proposals consist of a proposal for a Council Decision whereby all Member States would become (or remain) parties to the Hague Convention of 2000 on the International Protection of Adults Convention “in the interest of the Union”, and a proposal for a Regulation of the Parliament and the Council that would complement the Hague Convention in the relations between Member States. The envisaged complementing measures include the creation of a European Certificate of Representation which would make it easier for the representatives of an adult to prove their powers in a Member State other than the Member State where those powers were conferred or confirmed.

Scope and Purpose of the Submission

The joint submission examines the above proposals against the background of the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD). While acknowledging that private international law “has a profoundly important role to play in giving effect to the object and purpose, substance and interpretation of the UNCRPD”, the authors express serious reservations regarding the solutions envisaged by the Commission, and reiterate the idea – voiced in a previous joint statement, of 2021 – whereby the Hague Convention should “be re-purposed” in light of the UNCRPD “to subserve higher and newer goal of protecting human autonomy”.

According to the document, ratification of the Hague Convention and its implementation (including regionally, through the proposed EU measures) “must selfconsciously steer toward higher substantive norms and trends”, notably as regards the preservation of the autonomy of persons with disabilities.

There is “a real risk”, the submission warns, that, “if enacted as proposed”, the Regulation and the Decision

will only be used to freeze into place an outdated policy response to disability and the needs of older persons [and] only attract needless legal liability in the international legal order for the EU and its Member States.

Hence the call to

think through how the Hague Convention might be selfconsciously moulded to underpin and not undermine the UN CRPD and also create breathing space for the drafting and eventual adoption of a universal (UN) treaty on the rights of older persons.

Main Concerns Expressed in the Submission

The authors of the submission note that the Commission did recall the UNCRPD in its proposals, notably in Recitals 10 and 15 of the proposed Regulation, but consider that is largely insufficient. They just “do not see any consistent follow-through from these Recitals in the substantive provisions of the proposed Regulation”, and rather see “many contradictions”.

According to Recital 10, the interpretation of the Regulation “should be guided by its objectives that are to enhance the protection of fundamental rights and freedoms and other rights of adults in cross-border situations, including their right to autonomy, access to justice, right to property, right to be heard, right to free movement and equality”, since the rights enshrined in this regard in both the UNCRPD and the Charter of Fundamental Rights of the European Union “are to be protected both in national and cross-border cases”. Measures taken in relation to persons with disabilities, the Recital goes on, are to be in line with the UNCRPD in order to benefit from recognition under the Regulation.

For its part, Recital 15 of the proposed Regulation observes that, regardless of the terminology used in each Member State, “measures directed to the protection of adults and taken in compliance with the fundamental rights of the adults concerned should circulate without obstacles in the Union”, adding that, to this end, the Regulation “should be interpreted in accordance with the Charter and the UNCRPD”, where assessing whether a measure taken by the authorities of another Member State is not manifestly contrary to public policy (and should accordingly be refused recognition), “the authorities of a Member State where the recognition is sought should assess whether that measure ensures the fundamental rights of the adult, in light of Articles 3, 9 12 and 19 of the UNCRPD”.

All this being regarded as insufficient, the authors of the submission reiterate the view, expressed in the joint statement of 2021, mentioned above, that States, when joining the Hague Convention, should adopt an interpretive declaration whereby they would commit to interpret and apply the Hague Convention in accordance with obligations arising out of or relating to their participation in the UNCRPD and other relevant human rights obligations, “or as a result of participation in future human rights treaties” on the same matter.

The move, the submission explains, “would make clear (not only within the EU but also vis-à-vis third States) that the CRPD is given lexical priority”.

The authors of the joint submission further suggest, for the same purpose, that States joining the Hague Convention should make a reservation to that Convention, aimed at excluding (to the effect that the Convention does allow for it) “institutionalisation” (i.e., measures whereby an adult would be placed or kept in a residential institution against or regardless of their will), from the scope of protective measures that would benefit from the Convention (and the Regulation).

This would play a significant role, they say, in ensuring that institutionalisation “is no longer seen as an appropriate response to the needs of persons with disabilities or older persons”.

According to the submission, the proposed Regulation should even go further than that, and “explicitly” prohibit institutionalisation “as a form of ‘protection’ … as between EU Member States”, as this would be “manifestly at odds” with Articles 5 and 19 of the UNCRPD.

The submission is also concerned with “representation agreements”. The expression is used in the document to refer to private mandates or “powers of representation”, to use the language of the Convention. The authors argue that the arrangements in question “should be re-framed to only mean ‘supported decision making agreements’”. Arrangements “that only kick into place upon the occurrence of a contingency like ‘incapacity’”, it is added, should be “avoided at all costs”.

Some General Remarks

Gerard Quinn and Claudia Mahler address in their submission a range of delicate and complex issues. These cannot be discussed in detail here. I will limit myself to two rather general remarks.

Do the Hague Convention (and the Proposed EU Regulation) Really Need “Re-purposing”?

The joint submission appears to build on the premise that the rules of private international law (PIL) laid down in the Hague Convention (and in the Proposed Regulation) are designed to serve goals that differ from (and couldin fact be incompatible view) the objects of the UNCRPD. The general orientation, the submission seems to argue, not just their practical operation, should be reconsidered.

This assumption is, in my view, questionable. In a contribution to the Guide to Global Private International Law edited by Paul Beaumont and Jayne Halliday (Hart Publishing 2022), I argued that the Hague Convention was designed in such a way as to advance precisely the goals that the UNCRPD (which was adopted a few years later) is meant to promote.

The Convention, for example, sets out some rather elaborate rules regarding the allocation of jurisdiction among Contracting States and the mutual communication and cooperation between the authorities of the States concerned. These rules depart significantly from those found in other texts (the Brussels I bis Regulation for instance). This is so because they are inspired by policy considerations that reflect the peculiar concerns that surround the protection of adults, including the preservation and enhancement of their autonomy. In fact, the Convention is not guided by “value-neutral” policies such as legal certainty, nor it purports to ensure that Contracting States “blindly” open their legal systems to measures of protection taken elsewhere, or private mandates governed by foreign law. Rather, the Hague Convention aims to ensure that the fundamental rights of the adults concerned may be properly realised in cross-border situations; the same can be said, generally speaking, of the proposed EU Regulation.

The question, then, in my view, is not so much whether the purpose of the Convention or the proposed Regulation should be “corrected”. The issue is rather whether the technical solutions in the Convention and in the Regulation are such that they effectively and efficiently ensure the realisation of the UNCRPD in all circumstances.

Thus, the matter is not one of orientation, but one of legal engineering. I believe the Convention and the proposed Regulation already go in the same direction as the UNCRPD. One might wonder whether the interpretation of the Convention and the wording of the proposed Regulation can be improved in a way that is more conducive to the objectives of the UNCRPD being fully met.

Should References to the UNCRPD be Featured More Prominently in PIL Rules in this Area?

The joint submission seems to underlie a concern for the visibility of the UNCRPD. This is entirely understandable. The UNCRPD brought about a real paradigm shift in disability law. Tremendous efforts are needed at the national, regional and international law level to make sure that the rights enshrined in the UNCRPD turn into policy and normative changes that can actually improve the life of those concerned. In this sense, recalling the achievements of the UNCRPD and the challenges posed by its implementation is no doubt helpful.

That said, various elements indicate that PIL scholars and practitioners are already generally aware, notably in Europe, of the need to take human rights seriously in their day-by-day work.

For instance, more than twenty years have passed since the European Court of Human Rights ruled, in Pellegrini, that foreign judgments simply cannot be recognised if they were given in breach of the fundamental rights of the parties. And while it’s true that EU legislation has made the (intra-EU) movement of judgments easier, but – as the Court of Justice itself consistently repeated (starting from Debaecker) – this goal cannot be attained by undermining in any way the fundamental rights of those concerned. The two-decade long experience with EU texts dealing with the cross-border protection of children further attest that it is perfectly possible to embody human rights considerations in PIL instruments. Additionally, as the Court made clear in Krombach, the public policy defence – if no other tools are available – can always be triggered to avoid that fundamental rights are infringed through a “mechanical” application of PIL rules.

The question, accordingly, is not whether practitioners should be directed at taking the UNCRPD into account (they obviously should, and this should occur in respect of any rule, in the field of PIL or elsewhere). The issue is, again, technical rather than political in nature. It is uncontroversial that PIL rules must be crafted and applied in a manner that is entirely consistent with the UNCRPD: the question is, rather, whether this entails that safeguards other than those arising from the Convention and the Regulation must be adopted.

The joint submission suggests that States should issue a declarative interpretation when ratifying the Hague Convention that the latter must be read and applied in light of the UNCRPD, and even make a reservation regarding institutionalisation.

I’m not entirely certain this would be strictly necessary (the Vienna Convention on the Law of Treaties already provides various tools aimed to guarantee the kind of inter-textual coordination advocated by the submission), and sense that a similar initiative may have some unintended adverse effects.

I consider, however, that such a move would hardly be sufficient in itself. It is the task of those applying PIL rules (and, of course, the task of the Union’s legislature, for its part) to ensure the proper articulation of PIL rules and human rights instruments relating to the protection (including the self-determination) of adults. It’s a complex and certainly unfinished task, but one that should reasonably be approached with optimism.

The joint submission of Gerard Quinn and Claudia Mahler is a powerful reminder that the topic requires further discussion, and that efforts aimed to ensure mutual understanding between experts in different fields (human rights law and PIL, in this case) remain crucially necessary.

Amendments to Bulgarian Private International Law, Child Protection Act and Civil Procedure Code

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The Editors of the EAPIL blog
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This post was written by Nadia Rusinova (Hague University of Applied Sciences).

On 12 September 2023 a draft law to amend and supplement other statutes regarding the proceedings in civil cases under the application of the law of the European Union was submitted for consideration to the Bulgarian Parliament.

The adoption of legislative changes in the Civil Procedure Code, Child Protection Act and Private International Law Code is explained in the proposal as necessitated by the need to ensure the smooth and proper functioning of the common European area of justice while respecting the different legal systems and traditions of the Member States. The draft law is currently under discussion.

Civil Procedure Code

The draft law refers to the special rules regarding civil proceedings under the application of EU law. It provides conditions for implementing the provisions of three instruments: the Taking of Evidence Regulation, the Service Regulation and the Brussels II ter Regulation.

The amendments regarding the Taking of Evidence Regulation concern: the participation of representatives of the requesting court in evidence collection by the requested court, and the rights of the parties, their representatives, and experts to participate in evidence collection in another Member State as permitted by Bulgarian law (Article 615 of the Civil Procedure Code); possibility for direct collection of evidence in another Member State by the court, a delegated member of the court, or an expert appointed by the court (Article 614); implementation of Article 3(1) of the Regulation specifying that requests for evidence collection in Bulgaria are directed to the district court within whose jurisdiction the collection will occur (Article 617); and designation of the district court in Bulgaria, within whose jurisdiction the direct evidence collection will take place, as competent to authorize and provide practical assistance for evidence collection under Article 19 of the Regulation (Article 617).

The amendments relating to the Service Regulation are as follows: the indication of bailiffs as ‘transmitting authorities’ under Article 3(1) of the Regulation, in addition to district courts (Article 611 of the Code); a new rule for service in the event of an unsuccessful attempt to serve the specified address – the receiving authority makes an official check on the recipient’s address and, if necessary, forwards the request to the district court in whose district the service must be carried out (Article 611, para. 3); the indication of competent authorities under Article 7(1)(a) of the Regulation – the district court for whose district the address data is provided is competent. When no address information is provided, the Sofia District Court is competent (Article 612).

The amendments in respect of the Brussels II ter Regulation include the introduction of domestic procedures for issuing, correcting, and revoking certificates required by the Regulation (Articles 620a and 620b). A new Article 622c is envisaged, governing the direct enforcement of decisions from another member state in Bulgaria. It adheres to regulation principles, including the right to defense for the party against whom enforcement is sought, the ability to request refusal, and the right of the plaintiff to swift enforcement with the use of coercive measures, without harming the child. Provisions are made for suspention of the enforcement if it endangers the child, as well as measures in cases of long-term risk.

Child Protection Act

Changes stemming from the Brussels II ter Regulation affect as well the Child Protection Act regarding legal proceedings before Bulgarian courts concerning child return. They include hearing the child’s opinion based on age and maturity, evidence collection, decision deadlines, and issuing certificates for decision implementation. New rules cover measures for the child’s contact with the left behind parent, child protection during and after legal proceedings, ensuring the child’s safety upon return. The participation of a prosecutor in proceedings for child return under the 1980 Hague Convention is eliminated, aligning Bulgarian procedures with those of European countries. Prosecutors’ involvement is only maintained when the prosecutor initiates the return request, whereas in cases initiated by a parent through the Ministry of Justice, the Ministry represents the applicant, and the case is considered civil.

Private International Law Code

The proposed amendments to the Private International Law Code include a rule whereby international jurisdiction should be verified ex officio by the seised court, with the court ruling at an earlier stage on its own jurisdiction, including when the choice of court is made in the course of the proceedings. This would enable the court to take a stance on jurisdiction at the time of drawing up the preliminary report and notify the parties thereof.

Such early indication on the grounds of international jurisdiction and the applicable law, as well as the reflection of the choice of court and applicable law in the minutes of the hearing, create clarity and legal certainty and provide the parties with an opportunity to conduct the process in view of the applicable legal framework. The choice of court affects the issue of parallel proceedings in other Member States so it must be documented at the time of its execution.

Online Symposium on the Law Governing Arbitration Agreements: A View from Oslo

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The Editors of the EAPIL blog
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The post below was written by Giuditta Cordero-Moss, who is a Professor at the Department for Private Law, University of Oslo. It is the sixth and concluding contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Alex Mills, Manuel Penades, George Bermann, Sylvain Bollée and Matthias Lehmann.

Readers are encouraged to participate in the discussion by commenting on the posts. 

In this online symposium, we addressed one particular aspect of the Final Report on the Review of the Arbitration Act 1996 rendered by the Law Commission of England and Wales: the choice of the law applicable to the arbitration agreement.  The Law Commission recommends reversing the law as stated in the known UK Supreme Court decisions Enka (Enka v Chubb [2020] UKSC 38), and Kabab-Ji (Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2021] UKSC 48). Among other things, these decisions established that the choice of law made by the parties in their commercial contract applies also to the arbitration agreement.

Arbitration agreements are often contained in an arbitration clause which is part of a larger contract regulating the commercial relationship between the parties (which the Law Commission defines as the “matrix contract”, and I refer to as the “main contract”). Often, the main contract contains, in addition to the arbitration clause, a choice of law clause subjecting the contract to a certain law. The question is whether the choice of law made by the parties for the main contract also covers the arbitration clause. According to the Supreme Court, it does; according to the Law Commission, it does not.

In the Law Commission’s Final Report, the law chosen by the parties for the main contract applies to the arbitration clause only if it was expressly and specifically also made for the arbitration agreement. Failing an express and specific choice, the Report recommends that the arbitration agreement be subject to the law of the place of arbitral seat. This default rule is aligned with the New York Convention provision in article V(1)(a) and with the UNCITRAL Model Law provision in article 34(2)(a)(i), and will not be commented any further here, other than to commend the Law Commission for having recommended a clear rule harmonised with international sources.

The spirit of the reform is clear: party autonomy is respected, but subject to the principle of severability – although Manuel Penades points out in his post that the wording suggested by the Law Commission may give rise to some uncertainties.

The recommendation’s rationale is explained in sections 12.17-20 of the Final Report: the aim is to give a clear rule and to align the law applicable to the arbitration agreement with the law applicable to the arbitral procedure – which, incidentally, permits to apply English law to arbitration agreements that are to be performed in England.

A Restriction to Party Autonomy?

There is a general acceptance that the arbitration agreement may be subject to a law different from that governing the main agreement (see, for France, Cour de cassation, 28 September 2022, n° 20-20.260 (Kabab-Ji); for Sweden, ; for Germany,  BGH 26 November 2020, I-ZR 245/19 (Mace-Flower)). However, opinions diverge on the effects for the arbitration agreement of a choice of law contained in the main contract and that does not specifically refer to the arbitration agreement.

Alex Mills argues in his post that the Law Commission does not persuasively explain why the policies mentioned in the Report should trump the principle of party autonomy. Likewise, George Bermann finds that the law chosen by the parties should be given respect even though it does not specifically mention the arbitration agreement.

The question is, however, whether the Law Commission’s proposal represents a restriction of party autonomy. If the parties to a contract subject to the law of Ruritania decide to submit disputes between them to arbitration in England, are they more likely to expect that their arbitration agreement is subject to the law of Ruritania or to the law of England?

The arbitration agreement is the source of the arbitral tribunal’s powers. Subjecting it to the law applicable to the arbitral proceedings may turn out to be more compatible with the parties’ expectations than a scenario in which the law of Ruritania has a say on the existence and scope of the arbitral tribunal’s powers in an arbitration that, according to the parties’ choice, is to be carried out in England.

Severability and Choice of Law

The arbitration agreement is to be deemed a separate agreement, even where it is a clause within the main contract. This is confirmed, i.a., in article 16(1) of the UNCITRAL Model Law.

Without falling into excessive dogmatism, as correctly warned against in the post by Matthias Lehmann, the principle of severability has important practical consequences.

The purpose of severability is to preserve the integrity of the arbitration agreement; if there were no severability, any issues relating to the existence, validity or termination of the contractual relationship would affect the arbitration agreement. Questioning the validity of the contract would be sufficient to affect the whole basis of the arbitral process in which the contract’s validity is an issue. The question is how far severability reaches: does it cover only the validity of the arbitration agreement, or also its applicable law?

George Bermann correctly assumes, in his post, that parties who choose the arbitration seat only choose the arbitration law of that country. He concludes that rules on the arbitration agreement fall outside of this choice. Arguably, however, the arbitration law covers also questions relating to the arbitration agreement and its effects – both the New York Convention and the UNCIRAL Model Law, to name two examples, have rules precisely on this, and there is no doubt that they can be defined as arbitration law. By choosing the seat for their arbitral proceedings and the arbitration law applicable to them, therefore, parties may well have expected that their choice would cover also questions regarding the arbitration agreement.

The UK Supreme Court argues in Enka that the arbitration clause should be dealt with like any other clause in the agreement. Surprisingly, instead of concluding that the parties’ choice of law consequently directly applies to the arbitration clause, the majority in Enka states that choice of law for the main agreement amounts to an implied choice of law for the arbitration agreement. According to the minority, this choice creates a presumption that the law was chosen also for the arbitration agreement.

The Law Commission correctly points out in sections 12.34-38 that this reasoning lacks internal logic: if the arbitration agreement is a clause like any other clause in the main contract, shouldn’t the parties’ choice of law be deemed to be an expressed choice of law, just like it is for any other cause of the contract? Why is it defined as implied, or presumed? The severability principle prevents drawing a full equivalence of the arbitration agreement with any other clauses of the contract; but an implicit, or presumed, equivalence, is assumed after all.

A comparative view supports the Law Commission’s proposal.

Indirectly, some of the most arbitration-friendly national arbitration laws confirm that the law chosen by the parties for the main contract not necessarily is the law governing the arbitration agreement: Article 178(2) of the Swiss Private International Law Act, as well as Article 9(6) of the Spanish Arbitration Act, are based on the validation principle. According to these provisions, an arbitration agreement is valid if it complies with the requirements contained in (i) the law chosen by the parties to govern the arbitration agreement, (ii) the law applicable to the main contract, or (iii) the lex fori. If a choice of law for the main contract had the effect to select the law applicable to the arbitration agreement, it would not be necessary to list the law chosen by the parties as one of three alternatives.

Also under French law, the parties’ choice in the main agreement does not apply to the arbitration agreement – although this is the consequence of a special understanding of arbitration as an autonomous legal order, as Sylvain Bollée explains in his post.

According to Swedish courts, the principle of severability implies that the arbitration agreement is subject to the lex arbitri, irrespective of any choice the parties may have made for the main contract (Svea Court of Appeal, 20 May 2015, T 8043-13).

Indeed, it seems artificial to affirm that the validity of the arbitration agreement is to be examined separately, while the law applicable to the validity is the same as the law applicable to the main agreement. This does not to correspond to the practice of arbitration either.

Parties rarely specify the law governing their arbitration agreement. Usually, model Arbitration clauses recommended by arbitration institutions or, for ad hoc arbitration, by the UNCITRAL, do not contain a choice of law specific for arbitration either. The Model clauses may suggest adding which law governs the contract, but this applies to the merits of the dispute, not to the procedural aspects of the arbitration, as is confirmed by the wording suggested by the LCIA (‘The governing law of the contract shall be the substantive law of []’) and by the SCC (‘This contract shall be governed by the substantive law of […]’). By expressly mentioning the substance of the dispute, these rules arguably exclude that the choice applies to the arbitration agreement itself; and they are generally silent on the law applicable to the clauses themselves. In one instance, (Hong Kong), the model clause specifically suggests that the parties choose the law applicable to the arbitration clause, thus indirectly confirming that severability extends to choice of law.

In my opinion, the above supports extending severability to the applicable law, as the Law Commission recommends. It is compatible with the principle of severability, corresponds to the expectations in international practice, and favours harmonisation of English law with what has been defined as the preferred approach (Gary Born, International Commercial Arbitration 3rd edition, Kluwer Law International 2021, §4.04[A]).

Conclusion

The Law Commission approach is to be saluted. In addition to the practical and policy reasons it mentions, the proposal has the advantage of enhancing harmonization.

In a study carried out at the Hague Academy on the law applicable to various issues in arbitration (D. Fernández Arroyo and G. Cordero-Moss (eds.), Applicable Law Issues in International Arbitration, Brill 2023), one chapter is devoted precisely to the law applicable to arbitration agreements: Giulia Vallar, “Validity of the arbitration agreement”, pp. 325-346. Vallar suggests two main solutions to enhance predictability for the parties. One solution is readily available, but seldom applied: the parties should choose the applicable law in the arbitration agreement. The other, is defined by Vallar as utopistic: a uniform conflict rule.  While I agree with her skepticism about the feasibility of codifying a multilateral rule, I find it an acceptable second best solution that the different legal systems spontaneously adopt a harmonized solution.

The Law Commission recommendation is a step into the right direction.

Online Symposium on the Law Governing Arbitration Agreements: A View from Vienna

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The post below was written by Matthias Lehmann, who is Chair for Private Law, International Private Law and Comparative Law at the University of Vienna and an editor of the EAPIL blog. It is the fifth contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Alex Mills, Manuel Penades, George Bermann, Sylvain Bollée and Giuditta Cordero-Moss. 

Readers are encouraged to participate in the discussion by commenting on the posts. 

Legislative proposals from the British islands to correct the intricacies of the common law always fill the continental lawyer with joy. Yet interestingly, most of the questions that the Law Commission’s proposal to reform English arbitration law addresses are not dealt with explicitly by legislation but rather by court judgments on the continent. This is at least true for the two legal systems that I will survey in this post, German and Austrian law. Moreover, the case law of these two countries diverges in some very important respects from the Law Commission’s proposal.

The Law Governing the Arbitration Agreement
Respect for Party Autonomy

I start with the law governing the arbitration agreement. German and Austrian courts unanimously rule that the law governing the arbitration agreement can be chosen by the parties (see e.g. German Federal Court, 12 May 2011, IX ZR 133/10; Austrian Supreme Court, 23 June 2015, 18 OCg 1/15v). For this, they rely on the conflicts rule contained in Article V(1)(a) New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards (NYC), which they extend per analogiam to the situation before an arbitration award has been rendered. This position is buttressed by Article 6(2) European Convention on International Commercial Arbitration of 1961, which explicitly allows to choose the law applicable to the arbitration agreement.

Choice for Main Contract = Choice for Arbitration Clause?

More difficult is whether a choice in the main contract can be extended to the arbitration agreement, as the UK Supreme Court held, but the Law Commission denies. This issue is moot in German and Austrian literature. The whole debate is impregnated by an unhealthy dose of dogmatism. It basically revolves around the separability of the arbitration agreement from the main contract and its ‘true nature’ – whether it is procedural or substantive.

The Austrian Supreme Court has left this question open (decision of 23 June 2015, 18 OCg 1/15v). The German Supreme Court, however, has cut the Gordian knot and explicitly ruled that a choice in the main contract is to be presumed to also cover the arbitration clause contained therein – at least absent any indications to the contrary (see German Federal Court, 12 May 2011, IX ZR 133/10, discussed here). You can call this an ‘implied choice’, although this expression was not used by the German court; it would probably be more correct to speak of a ‘presumed choice’.

The Impact of the CISG

A notable particularity in comparison to English law is caused by the fact that both Germany and Austria are signatories of the Convention for the International Sale of Goods (CISG). Although this Convention is geared towards sales contracts, the German Federal Court has held that its provisions concerning the formation of the contract (Articles 14–24 CISG) also apply when determining the validity of an arbitration clause contained in the sales contract (German Federal Court, id.). As a result, the question whether standard terms and conditions of one party which contain such a clause have become part of the contract will be governed by the CISG if the contract falls within its scope. Even where the parties have explicitly excluded the CISG, it may be relevant when courts determine whether German law provides a more favourable rule in the sense of Article VII NYC (German Federal Court, id.). To understand this viewpoint, it is necessary to realise that in the eyes of German (and Austrian) courts, the CISG is part of their domestic law, merely providing a special regime for international sales contracts.

The Impact of the Arbitral Seat

In case no law has been chosen – neither for the arbitration agreement nor for the main contract – German and Austrian courts refer to the law of the place of the seat of arbitration to determine the validity of an arbitration agreement (see German Federal Court, id., para 52; Austrian Supreme Court 18 OCg 1/15v). For this, they rely again on Article V(1)(a) NYC per analogiam; with Article 6(2) European Convention on International Commercial Arbitration of 1961 being even more to the point. In this respect, both legal systems converge with the suggestions of the Law Commission.

The Fall-Back Rule

A difficult question is which law governs the arbitration agreement when the applicable law has not been chosen and the seat of the arbitration is yet to be determined. There is no case law in Austria or Germany on this issue yet.

Two solutions are discussed in literature. The first is to always apply the law of the forum of the state court that is facing the task to assess the validity of the arbitration clause, for instance when it is invoked as an exception to its jurisdiction. Yet, this lex forism has the evident downside of favouring diverging results and inviting forum shopping.

Therefore, the second solution is preferrable, which is to apply the law of the state with the closest connection to the arbitration agreement. This connection must be determined on the basis of all circumstances. Most authors understand this to be the law of the state that governs the merits of the case.

From an Austrian and German perspective, there is light and shadow in the Law Commission’s Proposals. The suggestion to lay down in statutory law the parties’ freedom to choose the law governing the arbitration agreement will be met with cheers. Equally, the role of the seat of the arbitral tribunal as a connecting factor in the absence of a choice is down the alley of German and Austrian law. In contrast, the decoupling of the law governing the main contract and that governing the arbitration agreement will raise some eyebrows, at least in Germany.

Verification of the Validity of the Arbitration Agreement by the Courts

But it is the exclusion of the review of the validity of the arbitration agreement by state courts that will be most frowned upon from Schleswig to the Danube. The Law Commission wants to exclude a de novo hearing when this issue has already been discussed and decided before by the arbitral tribunal (see the post by Ugljesa Grusic). The justification for this are efficiency and fairness.

Although German and Austrian courts are no less committed to these values, their position is entirely different. According to them, a party must always have the possibility to invoke a lack of consent to arbitration before a state court, regardless of whether this question was already debated before the arbitral tribunal or not. The famous concept of Kompetenz-Kompetenz developed by the German Federal Court does not imply otherwise. As the German Federal Court has said quite clearly:

“According to the mandatory provision of section 1041 (1) no. 1 ZPO [German Code of Civil Procedure before the reform of 1998, concerning the annulment of arbitral awards], the ordinary court has to examine the validity of the arbitration agreement without being bound by the decision of the arbitral tribunal. Since the arbitral tribunal, according to § 1025(1) ZPO [German Code of Civil Procedure before the reform of 1998, concerning the validity and effects of the arbitral agreement], obtains its jurisdiction solely through the arbitration agreement, it cannot itself make a binding decision on its legal existence. The so-called competence-competence, i.e. the power to make a binding decision on its jurisdiction for the state courts (or other authorities), is therefore not available to it.” (decision of 5 May 1977, III ZR 177/74)

This position, which is shared by Austrian courts (OGH, decision of 19 December 2018, 3 Ob 153/18y), is not merely the product of a particular legal thinking or culture. Instead, it seems to be required by the European Convention of Human Rights (ECHR). To bind a party to a decision of an arbitral tribunal to which it has not agreed would violate the right to a fair trial enshrined in Article 6 ECHR. In no case can efficiency prevail over this fundamental right. If the UK legislator retained the proposal by the Law Commission in this regard, it would create a permanent abyss between English law and that of other European states. This would certainly give rise to heated discussions and a possible recycling of the title of an old article: “What Sort of Kompetenz-Kompetenz has Crossed the Channel?”

— Many thanks to Paul Eichmüller for his assistance in researching the Austrian decisions.

Online Symposium on the Law Governing Arbitration Agreements: A View from Paris

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The post below was written by Sylvain Bollée, who is Professor at Paris 1 Panthéon-Sorbonne University. It is the fourth contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Alex Mills, Manuel Penades, George Bermann, Matthias Lehmann and Giuditta Cordero-Moss.

Readers are encouraged to participate in the discussion by commenting on the posts.  

For a French lawyer, the Law Commission’s proposal concerning the determination of the law governing the arbitration agreement is of particular interest. It comes a little less than a year after the decision rendered by the French Court of Cassation in the Koot Food Group case (Civ. 1st, 22 September 2022, No. 20-20.260), in which the French and English courts were notoriously divided on the contemplated issue.

Without going into the details of the solutions found in English case law, their key points can be summarized (albeit with a degree of approximation) – as follows: 1) the parties are free to choose the law applicable to the arbitration agreement; 2) a choice of law clause stipulated in the matrix contract will generally be held applicable to the arbitration agreement; 3) in the absence of any choice of law, the arbitration agreement will generally be governed by the law of the seat chosen by the parties.

In order to understand the French approach, it is important to bear in mind that it is primarily based on the rejection of any conflict-of-laws reasoning and, supposedly, the application of any national law to the arbitration agreement. French courts directly apply “substantive rules” (règles matérielles) which, to a large extent, seek to give effect to the parties’ common intent to submit their dispute to arbitration. In reality, this “substantive rules method” inevitably amounts to applying rules that are a creation of the French legal system. Thus, in the final analysis, it is not so much the application of legal rules from national sources that is set aside, but rather conflict-of-laws rules and all foreign laws (and also, at least in theory, the application of French law rules applicable to domestic situations). The Dalico judgment (Civ. 1st, 20 December 1993, No. 91-16.828), which is the landmark decision on the subject, does not bring this out so clearly. But that is indeed the methodological approach which, in principle, prevails before French courts. Obviously, the underlying policy is to favour the validation of arbitration clauses and, by implication, the enforcement of arbitral awards.

One question is whether the parties may still choose to submit their arbitration agreement to a foreign law. As a matter of principle, the French Court of Cassation has answered in the affirmative. But the existence of such an electio juris is not easy to establish: according to the terms of its judgment in Koot Food Group, “the parties must have expressly submitted the validity and effects of the arbitration agreement itself to such a law”. This entails that a choice of law clause stipulated in the matrix contract, with no specific indication as to its applicability to the arbitration agreement, will not be regarded as sufficient. As a result, the application of the substantive rules method will likely not be overturned in the vast majority of cases.

The Law Commission’s proposal would significantly narrow the gap between the English and French solutions. Of course, from a methodological point of view, there is still a profound divergence: the English approach does not deviate from conflict-of-laws reasoning in the first place, whereas the French approach only grants it a secondary role. But if one looks at the solutions in terms of their practical results, two points of convergence stand out.

The first is a strict limitation of the cases in which the existence of a choice of law clause applicable to the arbitration agreement will be deemed to be established. An express choice will be required, and it will not be sufficient to refer to the existence of a choice of law clause in the matrix contract.

This immediately gives rise to an objection: why exclude the possibility of an implied choice? If the arbitrator or the judge is convinced that the parties have implicitly agreed on the application of a certain law, is it not unfortunate that he or she is obliged to disregard this implicit choice? Of course, one should not be too quick to dismiss the prima facie advantages of the solution: it is expected to close the door to overly subtle discussions, costly litigation and, in the end, what is perceived as legal uncertainty. But can this objective really be achieved? Only to a limited extent, because the existence of an express choice might also be debated. My colleague Dr Manuel Penades rightly raised this point in his contribution and I will take one of his examples here: what will be decided in the case where the matrix contract contains both a choice of law clause the scope of which (as per its very wording) is “the Agreement”, and a clause that defines “the Agreement” as all the clauses contained in the contractual document (which, by hypothesis, will include the arbitration clause)? Commercial contracts regularly include such provisions and I suspect reasonable people might disagree about the existence of an express choice in the considered scenario.

Besides, it would seem to be in the nature of things that a choice of law clause included in the matrix contract should apply to the arbitration agreement, as long as it does not turn out that the parties intended otherwise. In this respect, it has been convincingly objected to the Law Commission’s proposal that it disregards the normal expectations of the parties (see the Final report, paras 12-32 et seq.). As a matter of fact, international contracts very often contain choice of law clauses, which tend to support the view that the parties are keen to settle the issue of applicable law themselves. At the same time, they generally say nothing specific about the law applicable to the arbitration clause. Why is that? Precisely, I believe, because they naturally assume that the choice of law clause they have inserted in the contract will also apply to the arbitration agreement. It is regrettable that the Law Commission’s proposal does not draw the consequences from this, all the more so as the application of two different laws – one to the matrix contract and the other to the arbitration clause – is not without practical disadvantages: it is likely to result in undesirable complexity, if not inconsistencies. This objection is not new and concerns about such a split in the applicable law were raised during the consultation process (see the second consultation paper, paras 2.66 and 2.67).

The second point of convergence between the Law Commission’s proposal and French law pertains to the case (which, in practice, is likely to be by far the most common) where the parties are deemed not to have expressly chosen the law applicable to the arbitration agreement. If the seat of the arbitration is in England, the English court will do what the French court would do in its place: it will apply its own law. In fact, this appears to be one of the main reasons why the Law Commission found it adequate to rule out the possibility of an implied choice: combined with the default rule in favour of the law of the seat, that solution is likely to ensure the applicability of English law in the contemplated situation and, correlatively, to protect the arbitration clause against the effects of a foreign law which might be less supportive of arbitration (see the Final report, paras 12-18, 12-72 and 12-73). Such a pro-arbitration attitude is also at the root of the French method of substantive rules and, arguably, the reluctance of French courts to acknowledge the existence of a choice of law clause which might submit the arbitration agreement to a foreign law.

This being said, French law goes much further in its policy of favouring the validity of arbitration agreements: its substantive rules method applies independently of any conflict of laws rule, so that the benefit of the pro-arbitration rules of French law is not restricted to arbitrations seated in France. The resonance of this approach is all the greater in the light of another aspect of French law: as shown by the decisions rendered in the well-known Hilmarton (Civ. 1st, 23 March 1994, No. 92-15.137) and Putrabali (Civ. 1st, 29 June 2007, No. 05-18.053) cases, the annulment of the award in the country of the seat does not constitute a ground for non-recognition in France. Thus, if the court of the seat of the arbitration, applying its own law, considered that the arbitral tribunal lacked jurisdiction, this will not prevent the French courts from granting exequatur to the award. The Law Commission’s proposal, as it provides for the application of the law of the seat even when it is located abroad, is a reminder that profoundly different conceptions of international arbitration prevail on either side of the Channel.

Online Symposium on the Law Governing Arbitration Agreements: A View from NY

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The post below was written by George A Bermann, who is Walter Gellhorn Professor of Law and Jean Monnet Professor of European Union Law at Columbia Law School. It is the third contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Alex Mills, Manuel Penades, Sylvain Bollée, Matthias Lehmann and Giuditta Cordero-Moss.

Readers are encouraged to participate in the discussion by commenting on the posts. 

The relationship between the law (if any) chosen in the arbitration clause and the law of the seat is unsettled in the US.

It was taken up in the Restatement of the US Law of International Commercial and Investor-State Arbitration. The gist of the Restatement is that, while the law of the seat governs the conduct of the arbitration, it does not govern the interpretation of the arbitration agreement. Interpretation of the arbitration agreement should of course be governed by the law, if any, chosen in the arbitration clause itself. (I note that the court in Enka v. Chubb cited the Restatement in support.)

There was debate over whether, in the absence of a choice of applicable law in the arbitration clause, the arbitration agreement should be governed by the law, if any, chosen in the main contract. The view that ultimately prevailed is that more respect on matters of choice of law should be given to any expression of preference as to choice of law in the contract (even if not in the arbitration clause) over the law of the seat. That was a choice of seat, not a choice of law (other than the law of arbitration of the seat).

Unfortunately, the Restatement drew no distinction between issues of the interpretation and the validity of the arbitration agreement. More on that below.

The Restatement did not go much further, but the thinking behind it can be amplified and extrapolated. I attempt to do so below. I hasten to add that what follows happens also to be what I think the law should be.

It is this framework that I would use in assessing the differences between US law and the law advanced by the Law Commission.

As a general matter, I believe that Report in some cases fails to make an important distinction and in other cases, acknowledges the distinction, but makes the wrong choice.

I set out below what I consider to be these important distinctions:

  1. Distinction between the purposes underlying a choice of law in the arbitration clause (absent which in the law of the main contract) and the purposes underlying a choice of law function of the arbitration law of the seat

When parties choose a seat, they are choosing a seat, full stop. We should not suppose they are choosing an applicable law of any kind other than the arbitration law of the seat (lex arbitri).

By contrast, when parties indicate an applicable law in their arbitration agreement they are making a choice of applicable law. But, absent an indication of an applicable law in the arbitration clause, where else did the parties express a choice of law preference? They expressed it in the choice of law clause in the main contract. There too they are making a choice of applicable law, and their choice of an applicable law should be respected.

  1. Distinction between the law of the arbitration agreement and the law of the main contract

This result should be unaffected by the principle of separability. The principle of separability exists for one reason: to ensure that the demise of the main contract (as invalid) does not entail the demise of its arbitration clause. That is why we have the separability principle. It should not be extended to functions (such as choice of law) for which it was not intended.

  1. Distinction between “arbitration law of the seat” and “law of the seat”

It is vital to distinguish between the arbitration law of a jurisdiction (lex arbitri) and the whole body of law at the seat, and we too often fail to do so by referring sloppily to “the law of the seat”. An arbitration statute should make clear what it is talking about when it refers to “the law of the seat.”

When the parties chose a seat they certainly chose the lex arbitri of the seat. But, notwithstanding, it seems to be assumed that when the law of the seat is referred to, it includes at least some parts of the law of the seat outside the lex arbitri. For example, if the formation or validity of an arbitration agreement is called into question, the law of the seat may include the law of contract of the seat. If contract law at the seat treats coerced contracts as invalid, then that would apply to a claim that the arbitration agreement was coerced.

  1. Distinction between the issues of interpretation and issues of validity

As I mentioned, the Restatement fails to distinguish between issues of interpretation and validity, but it should have.

The law chosen in an arbitration agreement most fundamentally determines the interpretation of that agreement (such as its scope). There is absolutely no reason why the law of the seat should have anything to say about the meaning and scope of the arbitration agreement. If there is no choice of law in the arbitration agreement, then interpretation of the arbitration agreement should be governed by the law chosen in the main contract (on the reasoning set out above).

The question of the validity of the arbitration agreement is slightly more subtle.

Suppose the arbitration agreement is invalid under the law, if any, designated in the arbitration agreement, failing which the law governing the main contract, then it is invalid. It should not matter that it happens to be valid under the law of the seat.

On the other hand, conversely, if the arbitration agreement is invalid under the law of the seat, it is invalid, even if it would be valid under the law, if any, designated in the arbitration agreement, failing which the law governing the main contract. Why? Because the seat has a legitimate interest in the validity of the arbitration agreement giving rise to an arbitration on its territory.

More generally, one should not assume that if the law of the arbitration agreement is not the law of the seat, the seat’s policies risk being impaired. But that is not the case. Under no circumstance can the law of the arbitration agreement or the law of the main contract override the mandatory norms of the arbitration law of the seat (or the public policy of the seat).

The approach set out here is of course contrary to the so-called “validation principle,” and deliberately so. The impetus is a belief that the law chosen by the parties (even that in the main contract) deserves a measure of respect, as does the law of the seat. More delineation should be given to the matter than is generally given. I believe it is sometimes assumed that, unless you give as much weight as you possibly can to the law of the seat, you are not pro-arbitration, which is not the case.

  1. Distinction between the mandatory and default law provisions of the lex arbitri

Focusing now on the lex arbitri, it contains both mandatory and default rules. Its mandatory law provisions (and principles of public policy at the seat more generally) must be respected. But its default rules can be contracted around by the parties.

How can parties contract around the arbitration law at the seat? Obviously parties can contract around default rules of the seat by a term of their arbitration agreement. But they should also be allowed to contract around the default rules of the seat via the law designated in the arbitration clause.

Whether they can contract around the default rules of the seat via the law governing the main contract will be more controversial, but, for the reasons set out above, they should be able to do so.

Thoughts on Specific Provisions of the Report and Recommendation
  1. 12.17: I do not share the view that subjecting an arbitration agreement to the law of the main contract is a threat to the UK as a seat. It is no more a threat than application of a law chosen in the arbitration clause itself; yet the Report allows the latter to apply in lieu of the law of the seat (sec. 12.17).
  2. 12.18, 12:47: The Report treats a choice of law clause in the main contract as only an “implied” choice of law for the arbitration agreement. Driving a wedge between the law designated in the arbitration agreement and the law designated in the main contract is an unwarranted extrapolation of the separability principle.
  3. 12.19: I see nothing wrong with the law designated in either the arbitration clause or the main contract with displacing the non-mandatory law of the seat.
  4. 12.22: the rule in Enka v. Chubb is not “too complex and unpredictable”.
  5. 12.25: as may be expected, I, like those commenters referred to here, do not believe the placement of the choice of law clause in a contract should be determinative.
  6. 12.35: This is just another assertion of separability where it doesn’t belong.
  7. 12.40: This view is correct. When parties choose a seat, they do not think they are choosing anything more than the seat. Maybe they should be bound by the lex arbitri, but why by the law of the seat writ large?
  8. 12.53: What is said here makes no sense. To have the law chosen in the main contract govern the arbitration agreement in no way compromises the parties’ decision to arbitrate. The parties will still arbitrate, won’t they?  The arbitration clause is 100% intact. What the Report is in effect doing is to convert the notion of “the decision to arbitrate” into the notion of “the decision to arbitrate under the law of the seat.” In other words, the remark already assumes what the Report wants to establish, namely necessarily subject the arbitration agreement to the law of the seat.  Moreover, if giving effect to a choice of law (other than the law of the seat) in the arbitration clause itself – which the Report clearly allows – does not undermine the decision to arbitrate, then giving effect instead to the applicable law clause in the main contract doesn’t undermine that decision either. Here, the Report is “question-begging.”
  9. 12.66: I do not understand the Report’s aversion to using the law designated in the main contract in the rare situation that no seat was yet chosen.
  10. 12.73: Here and elsewhere it is said that we can’t allow a choice of law in the main contract to override the parties’ intent to arbitrate. But it doesn’t override. We can easily give effect to the parties’ intent to arbitrate without subjecting the arbitration agreement in all respects to the law of the seat.

Online Symposium on the Law Governing Arbitration Agreements: A View from the Strand

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The post below was written by Manuel Penades, who is a Reader in International Commercial Law at King’s College London. It is the second contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Alex Mills, George Bermann, Sylvain Bollée, Matthias Lehmann and Giuditta Cordero-Moss.

Readers are encouraged to participate in the discussion by commenting on the posts. 

This post examines the changes proposed by the Law Commission of England and Wales to the choice of law rules for arbitration agreements. Previous contributions to this Symposium have transcribed the text of the draft legislation, which can be found here. The Law Commission introduces three significant amendments that impact the three steps of the common law doctrine of the proper law of the contract. First, the proposal limits the types of choice of law clauses that can demonstrate an express selection of the law applicable to arbitration agreements. Second, it eliminates the possibility to choose the governing law impliedly. Third, it replaces the closest and most real connection test with a hard-and-fast rule in favour of the law of the seat.

Each of these changes requires analysis, followed by a reflection on the New York Convention.

Express Choice of Law

The new rule continues to respect the parties’ freedom to choose the law governing their arbitration agreement. Party autonomy, however, is tempered by proposed section 6A(2) of the Arbitration Act, which provides that an ‘agreement between the parties that a particular law applies to the contract to which the arbitration agreement forms part does not, of itself, constitute an express agreement that that law also applies to the arbitration agreement’. The rule is apparently simple and excludes the possibility to rely on a generic choice of law clause applicable to the contract that includes the arbitration agreement. Section 6A(2) AA, however, does not capture other scenarios, which might become a source of controversy.

The first refers to cases in which the only choice of law in the whole contract is found in the arbitration agreement itself (e.g., ‘the arbitrators shall decide the dispute in accordance with the law of X’). While these cases do not refer to the arbitration agreement specifically, they are express references to the governing law of the whole contract and are contained in the arbitration agreement itself. It is unclear whether these choices will be express enough to satisfy section 6A(2) AA.

The second scenario refers to cases in which the matrix contract not only includes an express choice of law clause applicable to the whole ‘Agreement’, but also a clause in the contract that defines ‘Agreement’ as encompassing all the clauses incorporated in the contractual document, including the arbitration agreement. The UKSC ruled in Kabab-Ji v Kout Food [2021] UKSC 48 that ‘the effect of these clauses is absolutely clear’ [39] and amounts to an express choice also for the arbitration agreement. The Law Commission’s proposal does not mention whether section 6A(2) AA intends to overrule Kabab-Ji. In these scenarios it is not the generic choice of law clause ‘of itself’ that supports the finding of an express choice of law but the combined reading of that clause alongside the definition of the term ‘Agreement’ expressly agreed by the parties in another clause of the contract.

Neither of these uncertainties would exist in the current regime under Enka v Chubb [2020] UKSC 38, as the same law would apply under express or implied choice of law.

The Elimination of Implied Choice of Law

Enka clarified that the designation of a seat does not amount to an implied choice of the law governing the arbitration agreement. This reduced, yet did not eliminate, the uncertainty surrounding implied choice. The proposal of the Law Commission goes much further; it eliminates implied choice altogether from the choice of law rules applicable to arbitration agreements. This is quite revolutionary and might come as a surprise.

Notwithstanding the complexities caused by its application, the courts of England have never questioned the acceptance of implied choice and the UKSC confirmed in Enka that ‘an implied choice is still a choice which is just as effective as a choice made expressly’ [35]. An implied choice is a manifestation of party autonomy, a principle which is at the root of English contract and private international laws.

The proposed new rule also runs contrary to the acceptance of implied choice of law in the vast majority of instruments governing international business transactions (see article 3.1 Rome I, article 14.1 Rome II or article 4 Hague Principles on Choice of Law).

Against this background, disregarding an implied choice of law might seem a step backwards in the common law tradition and global trends. The truth, however, is that decades of arbitration-related litigation in England demonstrate that the inquiry around implied choice is a source of significant uncertainty, expense and tactical litigation. The Law Commission is willing to adopt a regime that disregards cases of real (yet implied) choice of law in exchange for the certainty and savings produced by the elimination of implied choice of law. This less litigious regime makes for better arbitration regulation and strengthens the position of England as efficient arbitration destination.

The proposed solution does not necessarily curtail party autonomy. In fact, the rule after Enka that an implied choice of law for the matrix contract automatically amounts to an implied choice of law for the arbitration agreement, while apparently straightforward, might not always be reflective of the real intent of the parties. The proposed rule eliminates such risk of artificiality.

Further, case law shows that in most disputes where the issue of implied choice arises, English law offers the most arbitration-friendly outcome among the various alternative laws. Under the proposed reform, those cases will be resolved frequently in favour of English law pursuant to the default rule. This will generally protect the parties’ agreement to arbitrate more than under the current regime.

From a normative point of view, the Law Commission’s proposal also eliminates the somewhat artificial cases of double implication, where an implied choice of law for the matrix contract is used as evidence to find an implied choice of the law governing the arbitration agreement (see the conclusion of the minority in Enka [207, 228]).

Finally, the proposal eliminates the confusion sometimes perceived in English judgments between the test applicable to imply a choice of law and the (stricter) requirements to imply an ordinary contractual term [Enka [35] or Kabab-Ji [53]].

The Law of the Seat and Role of the Validation Principle

Under the proposed regime, the absence of an express choice results in the application of the law of the seat. Hard-and-fast rules are alien to the common law doctrine, where the reference to the closest and most real connection permits certain room for manoeuvre in the determination of the applicable law. Other choice of law regimes that provide hard-and-fast rules incorporate escape clauses that allow for the exceptional disapplication of the identified law (e.g., article 4.3 Rome I). In contrast, the proposed rule lacks any reference to the possibility to escape from the law of the seat.

One could wonder whether this could be a residual role for the validation principle. This principle was used in Enka to support the application of the law of the seat when an implied choice in favour of the law of the matrix contract led to a serious risk that the arbitration agreement would be invalid or ineffective. The expulsion of implied choice from the proposed regime would eliminate the raison d’etre of the validation principle. Still, the Law Commission does not exclude the principle in absolute terms, and rather states that ‘we do not need the validation principle for that purpose’ [Para. 12.56]. The question then arises whether other purposes exist.

One option would be to retain the application of the validation principle to correct express choices of law that render the arbitration agreement invalid or ineffective. The answer should be negative. The role of courts is not to improve the contract (Arnold v Britton [2015] UKSC 35, [20]). The validation principle allows the court to resort to the more favourable interpretation when the contract allows for various possible interpretations. When the choice is express, however, there is only one undisputable choice, even if it renders the arbitration agreement invalid or ineffective. In those cases, party autonomy (and the pathologies derived from it) must prevail. Any deviation from the principle of party autonomy would have required an express rule in the Law Commission’s proposal.

The other possible application of the validation principle would be in the context of the default rule, when the law of the seat renders the arbitration agreement invalid or ineffective. Indeed, the majority of the UKSC in Enka suggested (but did not confirm) that the closest connection test might itself be subject to the validation principle [146]. As noted by the Law Commission [para. 12.58], my response to the Second Consultation said that it would be odd to apply the validation principle to escape from an invalidity provided by English law itself under the default rule. However, the proposed default rule is not just in favour of English law, but in favour of the law of any seat. This approach could open the door to the application of the validation principle when, unlike the law of the seat, English law rendered the arbitration agreement valid and effective. While the Final Report of the Law Commission does not explore this option, such extended reach of the validation principle would deviate from the finality and simplicity with which the Law Commission views the default rule. Also, it might not be an appropriate and efficient policy to use English law to enforce a foreign arbitration agreement when the parties have not selected the governing law and the law of the seat would render it invalid or ineffective.

The Conflict with the NYC

Article V(1)(a) NYC provides that arbitration agreements shall be governed by the law to which the parties subjected it or, failing any indication thereon, by the law of the country where the award was made. The default rule in the Law Commission’ proposal aligns English law with the NYC, which is a welcome result.

Section 103(2)(b) AA incorporates article V(1)(a) NYC and therefore allows ‘any indication’ of choice of law made by the parties. The UKSC concluded unanimously in Kabab-Ji that ‘the word “indication” signifies that something less than an express and specific agreement will suffice’ [33]. It is unclear whether the Law Commission intends the new choice of law rule to apply in the context of section 103 AA. The UKSC said in Kabab-Ji that the common law rules on choice of law for arbitration agreements were not ‘directly applicable’ in the context of NYC enforcement actions [35]. Also, awards caught by section 103 AA have a foreign seat by definition and are not English arbitrations. Still, the proposal makes it clear that ‘the new rule would apply whether the arbitration was seated in England and Wales, or elsewhere’ [12.75]. An option would be to interpret this statement as referring to every scenario in which English courts examine an arbitration agreement (whether seated in England and Wales or elsewhere) with the exception of cases caught by section 103 AA. That is, two different choice of law treatments would co-exist within the Act. This internal dealignment would be undesirable and could lead to serious inconsistencies. The same arbitration agreement in favour of an arbitration seated abroad could be subject to different laws in pre-award disputes (e.g., section 9 AA) and post-award litigation (e.g., section 103). The UKSC said in Enka [136] and in Kabab Ji [35] that this divide would be ‘ilogical’.

The better interpretation is that the Law Commission’s proposal also extends to section 103 AA cases. Nothing in the proposal expressly excludes this reading. In fact, the Report argues that the NYC allows, but does not require, the recognition of implied choices [12.47] and concludes that the proposal is compatible with the NYC [12.52]. Ultimately, the new rule replaces the common law doctrine with a statutory provision, which becomes part of the of the regulatory fabric of English arbitration law and should not be limited, unless otherwise provided, to areas originally governed by the common law. Section 100(2) AA shows that critical parts of the notion of arbitration agreement in Part III (where section 103 AA belongs) ‘have the same meaning as in Part I’ (where the new section 6A AA would be placed). Such internal coherence of English arbitration law supports the application of the proposed rule across the board. Still, should Parliament adopt of the Law Commission’s proposal, they would need to be aware of two undesirable (yet tolerable) dealignments.

The first is that English law would move away from the prevailing interpretation of article V(1)(a) NYC as regards the acceptance of implied choice. The UKSC in Kabab-Ji objected to this departure and held that ‘it is desirable that the rules set out in article V(1)(a) for determining whether there is a valid arbitration agreement should not only be given a uniform meaning but should be applied by the courts of the contracting states in a uniform way’ [32]. Still, England would not be alone in this travel. For instance, France has also departed from the choice of law rule in the NYC. Moreover, the generally pro-arbitration results usually achieved by the proposed rule could well place the reform within the favourable gateway of article VII NYC.

The second consequence is that the same arbitration agreement (and award) might be treated differently between English and foreign courts if an existing implied choice of law disregarded in England is effective in other jurisdictions. It should be noted, however, that retaining the possibility of implied choice does not guarantee the uniformity of outcome. For instance, the same dealignment of outcome could occur between two legal systems that accepted the possibility of implied choice of law if one favoured the law of the matrix contract whereas the other veered toward the law of the seat.

Conclusion

The reasons above support the view that the potential disregard of real (yet implied) choice in some exceptional cases and the risk of some disfunctions derived from the described dealignments would be compensated by the significant simplification and savings produced by the Law Commission’s proposal. The draft Bill is therefore well-founded, courageous and beneficial to reinforce English law’s position at the forefront of international arbitration globally.

Online Symposium on the Law Governing Arbitration Agreements: A View from Bloomsbury

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The Editors of the EAPIL blog
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The post below was written by Alex Mills, who is Professor of Public and Private International Law at University College London. It is the first contribution to the EAPIL online symposium on the English Law Commission’s proposed reform of the law governing arbitration agreements. The other posts are written by Manuel Penades, George Bermann, Sylvain Bollée, Matthias Lehmann and Giuditta Cordero-Moss.

Readers are encouraged to participate in the discussion by commenting on the posts. 

The Law Commission of England and Wales has produced a deeply thoughtful and well-researched Report, which proposes a number of very welcome reforms to the Arbitration Act 1996. Regretfully, however, I have significant reservations about the proposal which is the subject of this Symposium – the adoption of a new choice of law rule for arbitration agreements. This proposal is based on the Second Consultation Paper produced by the Law Commission in March 2023, and this comment draws on my Submission which responded to that Consultation Paper.

The rules for identifying the law applicable to an arbitration agreement have long been the subject of debate. The issue was prominently addressed by the UK Supreme Court in Enka v Chubb [2020] UKSC 38, which acknowledged (at [3]) that it had “long divided courts and commentators, both in this country and internationally”. The decision in Enka v Chubb has, however, strikingly failed to end the division among commentators. I understand why the Law Commission considered it desirable to address this question, because of the importance of the issue and the policy considerations it presents, and because it has been suggested that there is a lack of clarity in the Supreme Court’s judgment in Enka v Chubb. This issue is complex and reasonable arguments can certainly be made on both sides, as indeed acknowledged in the impressive Report and Second Consultation Paper. I am, however, not convinced of the proposal set out in the Report, which is that “the Arbitration Act 1996 be amended to provide that the arbitration agreement is governed by the law of the seat, unless the parties expressly agree otherwise” [Report, 12.77]. In this post I set out what I understand to be the relevant principles, and explain how these broadly support the rule adopted by the Supreme Court in Enka v Chubb, which has also been followed in other common law jurisdictions (such as Singapore and Hong Kong).

A first and well-known key principle is that the law governing the arbitration agreement need not be the same as that governing the remainder of the contract, sometimes referred to as the ‘matrix contract’. This is because of the principle of separability, which allows for a distinct analysis of the arbitration clause’s applicable law.

A second key principle is party autonomy, which is the starting point for analysis of any contractual choice of law issue, and particularly important in arbitration because of its contractual foundations. An agreement as to the law which governs a contract or a clause of a contract must generally be given effect, absent considerations of public policy. Traditionally, a choice of law may be express or implied – if the latter, the search is for factors which demonstrate a real (but undocumented) choice, not a choice which is imputed to the parties as one which they ought to have made.

In the absence of a real choice, it is necessary to consider not the intentions of the parties but the objective factors linking the contract to a particular system of law. Arbitration clauses remain subject to the common law choice of law rule, under which the objective test is sometimes described as a search for the system of law with ‘the closest and most real connection’ to the contract or contractual clause. An arbitration clause will generally be most closely connected to the place where it is to be performed, which is the seat of the arbitration (see further Enka v Chubb, at [120] et seq).

In the law of arbitration, another principle is that of efficiency, but this principle is secondary to that of party autonomy. While the fact that efficiency is generally a goal for parties and for arbitration can assist in interpreting arbitration clauses (see eg Fiona Trust v Privalov [2007] UKHL 40), parties may choose to have their agreements resolved according to inefficient arbitral procedures should they so wish. The law should not interfere with their choices merely because they are thought unwise or undesirable.

Choice of Law Rule in Enka v Chubb

On the basis of these clear principles, the law applicable to an arbitration agreement should be governed by the following rule, comprised of three parts in hierarchical order. This is, in essence although not form, the rule set out by the Supreme Court in Enka v Chubb.

Subject to considerations of public policy, an arbitration agreement is governed by:

(i)         The law expressly chosen to govern it;

(ii)        The law implicitly chosen to govern it;

(iii)       The law with which it has its closest and most real connection, which will ordinarily be the law of the seat of the arbitration.

This rule is simple in appearance, although its application may be complex in particular circumstances, as explained further below. The analysis below does not consider the application of public policy, but it remains an important limitation.

Choice of Law Rule in the Report

The Report proposes to amend the Arbitration Act 1996, to insert the following choice of law rule:

(1) The law applicable to an arbitration agreement is—

(a) the law that the parties expressly agree applies to the arbitration agreement, or

(b) where no such agreement is made, the law of the seat of the arbitration in question.

(2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not, of itself, constitute express agreement that that law also applies to the arbitration agreement.

This rule differs from the previous rule in three respects. First, for an express choice to be made, it is necessary that the parties expressly agree that it applies to the arbitration agreement. Second, there is no possibility for an implied choice. Third, in default of a choice, the law of the seat is automatically applied, rather than being the ordinary outcome of the rule.

Analysis

Under existing law a choice of law for an arbitration agreement may arise in one of three ways.

First, the contract may contain a specific express choice of law agreement for the arbitration clause. In this case, the application of this law to the arbitration clause is self-evidently based on the principles of party autonomy and separability, and is not controversial. This position is maintained in the Law Commission’s proposal.

Second, there may be an implied choice of law for the arbitration agreement. This could arise, for example, where the parties have indicated an understanding that certain statutory provisions which are specific to a governing law will apply to the validity of the arbitration agreement. In this case, the application of the chosen law to the arbitration agreement once again follows straightforwardly as a matter of party autonomy and the principle of separability. One important question in this context is whether a choice of arbitral seat should give rise to an implied choice of law for the arbitration clause. This would certainly be a factor indicating a possible choice of the law of the seat, but it is not generally considered to be a decisive one on its own, as the inquiry is concerned with identifying a real choice made (but not documented) by the parties, and must be attentive to the terms of the contract and other relevant circumstances. This rule would thus in many cases lead to the same outcome as the proposed rule 1(b) in the Report, but would do so not because of a fixed rule of law but because of an implied agreement of the parties. This possibility is rejected in the Law Commission’s proposal.

Third, the matrix contract may contain an express or implied choice of law which should, unless the contrary is agreed, be interpreted to extend to the arbitration clause. This is understood to follow from party autonomy, in combination with the common sense presumption that if parties have made a choice of law for their entire contract, and have not specified a different applicable law for any particular clause of the contract, their choice extends to all of the terms of their contract – including any arbitration agreement (see eg Enka v Chubb, at [43]). This presumption is, however, rebuttable, if there are indications that the parties would not have wanted their choice to cover the arbitration agreement. It is important, however, to understand that this question is about the correct interpretation of the scope of a choice which has been made by the parties. (Here I depart slightly from the reasoning in Enka v Chubb, as I take the view that an express choice of law in the matrix contract which also applies to the arbitration clause is an express, not implied, choice of law for the arbitration clause – see also Report, at [12.34] et seq.) The issue is whether there is evidence which might rebut the common sense presumption. The rule proposed in the Report abolishes the presumption and indeed the possibility of a choice of law in the matrix contract extending to the arbitration agreement, unless it does so specifically and expressly.

There are two main justifications offered for the changes in the Report. The first is that they align with the principle of separability (Report, [12.72]). The analysis of the law applicable to the arbitration agreement is treated as an issue which is entirely unrelated to the contract of which it forms part. It is submitted, however, that this takes separability too far (see eg Enka v Chubb, at [41] and [232] et seq). Separability as a principle rightly ensures that the validity of an arbitration clause is analysed separately from the matrix contract, so that challenges to the validity of the matrix contract do not necessarily undermine the validity of the arbitration clause. This does not, however, require that the arbitration clause be treated as an entirely free-floating agreement, ignoring the context in which it was formed. Indeed, if a choice of law clause in the matrix contract is (as proposed in the Report) deemed to be irrelevant to the arbitration clause, this raises the question whether other clauses in the matrix contract are similarly irrelevant. What if the matrix contract contains an ‘entire agreement’ clause, or a ‘no oral modification’ clause? Are they also irrelevant to the arbitration clause? If not, why is the choice of law singled out, particularly as it may also have interpretive effect?

The second is that the rule proposed in the Report would be more desirable for various policy reasons. The rule would, for example, undoubtedly be clearer and easier to apply than the current position (Report, [12.74]). Applying the rule would also strongly favour the selection of English law to determine the validity of an arbitration agreement with the seat of arbitration in England, which the Report considers to be desirable on various grounds, such as the alignment of the law governing the arbitration agreement and the law governing the arbitration process, and the favourable approach of English law toward arbitration agreements (see Report, [12.16] et seq). It is submitted, however, that these justifications are also not persuasive, as they elevate efficiency and other similar policy considerations above party autonomy. In the absence of an express choice of law specific to the arbitration clause, the fixed rule in the Report in favour of the law of the seat no longer requires but rather excludes an inquiry into what the parties have actually agreed. Contrary to the analysis in the Report (eg, at [12.53], [12.73]), this is a significant constraint on party autonomy. Where parties have chosen a seat for their arbitration, but have (expressly or impliedly) chosen a different governing law for their arbitration clause, the fact that they have thereby chosen different laws for the law governing the arbitration process and the law governing the arbitration agreement may be considered undesirable, and it may be inefficient, but it is submitted that this is not a sufficient reason for the law to disrespect their choice, which is the very foundation of arbitration. The proposed rule also has the undesirable effect that the arbitration agreement and the matrix contract are more likely to be governed by different laws, which raises difficult questions concerning their consistent interpretation and validity (see, eg, Enka v Chubb, at [53] and [235] et seq). There is also a concern that arbitrators will be faced with a difficult choice between applying a law chosen by the parties (for example, through a matrix choice of law agreement, or through an implied choice), which they may consider themselves to be required to do as a matter of their contractual mandate, and applying the law that will be applied by the English courts if their award is challenged.

The Law Commission’s Report is overall an excellent example of law reform, offering carefully crafted and well-reasoned proposals for improvement. On this issue, it makes its case well, and there would undoubtedly be some benefits to the reforms which it proposes. Ultimately, however, I am not persuaded that they are consistent with the core principles that should be guiding the law. A simple and clear rule is often desirable, but in this case it is my view that the complexities of the existing rule simply reflect the complexities of arbitration, which cannot and should not be legislated away.

English Law Commission Proposes Arbitration Reform – Introduction to the EAPIL Online Symposium

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Ugljesa Grusic
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London holds the distinction of being a preferred seat for arbitration, making significant developments in English arbitration law of general interest to arbitration specialists and, at times, private international lawyers. Few developments in arbitration law can match the significance of a reform affecting the statute providing a framework for arbitration. This is precisely what the Law Commission of England and Wales is recommending in its final report on the review of the Arbitration Act 1996.

One of the proposals aims to introduce a statutory rule for determining the governing law of an arbitration agreement, which significantly departs from the current common law position. Given the importance of this proposal, the EAPIL blog will host an online symposium on the law governing arbitration agreements from 11 to 13 September 2023.

In this post, I will introduce the Law Commission’s proposals and the symposium.

Law Commission’s Proposals

On 6 September 2023, following an extensive consultation process that included the publication of two consultation papers in September 2022 and March 2023, the Law Commission unveiled its proposals for reforming the 1996 Act (the text of the final report and draft Bill is available here; a summary is available here). These proposals aim to uphold the Act’s core principles, while introducing improvements aimed at enhancing London’s position as a global arbitration centre.

The Law Commission’s major proposals are: codifying an arbitrator’s duty of disclosure; strengthening arbitrator immunity around resignation and applications for removal; introducing the power to make arbitral awards on a summary basis; improving the framework for challenges to awards under section 67 on the basis that the tribunal lacked jurisdiction; adding a new rule on the law governing arbitration agreements; and clarifying court powers in support of arbitral proceedings and emergency arbitrators.

Additionally, the Law Commission proposes several minor corrections, including: allowing appeals from applications to stay legal proceedings; simplifying preliminary applications to court on jurisdiction and points of law; clarifying time limits for challenging awards; and repealing unused provisions on domestic arbitration agreements.

Since private international lawyers are likely more interested in the proposed choice-of-law rule for arbitration agreements and the proposed new relationship between courts and arbitrators regarding jurisdictional challenges, I will focus on these two proposals.

New Choice-of-Law Rule for Arbitration Agreements

The Rome I Regulation does not cover arbitration agreements, leaving the determination of the law governing arbitration agreements in England to the common law choice-of-law rules for contracts. These rules are well-known: a contract is governed by the law expressly or impliedly chosen by the parties or, in the absence of choice, by the system of law with which the contract is most closely connected. Applying this rule to arbitration clauses can be difficult. Does a broad choice-of-law clause in a matrix contract amount to an express choice of law for the arbitration clause contained therein? If the parties have not expressly chosen the law to govern their arbitration clause, is the choice of law for the matrix contract an indication of implied choice for the arbitration clause? Is the designation of the arbitral seat an indication of such implied choice?

The United Kingdom Supreme Court addressed these questions twice in the past three years in Enka and Kabab-Ji. The court’s majority in Enka (Lord Hamblen, Lord Leggatt, and Lord Kerr) set out the following rules for determining the existence of parties’ choice of law in [170]:

iii) Whether the parties have agreed on a choice of law to govern the arbitration agreement is ascertained by construing the arbitration agreement and the contract containing it, as a whole, applying the rules of contractual interpretation of English law as the law of the forum.

iv) Where the law applicable to the arbitration agreement is not specified, a choice of governing law for the contract will generally apply to an arbitration agreement which forms part of the contract.

v) The choice of a different country as the seat of the arbitration is not, without more, sufficient to negate an inference that a choice of law to govern the contract was intended to apply to the arbitration agreement.

vi) Additional factors which may, however, negate such an inference and may in some cases imply that the arbitration agreement was intended to be governed by the law of the seat are: (a) any provision of the law of the seat which indicates that, where an arbitration is subject to that law, the arbitration agreement will also be treated as governed by that country’s law; or (b) the existence of a serious risk that, if governed by the same law as the main contract, the arbitration agreement would be ineffective. Either factor may be reinforced by circumstances indicating that the seat was deliberately chosen as a neutral forum for the arbitration.

vii) Where there is no express choice of law to govern the contract, a clause providing for arbitration in a particular place will not by itself justify an inference that the contract (or the arbitration agreement) is intended to be governed by the law of that place.

The court also clarified that the law of the seat is ‘generally’ the system of law most closely connected to the arbitration agreement.

Unsurprisingly, consultees said that these rules were complex and unpredictable. This has led the Law Commission to propose a reform of these rules in its second consultation paper.

The proposal has three key elements: 1) retaining express choice; 2) eliminating implied choice; and 3) specifying that the law of the seat applies in the absence of an express choice.

The proposed choice-of-law rule for arbitration agreements reads as follows:

6A Law applicable to arbitration agreement

(1) The law applicable to an arbitration agreement is—

(a) the law that the parties expressly agree applies to the arbitration agreement, or

(b) where no such agreement is made, the law of the seat of the arbitration in question.

(2) For the purposes of subsection (1), agreement between the parties that a particular law applies to an agreement of which the arbitration agreement forms a part does not, of itself, constitute express agreement that that law also applies to the arbitration agreement.

(3) This section does not apply in relation to an arbitration agreement that was entered into before the day on which section 1 of the Arbitration Act 2023 comes into force.

New Relationship between Courts and Arbitrators Regarding Jurisdictional Challenges

If a party participates in arbitral proceedings, raises a jurisdictional challenge before the tribunal, and is accorded a fair hearing, should they be allowed to challenge the tribunal’s jurisdiction before a court using the same arguments and evidence? The answer to this question is principally guided by two somewhat conflicting considerations: efficiency and freedom of contract (which, of course, includes a freedom not to be bound by a non-existent or invalid contract).

The UKSC addressed this issue in Dallah. Lord Mance wrote obiter in [26] that:

An arbitral tribunal’s decision as to the existence of its own jurisdiction cannot…bind a party who has not submitted the question of arbitrability to the tribunal. This leaves for consideration the nature of the exercise which a court should undertake where there has been no such submission and the court is asked to enforce an award. Domestically, there is no doubt that, whether or not a party’s challenge to the jurisdiction has been raised, argued and decided before the arbitrator, a party who has not submitted to the arbitrator’s jurisdiction is entitled to a full judicial determination on evidence of an issue of jurisdiction before the English court, on an application made in time for that purpose under s.67 of the Arbitration Act 1996.

Lord Collins and Lord Saville expressed similar views in, respectively, [96] and [159]-[160].

The Law Commission believes that such a de novo rehearing is inefficient and unfair to the party wishing to enforce the arbitration agreement. It proposes to limit when a participating party can raise a jurisdictional challenge before English courts.

Following a very controversial proposal in its first consultation paper, the Law Commission has settled on a proposal that has the following four key elements: 1) it covers situations where a party participates in arbitral proceedings, objects to the tribunal’s jurisdiction, and the tribunal rules on its jurisdiction; 2) the court will not entertain any new grounds of objection, or any new evidence, unless it was not reasonably possible to put them before the tribunal; 3) the court will re-hear evidence only if necessary in the interests of justice; and 4) these limitations are to be introduced through rules of court rather than the 1996 Act itself.

The proposed rules outlining this new relationship between courts and arbitrators regarding jurisdictional challenges, to be inserted in section 67, read as follows:

(3A) Rules of court about the procedure to be followed on an application under this section may, in particular, include provision within subsection (3B) in relation to a case where the application—

(a) relates to an objection as to the arbitral tribunal’s substantive jurisdiction on which the tribunal has already ruled, and

(b) is made by a party that took part in the arbitral proceedings.

(3B) Provision is within this subsection if it provides that—

(a) a ground for the objection that was not raised before the arbitral tribunal must not be raised before the court unless the applicant shows that, at the time the applicant took part in the proceedings, the applicant did not know and could not with reasonable diligence have discovered the ground;

(b) evidence that was not heard by the tribunal must not be heard by the court unless the applicant shows that, at the time the applicant took part in the proceedings, the applicant could not with reasonable diligence have put the evidence before the tribunal;

(c) evidence that was heard by the tribunal must not be re-heard by the court, unless the court considers it necessary in the interests of justice.

EAPIL Blog Symposium on the Law Governing Arbitration Agreements

From 11 to 13 September 2023, the EAPIL blog will host an online symposium on the law governing arbitration agreements. The focus will be on assessing the Law Commission’s proposal and providing a comparative perspective. Professor Alex Mills (UCL) and Dr Manuel Penades Fons (KCL) will kick off the discussion by assessing the proposed choice-of-law rule for arbitration agreements from a UK perspective on Monday 11 September 2023. More contributions from comparative perspectives will follow on Tuesday and Wednesday.

Readers are encouraged to participate in the discussion by commenting on the posts.

Please follow the hyperlinks to access the posts by Alex Mills, Manuel Penades, George Bermann, Sylvain Bollée, Matthias Lehmann and Giuditta Cordero-Moss.

The EU Sustainability Directive and Jurisdiction

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The Editors of the EAPIL blog
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This post was written by Ralf Michaels and Antonia Sommerfeld, Max Planck Institute for Comparative and International Private Law, and is also available via conflictoflaws.net.

The Draft for a Corporate Sustainable Due Diligence Directive currently contains no rules on jurisdiction. This creates inconsistencies between the scope of application of the Draft Directive and existing jurisdictional law, both on the EU level and on the domestic level, and can lead to an enforcement gap: EU companies may be able to escape the existing EU jurisdiction; non-EU companies may even not be subject to such jurisdiction. Effectivity requires closing that gap, and we propose ways in which this could be achieved.

The Proposal for a Directive on Corporate Sustainability Due Diligence

The process towards an EU Corporate Sustainability Due Diligence Directive is gaining momentum. The EU Commission published a long awaited Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD), COM(2022) 71 final, on 23 February 2022; the EU Council adopted its negotiation position on 1 December 2022; and now, the EU Parliament has suggested amendments to this Draft Directive on 1 June 2023. The EU Parliament has thereby backed the compromise textreached by its legal affairs committee on 25 April 2023. This sets off the trilogue between representatives of the Parliament, the Council and the Commission.

The current state of the CSDDD already represents a milestone. It not only introduces corporate responsibility for human rights violations and environmental damage – as already found in some national laws (e.g. in France; Germany; Netherlands; Norway; Switzerland; United Kingdom) – but also and in contrast (with the exception of French law – for more details see Camy) introduces civil liability. Art. 22 (1) CSDDD entitles persons who suffer injuries as result of a failure of a company to comply with the obligations set forth in the Directive to claim compensation. It thereby intends to increase the protection of those affected within the value chain, who will now have the prospect of compensation; it also intends to create a deterrent effect by having plaintiffs take over the enforcement of the law as “private attorney generals”. Moreover, the Directive requires that Member States implement this civil liability with an overriding mandatory application to ensure its application, Art. 22 (5) CSDDD. This is not unproblematic: the European Union undertakes here the same unilateralism that it used to criticize when previously done by the United States, with the Helms/Burton Act as the most prominent example.

That is not our concern here. Nor do we want to add to the lively discussion on the choice-of-law- aspects regarding civil liability (see, amongst others, van Calster, Ho-Dac, Dias and, before the Proposal, Rühl). Instead, we address a gap in the Draft Directive, namely the lack of any provisions on jurisdiction. After all, mandatory application in EU courts is largely irrelevant if courts do not have jurisdiction in the first place. If the remaining alternative is to bring an action in a court outside the EU, the application of the CSDDD civil liability regime is not, however, guaranteed. It will then depend on the foreign court’s conflict-of-law rules and whether these consider the CSDDD provisions applicable – an uncertain path.

Nonetheless, no mirroring provisions on international jurisdiction were included in the CSDDD, although such inclusion had been discussed. Suggestions for the inclusion of a new jurisdictional rule establishing a forum necessitatis in the Brussels I Regulation Recast existed (see the Study by the European Parliament Policy Department for External Relations from February 2019, the Draft Report of the European Parliament Committee on Legal Affairs with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL) as well as the Recommendation of the European Groupe of Private International Law (GEDIP) communicated to the Commission on 8 October 2021). Further, the creation of a forum connexitatis in addition to a forum necessitatis had been recommended by both the Policy Department Study and the GEDIP. Nevertheless, the report of the European Parliament finally adopted, together with the Draft Directive of 10 March 2021, no longer contained such rule on international jurisdiction, without explanation. Likewise, the Commission’s CSDDD draft and the Parliament’s recent amendments lack such a provision.

Enforcement Gap for Actions against Defendants Domiciled within the EU

To assess the enforcement gap, it is useful to distinguish EU companies from non-EU companies as defendants. For EU companies, the Directive applies to companies of a certain size which are formed in accordance with the legislation of a Member State according to Art. 2 (1) CSDDD – the threshold numbers in the Commission’s draft and the Parliament amendments differ, ranging between 250–500 employees and EUR 40–150 million annual net worldwide turnover, with questions of special treatment for high-risk sectors.

At first sight, no enforcement gap seems to exist here. The general jurisdiction rule anchored in Art. 4 (1) Brussels I Regulation Recast allows for suits in the defendant’s domicile. Art. 63 (1) further specifies this domicile for companies as the statutory seat, the central administration or the principal place of business. (EU-based companies can also be sued at the place where the harmful event occurred according to Art. 7 (2) Brussels I Regulation Recast, but this will provide for access to an EU court only if this harmful event occurred within the EU.) The objection of forum non conveniens does not apply in the Brussels I Regulation system (as clarified in the CJEU’s Owusu decision). Consequently, in cases where jurisdiction within the EU is given, the CSDDD applies, including the civil liability provision with its mandatory application pursuant to Art. 22 (1), (5).

Yet there is potential leeway for EU domiciled companies to escape EU jurisdiction and thus avoid the application of the CSDDD’s civil liability. One way to avoid EU jurisdiction is to use an exclusive jurisdiction agreement in favour of a third country, or an arbitration clause. Such agreements concluded in advance of any occurred damage are conceivable between individual links of the value chain, such as between employees and subcontractors (in employment contracts) or between different suppliers along the chain (in purchase and supply agreements). EU law does not expressly prohibit such derogation. Precedent for how such exclusive jurisdiction agreements can be treated can be found in the case law following the Ingmar decision of the CJEU. In Ingmar, the CJEU had decided that a commercial agent’s compensation claim according to Arts. 17 and 18 of the Commercial Agents Directive (86/653/EEC) could not be avoided through a choice of law in favour of the law of a non-EU country, even though the Directive said nothing about an internationally mandatory nature for the purpose of private international law – as Art. 22 (5) CSDDD in contrast now does. The German Federal Court of Justice (BGH) extended this choice-of-law argument to the law of jurisdiction and held that jurisdiction clauses which could undermine the application of mandatory provisions are invalid, too, as only such a rule would safeguard the internationally mandatory scope of application of the provisions. Other EU Member State courts have shown a similar understanding not only with regard to exclusive jurisdiction agreements but also with regard to arbitration agreements (Austrian Supreme Court of Justice; High Court of Justice Queen’s Bench Division).

Common to Arts. 17 and 18 Commercial Agents Directive and Art. 22 CSDDD is their mandatory nature for the purpose of private international law, which established by the ECJ for the former and is legally prescribed for the latter in Art. 22 (5) CSDDD. This suggests a possible transfer of the jurisdictional argument regarding jurisdiction. To extend the internationally mandatory nature of a provision into the law of jurisdiction is not obvious; choice of law and jurisdiction are different areas of law. It also means that the already questionable unilateral nature of the EU regulation is given even more force. Nonetheless, to do so appears justified. Allowing parties to avoid application of the CSDDD would run counter to its effective enforcement and therefore to the effet utile. This means that an exclusive jurisdiction agreement in favour of a third country or an arbitration clause will have to be deemed invalid unless it is clear that the CSDDD remains applicable or the applicable law provides for similar protection.

Enforcement Gap for Actions against Defendants Domiciled Outside the EU

While the enforcement gap with regard to EU companies can thus be solved under existing law, additional problems arise with regard to non-EU corporations. Notably, the Draft Directive applies also to certain non-EU companies formed in accordance with the legislation of a third country, Art. 2 (2) CSDDD. For these companies, the scope of application depends upon the net turnover within the territory of the Union, this being the criterion creating a territorial connection between these companies and the EU (recital (24)). The Parliament’s amendments lower this threshold and thereby sharpen the scope of application of the Directive.

While application of the CSDDD to these companies before Member State courts is guaranteed due to its mandatory character, jurisdiction over non-EU defendants within the EU is not. International jurisdiction for actions against third-country defendants as brought before EU Member State courts is – with only few exceptions – generally governed by the national provisions of the respective Member State whose courts are seized, Art. 6 (1) Brussels I Regulation Recast. If the relevant national rules do not establish jurisdiction, no access to court is given within the EU.

And most national rules do not establish such jurisdiction. General jurisdiction at the seat of the corporation will usually lie outside the European Union. And the territorial connection of intra-EU turnover used to justify the applicability of the CSDDD does not create a similar basis of general jurisdiction, because jurisdiction at the place of economic activity (“doing business jurisdiction”) is alien to European legal systems. Even in the US, where this basis was first introduced, the US Supreme Court now limits general jurisdiction to the state that represents the “home” for the defendant company (BNSF Railroad Co. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)); whether the recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. (2023) will re-open the door to doing business jurisdiction remains to be seen (see Gardner).

Specific jurisdiction will not exist in most cases, either. Specific jurisdiction in matters relating to tort will be of little use, as in value chain civil liability claims the place of the event giving rise to damages and the place of damage are usually outside the EU and within that third state. Some jurisdictional bases otherwise considered exorbitant may be available, such as the plaintiff’s nationality (Art. 14 French Civil Code) or the defendant’s assets (Section 23 German Code of Civil Procedure). Otherwise, the remaining option to seize a non-EU defendant in a Member State court is through submission by appearance according to Art. 26 Brussels I Regulation Recast.

Whether strategic joint litigation can be brought against an EU anchor defendant in order to drag along a non-EU defendant depends upon the national provisions of the EU Member States. Art. 8 (1) Brussels I Regulation Recast, which allows for connected claims to be heard and determined together, applies only to EU-defendants – for non-EU defendants the provision is inapplicable. In some Member States, the national civil procedure provisions enable jurisdiction over connected claims against co-defendants, e.g. in the Netherlands (Art. 7 (1) Wetboek van Burgerlijke Rechtsvordering), France (Art. 42 (2) Code de procédure civile) and Austria (§ 93 Jurisdiktionsnorm); conversely, such jurisdiction is not available in countries such as Germany.

Various Member State decisions have accepted claims against non-EU companies as co-defendants by means of joinder of parties. These cases have based their jurisdiction on national provisions which were applicable according to Art. 6 (1) Brussels I Recast Regulation: In Milieudefensie in December 2015, the Court of Appeal at the Hague held permissible an action against a Dutch anchor defendant that was joined with an action against a Nigerian company as co-defendant based on Dutch national procedural law, on the condition that claims against the anchor defendant were actually possible. The UK Supreme Court ruled similarly in its Vedanta decision in April 2019, wherein it found that English private international law, namely the principle of the necessary or proper party gateway, created a valid basis for invoking English jurisdiction over a defendant not domiciled in a Member State (with registered office in Zambia) who had been joined with an anchor defendant based in the UK. The claim was accepted on the condition that (i) the claims against the anchor defendant involve a real issue to be tried; (ii) it would be reasonable for the court to try that issue; (iii) the foreign defendant is a necessary or proper party to the claims against the anchor defendant; (iv) the claims against the foreign defendant have a real prospect of success; (v) either England is the proper place in which to bring the combined claims or there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum. The UK Supreme Court confirmed this approach in February 2021 in its Okpabi decision (for discussion of possible changes in UK decisions after Brexit, see Hübner/Lieberknecht).

In total, these decisions allow for strategic joint litigation against third-country companies together with an EU anchor defendant. Nonetheless, they do not establish international jurisdiction within the EU for isolated actions against non-EU defendants.

How to Close the Enforcement Gap – forum legis

The demonstrated lack of access to court weakens the Directive’s enforceability and creates an inconsistency between the mandatory nature of the civil liability and the lack of a firm jurisdictional basis. On a substantive level, the Directive stipulates civil liability for non-EU companies (Art. 22 CSDDD) if they are sufficiently economically active within the EU internal market (Art. 2 (2) CSDDD). Yet missing EU rules on international jurisdiction vis-à-vis third-country defendants often render procedural enforcement before an intra-EU forum impossible – even if these defendants generate significant turnover in the Union. Consequently, procedural enforcement of civil liability claims against these non-EU defendants is put at risk. The respective case law discussed does enable strategic joint litigation, but isolated actions against non-EU defendants cannot be based upon these decisions. At the same time, enforceability gaps exist with respect to EU defendants: It remains uncertain whether the courts of Member States will annul exclusive jurisdiction agreements and arbitration agreements if these undermine the application of the CSDDD.

This situation is unsatisfactory. It is inconsistent for the EU lawmaker to make civil liability mandatory in order to ensure civil enforcement but to then not address the access to court necessary for such enforcement. And it is inadequate that the (systemic) question of judicial enforceability of civil liability claims under the Directive is outsourced to the decision of the legal systems of the Member States. National civil procedural law is called upon to decide which third-country companies can be sued within the EU and how the Ingmar case law for EU domiciled companies will be further developed. This is a problem of uniformity – different national laws allow for different answers. And it is a problem of competence as Member State courts are asked to  render decisions that properly belong to the EU level.

The CSDDD aims to effectively protect human rights and the environment in EU-related value chains and to create a level playing field for companies operating within the EU. This requires comparable enforcement possibilities for actions based on civil liability claims that are brought pursuant to Art. 22 CSDDD against all corporations operating within the Union. The different regulatory options the EU legislature has to achieve this goal are discussed in what follows.

Doing business jurisdiction

A rather theoretical possibility would be to allow actions against third-country companies within the EU in accordance with the former (and perhaps revived) US case law on doing business jurisdiction in those cases where these companies are substantially economically active within the EU internal market. This would be consistent with the CSDDD’s approach of stretching its scope of application based on the level of economic activity within the EU (Art. 2 (2) CSDDD). However, the fact that such jurisdiction has always been considered exorbitant in Europe and has even been largely abolished in the USA speaks against this development. Moreover, a doing business jurisdiction would also go too far: it would establish general jurisdiction, at least according to the US model, and thus also apply to claims that have nothing to do with the CSDDD.

Forum necessitatis and universal jurisdiction

Another possible option would be the implementation of a forum necessitatis jurisdiction in order to provide access to justice, as proposed by the European Parliament Policy Department for External Relations, the European Parliament Committee on Legal Affairs and the GEDIP. However, such jurisdiction could create uncertainty because it would apply only exceptionally. Moreover, proving a “lack of access to justice” requires considerable effort in each individual case. Until now, EU law provides for a forum necessitatis only in special regulations; the Brussels I Regulation Recast does not contain any general rule for emergency jurisdiction. Member State provisions in this regard generally require a certain connection with the forum to establish such jurisdiction – the exact prerequisites differ, however, and will thus not be easily agreed upon on an EU level (see Kübler-Wachendorff).

The proposal to enforce claims under Art. 22 CSDDD by means of universal civil jurisdiction for human rights violations, which could be developed analogously to universal jurisdiction under criminal law, appears similarly unpromising; it would also go further than necessary.

Forum connexitatis

It seems more promising to implement a special case of a forum connexitatis so as to allow for  litigation of closely connected actions brought against a parent company domiciled within the EU together with a subsidiary or supplier domiciled in a third country, as proposed by the European Parliament Policy Department for External Relations and the GEDIP. This could be implemented by means of a teleological reduction of the requirements of Art. 8 (1) Brussels I Regulation Recast with regard to third-country companies, which would be an approach more compatible with the Brussels Regulation system than the implementation of a forum necessitatis provision (such a solution has, for instance, been supported by Mankowski, in: Fleischer/Mankowski (Hrsg.), LkSG, Einl., para. 342 and the GEDIP). This would simultaneously foster harmonisation on the EU level given that joint proceedings currently depend upon procedural provisions in the national law of the Member States. Moreover, this could avoid “blame games” between the different players in the value chain (see Kieninger, RW 2022, 584, 589). For the implementation of such a forum connexitatis, existing Member State regulations and related case law (Milieudefensie, Vedanta, and Okpabi) can serve as guidance. Such a forum is not yet common practice in all Member States; thus, its political viability remains to be seen. It should also be borne in mind that the implementation of a forum connexitatis on its own would only enable harmonised joint actions that were brought against EU domiciled anchor defendants together with non-EU defendants; it would not enable isolated actions against third-country companies – even if they are economically active within the EU and fall within the scope of application of the CSDDD.

Best option: Forum legis

The best way to close the CSDDD enforcement gap would be introducing an international jurisdiction basis corresponding to the personal scope of application of the Directive. The EU legislature would need to implement a head of jurisdiction applicable to third-country companies that operate within the EU internal market at the level specified in Art. 2 (2) CSDDD. Effectively, special jurisdiction would be measured on the basis of net turnover achieved within the EU. This would procedurally protect the Directive’s substantive regulatory objectives of human rights and environmental protection within EU-related value chains. Moreover, this would ensure a level playing field in the EU internal market.

Other than a forum premised on joint litigation, this solution would allow isolated actions to be brought – in an EU internal forum – against non-EU companies operating within the EU. The advantage of this solution compared to a forum of necessity is that the connecting factor of net turnover is already defined by Art. 2 (2) CSDDD, thus reducing the burden of proof, legal uncertainty and any unpredictability for the parties. Moreover, this approach would interfere less with the regulatory interests of other states than a forum necessitatis rule, which for its part would reach beyond the EU’s own regulatory space.

A forum legis should not be implemented only as a subsidiary option for cases in which there is a lack of access to justice, because this would create legal uncertainty. The clear-cut requirements of Art. 2 (2) CSDDD are an adequate criterion for jurisdiction via a forum legis. On the other hand, it should not serve as an exclusive basis of jurisdiction, because especially plaintiffs should not be barred from the ability to bring suit outside the EU. The risk of strategic declaratory actions brought by companies in a court outside the EU seems rather negligeable, and this  can be avoided either by giving preference to actions for performance over negative declaratory actions, as is the law in Germany or through the requirement of recognisability of a foreign judgment, which would not be met by a foreign decision violating domestic public policy by not providing sufficient protection.

This leaves a problem, however: The CSDDD does not designate which Member State’s court have jurisdiction. Since a forum legis normally establishes adjudicatory jurisdiction correlating with the applicable law, jurisdiction lies with the courts of the country whose law is applied. This is not possible as such for EU law because the EU does not have its own ordinary courts. The competent Member State court within the EU must be determined. Two options exist with regard to the CSDDD: to give jurisdiction to the courts in the country where the highest net turnover is reached, or to allow claimants to choose the relevant court. The first option involves difficult evidentiary issues, the second may give plaintiffs an excessive amount of choice. In either case, non-EU companies will be treated differently from EU companies on the question of the competent court – for non-EU companies, net turnover is decisive in establishing the forum, for EU-companies, the seat of the company is decisive. This difference is an unavoidable consequence resulting from extension of the scope of application of the Directive to third-country companies on the basis of net turnover.

Implementation

How could this forum legis be achieved? The most straightforward way would be to include a rule on jurisdiction in the CSDDD, which would then oblige the Member States to introduce harmonised rules of jurisdiction into national procedural law. This would be a novelty in the field of European international civil procedure law, but it would correspond to the character of the special provision on value chains as well as to the mechanism of the CSDDD’s liability provision. An alternative would be to include in the Brussels I Regulation Recast a sub-category of a special type of jurisdiction under Art. 7 Brussels I Regulation Recast. This as well would be a novelty to the Brussels system, which in principle requires that the defendant be seated in a Member State (see also Kieninger, RW 2022, 584, 593, who favours reform of the Brussels I Regulation Recast for the sake of uniformity within the EU). This second option would certainly mesh with current efforts to extend the Brussels system to non-EU defendants (see Lutzi/Piovesani/Zgrabljic Rotar).

The implementation of such a forum legis is not without problems: It subjects companies, somewhat inconsistently with the EU legal scheme, to de facto jurisdiction merely because they generate significant turnover in the EU’s internal market. Yet such a rule is a necessary consequence of the extraterritorial extension of the Directive to third-country companies. The unilateral character of the CSDDD is problematic. But if the CSDDD intends to implement such an extension on a substantive level, this must be reflected on a procedural level so as to enable access to court. The best way to do this is by implementing a forum legis. The CSDDD demonstrates the great importance of compensation of victims of human rights and environmental damage, by making the cicil liability rule internationally mandatory. Creating a corresponding head of jurisdiction for these substantive civil liability claims is then necessary and consistent in order to achieve access to court and, thus, procedural enforceability.

Single Currency Package: New Proposals on Digital Euro

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Marco Pasqua
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On 28 June 2023, the European Commission presented a package consisting of three proposals regarding the Euro currency. It includes a proposal for a regulation on the legal tender of Euro banknotes and coins, a proposal for a regulation on the establishment of the digital euro, accompanied by a proposal for a regulation of on the provision of digital Euro services by payment services providers incorporated in Member States whose currency is not the Euro.

While ensuring that individuals and businesses can continue to access and pay with Euro banknotes and coins across the Euro area, the package aims to set out a framework for a possible new digital form of the Euro that the European Central Bank could choose to issue in the future, as a complement to cash.

The package is not concerned, as such, with private international law. However, it appears to have some implications for private international law, which will be briefly discussed below.

Background

Digitalisation and new technology are progressively influencing the lives of Europeans and the European economy. As the European economy becomes more digital, Europeans are increasingly using private digital payment methods to transact. Banknotes and coins, the only existing forms of central bank money with legal tender available to the general public (including individuals, governments, and corporations), cannot support the EU’s economy in the digital age.

As online transactions expand and payment habits of the general public migrate to the wide range of private digital payment methods available in the EU, their use in payments declines. The lack of a widely available and useable form of central bank money that is technologically fitted to the digital era may also erode trust in commercial bank money, and eventually in the Euro itself.

In this context, the issuing of a retail CBDC (Central Bank Digital Currency) has acquired substantial attention in recent years: a retail CBDC, like cash, would be an official form of central bank money that is directly available to the general public and has the legal tender status. And attention would like to turn into reality also in the EU.

Indeed, many central banks across the world have started looking at the possibility of introducing CBDCs. They, like the European Central Bank, have been conducting research and piloting programmes to better understand their potential advantages and drawbacks. Sweden, for instance, began a research on the viability of an e-krona within the EU. Outside of the EU, the United Kingdom has published multiple consultations and begun research towards a digital pound, akin to the European Central Bank’s technical inquiry into a digital euro. China has previously produced a digital yuan outside of Europe, which is already accessible for payment in an increasing number of places, with major banks and payment service providers facilitating the process. The United States, then, is looking at the possibility of a digital dollar but has not yet concluded if it is necessary.

However, some underlying choices need to be faced. For example, CBDC can be of two different types: (a) Account-based: before allowing a user to make a payment, an account-based approach often entails the use of a trusted third party to authenticate the identification of the account holder and the check on account balance; the accounts are then debited and credited accordingly; or (b) Token-based: a form of money issued by a central bank whereby the monetary claim on the central bank is incorporated in a digital token and the transfer of the token equals transfer of the claim, without current-account relationship between the central bank and the holder.

To conclude this overall background, it is useful to clarify that it is not a matter of crypto-assets and blockchain. Crypto assets, indeed, are purely digital assets that use public ledgers over the internet to prove ownership. They use cryptography, peer-to-peer networks and a distributed ledger technology (DLT) – such as blockchain – to create, verify and secure transactions. While the digital euro, unlike crypto-assets, would be central bank money. The European Central Bank would guarantee its safety, stability, and ability to be exchanged for Euro currency at face value. In contrast, the value of crypto-assets might vary substantially, and their conversion into Euro currency or even commercial bank money cannot be guaranteed.

Proposal on Digital Euro

The goal of the proposal on digital Euro is to keep central bank money with legal tender status available to the general public, while also providing a cutting-edge and cost-effective payment method, ensuring a high level of privacy in digital payments, maintaining financial stability, and promoting accessibility and financial inclusion.

As a result, they offer the essential legal framework to guarantee the successful use of the digital Euro as a single currency throughout the eurozone, addressing the demands of users in the digital age, and supporting competitiveness, efficiency, innovation, and resilience in the EU’s digitalizing economy. They offer the essential legal framework to guarantee the successful use of the digital Euro as a single currency throughout the eurozone, addressing the demands of users in the digital age, and supporting competitiveness, efficiency, innovation, and resilience in the EU’s digitalizing economy.

Subject Matter, Establishment and Issuance of the Digital Euro

‘Digital euro’ means the digital form of the single currency available to natural and legal persons for the purpose of retail payments. It may be issued by the European Central Bank and, if authorised by the European Central Bank, by eurozone national central banks. This means that it would be public money or central bank money. Like Euro banknotes and coins, the digital Euro will be a direct liability of the European Central Bank or of eurozone national central banks vis-à-vis digital Euro users, i.e. those making use of a digital Euro payment service in the capacity of payer, payee, or both.

Several rules are being proposed to integrate the digital Euro into the current legal framework. In particular, digital Euro payment transactions shall be subject to Payment Services Directive (PSD2, as will be replaced by proposed PSD3 and PSR), the Cross-Border Payments Regulation (as will be amended by the proposed accompanying Regulation), the Anti-Money Laundering Directive (AMLD5, as will be replaced by proposed AMLD6 and AMLR) and the Funds Transfer Regulation.

Legal Tender

The digital Euro will have legal tender status, which means that it must be accepted at face value with the ability to satisfy a payment obligation; this is not the case for existing electronic means of payments provided by commercial banks. Surcharges will be prohibited. To guarantee the effective preservation of the digital euro’s legal tender status as a unified currency throughout the eurozone, as well as the acceptance of digital Euro payments, provisions on sanctions for infringements will be adopted and implemented in the Member States.

Payees are entitled to refuse payment in digital Euro under the circumstances indicated in Article 9.
The digital Euro will be convertible in the same way as Euro banknotes and coins, scriptural money, and electronic money are. Where both digital Euro and Euro cash acceptance is required, the payer may choose between the two.

Distribution

(Private) Payment service companies would act as intermediaries for the digital euro. Banks and other payment service providers, indeed, would be in charge and in responsibility of distributing digital euros and providing payment services to natural and legal persons, primarily via offering a variety of digital Euro payment services (without the need for an extra licence). These services include first of all enabling users to access and use digital euro; persons, indeed, would be able to open a digital Euro account at any commercial bank or any other payment service provider, such as payment institutions and electronic money institutions. Then, other digital Euro payment services included cover initiating and receiving digital Euro payment transactions, managing their digital Euro payment accounts (which function similarly to digital wallets and have a unique account number), providing users with digital Euro payment instruments, and conducting funding (i.e., acquiring digital Euro in exchange for cash or other funds) / defunding operations.

There is also a list of basic digital Euro payment services that must be provided to individuals for free, such as opening and maintaining digital Euro payment accounts, funding/defunding from/into cash, initiating and receiving digital Euro payment transactions (person-to-person, person-to-government, government-to-person, or point of interaction including point-of-sale and e-commerce) via an electronic payment instrument, or providing such instruments. Users using digital euros can have one or more digital Euro payment accounts with the same or other payment services providers.

Access, Use and its Limits, Technical Features and Privacy

The proposal provides also other rules.

Chapter six, devoted to the access side, deals with the use of the digital Euro outside the Euro area, which depend on whether natural and legal persons reside or are established in a non-Euro area Member States or in a third country. It will be possible, subject to described conditions under Articles 18 to 21.

Technical features are also taken into account under chapter seven, where it is indicated that the digital Euro should be developed in a way that makes it easy to use for the general public, including financially excluded or at-risk individuals, those with impairments, functional limits, or inadequate digital skills, and the elderly. In order to achieve this aim, digital Euro users will not be needed to have a non-digital Euro payment account. And the digital Euro should be available for digital Euro payment transactions both offline and online as of the first issuance of the digital Euro and should allow for conditional payment transactions. Users may use the European Digital Identity Wallets established under the proposed Regulation on a European Digital Identity, described on this blog, to onboard and make payments. The digital Euro should enable digital users to switch their digital Euro payment accounts to another payment services provider at the request of the digital Euro user.

Finally, privacy and data protection issues are addressed.

Private International Law Implications

CBDCs are not free from private international law implications. Payment currency, indeed, is a component that private international law cannot ignore.

Basically, the problem of problems, which then concerns all the classic private international law issues, is that relating to the connecting factors to be used for this currency. Can the criteria of the locus rei sitae and lex rei sitae have any weight? And if so, where is this currency located? If not, what other criteria to use?

And, generally related to the latter, also the role of private autonomy and its possible limits is to be addressed. For instance, if the CBDC is included in a contract with cross-border elements, how do you provide for party autonomy? Should boundaries to CBDC, and the contract, be established?

In jurisdiction matter, it follows that identifying the court to deal with it is relevant, among intermediaries and account holders.

But also for the applicable law the problems are no less: opening CBDC accounts, holding, transactions, payments, settlements, and other aspect such as data flow can be dealt with.

An impact, also, in terms of recognition and enforcement, imagining having a judgement including CBDC matters to be recognized and enforced in different countries.

History tends to repeat itself: what to do then? Adapt existing rules, if they resist this tool, or devise new ones?

Surely a good starting point is to refer to the contribution in progress in this field, such as the Proposal for Exploratory Work: Private International Law Aspects of Central Bank Digital Currencies (CBDCs) by the Hague Conference on Private International Law. Perhaps the HCCH is also the place to regulate these private international law issues at international level (so, with non-EU countries) on these topics?

Finally, since we are talking about dematerialized assets, can some help come from the system developed under the Convention of 5 July 2006 on the Applicable Law to Certain Rights in Respect of Securities held with an Intermediary (Securities Convention)?

Analysing the EU Parenthood Proposal – Many Questions and Some Tentative Answers

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The Editors of the EAPIL blog
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The authors of this post are Bernadette Boehl, Sophie Dannecker, Larissa Grundmann, Maira Gabriela Nino Pedraza (all University of Bonn). A series of webinars took place in May 2023 under the title The Future of Cross-Border Parenthood in the EU – Analysing the EU Parenthood Proposal. Experts from various Member States discussed the main elements of the proposal and possibilities for improvement. The key issues addressed  in  each webinar are illustrated  below. Those interested in the PowerPoint presentations prepared by the speakers, are invited to follow this link. 

Session One

The first webinar (3 May 2023) started with a presentation by Jens Scherpe about Surrogacy in comparative perspective. 

Scherpe emphasized the impossibility of avoiding surrogacy as a worldwide phenomenon, hence the global surrogacy market which affects people on an international level.  He classified the jurisdictions into three categories. The jurisdictions that prohibit (e.g., France, Germany), tolerate (e.g. England), and regulate surrogacy.

For Scherpe, surrogacy tourism is a consequence of the prohibitive as well as the tolerant approach to surrogacy. Surrogacy plays an important economic role. It can be a multi-million-dollar business. This is especially true in countries whose jurisdictions follow a free market approach, such as some Canadian provinces, which could be described as “Rolls Royce” jurisdictions. This allows the intended parent to be recognised on the birth certificate from the outset. Countries that allow surrogacy in a way that the intended parents can be documented on the birth certificate beforehand but leave the process more or less unregulated tend to be attractive to a lot of people from prohibitive or tolerant countries. Those “Wild-West” jurisdictions, as Scherpe calls them, are much cheaper for future parents. But as a matter of fact, they are less protective of the surrogate and of children, and exploitation may occur. According to Scherpe, the achievement of the seemingly morally better approaches, the prohibitive and the tolerant, has the effect of exporting exploitation to those countries.

After signaling the experiences of countries like England and Denmark, the speaker concluded that both models, the prohibitive and the tolerant, have failed to prevent surrogacy by not recognising parenthood. In fact, a clear regulation is necessary and unavoidable and could solve some of the legal problems. He ends with the prediction that good regulation will not wipe out all exploitation in surrogacy matters but will, with no doubt, reduce the number of cases drastically.

Afterwards, Cristina González Beilfuss introduced the Parenthood Proposal and explained in her presentation (What’s in it? The subject matter, scope and definitions) four of the most important issues regarding the scope of the proposal.

(1) The substantive scope of the proposal is described in Article 1. “jurisdiction and applicable law for the establishment of parenthood in a Member State in cross-Border situations”. To understand parenthood is also to be seen from a sociological perspective, the definition in Article 4 can be used. Beilfuss expresses her sympathy with the term used in the Spanish draft, which is not “parentalidad” but “filiación” because it puts the child in the center of the law. Filiation should also be the preferred term in the English version, since it is a more child-centered concept than parenthood. For González, the contestation of parenthood, which is included, should have a more significant role in the proposal.

(2) Following the traditional practice of the European Commission, Article 3 defines the scope of application in a negative way. This Article confirms that the Proposal focuses on the bond of filiation but not on its consequences (Articles 3, 2. (b), (f) or (g)). Parental responsibility is not covered and should be consistently distinguished from filiation.

(3) Among the excluded matters is the existence, validity or recognition of a marriage. Marriage, however, regularly arises as a preliminary question in filiation matters. This is due to the significance of the mother´s civil status in establishing  a second child-parent relationship. It would therefore be important that the Regulation included a common rule on the preliminary question in order to ensure that it is solved uniformly across the Member States.

(4) Another exclusion that is problematic is that of adoption. The English text is more correct than the French or the Spanish.  Only intercountry adoptions, e.g. adoptions where the child is taken from their country of habitual residence to the country of habitual residence of those adopting are excluded, The Proposal is however wrong in assuming that all other adoptions are domestic adoptions that do not give rise to Private international questions. Whenever the child or the prospective adopters hold a foreign nationality there is a need to determine jurisdiction and the applicable law. The rules proposed are not well suited for adoption cases.

(5) The proposed rules only apply to the recognition or, as the case may be, acceptance of documents issued in a Member (see Article 3.3). Documents, in particular, birth certificates may however be issued after the recognition or acceptance of a decision or document issued in a Third State. This entails that the dividing line between Third State and European Union cases is far from clear.

In conclusion, the examination conducted by Cristina González Beifuss, as well as the questions left open, highlights the need for further discussion about the Proposal from the European Commission.

Session Two

The second webinar (10 May 2023) opened with a look at EU Primary law and a presentation by Susanne Gössl titled The EU Proposal and primary EU law: a match made in heaven?

The presentation started with an overview of the case law of the CJEU regarding the free movement of citizens (Article 21 TFEU), Article 18 TFEU (discrimination on grounds of nationality) and Article 20 (EU citizenship) in questions of status. According to that case law, a limping status constitutes an obstacle to the free movement of EU citizens and EU primary law requires the Member States to remove the obstacle.

To avoid a limping status, courts need to recognize at least parts of a status validly established in another EU Member State. The EU has two possibilities to legislate: harmonization of substantial law (as happened in Company Law) and the harmonization of private international law which is the approach the EU has taken in family law matters. The Proposal follows the second path and transforms the CJEU case law into EU secondary law.

In that reading, Article 2 of the Proposal (relationship with other provisions of Union law) seems mysterious, as EU primary law is at another level of hierarchy than EU secondary law.

One reading could be that the provision allows Member States to give more room to free movement if the national law is more generous than the proposal. Another interpretation could be that the Proposal does not understand itself as exhaustive in transforming the case law into secondary law. The latter could be the case if the scope of application does not extend to situations where EU citizens are not domiciled and therefore not registered in a Member State. They would fall under EU primary law as EU citizens but not under the proposal.

Furthermore, Gössl criticized Article 17 para. 2 (applicable law) as it contains alternative connecting factors and discretion to the court in case the main rule does not establish two parents. Discretion of the court means that EU primary law could give an obligation to recognize as father an EU citizen no matter whether this is in the best interest of the child. Finally, it remains unclear whether the conflict of laws rules of the proposal can be used in EU Member States to accept a status if they use the method of “recognition via conflict of laws”.

In Sahyouni I & II, the CJEU rejected the use of Rome III for such a national method. It would enhance the free movement of citizens if the Parenthood Proposal allowed Member States to use the Proposal for that way of acceptance. At least a clarification would be helpful.

In this order of ideas, the relationship between the draft and European private law is, for Gössl, not a match made in heaven, but at least a match.

Afterwards, Tobias Helms talked about The law governing parenthood: are you my father?.

Helms emphasized in advance that the initiative of the European Commission is to be welcomed. However, there would still be room for improvement in detail. During his presentation, Tobias Helms mainly analysed Article 17 of the Proposal.

The primary connecting factor for the establishment of parenthood is, according to para. 1, the law of the state in which the person giving birth has their habitual residence at the time of birth. As Tobias Helms pointed out, this connecting factor would be particularly friendly to surrogate motherhood. However, the connecting factor is unchangeable because it is fixed forever at the time of birth, which is problematic. Therefore, Article 17 para. 1 of the draft should be applied only with regard to the time of the child’s birth; thereafter, the child’s habitual residence should be decisive.

Also, Article 17 would have to be supplemented by establishing an Article 17a concerning the termination of parenthood. Additionally, a new Article 18a should be introduced regarding adoptions. An extra Article 22a could deal with overriding mandatory provisions.

Session Three

The third webinar (17 May 2023) started with a presentation by Alina Tryfonidou on The mutual recognition of decisions under the EU Proposal: much ado about nothing?

Tryfonidou provided an overview of the EU provisions regarding the recognition of decisions concerning parenthood. The provisions broadly follow the approach of other EU private international law regulations in the field of family law.

Article 4 of the proposal defines court and court decisions. The definitions are more abstract than those used in other EU private international law provisions in family law. Therefore, further clarification is desirable. The EU proposal is only applicable to cases with cross-border elements between member states. Decisions in third-party states are excluded from the scope of the application (Article 3(3)). Recognition of those decisions remains a question of national law. Children subject to decisions in third states are at least protected by the ECHR.

The central provision regarding the recognition of decisions is Article 24(1). It states that a court decision on parenthood given in a Member State shall be recognized in all other Member States without any special procedure being required. Article 24(3) allows the court to determine the issue where the recognition of a court decision is only raised as an incidental question.

Article 26 specifies the documents to be produced for recognition of a decision. The required attestation is supposed to enable the authority to determine whether there are grounds for refusal. The exhaustive list of such grounds is laid down in Article 31(1). The most famous ground allows the refusal if the recognition is manifestly contrary to the public policy of the Member State in which recognition is sought. The provision must be applied in observance of fundamental rights and principles laid down in the CFR. Articles 32 and 25 regulate applications for the refusal of recognition or the decision that there are no grounds for the refusal of recognition.

The next presentation was given by Maria Caterina Baruffi on Who decides on parenthood? The rules of jurisdiction.

Baruffi started by referring to the heavy criticism aimed at the proposal. Although she admitted that some of these criticisms are partly justified, she emphasized the positive aspects, namely the protection of children and fundamental rights.

The general system of jurisdiction is laid down in Article 6 of the proposal. It lists six grounds for jurisdiction alternatively. That allows for additional flexibility and facilitates access to justice.

On the other hand, a different approach may have reduced the possibility of parallel proceedings and forum shopping. Article 7 combines the presence rule with these grounds. According to recital 42, this is supposed to allow the courts to exercise jurisdiction regarding third-country national children. Article 8 states that where no court of a Member State has jurisdiction pursuant to Articles 6 or 7, jurisdiction is determined by national law. Article 9 adds the forum necessitatis rule. Articles 6 to 9 could be called exorbitant when combined. The reference to the national law of member states in Article 8 creates the additional possibility of taking recourse to exorbitant rules of jurisdiction in national law. However, the broad approach further facilitates access to justice and protects children’s fundamental rights.

Following this, Maria Caterina Baruffi briefly introduced Articles 10 and 14 which mirror the Brussels IIb Regulation, Article 15 which specifies the child’s right to be heard. She then touched on the child’s right to know its origin. This right was excluded from the proposal. Maria Caterina Baruffi argued that the Union does not have the competence to include such a right. It is not possible to predict the outcome of the proposal. It is a good starting point for a reasonable solution.

Session Four

The last webinar started with Patrick Wautelet who talked about Authentic documents and parenthood: between recognition and acceptance.

Wautelet discussed the recognition of court decisions in another Member State (Chapter IV, Section 1-2) together with the acceptance of other authentic instruments with either binding legal effect (Chapter IV, Section 3) or those with no binding legal effect (Chapter V) in the Member State of origin.

The most critical point of the proposal regarding Chapters IV and V is the distinction between the authentic instruments with binding or no binding legal effect since the question of whether an instrument has legally binding effect or not is a matter for the national law of the Member State in which the instrument was issued. It may therefore be answered differently in each Member State.

Wautelet illustrated the difficulties which this diversity may cause with an example from practice: when a child is born in France to married parents, the birth certificate drawn up must, of course, be regarded as an authentic instrument. Whether it also has a “binding legal effect” must be determined according to French family law. This question must be answered differently in France regarding maternity and paternity. However, this does not apply equally to every Member State, which means the question which category is relevant may not be answered in general for all birth certificates.

In the presentation and the following discussion, it was underlined that drawing the line between authentic instruments with binding and no binding legal effect can be complex, not least regarding other existing family arrangements (same-sex parenthood).

Furthermore, it was suggested that the terms used in the Proposal lack precision: even if an authentic act has a binding legal effect, it may be that it is not completely binding, as it may be amenable to challenge. The  term ‘no legal binding effect’ suggests further that the instrument is not legally effective although it actually is. Those labels are therefore confusing and should either be reconsidered or at least explained further. His preferred choice is to not differentiate between the two categories but to merge the two.

Another topic was the acceptance of authentic instruments with no binding legal effect, as stated in Article 45 of the Proposal. There are two options for an evidentiary effect of those documents: the text may provide that the effects the original instrument has in the Member State of origin will be extended to other Member States (“same evidentiary effects”). Article 45, however, also includes another possibility, i.e. that an instrument be giventhe “most comparable effect”. Understand the evidentiary effect exiting in the state of origin requires extensive and difficult work. Patrick Wautelet proposes simplifying the Regulation with regard to the comparable effect by striking it out.

To conclude, the speaker presented four points to be considered for further reflection. Firstly, it is important to work on the language, ensuring that all terms are clearly defined. Secondly, the alternative rules for acceptance and the relationship with public policy need to be cleared. Thirdly, it is advisable to merge the two categories of authentic instruments, which should help avoid confusion or ambiguity in their application. Finally, he would like to strive for a less complex regulation – not at least to keep the users in mind.

The very last presentation, given by Ilaria Pretelli, concerned The European certificate of Parenthood: a passport for parents and children?.

The last presentation refers to Chapter VI of the proposal and the creation of a “European Certificate of Parenthood”. The certificate is supposed to make a binding presumption of the status, which results only from the certificate itself. This certificate may not make a decisive difference in numerous cases because birth certificates are widely accepted even today. But especially for cases of co-maternity, it will help with an easier recognition of co-maternity and support same-sex couples by setting a reliable framework. Additionally, this framework will be useful regarding contractual arrangements, such as surrogacy. It eliminates the risk of the child being stateless.

The similarity between the proposed “European Certificate of Parenthood” and the “European Certificate of Succession” regarding the presumption of status should not be seen as extensive as it may seem at first sight. The presumption of the status of parenthood stated by Article 53 para. 2 of the proposal differs not in the wording but in the meaning, from the presumption of status regulated by the Certificate of Succession (Article 69 para. 2). According to Ilaria Pretelli there is a huge difference in the meaning of the “presumption of status” as it is used by the proposal, because of how it can be challenged. The granted status by the proposal states a much stronger binding effect than the certificate of succession. This she concludes from seeing the explanatory memorandum, which stresses the evidentiary effects of established parenthood in another Member State. But she suggests that this matter should be clarified because of the identical and therefore misleading wording. She points to the unanswered question about the possibility of challenging the certificate by another Member State as a main problem in the proposal.

Also, Ilaria Pretelli explained the background of the numerous specifications of the certificate’s content. The purpose of those elaborate regulations is to prevent attempts of manipulation. In this respect, the rights of the child should be more in the focus of the regulations, especially the right of the child to know their origin. To do so, appropriate safeguards could be introduced by means of ad hoc rules specially designed to meet the need of pursuing the best interests of the child.  In this matter, she points out that the language of the whole proposal is not focused enough on the child. She suggests to change the wording of the English version of the proposal, e.g. “filiation” instead of “parenthood”.

“Wishes” of the Organisers of the Series of Webinar

At the end of the seminar, the five organizers of the Webinars concluded the last session by expressing their “wishes” for improvement of the proposal.

These wishes were:
– Further definition of the concept of Court (Cristina Gonzalez Beilfuss);
– If the Regulation keeps the distinction between 2 types of authentic acts, that Member States and the Commission find a better way to distinguish them (Patrick Wautelet);
– Restrict the existing rule on the applicable law to designating the applicable law at the time of birth and find other rules for the time after birth (Tobias Helms);
– Introduce safeguards to prevent child-trafficking or exploitation (e.g. right of the child to know their origins or rules as those preventing illegal adoptions) (Ilaria Pretelli);
– Define the concept of “establishment” of parenthood in cases parenthood is established by the law and not by courts or authentic acts with binding effect (Susanne Gössl).

European Parliament Adopts its Negotiating Position on the Proposed Directive on SLAPPs

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Marco Pasqua
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The European Parliament on 11 July 2023 adopted its negotiating position on the proposal for a directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

The Parliament will now start discussions on this basis with the European Council, whose first position has been analysed by Pietro Franzina in a previous post on this blog.

The text resulting from the Council’s general approach departs from the initial proposal (analysed by Marta Requejo in a previous post on this blog), in various respects.

The most significant innovations include the following.

Subject Matter

Parliament specified that the directive poses a set of minimum standards of protection and safeguards against manifestly unfounded or abusive court proceedings in civil matters, as well as the threats thereof, with cross-border implications brought against natural and legal persons engaging in public participation. No specification on journalists and human rights defenders is provided.

Scope

The scope of the proposed directive should apply to matters of a civil or commercial nature having cross-border implications, including interim and precautionary measures, counteractions or other particular types of remedies available under other instruments, whatever the nature of the court or tribunal. Parliament, then, specified the directive tool as posing minimum requirements. Member States, indeed, may introduce or maintain more favourable provisions than the safeguards provided for in this directive against manifestly unfounded and abusive court proceedings in civil matters. As a result, the implementation of this directive shall in no circumstances constitute grounds for a reduction in the level of safeguards already afforded by Member States in the matters covered by this directive.

Definitions

Parliament clarified the definition of ‘public participation’ to mean any statement or activity by a natural or legal person expressed or carried out in the exercise of the right to freedom of expression and information, academic freedom, or freedom of assembly and association, and preparatory, supporting or assisting action directly linked thereto, on a matter of public interest. This includes complaints, petitions, administrative or judicial claims, the participation in public hearings, the creation, exhibition, advertisement or other promotion of journalistic, political, scientific, academic, artistic, satirical communications, publications or works.

Also the ‘matter of public interest’ is deepened by the Parliament, adding fundamental rights including gender equality, media freedom and consumer and labour rights, as well as the already indicated public health, safety, the environment or the climate. Activities of a person or entity in the public eye or of public interest includes governmental officials and private entities too. Allegations of corruption and fraud are extended, comprising also embezzlement, money laundering, extortion, coercion, sexual harassment and gender-based violence, or other forms of intimidation, or any other criminal or administrative offence, including environmental crime. All activities aimed to protect the values enshrined in Article 2 TEU, the principle of non-interference in democratic processes, and to provide or facilitate public access to information with a view to fighting disinformation are included.

The ‘fully or partially unfounded’ element related to these proceedings is better explained, that is when characterised by elements indicative of a misuse of the judicial process for purposes other than genuinely asserting, vindicating or exercising a right and have as their main purpose to abusively prevent, restrict or penalize public participation. Indications of such a purpose are added and further clarified, as follows. It is added the misuse of economic advantage or political influence by the claimant against the defendant, leading to an imbalance of power between the two parties. Intimidation, harassment or threats on the part of the claimant or his or her representatives can occur before or during the proceedings, as well as any previous history of legal intimidation by the claimant. It is then added also the use in bad faith of procedural tactics, such as delaying proceedings, and choosing to pursue a claim that is subject to the jurisdiction of the court that will treat the claim most favourably, or the discontinuation of the cases at a later stage of the proceedings.

Matters with Cross-Border Implications

The aim is to cover as many cases as possible, working on the cross-border notion in order to enlarge it. Cross-border implications, indeed, occur for the Parliament if the act of public participation is relevant to more than one Member State, either due to the cross-border dimension of the act itself or due to the legitimate interest which the public may take in the matter concerned by the act, including if the act is accessible via electronic means. The other element, i.e. the filing of concurrent or previous proceedings against the same or associated defendants in another Member State, is confirmed by the Parliament.

Application for Procedural Safeguards

Providing expeditious court proceedings is outlined. Member States shall ensure that courts or tribunals seised with an application for procedural safeguards in the proceedings in relation to which the application has been sought using the most expeditious procedures available under national law, taking into account the circumstances of the case, the right to an effective remedy and the right to a fair trial.

According to the Parliament, then, Member States shall (not ‘may’) provide that measures on procedural safeguards in accordance with chapters on early dismissal and remedies can be taken by the court or tribunal seised of the matter ex officio.

Assistance to natural or legal persons engaging in public participation is added. Member States shall ensure that natural or legal persons engaging in public participation have access, as appropriate, to support measures, in particular the following: (a) comprehensive and independent information and advice which is easily accessible to the public and free of charge on procedures and remedies available, on protection against intimidation, harassment or threats of legal action, and on their rights; and (b) legal aid in accordance with Directive 2003/8/EC, and, in accordance with national law, legal aid in further proceedings, and legal counselling or other legal assistance; (c) financial assistance and support measures, including psychological support, for those targeted by abusive court proceedings against public participation.

Third Party Intervention

The third party intervention is strengthened: in addition to widening the audience of interveners, their role is increased. Member States shall take the necessary measures to ensure that a court or tribunal seised of court proceedings against public participation may accept that associations, organisations and other collective bodies, such as trade unions, and any other legal entities which have, in accordance with the criteria laid down by their national law, a legitimate interest in safeguarding or promoting the rights of persons engaging in public participation may take part in those proceedings, either on behalf or in support of the defendant, with his or her approval or to provide information, in any judicial procedure provided for the enforcement of obligations under this directive. This provision is without prejudice to existing rights of representation and intervention as guaranteed by other Union or national rules.

Security

Security for procedural costs, or for procedural costs and damages, is remodelled as security for costs of the proceedings, including the full costs of legal representation incurred by the defendant and damage. Where national law provides for such possibility, security may be granted to the defendant at any stage of the court proceedings.

Early Dismissal

Member States shall (not ‘may’) establish time limits for the exercise of the right to file an application for early dismissal. The time limits shall be also reasonable.

Award of Costs

The claimant who has brought abusive court proceedings against public participation is to be ordered to bear all the costs. Where national law does not guarantee the award in full of the costs of legal representation beyond statutory fee tables, Member States shall ensure that such costs are fully covered by other means available under national law, and, where appropriate, through compensation of damages in accordance with Article 15.

Compensation of Damages

Full compensation for harm is clarified covering material or non-material harm, including reputational harm, without the need to initiate separate court proceedings to that end.

Penalties and National Register

Parliament added that Member States shall ensure that courts or tribunals imposing penalties take due account of: (i) the economic situation of the claimant; (ii) the nature and number of the elements indicating an abuse identified.

In addition, Member states shall take appropriate measures to establish a publicly accessible register of relevant court decisions falling within the scope of this directive, in accordance with Union and national rules on the protection of personal data.

Jurisdiction for Actions Against Third-Country Judgements

Parliament modified this matter, stating that the concerned person shall (not ‘may’) have the right granted under Article 18.

Jurisdiction, Applicable Law and Relations with Union Private International Law Instruments

On jurisdiction matters, a new article has been included stating that in defamation claims or other claims based on civil or commercial law which may constitute a claim under this directive, the domicile of the defendant should be considered to be the sole forum, having due regard to cases where the victims of defamation are natural persons. With the exception of the latter new added Article, this directive then shall not affect the application of the Brussels I bis Regulation.

On the applicable law, in claims regarding a publication as an act of public participation, the applicable law shall be the law of the place to which that publication is directed to. In the event of it not being possible to identify the place to which the publication is directed, the applicable law shall be the law of the place of editorial control or of the relevant editorial activity with regard to the act of public participation. With the exception of the latter new added Article, this directive shall not affect the application of the Rome II Regulation.

Union Register

The Commission shall take appropriate measures to establish a publicly accessible Union register, on the basis of the information provided in accordance with the Article concerning the national register, of relevant court decisions falling within the scope of this directive, in accordance with Union rules on the protection of personal data.

Awareness-Raising

A new addition by the Parliament. Member States shall take appropriate action, including via electronic means, aimed at raising awareness about strategic lawsuits against public participation and the procedural safeguards set out in this directive against them. Such action may include information and awareness-raising campaigns and research and education programmes, where appropriate in cooperation with relevant civil society organisations and other stakeholders.

One-Stop Shop

Parliament included a new article establishing a ‘one-stop shop’ comprising dedicated national networks of specialised lawyers, legal practitioners and psychologists, which targets of SLAPPs can contact, and through which they can receive guidance and easy access to information on, and protection against SLAPPs, including regarding legal aid, financial and psychological support.

Training of Practitioners

To foster prevention of the initiation of SLAPPs and protection of targeted natural or legal persons, it is crucial to promote relevant information, awareness-raising, campaigns, education and training, including on their rights and protection mechanisms. Parliament proposed that, with due respect for the independence of the legal profession, Member States should recommend that those responsible for the training of lawyers make available both general and specialist training to increase the awareness of strategic lawsuits against public participation and the procedural safeguards against them provided for in this directive. Training should also be provided to legal professionals in order to increase awareness of abusive court proceedings and be able to detect them at a very early stage.

Cooperation and Coordination of Services

Member States should take appropriate action to facilitate cooperation between Member States to improve the access of those targeted by manifestly unfounded or abusive court proceedings against public participation to information on procedural safeguards provided for in this directive and under national law. Such cooperation should be aimed at least at: (a) the exchange of current practices; and (b) the provision of assistance to European networks working on matters directly relevant to those targeted by manifestly unfounded or abusive court proceedings against public participation.

Deontological Rules for Legal Professionals

Member States shall, with due respect for the independence of the legal profession, encourage the adoption by professional associations of deontological rules that guide the conduct of legal professionals to discourage the taking of abusive lawsuits against public participation, and where appropriate, considering measures to address any violation of those rules.

Data Collection

Member States shall, taking into account their institutional arrangements on judicial statistics, entrust one or more authorities to be responsible to collect and aggregate, in full respect of data protection requirements, data on abusive court proceedings against public participation initiated in their jurisdiction. Data referred to shall include, in particular, many specified criteria.

Transposition into National Law

Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this directive according to the Parliament by 1 years, compared to the 2 years of the original Commission text.

In addition, Member States shall apply this directive also to cases pending before a national court at the time of entry into force of the national rules transposing this directive.

The European Parliament and the Council on the Proposed Directive on Corporate Sustainability Due Diligence

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Marco Pasqua
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The readers of this blog are aware of the pending proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence. The topic was dealt with in a post that can be found here, and in another post here, with reference to the recommendations by GEDIP, the European Group of Private International Law.

The proposed directive aims to foster sustainable and responsible corporate behaviour throughout global value chains. In-scope companies will be required to identify and, where necessary, prevent, end or mitigate adverse impacts of their activities on human rights.

The next steps for the directive proposal will be the trilogue discussions between the European Parliament, the Council of the European Union and the Commission.

The Views of the European Parliament

On 1 June 2023, the European Parliament, at 1st reading/single position, adopted amendments to the proposal. It could be summarized as follows.

Scope of application

Parliament addressed the threshold criteria to fall within the scope of the directive. The new rules will apply to EU-based companies, regardless of their sector, including financial services, with more than 250 employees and a worldwide turnover over EUR 40 million, as well as to parent companies with over 500 employees and a worldwide turnover of more than EUR 150 million. Non-EU companies with a turnover higher than EUR 150 million, if at least EUR 40 million was generated in the EU will also be included; the same for non-EU parent companies with a turnover exceeding EUR 150 million, from which at least EUR 40 was generated in the EU.

Definitions

Parliament moves in broadening the definition of ‘value chain’, to include the sale, distribution, transport, and waste management of products.

Companies’ Obligations

Parliament, in Article 8b (new), specified that the directive should lay down rules on companies’ obligations regarding actual and potential negative impacts on human rights and the environment that they have caused, contributed to or are directly involved in, with regard to their own activities, and those of their subsidiaries.
Companies would be required to identify and, where appropriate, prevent, bring to an end or mitigate the negative impact of their activities on human rights and the environment, such as child labour, slavery, labour exploitation, pollution, environmental degradation and loss of biodiversity. They should also monitor and assess the impact of their business partners, not only suppliers, but also sales, distribution, transport, storage, waste management and other areas.

Integration of Due Diligence

Companies covered by the Directive should: integrate due diligence into their corporate policies, identify and, where necessary, prioritise, prevent, mitigate, remedy, eliminate and minimise potential and actual adverse impacts on human rights, the environment and good governance; establish or participate in a mechanism for the notification and out-of-court handling of complaints; monitor and verify the effectiveness of actions taken in accordance with the requirements set out in the Directive; communicate publicly on their due diligence and consult relevant stakeholders throughout this process.
Member States should ensure that parent undertakings can take action to help ensure that their subsidiaries falling within the scope of the Directive comply with their obligations.
Companies should apply a due diligence policy that is proportionate and commensurate to the degree of severity and the likelihood of the adverse impact and commensurate to the size, resources and capacities of the company, taking into account the circumstances of the specific case, including the nature of the adverse impact, characteristics of the economic sector, the nature of the company’s specific activities, products, services, the specific business relationship.
In conflict-affected and high-risk regions, companies should uphold their obligations under international humanitarian law and demonstrate heightened, conflict-sensitive due diligence in their operations and business relationships.

Prevention of Potential Negative Impacts

Companies would be required to take the following steps, as appropriate: consider establishing contractual arrangements with partners with whom the company has a business relationship, obliging them to comply with the company’s code of conduct and, where appropriate, a prevention action plan; take necessary modifications, improvements to, withdrawals of or investments in, the company’s own operations, such as into management, production or other operational processes, facilities, products and product traceability, projects, services and skills; adapt business models and strategies, including purchasing practices, including those which contribute to living wages and incomes for their suppliers, in order to prevent potential adverse impacts, and develop and use purchase policies that do not encourage potential adverse impacts on human rights or the environment; take appropriate measures to ensure that the composition, design and commercialisation of a product or service is in line with Union law and does not lead to adverse impacts, be it individual or collective. In this regard, particular attention shall be paid to potential adverse impact on children.

Mitigating Actual Negative Impacts

Where a company has caused or contributed to an actual adverse impact, it should take steps to remedy or contribute to the remedy of that adverse impact and any harm it has caused to people or the environment. Remedial measures, introduced by Parliament, would aim to restore the affected individuals, groups, communities and/or the environment to a situation equivalent to, or as close as possible to, that which existed prior to the adverse impact.

Exchanges with Stakeholders

The new rules would also require companies to engage in dialogue with those affected by their actions, including human rights and environmental defenders. Companies would also be required to regularly monitor the effectiveness of their due diligence policies. To facilitate investor access, information on a company’s due diligence policy should also be available on the European Single Access Point (ESAP).
Employees and their representatives should be informed by their company of its due diligence policy and its implementation.

Guidelines

To provide support to companies or to Member State authorities, the Commission, in consultation with Member States, the European cross-industry and sectoral social partners and other relevant stakeholders, should issue clear and easily understandable guidelines, including general and sector- specific guidance, in order to facilitate compliance in a practical manner. Each Member State should designate one or more national helpdesks for corporate sustainability due diligence.

Combating Climate Change

Companies should implement a transition plan to limit global warming to 1.5°C. Companies, with more than 1 000 employees on average according to Parliament, should have an effective policy in place to ensure that part of any variable remuneration for directors is linked to the company’s transition plan.

Sanctions

Non-compliant companies will be liable for damages and can be sanctioned by national supervisory authorities. According to Parliament, sanctions include measures such as “naming and shaming”, taking a company’s goods off the market, or fines of at least 5% of the previous net worldwide turnover. Non-EU companies that fail to comply with the rules will be banned from public procurement in the EU.

Single Market Clause

Parliament introduced the single market clause. According to the latter, the Commission and the Member States shall coordinate during the transposition of this Directive and thereafter in view of a full level of harmonisation between Member States, in order to ensure a level playing field for companies and to prevent the fragmentation of the Single Market.

Justice Costs, Injunctions and Third-party Intervention

Parliament require Member States in ensuring that: the limitation period for bringing actions for damages is at least ten years and measures are in place to ensure that costs of the proceedings are not prohibitively expensive for claimants to seek justice; claimants are able to seek injunctive measures, including summary proceedings (these shall be in the form of a definitive or provisional measure to cease an action which may be in breach of this Directive, or to comply with a measure under this Directive); measures are in place to ensure that mandated trade unions, civil society organisations, or other relevant actors acting in the public interest can bring actions before a court on behalf of a victim or a group of victims of adverse impacts, and that these entities have the rights and obligations of a claimant party in the proceedings, without prejudice to existing national law.

The Council’s General Approach of November 2022

Previously, on 30 November 2022, the Council of the European Union had adopted its negotiating position, or general approach. It included the following provisions.

Companies Concerned

In relation to companies concerned (see Article 2), the rules of the due diligence directive would still apply to large EU companies and to non-EU companies active in the EU. For EU companies, the criteria that determine whether a company falls within the scope of the directive are based on the number of employees and the company’s net worldwide turnover, whereas in the case of non-EU companies the criterion is related to the net turnover generated in the EU; if a non-EU company fulfils the criterion regarding net turnover generated in the EU, it will fall under the scope of the due diligence directive, irrespective of whether it has a branch or a subsidiary in the EU.
The Council’s text has introduced a phase-in approach regarding the application of the rules laid down in the directive. The rules would first apply to very large companies that have more than 1000 employees and €300 million net worldwide turnover or, for non-EU companies, € 300 million net turnover generated in the EU, 3 years from the entry into force of the directive.

Definitions

The European Council’s draft limits the scope of the due diligence obligations identified by the Commission in the full life-cycle “value chain” approach towards a more narrowed “chain of activities”: the latter covers a company’s upstream and in a limited manner also downstream business partners as it leaves out the phase of the use of the company’s products or the provision of services and excludes the use of a company’s products by its consumers (see Article 3(g)); then, it leaves it up to the Member States to decide whether regulated financial undertakings (including fund managers) shall be included in the scope of the directive.
The Council’s text also strengthens the risk-based approach and the rules on the prioritisation of the adverse impacts to ensure that carrying out due diligence obligations is feasible for companies (see Article 3, points (e) and (f)).

Combating Climate Change

The text of the provision on combating climate change (see Article 15) has been aligned as much as possible with the soon-to-be-adopted Corporate Sustainability Reporting Directive (CSRD), including a specific reference to that directive, in order to avoid problems with its legal interpretation, while avoiding broadening the obligations of companies under this Article.
Due to the strong concerns of Member States regarding the provision proposed by the Commission linking the variable remuneration of directors to their contribution to the company’s business strategy and long-term interest and sustainability, this provision has been deleted (Article 15(3)). The form and structure of directors’ remuneration are matters primarily falling within the competence of the company and its relevant bodies or shareholders. Delegations called for not interfering with different corporate governance systems within the Union, which reflect different Member States’ views about the roles of companies and their bodies in determining the remuneration of directors.

Civil Liability

The Council’s text provides more clarity to the conditions of civil liability (see Article 22) with a provision that ensures full compensation for damages resulting from a company’s failure to comply with the due diligence obligations, avoiding unreasonable interference with the Member States’ tort law systems.
The four conditions that have to be met in order for a company to be held liable – a damage caused to a natural or legal person, a breach of the duty, the causal link between the damage and the breach of the duty and a fault (intention or negligence) – were clarified in the text and the element of fault was included.
Furthermore, the right of victims of human rights or environmental adverse impacts to full compensation were expressly provided for in the compromise text. On the other hand, the right to full compensation should not lead to overcompensation, for example by means of punitive damages.
Further, clarifications of the joint and several liability of a company and a subsidiary or a business partner and the overriding mandatory application of civil liability rules were made.
All of these clarifications and precisions allowed to delete the safeguard for companies that sought contractual assurances from their indirect business partners after a strong criticism of this provision due to its heavy reliance on contractual assurances.

Directors’ Duties

Due to the strong concerns expressed by Member States that considered Article 25 to be an inappropriate interference with national provisions regarding directors’ duty of care, and potentially undermining directors’ duty to act in the best interest of the company, the Council’s proposal deletes the director’s duties introduced by the Commission.

Annex I

The Annex I to the proposed directive has undergone significant changes with the main objective of making the obligations as clear and easily understandable for companies as possible, while ensuring a legally sound base. The logic of the Annex I is to list specific rights and prohibitions, the abuse or violation of which constitutes an adverse human rights impact (see Article 3, point (c)) or adverse environmental impacts (see Article 3, point (b)). To better understand how these rights and prohibitions should be interpreted, the Annex I contains references to international instruments that serve as points of reference.
To ensure the legitimacy of referring to international instruments that are legally binding only on the States, and following the overall logic of the Annex I, the Annex I covers only those international instruments that were ratified by all Member States. Overall, the Annex I of the compromise text only refers to such obligations and prohibitions that can be observed by companies, not just by States.
As regards the human rights part of the Annex I, it covers only legally binding international instruments that are recognised as a minimum list of instruments in the international framework. Concerning the environmental part of the Annex I, a limited number of additional specific obligations and prohibitions under international environmental instruments have been added, the violation of which results in an adverse environmental impact.
Moreover, the definitions of adverse environmental and human rights impacts have been clarified. Furthermore, the so-called ‘catch-all clause’ included in the Commission’s proposal has been kept in order to safeguard the indivisibility of human rights, but it has been clarified thoroughly to ensure maximum predictability for companies.

Consumer Protection under the Brussels I bis Regulation: Room for Improvement

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The Editors of the EAPIL blog
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The author of this post is Willem Visser. He is one of the editors of the Dutch Journal for Consumer Law and Unfair Commercial Practices (Tijdschrift voor Consumentenrecht & handelspraktijken).

In April 2023, the EAPIL Working Group on the Reform of the Brussels I bis Regulation issued a preliminary position paper formulating proposals for reforming the Regulation. On 29 March 2023, the European Commission published a study to support the preparation of a report on the application of the Brussels Ibis Regulation.

In my opinion, consumer protection seems to be only marginally on the radar in these documents. Therefore, I wrote this article, which was published in the Dutch Journal for Consumer Law, where I propose to extend the material scope of the provisions dealing with consumer contracts (Articles 17-19 Brussels I bis Regulation) and to significantly simplify the entire chapter on jurisdiction. A summary of my article and proposals is set out below.

Consumers are protected through EU regulations not only when it comes to their substantive rights (against unfair commercial practices, unfair terms, etc.), but also when it comes to procedural law, in particular the assesment of international jurisdiction in disputes over consumer contracts.

This procedural protection is enshrined in the Brussels I bis Regulation and its predecessors (Regulation No. 44/2001 and the 1968 Brussels Convention). These instruments will be referred to below as ‘the Brussels regime’.

The Brussels regime protects consumers by giving jurisdiction to the courts of their country of residence (Articles 17-19 Brussels I bisRegulation). That seems like a great deal, but in practice there are several limitations to that protection.

First, the consumer protection only applies to consumer contracts and not to any non-contractual obligations invoked by consumers (for example, tort, unjust enrichment and negotiorum gestio). In these types of cases the consumer cannot litigate before the court of his or her domicile, but will probably have to seek the courts of its professional counterparty: the defendant’s domicile. It is not desirable for consumers to be forced to litigate outside their country of residence, because that means extra travel time, litigating in an unfamiliar country and in a different language, with the help of a foreign lawyer, in a procedure that may well be more expensive than in his or her home country. Moreover, it is not always clear – on the basis of the various rulings by the EU Court of Justice – whether an obligation should be qualified as a ‘contractual obligation’ or a ‘non-contractual obligation’. There have been several cases where the natural person was the weaker party and needed protection, but did not get it because of the non-contractual nature of the obligation in question (see the ECJ decisions in Wikingerhof, Kolassa and Deepwater Horizon). I therefore believe that consumer protection in the Brussels Ibis Regulation should not be limited to consumer contracts but should be extended to non-contractual consumer obligations.

Second, the ECJ interpretes the concept of ‘consumer’ restrictively: it “must necessarily be interpreted strictly, in the sense that it cannot be extended beyond the cases expressly mentioned in that Regulation” (amongst others: Poker Player, C-774/19, para. 24). This restrictive approach resulted in a natural person not being able to claim consumer protection under the Brussels regime in the following situations: if he/she was a consumer but transferred his/her rights; in that case, the person to whom the rights have been transferred cannot be considered a ‘consumer’ (C-89/91); if the contract was entered into with a view to an as yet unexercised but future professional activity (C-269/95); if it concerns a class action initiated by a group of consumers (C-167/00); if both parties are consumers (C-508/12); if the consumer does not have a contract with the issuer of the certificates (C-375/13); if the agreement subsequently acquired a professional character (C-498/16); if the contract was concluded for a dual purpose, unless the contract, in view of the context of the transaction – considered as a whole – for which it was concluded, is so distinct from that professional activity that it is evident that it was concluded primarily for private purposes (C-630/17); if there is a claim by a consumer against an airline that is not a party to the transport contract (C-215/18).

So, there are quite a few situations where a natural person is not considered a ‘consumer’, and therefore cannot litigate before the courts of his or her own domicile. This is remarkable, because the European Union ensures “a high level of consumer protection” (Article 38 of the EU Charter of Fundamental Rights). I believe that in several of the situations mentioned above, there is an unjustified lack of protection. In my opinion, the regime of Article 17-19 Brussels I bis Regulation should therefore be applied less restrictively by entering an assumption into the Regulation that a natural person acts in his capacity as a consumer. It is up to the counterparty to prove that the natural person has unmistakably acted in the context of his or her profession or business.

In addition, I believe that consumer protection should also apply to consumer collective actions. There is no valid reason why the collective nature of a claim should result in a group of consumers no longer being considered a weaker party. At the time the contracts were concluded, the consumers represented had less room to negotiate with their professional counterparty, and thus to that extent still had a weaker position. Moreover, it leads to a divergence between the competent court and the applicable law. Still, collective actions based on a breach of consumer contracts remain governed by the law of the consumers’ country. The freedom to conduct a business, guaranteed in Article 16 of the EU Charter, does not necessitate the exclusion of collective actions from consumer protection. The professional counterparty of the consumer has already had to take into account that individual consumers could bring proceedings against it in their own place of residence. That this is different in the case of a consumer collective action is therefore, in that sense, an unexpected advantage for the counterparty.

Third, in my opinion the ‘targeting requirement’ in Article 17 (1)(c) Brussels I bis Reguliation is not workable in practice. This requirement has given rise to much ECJ case-law and leads to legal uncertainty (see the legal commentary on the Alpenhof judgment). In my opinion, in this digital day and age a consumer contract should only be excluded from consumer protection where the professional would not have to expect litigating in the courts of the consumer’s domicile. This is the case only, when the contract is concluded in a physical sales area or when the consumer cannot get the goods or services delivered in his place of residence under the trader’s terms and conditions.

In light of the above, I conclude that consumer protection under the Brussels regime has not kept pace with substantive consumer law in which consumer protection has become more extensive.

But that’s not the only comment I would like to make on the current Brussels I bis Regulation. The complexity of the chapter on jurisdiction (Chapter II of the Regulation) results even today – more than 50 years after its predecessor, the Brussels Convention, was signed by the the EEC members States – in large numbers of preliminary rulings. The Brussels/Lugano regime accounts for the majority of the 245 preliminary rulings on private international law sources from 2015 to 2022. That means more than 120 questions (128 to be precise) over a 7-year period. In my opinion, that is too much for an instrument that is in place more than 50 years.

Reducing the Court of Justice’s workload is not necessarily a compelling reason to simplify a regime, but it should be borne in mind that behind every case submitted to a court, there are two or more parties who – until the preliminary question is answered – cannot proceed with their legal proceedings. The delay is considerable, since preliminary reference proceedings before the Court of Justice take 16.6 months on average.

I therefore propose to replace the articles which give rise to the largest amount of preliminary questions (Article 7(1) and (2) of the Brussels I bis Regulation) by an article which aligns jurisdiction and applicable law. My proposal is that Article 7(1) and (2) (and perhaps other parts of Article 7) should be replaced by the following rule:

A person domiciled in one Member State may also be sued in another Member State whose laws governs the relevant contractual or non-contractual obligation underlying the claim. Where there are several claims governed by different laws, the courts of the Member State which laws governs the most far-reaching claim shall have jurisdiction.

The advantage of aligning jurisdiction and applicable law is that it improves coherence between the Brussels I bis Regulation and the Rome I and Rome II Regulations (which designate the law that is applicable to a contractual or non-contractual obligation). These Regulations all aim to promote predictability of the outcome of litigation, legal certainty and mutual recognition of judgments.

Simplifying the Brussels regime would give rise to fewer preliminary questions and fewer delays. Preventing delays is one of the objectives of procedural law. As the saying goes: ‘Justice delayed is justice denied’.

I admit that I have not yet thought through all consequences of my proposals, and it is going too far to elaborate all of them in the context of my article. But it seems right to discuss these proposals further and, if possible, to include it as an option in the ongoing review of the Brussels I bis Regulation.

EU to Sign the Beijing Convention on the Judicial Sale of Ships

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Pietro Franzina
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On 30 June 2023, the European Commission presented a proposal for a Council decision on the signing, on behalf of the European Union, of the United Nations Convention on the International Effects of Judicial Sales of Ships, adopted on 7 December 2022, also known as the Beijing Convention on the Judicial Sale of Ships.

The Convention sets out a uniform regime for giving effect to judicial sales internationally, while preserving domestic law governing the procedure of judicial sales and the circumstances in which judicial sales confer clean title, that is, title free and clear of any mortgage or charge. By ensuring legal certainty as to the title that the purchaser acquires in the ship, the Convention aims to maximize the price that the ship is able to attract in the market and the proceeds available for distribution among creditors, and to promote international trade.

The key rule of the Convention is that a judicial sale  in one State Party which has the effect of conferring clean title on the purchaser has the same effect in every other State Party, subject only to a public policy exception. Various provisions are found in the Convention which establish how a judicial sale is given effect after completion, including a requirement that the ship registry deregister the ship or transfer registration at the request of the purchaser, and a prohibition on arresting the ship for a claim arising from a pre-existing right or interest (i.e. a right or interest extinguished by the sale). To support the operation of the regime and to safeguard the rights of parties with an interest in the ship, the Convention provides for the issuance of two instruments: a notice of judicial sale and a certificate of judicial sale. It also establishes an online repository of those instruments which is freely accessible to any interested person or entity.

The Council decision that the Commission proposing is based on Article 81(2)(a) and (b) of the Treaty in the Functioning of the European Union, on the recognition and enforcement of judgments and the cross-border service of documents, in conjunction with Article 218(5) (concerning the conclusion of international agreements by the Union). In fact, some of the matters dealt with in the Beijing Convention affect the Brussels I bis Regulation and the Recast Service Regulation. The conclusion of the Convention comes, for those aspects, with the purview of the exclusive external competence of the Union.

The other matters covered by the Convention do not fall under that competence (the Convention includes provisions that deals with other issues of private international law, including jurisdiction, but they do not affect the operation of existing EU legislation). This means that that Member States should join the Convention alongside the Union, in order to ensure the full application of the Convention between the Union and third states.

Deal on Digitalised Judicial Cooperation in the EU

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Marco Pasqua
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The readers of the blog are aware of the European Commission proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters, and the associated proposal for a Directive amending several existing directives with a view to improving digitalisation and ensuring secure, reliable and time-efficient communication between courts and competent authorities.

Presented in December 2021, the two proposals aim to ensure access to justice in the EU including in the events of force majeure, such as pandemics, and adapt judicial cooperation between Member States for such situations.

On 28 June 2023, Parliament and Council negotiators reached an agreement on the use of digital technology in the judicial cooperation among Member States. Negotiators of the Legal Affairs Committee (JURI) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) agreed with Council negotiators on its future shape. The agreement, once formally approved by the Council, will be confirmed by a vote in the European Parliament.

The Parliament press note, which provides few details, highlights two aspects: one relating to electronic documents and videoconferencing, the other regarding inclusive digitalisation.

In relation to electronic documents and videoconferencing, the proposed legislation enables the use of digital technology for exchange of information, documents, payments of fees and videoconferencing. Communication between citizens, companies and national authorities would be ensured by an IT system, created and maintained by the European Commission and financed through the Digital Europe Programme with an access point in each Member State. The European e-Justice portal will provide information to individuals and companies on their rights and the European electronic access point will enable their direct communication with authorities.

Inclusive digitalisation refers to efforts to ensure that digitalisation does not lead to exclusion and is implemented in a way to ensure right to a fair trial for everyone. Equivalent access for people with disabilities is also stressed.

The Council press note specifies that the new rules, once adopted, will improve cross-border judicial procedures by:
-allowing parties and other relevant persons in civil, commercial and criminal hearings to participate by means of videoconferencing or other distance communication technology;
-establishing a European electronic access point through which natural and legal persons can file claims, send and receive relevant information, and communicate with the competent authorities;
-accepting electronic communication and documents from natural and legal persons;
-recognising documents with electronic signatures or seals;
-promoting the payment of fees through electronic means.

Negotiators further agreed on the need for additional training for justice professionals when it comes to the use of digital tools such as videoconferencing and the IT system and encouraged Member States to share their best practices on the use of digital tools.

The Aftermath in Italy of the Ruling of the European Court of Human Rights in BEG

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The Editors of the EAPIL blog
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The author of this post is Michele Grassi, who is a post-doc at the University of Milan.

In 2010, Bechetti Energy Group (‘BEG’) commenced proceedings against Italy before the European Court of Human Rights (ECtHR). The applicant complained that Italy had breached its obligations under Article 6(1) of the European Convention on Human Rights (ECHR) by failing to set aside an arbitral award rendered in a dispute between BEG and Enelpower, despite the apparent lack of impartiality of the arbitrator appointed by the opposing party. In particular, the concerned arbitrator had served as Vice-Chairman and member of the Board of Directors of Enel, Enelpower mother company, and had several professional links with the latter.

In May 2021, the ECtHR rendered its ruling and found that Italy had in fact violated Article 6(1) ECHR. Nonetheless, the Strasbourg Court dismissed the applicant’s request to order the reopening of the domestic proceedings in which Italian courts rejected the appeal for nullity of the arbitral award. They did so on the assumption that

it is in principle for the Contracting States to decide how best to implement the Court’s judgments without unduly upsetting the principles of res judicata or legal certainty in civil litigation.

However, the Court stressed the

importance, for the effectiveness of the Convention system, of ensuring that domestic procedures are in place to allow a case to be revisited in the light of a finding that the safeguards of a fair hearing afforded by Article 6 have been violated.

The Revocation of Final Civil Judgments under Italian Law

Under Italian procedural law, revocation of final civil judgments (and the reopening of the respective proceedings) is only available in a limited number of cases, listed at Article 395 of the Italian code of civil procedure (CPC). This same provision also applies (in part) to arbitral awards pursuant to Article 831 CPC.

Before 2022, revocation was not available in case of breach of the ECHR rights (see the judgments of the Italian Constitutional Court of 26 May 2017 no. 123, and of 27 April 2018 no. 93). The situation has now changed, following a recent reform of the Italian code of civil procedure that introduced, among other things, a new reason for revocation of civil judgments that have been found in breach of the Convention by the ECtHR (Article 391-quater CPC).

Still, the new provision requires that three cumulative – and quite restrictive – conditions be met: (1) The violation must concern a right of status of a natural person; (2) The just satisfaction awarded by the Court pursuant to Article 41 ECHR must not be sufficient to remedy the consequences of the violation; (3) The revocation of the judgment must not affect the rights of third parties (i.e. parties that did not participate in the proceedings before the ECtHR).

Those conditions resemble the requirements for the reopening of domestic proceedings provided by the laws of other States parties to the ECHR (e.g., Article L 452-1 of the French code de l’organisation judiciaire or Article 510 of the Spanish code of civil procedure. See also the recommendation issued by the Committee of Ministers to member States, R(2000)2 of 19 January 2000). Still, the combined application of the above conditions significantly narrows the scope and effectiveness of the Italian remedy. In particular, it is apparent that Article 391-quater CPC cannot be applied in the BEG case, since the violation of the ECHR addressed in the case does not concern a right of status of a natural person.

The Position of the Italian Government

In light of the above, on 3 August 2022, the Italian government submitted an Action Report to the Secretariat of the Committee of Ministers. According to the Report: the Italian State had promptly paid to BEG the “just satisfaction” awarded by the ECtHR judgment (€ 51,400); the domestic civil proceedings that led to the violation of the ECHR had not been reopened, in compliance with the decision of the Court that dismissed the applicant’s request to that end; the Italian State considered to have fully discharged its obligations under Article 46 ECHR; BEG had commenced proceedings in Italy against the Italian government, the opposing party in the arbitral proceedings and the arbitrator concerned, seeking compensation of further damages.

The Position of the Applicant

On 27 January 2023, BEG submitted a Communication pursuant to Rule 9(1) of the Rules of the Committee of Ministers for the supervision of the execution of judgments, whereby it: confirmed that it had commenced proceedings against, inter alia, the concerned arbitrator for compensation of the relevant damages; contested the Italian government’s contention that the judgment only entailed the payment of the amount of just satisfaction awarded by the Court pursuant to Article 41 ECHR; contested the Italian government’s argument that it had no obligation to ensure the reopening of the domestic proceedings, because the Court had dismissed the applicant’s request to that effect; contended that, from a theoretical standpoint, the re-examination or reopening of the domestic proceedings would constitute an appropriate measure of restitutio in integrum to re-establish the situation which would have existed if the violation had not been committed. At the same time, it acknowledged that, under Italian procedural law, it was not possible to reopen the domestic proceedings; requested, as a result, full financial compensation of the damages suffered.

The Effects of the BEG judgment in Italy

The Committee of Ministers of the Council of Europe has not yet issued a final resolution and the supervision process is still pending. Accordingly, for the time being, the decision of Italian courts on the validity of the contested arbitral award still stands as res judicata. The applicant has not sought a revocation of the domestic judgment, as this remedy is not available under Italian procedural law, but it has rather commenced new proceedings, claiming full compensation of the relevant damages. Conversely, the Italian government contends to have fully discharged its international obligation to abide by the final judgment of the ECtHR by paying the just satisfaction awarded by the ECtHR.

One might then question the effectiveness of the ECtHR decision in this case. Following several years of litigation, the applicant is still bound by a decision that has been found in violation of its Convention rights. This is not the place to elaborate on the possible existence of an international obligation of the Italian State to ensure that the domestic proceedings are reopened, despite the ECtHR’s dismissal of the applicant’s claim to that end. I personally think that this is the case, based on the State’s customary law obligation to ensure the cessation of international wrongful acts and to make full reparation for the injury caused. Moreover, in a recent decision against Greece, the same Strasbourg Court held that “the taking of measures by the respondent State to ensure that the proceedings before the Court of Cassation are reopened, if requested, would constitute appropriate redress for the violation of the applicant’s rights” (see Georgiou v Greece, 14 March 2023, app. no. 57378/18).

What is worth mentioning – especially in light of the recent decision of the French Cour de Cassation, reported in the post by Gilles Cuniberti on this blog – are the possible side effects of the BEG judgment, concerning the recognizability of the arbitral award at stake outside Italy. Indeed, according to well established case-law of the ECtHR, requested States shall refuse the recognition and enforcement of foreign judgments if the parties’ procedural rights were infringed in the State of origin (see Pellegrini v. Italy, 20 June 2000, app. no. 30882/96; Avotiņš v Latvia, 23 May 2016, app. no. 17502/07; Dolenc v Slovenia, 20 October 2022, app. no. 20256/20). This might explain why the Cour de Cassation did not focus on the possible irreconcilability between the Albanian judgment, whose recognition was sought in France, and the arbitral award between BEG and Enelpower. Nonetheless, it might still be quite contradictory to hold that a foreign decision cannot be enforced due to the party’s attempt to “evade” an award that has been found in violation of the Convention right to fair proceedings.

The European Parliament on EU-Ukraine Relations under the Hague Judgments Convention

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Pietro Franzina
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The European Parliament passed on 15 June 2023 a resolution expressing support for the accession of Ukraine to the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters.

As reported on this blog, the Council of the European Union had already decided on 24 April 2023 that the Union would establish treaty relations with Ukraine under the Convention following the accession of Ukraine.

According to Article 29 of the Convention, accession to the Convention by one State creates treaty relations between that State and the States that have already joined the Convention only if neither of them has notified the depositary that the accession should not have the effect of establishing treaty relations with the other. If a State intends to issue a declaration to that effect, it must do so within 12 months of the ratification or accession of the State concerned. Absent a declaration, the Convention comes into effect between the States in question on “the first day of the month following the expiration of the period during which notifications may be made”. 

The Council of the Union assessed, in its decision of 24 April 2023, that there were no reasons to prevent the accession by Ukraine from creating treaty relations between the Union and Ukraine under the Convention, and accordingly decided that an Article 29 declaration should not be issued.

By its recent resolution, the European Parliament basically expressed the same view.

The resolution does not entail, in itself, any effect on the international plane. Rather, it addresses a concern that relates to the role that the Parliament is entitled to play in the process leading to decisions regarding the establishment of the Union’s treaty relations with third countries.

Pursuant to Article 218(6) TFEU, the conclusion of an international agreement by the European Union requires a Council decision. When it comes to agreements covering fields to which the ordinary legislative procedure applies, including judicial cooperation in civil matters, the Council may only act “after obtaining the consent of the European Parliament”. The decision of 12 July 2022 whereby the Council decided that the Union would accede to the Hague Judgments followed precisely that pattern.

Now, under the current practice of the institutions, no formal procedure in accordance with Article 218(6) TFEU is initiated for the conventions that contain a non-objection mechanism, such as the Judgments Conventions. With respect to these conventions, the Commission only informs the Council and Parliament of any third country’s request to accede to a the convention in question. This means that if the Council decides to take no action regarding the third State’s accession (thus paving the way to the establishment of treaty relations with the latter), the Parliament risks being prevented from expressing its views on the desirability of the establishment of such relations.

In its recent resolution, the Parliament, having recalled that “an international agreement cannot affect the allocation of powers fixed by the Treaties”, stated that “the fact that at international level a silence procedure has been adopted to facilitate accession by third states should be of no consequence for the EU’s internal decision-making process”.

It is thus for the purposes of the internal decision-making process of the EU that the Parliament made use, by this resolution, of its prerogative under Article 218(6) TFEU to make a stance on the establishment of treaty relations between the Union and Ukraine under the Hague Judgments.

That said, the resolution also provided the Parliament with an opportunity to issue a political statement concerning the Union’s relations with Ukraine, in general. In the operative part, the Parliament reiterated its “unwavering solidarity with the people and leadership of Ukraine and its support for the independence, sovereignty and territorial integrity of Ukraine, within its internationally recognised borders”.

European Citizens‘ Initiative on Concept of Judicial Precedent in EU Countries

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Marta Requejo Isidro
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On 31 May 2023, the Commission adopted an implementing decision whereby the European citizens’ initiative (ECI) entitled Effective implementation of the concept of judicial precedent in EU countries shall be registered. The English version can be downloaded here.

The decision has been taken pursuant to Regulation (EU) 2019/788 on the European citizens’ initiative. The Regulation establishes the procedures and conditions required for an initiative inviting the Commission, within the framework of its powers, to submit any appropriate proposal on matters where citizens of the Union consider that a legal act of the Union is required for the purpose of implementing the Treaties.

The initiative comes from a small group of persons (according to Article 5 of the Regulation, an initiative must be prepared by at least seven natural persons), whose affiliation is not disclosed on the webpage. The e-mail address of the substitute to the representative of the organisers points to the University of Bucarest.

The objectives of the initiative as expressed by the organisers are the introduction of ‘a mechanism at national level which guarantees mutual recognition of final judicial decisions adopted by courts’ in other Member States and ‘the option of invoking national judicial precedents decided by the courts of the country in question’, with a view to ‘consolidat[ing] a uniform judicial practice among the Member States’.

The mechanism would apply provided that: ‘(a) the Court of Justice of the European Union (CJEU) has had occasion to interpret the applicable provisions of EU law’ and that ‘(b) the case in question concerns similar or identical legal questions’. The organisers ask for the mechanism to be ‘actually available to litigants, allowing them to request the recognition of another decision relevant to their case at any stage of the proceedings.’ Furthermore, they consider that ‘a certain degree of flexibility should be ensured in light of the ‘rebus sic stantibus’ clause, making it possible to change the case-law if certain fundamental circumstances have changed.’ In addition, Member States should be ‘obliged to impose  effective, dissuasive and proportionate penalties in cases where the mechanism is not complied with’.

The text of the initiative is available here. Judging from its last paragraph, it has wide ambitions in terms of material scope: ‘Firstly, the initiative is based on Articles 81 and 82(1) TFEU as regards the recognition of judgments with cross-border implications. Secondly, the proposal is based on Article 352 TFEU and potentially Article 114 TFEU, so as to cover all situations which lead to inconsistent application and interpretation of EU [law] that could impede the attainment of EU’s objectives and the proper functioning of its internal market.’

In the absence of further explanations, I am not sure (but curious) about how the future mechanism would relate to already existing EU legal texts on the recognition and enforcement of foreign judgments in civil and commercial matters.

I fail to see third parties to a decision being granted, as per EU law, a right to requests its recognition in the usual sense of the word; but perhaps there is a new notion of recognition in the making – one providing for ‘precedential’ effect. Or, maybe, what makes the difference between the initiative’s desired mechanism in comparison to the status quo is the prong on ensuring litigants an option to rely ‘on national judicial precedents decided by the courts of the State concerned’, if ‘the State concerned’ is means a Member State other than the one where the court seized sits.

Again, I am not sure this is the correct understanding of the initiative, which at some point states that The mechanism ‘should apply not only to recognising final judicial decisions adopted in other Member States, but also to recognising final judicial decisions adopted in the country in question’ (italics added).

In any event, the future mechanism would only apply subject to three cumulative criteria being met: (i) the final judicial decision at stake applied provisions of Union law; (ii) the CJEU has already interpreted the same relevant provisions of Union law and (iii) the case concerned is governed by similar or identical points of law. First and second conditions do not look like too difficult to identify in a given case; the same can definitely not be claimed for the third one.

As a rule, all statements of support of a citizen’s initiative* shall be collected within a period not exceeding 12 months from a date chosen by the group of organisers (the ‘collection period’). According to Article 8 (1) of Regulation 2019/788, that date must be not later than six months from the registration of the initiative in accordance with Article 6. So far, I have found no indication on how to express support to this particular initiative. Pursuant to Article 11(7) of Regulation 2019/788, the recourse to individual online collection systems will no longer be possible for initiatives registered after the end of 2022; organisers will thus have to use the central online collection system, for which the Commission is responsible. It maybe that further clarification as regards the exact scope of the initiative’s proposed mechanism is to be found there (not to be taken for granted, though: assuming it is technically possible, there is a thin line between simply explaining an initiative and actually amending it).

*In order to ensure that a European citizen’s initiative is representative, a minimum number of signatories coming from each of those Member States is required. This translate into conditions set under Article 3 of the Regulation. Statistics on European Citizen Initiatives presented, registered, and valid, can be found in a recent report of the European Parliament.

Political Agreement Reached at Council Level on the SLAPPs Directive

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Pietro Franzina
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The Council of the European Union adopted on 9 June 2023 a political agreement on the proposal for a directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

Based on this common position, the Council will now start discussions with the European Parliament with a view to settling on the final text of the directive.

The text resulting from the Council’s general approach departs from the initial proposal (analysed by Marta Requejo in a previous post on this blog), in various respects. The suggested changes have been presented as underlying a concern for  more balanced solutions, and for increased discretion left to national courts, but have been criticised by some stakeholders as involving a watered-down compromise.

The most significant innovations include the following.

The Council, while agreeing that the future directive should apply only to matters with cross-border implications,  advocates the suppression of the provision in the Commission’s proposal that defined what matters should be considered to have such implications.

According to Article 4 of the proposal, a matter ought to be considered to have cross-border implications “unless both parties are domiciled in the same Member State as the court seised”. The proposal added that, where both parties are domiciled in the same Member State, the matter would still be deemed to have cross-border implications if (a) the act of public participation targeted by the SLAPP “is relevant to more than one Member State”, or (b) the claimant have initiated concurrent or previous proceedings against the same defendants in another Member State.

The rule providing early dismissal of manifestly unfounded claims should, according to the Council, be rephrased as follows: 

Member States shall ensure that courts may dismiss, after appropriate examination, claims against public participation as manifestly unfounded at the earliest possible stage, in accordance with national law.

The proposed rewording includes language that was not in the initial proposal (“after appropriate examination”, “at the earliest possible stage, in accordance with national law”). Conversely, the Council’s text fails to retain the paragraph in the initial proposal according to which “Member States may establish time limits for the exercise of the right to file an application for early dismissal”, provided that such time limits are “proportionate and not render such exercise impossible or excessively difficult”.

The Council further suggests the deletion of the provision in the proposal which asked Member States to “ensure that if the defendant applies for early dismissal, the main proceedings are stayed until a final decision on that application is taken”.

According to the Council, the provision on compensation in the Commission’s proposal should likewise be suppressed (arguably, because it was considered to be unnecessary, in light of the existing law). It read as follows:

Member States shall take the necessary measures to ensure thata natural or legal person who has suffered harm as a result of an abusive court proceedings against public participation is able to claim and to obtain full compensation for that harm.

The Council also seeks to modify the wording of the provision in the initial proposal whereby Member States should deny recognition to judgments given in a third State in the framework of a SLAPP brought against natural or legal person domiciled in the Union. The amended version of the provision no longer refers to violation of public policy as the reason for non-recognition.

As regards jurisdiction, the text agreed by the Council retains the rule whereby those targeted by a SLAPP brought in a third State should be able to seek compensation in the Member State of the courts of their domicile, for the damages and the costs incurred in connection with the proceedings in the third country, but adds that Member States “may limit the exercise of the jurisdiction while proceedings are still pending in the third country”.

Finally, according to the Council’s general approach, the Member States should be given three years, instead of two as initially contemplated, to implement the directive in their legal systems.

French Committee Issues Report on Paris International Commercial Courts

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Gilles Cuniberti
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The Legal High Committee for Financial Markets of Paris issued a report on the work of the international commercial chambers of Paris courts (Bilan du fonctionnement des chambres internationales du tribunal de commerce et de la cour d’appel de Paris) in March 2023.

The report discusses the competitive environment of the Paris international commercial courts, the resources of the courts, how they can be seized, and their procedural rules.

It concludes with 15 propositions for reform. They include:

  • Offering to the parties the power to agree on specialised judges assigned to other chambers (than the international commercial chamber) of the commercial court of Paris,
  • Reflecting on the possibility to appoint French and foreign lawyers to supplement the international chambers,
  • Introducing the possibility to hear private experts retained by the parties
  • Allowing the parties to agree on confidential proceedings in cases which could have gone to arbitration.

European Commission Proposes Decision and Regulation on the Protection of Adults

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Pietro Franzina
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On 31 May 2023, the European Commission has proposed new rules aimed to ensure that the protection of adults is maintained in cross-border cases, and that their right to individual autonomy, including the freedom to make their own choices as regards their person and future arrangements is respected when they move within the EU.

The proposals, based on Article 81(2) TFEU, cover adults who, by reason of an impairment or insufficiency of their personal faculties, are not in a position to protect their own interests (e.g., due to an age-related disease).

Specifically, In the context of a growing cross-border mobility of people in the EU, this gives rise to numerous challenges. For instance, individuals concerned or their representatives may need to manage assets or real estate in another country, seek medical care abroad, or relocate to a different EU-country. In such cross-border situations, they often face complex and sometimes conflicting laws of Member States, leading to legal uncertainty and lengthy proceedings.

The proposed Regulation, which is meant to apply 18 months after its adoption, introduces a streamlined set of rules that will apply within the EU, in particular to establish which court has jurisdiction, which law is applicable, under what conditions a foreign measure or foreign powers of representation should be given effect and how authorities can cooperate. It also proposes a set of practical tools, including the introduction of a European Certificate of Representation, which will make it easier for representatives to prove their powers in another Member State.

The proposal for a Council Decision provides for a uniform legal framework for protecting adults involving non-EU countries. It obliges all Member States to become or remain parties to the 2000 Protection of Adults Convention in the interest of the Union. Once the Decision is adopted, the Member States that are not yet party to the Convention will have 2 years to join it. Actually, some Member States have already launched their own ratification process, with the latest to announce (or re-announce) such a move being Italy, just a few days ago.

The approach underlying the package – in short, ensuring that the Hague Adults Convention enters into force for all Member States, and adopting a Regulation aimed to strengthen the operation of the Convention in the relations between Member States – reflects the suggestions that were put forward, inter alia, by the European Law Institute and the European Association of Private International Law, notably through a position paper issued in April last year.

Further analysis of the two proposals will be provided through this blog in the coming weeks.

UNIDROIT Principles on Digital Assets and Private Law Adopted

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Matthias Lehmann
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On 10 May 2023, UNIDROIT adopted the Principles on Digital Assets and Private Law. The Principles contain recommendations to national legislators on how to deal with the private law issues raised by digital assets, such as cryptocurrencies or tokens. The final text can be found here.

Principle 5 concerns the conflict of laws. A previous draft and online consultation by UNIDROIT (see this blogpost) led the European Association of Private International Law to create a Working Group on the Law Applicable to Digital Assets, which has provided special input on this provision. Some of the Working Group’s suggestions are reflected in the final version, which reads:

Principle 5: Applicable law

(1) Subject to paragraph (2), proprietary issues in respect of a digital asset are governed by:

(a) the domestic law of the State expressly specified in the digital asset, and those Principles (if any) expressly specified in the digital asset; or, failing that,

(b) the domestic law of the State expressly specified in the system on which the digital asset is recorded, and those Principles (if any) expressly specified in the system on which the digital asset is recorded; or, failing that,

(c) in relation to a digital asset of which there is an issuer, including digital assets of the same description of which there is an issuer, the domestic law of the State where the issuer has its statutory seat, provided that its statutory seat is readily ascertainable by the public; or

(d) if none of the above sub-paragraphs applies:

OPTION A:

(i) those aspects or provisions of the law of the forum State as specified by that State;

(ii) to the extent not addressed by sub-paragraph (d)(i), those Principles as specified by the forum State;

(iii) to the extent not addressed by sub-paragraphs (d)(i) or (d)(ii), the law applicable by virtue of the rules of private international law of the forum State.

OPTION B:

(i) those Principles as specified by the forum State;

(ii) to the extent not addressed by sub-paragraph (d)(i), the law applicable by virtue of the rules of private international law of the forum State.

(2) In the interpretation and application of paragraph (1), regard is to be had to the following:

(a) proprietary issues in respect of digital assets, and in particular their acquisition and disposition, are always a matter of law;

(b) in determining whether the applicable law is specified in a digital asset, or in a system on which the digital asset is recorded, consideration should be given to records attached to, or associated with, the digital asset, or the system, if such records are readily available for review by persons dealing with the relevant digital asset;

(c) by transferring, acquiring, or otherwise dealing with a digital asset a person consents to the law applicable under paragraph (1)(a), (1)(b) or (1)(c);

(d) the law applicable under paragraph (1) applies to all digital assets of the same description;

(e) if, after a digital asset is first issued or created, the applicable law changes by operation of paragraph (1)(a), (1)(b) or (1)(c), proprietary rights in the digital asset that have been established before that change are not affected by it;

(f) the ‘issuer’ referred to in paragraph (1)(c) means a legal person:

(i) who put the digital asset, or digital assets of the same description, in the stream of commerce for value; and

(ii) who, in a way that is readily ascertainable by the public,

(A) identifies itself as a named person;

(B) identifies its statutory seat; and

(C) identifies itself as the person who put the digital asset, or digital assets of the same description, into the stream of commerce for value.

(3) The law applicable to the issues addressed in Principles 10 to 13, including whether an agreement is a custody agreement, is the domestic law of the State expressly specified in that agreement as the law that governs the agreement, or if the agreement expressly provides that another law is applicable to all such issues, that other law.

(4) Paragraphs (1) and (2) are subject to paragraph (3).

(5) Other law applies to determine:

(a) the law applicable to the third-party effectiveness of a security right in a digital asset made effective against third parties by a method other than control;

(b) the law applicable to determine the priority between conflicting security rights made effective against third parties by a method other than control.

(6) Notwithstanding the opening of an insolvency-related proceeding and subject to paragraph (7), the law applicable in accordance with this Principle governs all proprietary issues in respect of digital assets with regard to any event that has occurred before the opening of that insolvency related proceeding.

(7) Paragraph (6) does not affect the application of any substantive or procedural rule of law applicable by virtue of an insolvency-related proceeding, such as any rule relating to:

(a) the ranking of categories of claims;

(b) the avoidance of a transaction as a preference or a transfer in fraud of creditors;

(c) the enforcement of rights to an asset that is under the control or supervision of the insolvency representative.

As one can see, the Principle is quite long and complex.

The starting point is that the law applicable to a digital asset may be chosen either in the digital asset itself (Principle 5(1)(a)) or in the system in which the digital asset is recorded (Principle 5(1)(b)). Thus, precedence is given to the principle of party autonomy. This remarkably resembles the recently adopted sec. 12-107 US Uniform Commercial Code (UCC).

In the absence of a choice of law, the law of the statutory seat of the issuer of the digital asset shall apply, provided that this seat is readily ascertainable to the public (Principle 5(1)(c)). This was one of the key proposals of the EA PIL Working Group. Yet the Principles define the issuer as the person who has put the asset “in the stream of commerce for value” and has identified itself as such as well as its statutory seat (Principle 5(2)(f)). This considerably reduces the provision’s significance. It would, for instance, not apply to those who distribute their assets via airdrop or those who choose not to identify their statutory seat.

If none of these rules apply, the Principles give the national legislator two options: Under Option A, it can submit digital assets to special rules of its national law, to be supplemented by the UNIDROIT Principles. Under Option B, it can directly refer to the UNIDROIT Principles as governing law. In both cases, any remaining gaps will be filled by the law that is applicable according to the conflict-of-laws rules of the forum state.

This latter technique, which effectively substitutes the law of the forum for the search for an applicable law, is known in French law as a substantive rule of PIL (règle materielle de droit international privé). It provides a simple solution to the conflict-of-laws conundrum. That the Principles suggest themselves as applicable law is novel, but well understandable given their goal of legal harmonisation.

Less harmonisation is the default rule, which refers to the conflict-of-laws rules of the forum. No indication whatsoever is given what these conflicts rules should look like. One might fear that this will lead to divergence between national laws. It is to be hoped that they can be overcome by the Joint Project of the Hague Conference on Private International Law and UNIDROIT on Digital Assets and Token, which was recently announced.

— Thanks to Felix Krysa and Amy Held for contributing to this post.

European Parliament’s Study on the Cross-Border Legal Recognition of Parenthood in the EU

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Pietro Franzina
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At the request of the Committee on Petitions of the European Parliament, the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs commissioned  a study titled Cross-Border Legal Recognition of Parenthood in the EU. It is available here.

Authored by Alina Tryfonidou (Neapolis University of Pafos), the study examines the problem of non-recognition of parenthood between Member States and its causes, the current legal framework and the (partial) solutions it offers to this problem, the background of the Commission proposal for a regulation on jurisdiction, applicable law, recognition of decisions and acceptance of authentic instruments in matters of parenthood and on the creation of a European Certificate of Parenthood, and the text of the proposal. It also provides a critical assessment of the proposal and issues policy recommendations for its improvement.

Marburg Group Issues Comments on the Commission’s Proposal on Parenthood

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Pietro Franzina
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A group of German scholars, consisting of Christine Budzikiewicz (University of Marburg), Konrad Duden (University of Leipzig), Anatol Dutta (Ludwig Maximilian University of Munich), Tobias Helms (University of Marburg) and Claudia Mayer (University of Regensburg), collectively the Marburg Group, reviewed the European Commission’s proposal of 7 December 2022 for a regulation on jurisdiction, applicable law, recognition of decisions and acceptance of authentic instruments in matters of parenthood and on the creation of a European Certificate of Parenthood.

The Group, while welcoming the initiative of the Commission issued a paper to suggest some fundamental changes, apart from technical amendments.

The Group’s comment can be found here.

Bulgarian Supreme Court Judgment on Pancharevo – Correct Answer to a Wrong Question

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The Editors of the EAPIL blog
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This post was written by Nadia Rusinova (Hague University of Applied Sciences).

The judgment of the Court of Justice of the EU in the Pancharevo case (C-490/20) drew the attention of the legal community across Europe (see post on this blog here), as it analyzed the compatibility with the EU law of the refusal to issue a Bulgarian birth certificate indicating two persons of the same sex as parents. Following this judgment, the legal proceedings in Bulgaria continued and final Supreme Court judgment was issued on 1 March 2023. This final court act is important for the further developments in regard to the free movement and cross-border recognition of parenthood.

The Facts

To recall the facts, the Bulgarian V.M.A. and the British K.D.K. – both women – are married and have been living together in Spain since 2015. In December 2019, the couple had a daughter, S.D.K.A., who was born and lives in Spain. The Spanish authorities issued a birth certificate for S.D.K.A. which names V.M.A. and K.D.K. as her mothers. V.M.A. also applied to the Bulgarian authorities for a birth certificate for the child, which is needed to secure a Bulgarian identity document. Sofia municipality instructed V.М.А. to disclose the identity of the child’s biological mother. V.М.А. did not do so. Sofia municipality then refused to issue the birth certificate.

V.M.A. appealed before the Administrativen sad Sofia-grad (Administrative Court of the City of Sofia), which in turn referred to the Court of Justice of the EU. In its judgment, delivered by the Grand Chamber, the CJEU held that a child, who is an EU citizen and whose birth certificate, issued by the competent authorities of the host Member State, designates two persons of the same sex as the child’s parents, the Member State of which that child is a national is obliged (i) to issue to that child an identity card or a passport without requiring a birth certificate to be drawn up beforehand by its national authorities, and (ii) to recognise, as is any other Member State, the document from the host Member State that permits that child to exercise, with each of those two persons, the right to move and reside freely within the territory of the Member States.

Following the CJEU judgment in Pancharevo, the referring court obliged Sofia municipality to issue a birth certificate for the child noting V.M.A. and K.D.K as her parents. After an appeal the Bulgarian Supreme Administrative Court (Supreme Court) overruled this decision, upholding the refusal to issue a birth certificate for the child, stating that the child is not a Bulgarian citizen (author’s unofficial translation of the judgment into English here)

What are the Facts and was is the Law?

To answer this question, it is important to review the initial application: the request is to draw up a birth certificate for the child, a prerequisite for Bulgarian identity documents to be issued. As noted, CJEU explicitly points that the obligation of the Member State under Article 4, § 3 Directive 2004/38/EC is to issue an identity card or passport to its citizens. In this sense, the question of the nationality of the child becomes crucial: if the child does not have Bulgarian nationality, then the Republic of Bulgaria is under no obligation to draw up a birth certificate, and in this case the refusal would be fully in accordance with the law.

The CJEU confirms what is obvious, finding that it is for each Member State, having due regard to international law, to lay down the conditions for acquisition and loss of nationality. Then it stated that “according to the findings of the referring court, which alone has jurisdiction in that regard, S.D.K.A. has Bulgarian nationality by birth”. Therefore, the entire CJEU judgment is rendered under the initial assumption that the child has acquired Bulgarian nationality at birth, stating in § 44 that “since S.D.K.A. is a Bulgarian national, the Bulgarian authorities are required to issue to her an identity card”. Following the CJEU judgment, the referring court imposed an obligation on the Bulgarian authority to issue a birth certificate for the child, again assuming that the child is a Bulgarian citizen.

The Supreme Court as a last instance court has the power to reassess the facts. The Supreme Court then starts the assessment of the requirements de novo and notes that for a child to acquire Bulgarian nationality by birth, at least one of the parents must be a Bulgarian national, and points that “of importance in this case (…) is the presence of filiation with the Bulgarian citizen”. Indeed, Article 25 of the Bulgarian Constitution and Article 8 of the Law on Bulgarian Citizenship state that a Bulgarian citizen is anyone whose at least one parent is a Bulgarian citizen. How then can it be established who has the capacity of “parent” in this situation, and is it decisive that in the Spanish birth certificate the child has two (same-sex) parents?

In their plea to the first instance court, the applicants referred to the provisions of the Bulgarian Private International Law (PIL) Code. They essentially argued that the Spanish law is applicable to the establishment of parenthood and since both mothers have validly acquired the status of parent of the child in Spain, thus filiation with the Bulgarian mother is established and leads to acquisition of Bulgarian nationality. It is however questionable if these PIL provisions can be applied for the purpose of nationality determination, which is traditionally purely domestic issue. According to the Article 83 § 1 of the PIL Code, establishment of a parent-child relationship is governed by the law of the State whose nationality the child acquired at the time of birth. It is true that if the child has Spanish nationality by birth, then parenthood should be established according to the Spanish law. If it is stateless Article 83, para. 2 and 3 of the PIL Code would again point to the Spanish law as applicable law as more favorable to the child. However, for these provisions to be applicable, the child first needs to be found to be a Spanish citizen by birth or stateless, both logically following a determination of its nationality.

To initially determine whether the child has Bulgarian nationality under Article 25 of the Constitution, the parenthood would therefore inevitably be established under the Bulgarian law. Pursuant to Article 60, paras. 1 and 2 of the Family Code the origin from the mother is determined by birth. The child’s mother is the woman who gave birth, including in instances of assisted reproduction. It was therefore necessary in the present case to identify the woman who gave birth, information the couple concerned refused to disclose. This refusal led to the result that filiation with the Bulgarian mother cannot be established. The Supreme Court then held that “After it was established in the case that the child (…) is not a Bulgarian citizen, in the sense of the applicable law, there is no obligation for the Republic of Bulgaria (…) to draw up a birth certificate”.

The conclusion concerning the nationality of the child, and the judgment in this part, are technically correct. They are also very convenient in that they provide the ideal setting for the Bulgarian authorities to achieve the result they need to achieve, that is, to not recognise same-sex parenthood under the Bulgarian legal order. This approach allowed a formally accurate judgment and released the Supreme Court from an obligation to rule on several decidedly inconvenient issues, the first and most important one being the thorny question on the same-sex parenthood.

In addition, no danger of statelessness is present because the child is entitled to Spanish nationality. When Bulgarian nationality by birth is not possible, no other ground for acquisition can be applied to the present case. The Supreme Court notes also that the child did not acquire British nationality by birth because the British mother, who was born in Gibraltar to a parent who was a British national, cannot pass on her nationality to a child when that child is born outside the territory of the United Kingdom (footnote 14 of the AG Opinion). Since concerns regarding potential statelessness were raised, the Supreme Court needed to examine whether a danger existed for the child to be stateless – an undesired outcome for the Bulgarian authorities as it would bring supranational response and potential accountability.

To exclude potential statelessness, after establishing that the child is not Bulgarian national, the Supreme Court referred to the Spanish law that Spanish citizens by origin are persons born in Spain when the national law of neither of their parents confers nationality on the child.

Given the facts established in the case, that the national legislation of either of the parents named in the child’s birth certificate drawn up in Spain, where it was born, does not grant citizenship, it [the child] should, by virtue of the said provision, be a citizen of Spain, member of the European Union. […] its applicability, in the present case, was expressly confirmed by the Spanish Government […] as the Advocate General points out, there is no danger of the child being stateless.

Essentially, by stating that the child is not a Bulgarian national, the Supreme Court provides the mothers with the only condition needed to claim the child’s right to Spanish nationality and shifts the responsibility for the current statelessness to them.

As a consequence, the child is also an EU citizen and therefore has the right to free movement. The Supreme Court mentions that because the child is not a Bulgarian citizen, she cannot invoke either the rights arising from 4, § 3 of Directive 2004/38/EC, or those arising from Articles 20 and 21 TFEU. But this would be true only if the child was not an EU citizen. Because the child’s right to Spanish nationality “upon request” is established, it is for the mothers to exercise the right and receive the protection of the rights of the child through the acquisition of Spanish citizenship.

Is Bulgaria in Violation of its Obligations under EU law?

In § 67 and 68 of the Pancharevo ruling, CJEU also considered the possibility that S.D.K.A. does not have Bulgarian nationality. In this case, it pointed out that regardless of their nationality and whether they themselves are EU citizens, K.D.K. and S.D.K.A. must be regarded by all Member States as being, respectively, the spouse and the direct descendant of an EU citizen – V.M.A., within the meaning of Article 2(2)(a) and (c) of Directive 2004/38, and therefore must be regarded as being V.M.A.’s family members “for the purposes of the exercise of the rights conferred in Article 21(1) TFEU and the secondary legislation relating thereto”. Can we then say that Bulgaria refuses to recognize the parent-child relationship legally established between a child and both her (same-sex) parents in another Member State for the purpose of exercising EU free movement rights with both parents?

Such conclusion appears to be rushed. With the Supreme Court judgment Bulgaria does not create obstacles to the child’s freedom of movement because “to exercise without impediment, with each of her two parents, her right to move and reside freely within the territory of the Member States as guaranteed in Article 21(1) TFEU” is not at all what was requested from the Bulgarian authorities. The two mothers requested a Bulgarian birth certificate intended to be used to apply for a Bulgarian identity document (this is also established and noted in §15 of the Request for preliminary ruling) and the legal nature of this request inevitably triggered the application of Bulgarian law on nationality.

The Pancharevo ruling does not require the Member States to mutually recognize the contents of birth certificates in regard to matters that do not relate to free movement rights. If the request had concerned indeed the right to free movement on the basis of the child’s being a direct descendant and V.M.A.’s family member, the authorities would not have had grounds to refuse. However, this should have been anticipated at an earlier stage of the proceedings. It is not in the Court’s power to rule on an issue not raised in any of these administrative proceedings.

What Would be the Right Way to Proceed?

It perhaps remains true that if the applicants had asked the right question, they would have received the right answer. Adequate proceeding is currently available under the Law on the entry, residence and departure of the citizens of the European Union and their family members (it is worth to note that indeed before 2019 this avenue was not available for Bulgarian citizens as this instrument used to encompass the citizens of the European Union who are not Bulgarian citizens and their family members.) As an example, this same Supreme Court rendered not so long ago a judgment recognising same-sex marriage for the purposes of free movement, in line with the Coman ruling, by issuing a permit for a long-term residence of a family member of a citizen of the EU in Bulgaria. Indeed, Bulgarian law does not permit same-sex marriage, and the Bulgarian Constitution stipulates that marriage is a voluntary union between a man and a woman. The Court then rightly noted that the disputed issue in the case is not related to the conclusion or recognition of a same-sex civil marriage in Bulgaria, but to the presence or lack of the prerequisites for a family member of an EU citizen to reside lawfully in Bulgaria. In addition, the Court’s decision holds that

It follows that a Member State cannot invoke its national law to refuse to recognize on its territory, solely for the purpose of granting a derived right of residence to a third-country national, a marriage concluded by him/her with a Union citizen of the same sex in another Member State in accordance with its law.

International Commercial Courts for Germany?

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The Editors of the EAPIL blog
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This post was written by Giesela Rühl, LL.M. (Berkeley), Humboldt-University of Berlin, and is also available via conflictoflaws.net.

On 25 April 2023 the German Federal Ministry of Justice (Bundesministerium der Justiz – BMJ) has published a bill relating to the establishment of (international) commercial courts in Germany. It sets out to strengthen the German civil justice system for (international) commercial disputes and aims to offer parties an attractive package for the conduct of civil proceedings in Germany. At the same time, it is the aim of the bill to improve Germany’s position vis-à-vis recognized litigation and arbitration venues – notably London, Amsterdam, Paris and Singapore. Does this mean that foreign courts and international commercial arbitration tribunals will soon face serious competition from German courts?

English-language Proceedings in All Instances

Proposals to improve the settlement of international commercial disputes before German courts have been discussed for many years. In 2010, 2014, 2018 and 2021, the upper house of the German Federal Parliament (Bundesrat) introduced bills to strengthen German courts in (international) commercial disputes. However, while these bills met with little interest and were not even discussed in the lower house of Parliament (Bundestag) things look much brighter this time: The coalition agreement of the current Federal Government, in office since 2021, promises to introduce English-speaking special chambers for international commercial disputes. The now published bill of the Federal Ministry of Justice can, therefore, be seen as a first step towards realizing this promise. It heavily builds on the various draft laws of the Bundesrat including a slightly expanded version that was submitted to the Bundestag in 2022.

The bill allows the federal states (Bundesländer) to establish special commercial chambers at selected regional courts (Landgerichte) which shall, if the parties so wish, conduct the proceedings comprehensively in English. Appeals and complaints against decisions of these chambers shall be heard in English before English-language senates at the higher regional courts (Oberlandesgerichte). If the value in dispute exceeds a threshold value of 1 million Euros and if the parties so wish, these special senates may also hear cases in first instance. Finally, the Federal Supreme Court (Bundesgerichtshof) shall be allowed to conduct proceedings in English. Should the bill be adopted – which seems more likely than not in light of the coalition agreement – it will, thus, be possible to conduct English-language proceedings in at least two, maybe even three instances. Compared to the status quo, which limits the use of English to the oral hearing (cf. Section 185(2) of the Court Constitution Act) and the presentation of English-language documents (cf. Section 142(3) of the Code of Civil Procedure) this will be a huge step forward. Nonetheless, it seems unlikely that adoption of the bill will make Germany a much more popular forum for the settlement of international commercial disputes.

Remaining Disadvantages vis-à-vis International Commercial Arbitration

To begin with, the bill – like previous draft laws – is still heavily focused on English as the language of the court. Admittedly, the bill – following the draft law of the Bundesrat of March 2022 – also proposes changes that go beyond the language of the proceedings. For example, the parties are to be given the opportunity to request a verbatim record of the oral proceedings. In addition, business secrets are to be better protected. However, these proposals cannot outweigh the numerous disadvantages of German courts vis-à-vis arbitration. For example, unlike in arbitration, the parties have no influence on the personal composition of the court. As a consequence, they have to live with the fact that their – international – legal dispute is decided exclusively by German (national) judges, who rarely have the degree of specialization that parties find before international arbitration courts. In addition, the digital communication and technical equipment of German courts is far behind what has been standard in arbitration for many years. And finally, one must not forget that there is no uniform legal framework for state judgments that would ensure their uncomplicated worldwide recognition and enforcement.

Weak Reputation of German Substantive Law

However, the bill will also fail to be a resounding success because it ignores the fact that the attractiveness of German courts largely depends on the attractiveness of German law. To be sure, German courts may also apply foreign law. However, their real expertise – and thus their real competitive advantage especially vis-à-vis foreign courts – lies in the application of German law, which, however, enjoys only a moderate reputation in (international) practice. Among the disadvantages repeatedly cited by practitioners are, on the one hand, the numerous general clauses (e.g. §§ 138, 242 of the German Civil Code), which give the courts a great deal of room for interpretation, and, on the other hand, the strict control of general terms and conditions in B2B transactions. In addition – and irrespective of the quality of its content – German law is also not particularly accessible to foreigners. Laws, decisions and literature are only occasionally available in English (or in official English translation).

Disappointing Numbers in Amsterdam, Paris and Singapore

Finally, it is also a look at other countries that have set up international commercial courts in recent years that shows that the adoption of the bill will not make German courts a blockbuster. Although some of these courts are procedurally much closer to international commercial arbitration or to the internationally leading London Commercial Court, their track record is – at least so far – rather disappointing.

This applies first and foremost to the Netherlands Commercial Court (NCC), which began its work in Amsterdam in 2019 and offers much more than German courts will after the adoption and implementation of the bill: full English proceedings both in first and second instance, special rules of procedure inspired by English law on the one hand and international commercial arbitration law on the other, a court building equipped with all technical amenities, and its own internet-based communication platform. The advertising drum has also been sufficiently beaten. And yet, the NCC has not been too popular so far: in fact, only 14 judgments have been rendered in the first four years of its existence (which is significantly less than the 50 to 100 annual cases expected when the court was set up).

The situation in Paris is similar. Here, a new chamber for international commercial matters (chambre commerciale internationale) was established at the Cour d’appel in 2018, which hears cases (at least in parts) in English and which applies procedural rules that are inspired by English law and international arbitration. To be sure, the latter cannot complain about a lack of incoming cases. In fact, more than 180 cases have been brought before the new chamber since 2018. However, the majority of these proceedings are due to the objective competence of the Chamber for international arbitration, which is independent of the intention of the parties. In contrast, it is not known in how many cases the Chamber was independently chosen by the parties. Insiders, however, assume that the numbers are “negligible” and do not exceed the single-digit range.

Finally, the Singapore International Commercial Court (SICC), which was set up in 2015 with similarly great effort and ambitions as the Netherlands Commercial Court, is equally little in demand. Since its establishment, it has been called upon only ten times by the parties themselves. In all other cases in which it has been involved, this has been at the instigation of the Singapore High Court, which can refer international cases to the SICC under certain conditions.

No Leading Role for German Courts in the Future

In the light of all this, there is little to suggest that the bill, which is rather cautious in its substance and focuses on the introduction of English as the language of proceedings, will lead to an explosion – or even only to a substantial increase – in international proceedings before German courts. While it will improve – even though only slightly – the framework conditions for the settlement of international disputes, expectations regarding the effect of the bill should not be too high.

— Note: Together with Yip Man from Singapore Management University Giesela Rühl is the author of a comparative study on new specialized commercial courts and their role in cross-border litigation. Conducted under the auspices of the International Academy of Comparative Law (IACL) the study will be published with Intersentia in the course of 2023.

EU to Recognise and Enforce Ukrainian Judgments

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Matthias Lehmann
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The EU has decided on 24 April 2023 to establish treaty relations with Ukraine under the Hague Judgments Convention. Ukraine acceded to the Convention on 29 August 2022 by submitting its ratification to the depositary, the Dutch Ministry of Foreign Affairs. From that moment, the other Signatories have 12 months to object against the establishment of treaty relations with the new member (Article 29 of the Convention).

The EU Council decided not to do so. According to the Press Release, the Council considers that

there are no fundamental obstacles, such as related to the independence and efficiency of the judiciary, the fight against corruption or the respect of fundamental rights, which could prevent the EU from entering into treaty relations with Ukraine.

The Swedish Minister for Justice, Gunnar Strömmer, said on the occasion that “[w]ith this decision to recognise and enforce each other’s judgments the ties between the EU and Ukraine will only become stronger.”

The Judgments Convention will enter into force for all Signatories on 1 September 2023. Although the EU theoretically still has time until the 29 August 2022 to notify the depositary of its objections to establish relations with Ukraine under the Convention, this is unlikely after the decision by the Council. Courts in the EU will therefore soon be obliged under the Convention to recognise and enforce Ukrainian judgments in civil or commercial matters, and vice versa.

Commission Study on the Application of the Maintenance Regulation

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Pietro Franzina
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The European Commission published on 13 April 2023 a study on the application of Regulation 4/2009 on maintenance obligations. The study, authored by Marion Goubet, Sophie Buckingham,  Cécile Jacob, Michael Wells-Greco and Quentin Liger, consists of a final report and various annexes, including a synthesis report. Details on the operation of the Maintenance Regulation in the Member States between 2011 and 2019 are found here.

The final report finds that the majority of stakeholders consider the Maintenance Regulation to be effective in establishing common rules for the recovery of maintenance claims across the EU, but acknowledges that, in response to the challenges and issues raised in terms of practical implementation of the Regulation’s provisions, “certain adjustments could be made were it to be recast”.

The report observes, among other things, that the provisions regarding jurisdiction appear to be fragmented and can thus difficult to apply due to there being multiple possible fora and no hierarchy amongst them. In addition, “certain inconsistencies arise both within the Regulation itself, and when compared to other instruments, including Brussels IIa and Brussels IIa recast”.

Concerning the applicable law, which is to be determined in accordance with the Hague Protocol of 2007, the report highlights the practical difficulties experienced in respect of Article 10, concerning public authorities. One issue, the report notes, “was that the process for a public body to prove permissible representation of a creditor is sometimes lengthy and burdensome”. In addition, “if recovery is already under way for the applicant (not a public body) for unpaid maintenance, a public body can be denied legal aid given that two recoveries from the same debtor are not possible”.

As to recognition and enforcement, the study indicates that challenges have arisen in the enforcement of maintenance decisions that set the amount of maintenance obligations on the basis of a percentage of the salary of the debtor or of the requesting State’s minimum wage, but adds that, in this aspect, “a greater uptake and update of the current non-compulsory standard form on the statement of maintenance arrears created by the EJN could be recommended”. For example, “the form could also include information on how to calculate the maintenance based on the State’s minimum monthly wage”. 

The report also signal that “delays are still encountered to enforce maintenance decisions originating from Member States other than the Member State of enforcement”, which is “partly due to the obligation under Article 41 of the Regulation to afford the same conditions for enforcement in the Member State of enforcement to those decisions originating from another Member State”. In fact, if “criteria that are necessary for enforcement in some Member States are not met, this circumstance explains the delays faced for the enforcement of decisions originating from a Member State other than the Member State of enforcement”. The lack of minimum procedural harmonisation, it is contended, “also encompasses differences in the service of maintenance decisions across Member States, termination of maintenance proceedings and different practices in the recovery of lawful interests”. In the end, “a minimum harmonisation of enforcement procedures of maintenance decisions across Member States could be recommended”, in particular as concerns “the procedures for the location of the income and other financial circumstances of the debtor abroad, the possibility to access some information about the debtor, and the introduction of grounds for the suspension and the termination of the maintenance proceedings”.

Challenges (and proposals aimed to address them) are identified in the report also as regards legal aid and cooperation between authorities.

Various remarks are made concerning the interplay between the Maintenance Regulation an other instruments. It is observed, inter alia, that the Regulation and the 2007 Lugano Convention “are not sufficiently aligned, and their interaction can be complex, especially when it comes to jurisdictions rules such as in the case of choice of court agreements”. If the Regulation were to be revised, “the opportunity could be taken to abide by the 2007 Lugano Convention, especially when dealing with the application of exclusive jurisdiction clauses agreed based on the Convention”. Likewise, the Regulation “could allow the EU second seized court to decline jurisdiction in favour of the first seized non-EU court, thus ensuring the respect of the lis pendens rule of the 2007 Lugano Convention”: a recommendation would be to “draft choice of law rules that leaves less leeway for different interpretations in different States”. 

The report also stresses the benefits that (further) digitalisation in this area would provide.

EAPIL Working Group on Brussels I bis Reform: Last Opportunity to Take the Survey

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Elena Alina Ontanu
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Readers of this blog are aware that an EAPIL Working Group has been set to reflect on the reform of the Brussels I bis Regulation. A survey has been launched to collect feedback and comments on the proposals included in the Working Group’s preliminary position paper (see further here and here). Those wishing to share their views are invited to take the survey by 15 April 2023.

Participation in the survey is opened to anybody familiar with Brussels I bis, regardless of their membership in the European Association of Private International Law.

The members of the Working Group are eager to know about the opinion of scholars and practitioners both  on the operation of the Regulation and on the improvements proposed by the Group.

All the received input is valuable for the work that is being done in preparation of the Brussels I bis Reform. Warm thanks to those who have already provided their feedback and to those who plan to so in the next few hours!

The Singapore Convention on Mediation – A Commentary

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Marta Requejo Isidro
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Mediation has acquired a growing and unstoppable implantation during the last years, becoming an alternative dispute mechanism for the resolution of international disputes in civil and commercial matters with a great impact on the comparative and international arena. As a result, the normative responses that have been developed to face the challenges generated by the organisation of cross-border mediation have been successive in recent years, both at national and regional level. However, it was not until recently that the international legislator paid attention to this matter. In this framework, the publication of the United Nations Convention on International Settlement Agreements resulting from Mediation (Singapore Convention) constitutes a significant step forward in this direction.

Undoubtedly, one of the major practical difficulties raised by the implementation of mediation to resolve international commercial disputes lays with the cross border enforcement of the agreements resulting from it. Hence the logical aspiration to provide mediation with an international regulatory framework of multilateral origin favoring the international circulation of the agreements resulting from a mediation procedure. This ambition culminated finally in the approval of the Singapore Convention, whose negotiation was not, however, a simple task, but rather plagued by obstacles and complications.

The Singapore Convention represents an outstanding conventional instrument, drawn up within the United Nations Commission on International Trade Law (UNCITRAL), approved by Resolution of the General Assembly of the United Nations (UN) on 20 December 2018; its adoption was accompanied by the publication of the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018 (amending the UNCITRAL Model Law on International Commercial Conciliation, 2002). Consequently, the approval and entry into force of the Singapore Convention, on 12 September 2020, is of an extraordinary importance for the global development and promotion of mediation, since it is the first conventional instrument drawn up in this field by the UNCITRAL –and which has already been ratified by 10 States, Parties to the Convention-.

The Singapore Convention constitutes a concise text (with 16 articles), endowed with great flexibility and a clear functional character. Resulting from a high level of compromise, this UNCITRAL Convention not only builds on its precedents and normative models – mainly the 1958 New York Convention on international arbitration – but also offers novel responses and a uniquely advanced circulation model aiming at solving the main obstacle for mediation practitioners: the international effectiveness of mediation agreements.

A timely Commentary, edited by Guillermo Palao Moreno (Professor of Private International Law, University of Valencia) and published by Edward Elgar in its Commentaries in Private International Law Series, offers academics and practitioners an article-by-article examination of the Singapore Convention, as well as insights into the negotiation process through which the Convention was developed.

It provides deep theoretical and practical analysis of the Convention and its consequences for the promotion of mediation as a mechanism to solve commercial conflicts with a cross-border character. In particular, this work includes a comparative approach with perspectives from five continents and a variety of legal traditions, a critical discussion of every stage from the negotiation to the conclusion of the Convention, with proposals for the Convention’s implementation and application by States and regional organisations. A particular feature of the work is that it provides contributions of a diverse group of leading practitioners and academics from diverse legal backgrounds and jurisdictions, including some who participated of the negotiation of the Singapore Convention itself.

Contributors to the commentary include Itai Apter, Gabriela Balseca, Roni Ben David, Ximena Bustamante, Pablo Cortés, Stefano Dominelli, Carlos Esplugues, Nuria González Martín, Mark T. Kawakami, Gyooho Lee, Dulce Lopes, Peter Mankowski, Théophile M. Margellos, Cedr Mciarb, Achille Ngwanza, Guillermo Palao, Afonso Patrão, Ilaria Queirolo, Valesca Raizer Borges Moschen, S.I. Strong, Sven Stürmann, Dai Yokomizo

See here for the table of contents.

European Commission’s Brussels I Study and Jurisdiction in Employment Matters – A Disappointment

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The Editors of the EAPIL blog
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The author of this post is Uglješa Grušić, Associate Professor, Faculty of Laws, University College London.

As has already been reported on this blog, on 29 March 2023 the European Commission published a study to support the preparation of a report on the application of the Brussels I bis Regulation. This is an important and potentially very influential document.

It is because of its importance and potential influence that I want to share my disappointment with the part of the study that deals with jurisdiction in employment matters (pp 165-171). This part of the study contains some obvious mistakes and omissions.

Let me turn first to the mistakes. The study says this about the comparison between the 2012 Brussels I bis Regulation and the 2001 Brussels I Regulation on p 165:

[Section 5 of Chapter II] remains substantially the same in the Brussels Ia Regulation, with a small change in Article 20(1) (previously Article 18(1)), to which was added ‘(…) in the case of proceedings brought against an employer, point 1 of Article 8’. This insertion clarifies rather than changes the Article’s scope of application.

The study makes the same point on p 166:

The Regulation remains unchanged regarding the provisions addressing jurisdiction relating to individual employment contracts, except for an alteration inserted in Article 20(1).

These statements are not entirely correct. In addition to specifying that employees can join third parties pursuant to Article 8(1), the Brussels I bis Regulation introduces one further novelty in Section 5 of Chapter II. This novelty is the rule in Article 21(2), which provides that an employer not domiciled in a Member State may be sued in a court of a Member State in accordance with Article 21(1)(b), that is, in the courts for the habitual place of work if the habitual place of work is in the EU or, in the absence of the habitual place of work, in the courts for the engaging place of business if the engaging place of business is in the EU.

Another, seemingly innocuous mistake is the wrong citation of an academic commentary on which the authors of this part of the study heavily rely, namely Louse Merrett’s chapter on ‘Jurisdiction over Individual Contracts of Employment’ in Dickinson and Lein’s edited collection on the Brussels I bis Regulation. The mistake in the citation is that Merrett’s chapter was not published in 2020, as the study says, but in 2015. The relevance of this mistake lies in the fact that the authors of this part of the study rely on Merrett’s chapter as supporting the claims made on p 166 that the “concerned parties are satisfied with the solutions adopted and its application in practice through court judgments” and that “[t]here is little case-law related to jurisdiction on individual employment contracts, suggesting that this section has not been subject to much litigation”. Misciting Merrett’s chapter creates a wrong sense of complacency: if a leading scholar writes in a piece published relatively recently that Section 5 of Chapter II works well and there is little case-law, then the implication is that the European Commission need not worry too much about this part of the Brussels I bis Regulation. The problem, however, is that Merrett’s chapter was published in 2015, the same year when this regulation started to apply, and a lot has happened since then.

This brings me to the omissions. The study was completed in January 2023 and was published on 29 March 2023. The study was largely informed by the case law of the CJEU. The problem with the part of the study that deals with jurisdiction in employment matters is that it was outdated the moment it was completed because the authors did not take into account the controversial judgment in ROI Land Investments Ltd v FD that was handed down on 20 October 2022.

While persons domiciled outside the EU can, generally speaking, be sued in the Member State courts under national jurisdictional rules (Article 6(1)), employers domiciled outside the EU can only be sued in the courts for the habitual place of work or, absent a habitual place of work, in the courts for the engaging place of business if the habitual place of work/engaging place of business is located in the EU. The CJEU has clarified in ROI Land Investments Ltd v FDthat, if the habitual place of work/engaging place of business is located in the EU, employers domiciled outside the EU cannot be sued in the Member State courts under national jurisdictional rules. This makes little sense from the perspective of employee protection. As Recital 18 states, ‘[i]n relation to…employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.” ROI Land Investments Ltd v FD achieves the opposite effect.

The purpose of this post is to indicate that there are deficiencies in the part of the study that deals with jurisdiction in employment matters. Consequently, the European Commission should approach this part of the study with care and look at other sources when preparing its report on the application of Section 5 of Chapter II.

For what it’s worth, I have already shared on this blog my proposals for reform of this part of the regulation.

French Debates on Desirability of National Code of PIL

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Gilles Cuniberti
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The desirability of adopting a French code of private international law in a field dominated by EU law is hotly debated in France.

In October 2022, the French Committee of Private International Law hosted a conference on the project. The text of the presentations is freely available here. The presentations were followed by a Q&A session where a number of French scholars expressed their criticism of the draft code and indeed of the entire project. The drafters of the code have since then responded in writing to these critiques.

Some of the criticisms voiced during this conference were since then published. They include an article by Dominique Bureau and Horatia Muir Watt and an article by Louis d’Avout.

Study to Support a Report on the Application of Brussels I bis

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Pietro Franzina
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The European Commission has published, on 29 March 2023, a Study to support the preparation of a report on the application of the Brussels I bis Regulation, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

The blurb reads as follows.

Regulation 1215/2012 (Brussels Ia Regulation) was adopted on 12 December 2012, entered into force on 9 January 2013, and started to apply from 10 January 2015 onwards. It aims to establish a uniform and comprehensive set of rules governing jurisdiction and the recognition and enforcement of judgments in cross-border civil and commercial matters. The scope of the Regulation encompasses a wide range of civil and commercial matters, including insurance, consumer, and employment contracts. It applies in all EU Member States. Since the adoption of the Regulation, several developments, such as the case-law of the CJEU, increased worker mobility, digitalisation, the adoption of new international instruments in the field of private international law (PIL) (such as the 2019 Hague Judgments Convention), the adoption of other EU instruments providing for PIL rules applicable in civil and commercial cross-border matters (such as the Maintenance Regulation or the Insolvency Regulation) are likely to have had an impact on its operation. In this context, the objective of the Study is to assist the Commission in preparing the report on the application of the Brussels Ia Regulation (as provided under its Article 79), and to provide a thorough legal analysis of the application of the Brussels Ia Regulation in the Member States. In particular, the Study aims to determine whether the Regulation is correctly applied in the Member States and to identify specific difficulties encountered in practice. The Study also aims to assess whether recent socioeconomic changes pose challenges to the application of Brussels Ia Regulation’s rules, definitions, and connecting factors. The analysis – based on desk research, CJEU and national case-law analysis and interviews at both the EU and national levels – covers 34 questions on the main legal and practical issues and questions arising from the application of the Brussels Ia Regulation.

The study, written by Milieu, is based on advice provided by Pedro de Miguel Asensio and Geert Van Calster, and draws on input from a team of national experts including Florian Heindler and  Markus Schober, Michiel Poesen, Dafina Sarbinova, Christiana Markou, Hana Špániková, Bettina Rentsch and Maren Vogel, Morten M. Fogt, Thomas Hoffmann and Karine Veersalu, Argyro Kepesidi Eduardo Álvarez-Armas, Katja Karjalainen, Virginie Rouas, Ivan Tot, Tamás Fézer, William Binchy, Laura Carpaneto and Stefano Dominelli, Yvonne Goldammer and Arnas Stonys, Vincent Richard, Aleksandrs Fillers, Emma Psaila, Kirsten Henckel, Anna Wysocka-Bar, Maria João E. de Matias Fernandes, Sergiu Popovici, David Jackson, Ela Omersa, and Natalia Mansella.

The report can be found here.

Unified Patent Court Agreement – Sunrise Period Ongoing

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Marta Requejo Isidro
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As many readers of the blog surely know already, the Unified Patent Court Agreement (UPC Agreement) will enter into force on 1 June 2023.

With this in mind, a 3-month Sunrise period started on 1 March 2023. From that date, an opt-out from the jurisdiction of the Court, as laid down in Article 83(3) of the UPC Agreement, can be filed. According to the provision, applicants for and proprietors of a “classic” European patent, as well as holders of a supplementary protection certificate (SPC) issued for a product protected by a “classic” European patent, can opt out their application, patent or SPC from the exclusive competence of the Court. As a result, the UPC will have no jurisdiction concerning any litigation related to this application, patent or SPC. The application to opt out can only be made via the Case Management System of the Court (CMS); the conditions are explained here. It should be noted that the opt-out will only become effective on the date of entry into force of the Agreement on a Unified Patent Court.

Filing a request to become a representative before the UPC, as per Article 48 of the Agreement, is also possible since 1 March 2023. Two categories are eligible to become representative before the UPC: lawyers authorised to practice before a court of a Contracting Member State  (Article 48(1) UPCA) and European Patent Attorneys who are entitled to act as professional representatives before the European Patent Office and who have appropriate qualifications as per Article 48(2) UPCA and the European Patent Litigation Certificate Rules.

The first experiences with the live version of the Court’s Case Management System (CMS) have just been reported by the Registrar (a week before, Luxembourg launched a call for applications for administrative support staff at the Registry and Court of Appeal of the Unified Patent Court in Luxembourg, deadline ending soon, in case of interest. Other vacancies are posted here).

Just for the record: 24 EU Member States have signed the Agreement on a Unified Patent Court (Spain, Poland and Croatia have not). Initially, the UPCA will be in force in 17 states which have ratified the Agreement (Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, Slovakia have not). The unitary patent is the outcome of enhanced cooperation procedure; it was established via Regulation No 1257/2012 of 17 December 2012. In 2014, Regulation No 542/2014 was adopted amending Regulation No 1215/2012 as regards the rules on jurisdiction to be applied with respect to the Unified Patent Court (see consolidated version of the latter Regulation, whose Article 24(4) will still remain in force after 1 June 2023, albeit with a more limited scope of application).

European Parliament Study on Efficient Cooperation with the UK

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Gilles Cuniberti
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Lotario Benedetto Dittrich (University of Trieste) has written a Study at the request of the JURI committee of the European Parliament on Ensuring Efficient Cooperation with the UK in civil law matters.

The abstract reads:

This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the JURI Committee, analyses the implications of Brexit in relation to the profile of judicial cooperation in civil matters. It examines the existing legal framework in order to identify the areas of law in respect of which there is a gap in the relationship between the EU and the UK. It assesses the consequences of the UK’s failure to accede to the 2007 Lugano Convention. Concludes that the conclusion of new treaties between the EU and the UK should be pursued in relation to those areas where there is a regulatory gap, with particular reference to the area of human rights.

And from the executive summary:

The paper is divided into seven chapters.

In the first chapter, the effects of the Withdrawal Agreement in the field of civil judicial cooperation are outlined, with particular reference to the residual applicability of the individual European Regulations in relations with the UK in the so-called transitional period, that is, from the entry into force of the Withdrawal Agreement until December 31, 2020. The reasons why the revival of the 1968 Brussels Convention is not conceivable are also explained.

It then goes on to examine the “body of law” consisting of the Hague Conventions (1961 Apostille Convention; 1965 Service Convention; 1970 Evidence Convention; 1970 Divorce Convention; 1980 Child Abduction Convention; 1996 Child Protection Convention; 2005 Choice of Court Convention; 2007 Child Support Convention) to see which of them and to what extent still apply to the relationship between the EU and the UK.

The third chapter discusses the content of the so-called EU Reitaned Laws, i.e., the set of UK rules transposing sectors of EU legislation into that country’s legal system. The continued applicability of the Rome I and Rome II Regulations and their effects in relations with the EU will be the subject of analysis, as well as, conversely, the superseded inapplicability of European simplified procedures and exclusion from the European Judicial Network.

The fourth chapter is specifically devoted to an analysis of the most relevant gaps left by Brexit in the area of, in particular, the following matters: legal separation and divorce, maintenance obligations, successions, notifications, taking of evidence, public documents, access to justice, mediation, and insolvency.

Particular attention is paid in Chapter Five to the effects resulting from the United Kingdom’s non accession to the 2007 Lugano Convention.

Indeed, as is well known, on June 28, 2021, the European Commission submitted a Note Verbale to the Swiss Federal Council as the Depositary of the Lugano Convention, in which it denied its consent to the UK’s application for accession.

The effect of the UK’s accession to the aforementioned Lugano Convention would have been that Regulation No. 44/2001, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (so-called Brussels I), would also apply to it. This accession would have entailed renewed UK participation in the European judicial area, albeit without the automatic recognition of court decisions introduced only by the subsequent Regulation No. 1215/2012 (so-called Brussels I bis).

The effects on the legal services market of the UK’s exclusion from the European legal system are also analysed. Indeed, there is the emergence of specialized commercial courts, located in several EU countries, which are bidding to be alternative judicial hubs to the London courts. Such competition would be fostered by the easier circulation of judicial orders rendered by EU courts in the European legal space than judicial orders rendered by UK courts.

The study dwells on the actual likelihood of success of such initiatives, raising the possibility in the future of the establishment at the EU level of a single court specializing in commercial matters, which could more effectively undermine the continued attractiveness of London courts.

The study then turns to viable remedies to prospectively reduce the impact of Brexit in the area of rights protection, with particular reference to individuals, families and Small Medium Enterprises (SMEs).

In particular, a possible path is outlined, as a result of which covenanted regulations can be introduced in the following matters: divorce and legal separation, alimentary obligations, Small Claims, and cross border insolvencies.

Finally, special attention is given to the phenomenon of Strategic Lawsuits Against Public Participation (SLAPPs), the subject of a European Commission proposal for a directive, concluding as to the desirability of agreements involving the UK as well, in order to ensure broader protection for freedom of the press and opinion, limiting phenomena of forum shopping and possible circumvention of decisions on the subject.

In summary, the study pragmatically suggests that the parties establish negotiations on specific and limited matters of particular social relevance as a first step in rebuilding a system of international cooperation between the EU and the UK.

At the same time, the study points to the existence of areas in which economic competition is currently taking place in the area of legal services.

Thanks to Jorg Sladic for the pointer.

France to Be Authorised to Negotiate Agreements with Algeria Regarding Judicial Cooperation

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Pietro Franzina
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On 8 February 2023, the European Commission presented two proposals, the purpose of which is to pave the way to the negotiation (and conclusion) of bilateral agreeements between France and Algeria in the field of private international law.

One proposal is for a decision of the Council of the Union and the European Parliament that would authorise France to negotiate a bilateral agreement on matters related to judicial cooperation in civil and commercial matters (COM/2023/65 final). The other is for a Council decision authorising France to negotiate a bilateral agreement with Algeria on matters related to judicial cooperation concerning family law matters (COM/2023/64 final).

The future agreements are meant to replace bilateral agreements concluded in 1962, 1964 and 1980, and to align cooperation with Algeria with EU standards in this area.

The subject matter of the new agreements falls, to a large extent, within the exclusive external competence of the Union. In these circumstances the negotiation of bilateral agreements of Member States with third countries is generally limited to the possibilities offered by the special mechanism provided by Regulation No 662/2009 (on particular matters concerning the law governing contractual and non-contractual obligations) and Regulation No 664/2009 (regarding jurisdiction, recognition and enforcement of judgments and decisions in matrimonial matters, matters of parental responsibility and matters relating to maintenance obligations, as well as regarding the law applicable to matters relating to maintenance obligations).

Also relevant, in principle, is Article 351 TFEU. This begins by establishing that the rights and obligations arising from agreements pre-dating the launch of the European integration process between one or more Member States on the one hand, and one or more third countries on the other, are not affected by EU law. However, the provision goes on to state that, to the extent that such agreements are not compatible with the Treaties (and EU legislation), “the Member State or States concerned shall take all appropriate steps to eliminate the incompatibilities established”.

When the prospect of one or more bilateral agreements between the two States emerged, in 2016, the Commission, while recognizing the exceptional economic, cultural, historical, social and political ties between France and Algeria, remarked that, in its judicial cooperation with third States, the Union broadly relies on the existing multilateral framework, such as the one created by the Hague Conference on Private International Law, rather than bilateral agreements. The Commission observed that  authorising a Member State to negotiate and conclude bilateral agreements with third countries in the area of civil justice falling outside the scope of Regulations No 662/2009 and No 664/2009 would not be in line with the EU policy in this field.

The position of the Commission was later reviewed in light of further developments and additional information, including the fact that an accession of Algeria to key Hague Conventions was (and still is) unlikely to happen in the foreseeable future (Algeria is not a member of the Hague Conference and has not acceded, so far, to any convention elaborated under the auspices of the Conference), and the fact that an EU-Algeria agreement related to judicial cooperation in civil matters is not planned by the Commission.

The Commission observed that the EU policy in the field of private international law is based on multilateralism, and that bilateral agreements between the EU and a third country, even where the third country consistently refuses to accede to Hague Conventions, could be contemplated only where a sufficiently strong Union interest can be identified based on the substantial relevance of judicial cooperation with this country across Member States and not only for an individual Member State. In the opinion of the Commission, this is not the case of the relations with Algeria.

The Commission further contended that neither the possibility offered by Article 351 TFEU nor an authorisation under Regulations 662 and 664/2009 are applicable in the present case.

Article 351, the Commission explained, is of no avail because it applies, for a founding Member (like France), only to agreements concluded prior to 1958, whereas the existing bilateral agreements between France and Algeria date from 1962, 1964 and 1980 (the Commission does not seem to give weight to the fact that, back in 1985, the European integration process simply did not include judicial cooperation: the latter became a concern for the European Community, as it was then, only with the entry into force of the Amsterdam Treaty, in 1999).

The Regulations of 2009, for their part, are of limited help, according to the Commission, because their scope is very narrow and they do not cover the range of matters dealt with in the France-Algeria draft agreements. Besides, the Commission stressed, the two Regulations are of exceptional nature and should be interpreted in a restrictive manner.

Therefore, the Commission concluded that an ad hoc authorization under Article 2(1) TFEU to France could be considered (according to Article 2(1), where the Treaties confer on the Union “exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts”, but clarifies that the Member States are permitted to do so themselves, inter alia, “if so empowered by the Union”).

The decisions that the Commission has proposed to adopt would authorise France to negotiate (and at a later stage conclude) bilateral agreements with Algeria in matters falling within the EU exclusive external competence, having considered the exceptional ties which link these two countries, provided that this would not constitute an obstacle to the development and the implementation of the Union’s policies.

In the memorandum that accompanies the two proposals, the Commission reiterated that “multilateralism remains a cornerstone of the EU policy towards third countries in the field of judicial cooperation in civil and commercial matters”, and clarified that the authorisation to negotiate, if granted, should be “considered exceptional” and by no means serve as a precedent. The mere refusal of a third State to accede to the relevant Hague Conventions, the Commission added, “should not be regarded as a the only pre-requisite to grant an authorisation under Article 2(1) TFEU, but evidence of the exceptional situation of the relationship of a Member State with a given third country should be duly demonstrated”.

Digital Services Act – Part Two: Inside the Belly of the Beast

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The Editors of the EAPIL blog
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This is the and final part of a post collectively written by Marion Ho-Dac and Matthias Lehmann. Part one is found here.

The previous post has underlined the DSA’s indifference to PIL. In this post, we will take the example of “illegal content” to illustrate the need for a conflict-of-laws approach.

DSA Regulation of Illegal Content and Conflicts of Laws

The DSA obliges intermediaries to inform the authorities of any effect given to their orders regarding illegal content “on the basis of the applicable Union law or national law in compliance with Union law” (Article 9(1) DSA). This formulation echoes the very definition of illegal content described as “any information … that is not in compliance with Union law or the law of any Member State which is in compliance with Union law” (Article 3 (h) DSA). The Act avoids the – quite arduous – problem how the applicable law shall be identified.  And, more broadly, it demonstrates its indifference to the mere distinction between public and private law issues, by stating that the characterisation of the illegality of the said contents, at the origin of the orders, is based on the applicable law regardless of “the precise nature or subject matter … of the law in question” (Recital 12 in fine DSA).

The same pattern reoccurs with regard to the intermediaries’ obligation to inform the authorities about individual recipients of their services (Article 10(1) DSA). The DSA simply assumes that orders requiring such information will be issued “on the basis of the applicable Union law or national law in compliance with Union law”, without detailing which national law actually is governing.

At the bottom of this method is the assumption that Union law or the national law will identify itself as applicable. Thereby, legal unilateralism is not only embraced, but also reinforced because orders based on unilateralist Union law or national law are strengthened. There are little limits the Act poses on national authorities, except that the territorial scope of their orders must be in compliance with Union law, including the EU Charter of Fundamental Rights, and – “where relevant” – general principles of international law and the principle of proportionality (see Article 9(2)(b) DSA). Interestingly, Recital 36 makes the (exceptional) extraterritoriality of the orders mainly conditional upon the EU legal basis of the illegality of the content, or requires “the interests of international comity” to be taken into account.

The problem with such unilateralism “set in stone” is that it does not overcome conflicts of laws, but exacerbates them. The law of the Member State having the strictest rules with the widest scope of application will be given preference over those who take a more liberal, balanced or nuanced approach.

Additionally, this ‘regulatory competition’ effectively suspends the country-of-origin principle laid down in Article 3(1) e-commerce Directive, which gives exclusive competence to the Member State in which the service provider addressed is established (see Recital 38 DSA). The orders regarding illegal content can be issued by the authorities of any Member State. This can be justified by Article 3(4), though, which provides a public policy exception.

The DSA’s Reason for Indifference to PIL

The reason why this road was taken is, quite obviously, the difficulties to overcome the entrenched divergences between national laws with overlapping scope. For this reason, the EU legislator decided to pass over this problem and place its rules on a different level. Conflicts of laws will be managed, not solved. This is in line with the “procedure over substance” philosophy of the Act, which has been criticised by others.

True, the illegality of internet content is often patently obvious, making the search for the applicable law a redundant exercise. Child pornography, hate speech, details of crimes or private photos do not justify long legal analysis. The DSA calls this “manifestly illegal content” and allows particularly strict measures in their regard, such as the suspension of services to their senders (Article 23(1) DSA). Still, the issue of legality or illegality may not always be so obvious, for instance when it comes to copyright infringements, the offering of accommodation services or the sale of live animals (examples taken from Recital 12), which is regulated quite differently in the Member States, not to speak of betting and gaming or the clash between privacy rights and free speech/freedom of the press that is resolved differently in different countries.

The Limits of Conflicts of Laws

In these instances, and in many others, it would have been preferable to have clear-cut rules that allow to identify the applicable rules. However, and from a more operational perspective, common substantive rules, rather than bilateral conflict-of-laws rules, should have been adopted where Union law is silent on what is illegal content. This would help to preserve individual freedom and to avoid contradicting orders between different Member States. In the absence of a political agreement between Member States on this question, the DSA opts instead for cooperation between regulators, especially the “Digital Services Coordinators” of the various Member State. However, without any clear guidance on whose laws governs, they may lack the means to solve these disputes in a matter that is legally certain, foreseeable and compatible with fundamental rights.

Moreover, the European digital environment will remain fragmented and there may be a risk that “illegal content havens” emerge (in the same way as tax havens in corporate matters). On the one hand, it can be expected that non-EU-based online platforms will choose a legal representative established in a Member State (Article 13 DSA) that is liberal in matters such as freedom of expression and privacy issues. On the other hand, one can imagine these platforms to strategically and systematically invoke their European “law of origin” (i.e. that of the Member State of establishment of their legal representative) in application of the internal market clause of the e-commerce Directive in the event of a civil liability action brought against them. Eventually, it will be for the national court of the Member States to navigate within this regulatory maze, with the sole help of the CJEU.

We guess national judges would rather favour their own law. Indeed, the law of the forum has several reasons to apply here, i.e. as the law governing the illegality of the content, the law of the place where the damages occurred and, more broadly, the law of the place of “use” of the content. This will reinforce the unilateralist tendencies that characterises the whole Act.

Digital Services Act – Part One: An Outside Look at the Monster

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The Editors of the EAPIL blog
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This post was collectively written by Marion Ho-Dac and Matthias Lehmann. It consists of two parts. Part two can be found here.

The Digital Services Act (DSA) is a landmark legislation in many respects, also regarding its volume (102 pages in the O.J., no less than 156 Recitals). It will force online platforms such as Youtube, Google or Amazon to be more responsible for the contents posted on them. It has been adopted on 19 October 2022 and will (mainly) be applicable from 17 February 2024 (Article 93(2) DSA). Inter alia, it partially amends the e-commerce Directive (Art. 89 DSA) but preserves its famous “internal market clause”.

The DSA’s Indifference to PIL

The DSA states that it applies “without prejudice to Union rules on private international law” (Recital 10 DSA). However, the text deals with the provision of “intermediary services” within the broader concept of “information society services” (i.e. digital services). These virtually always raise cross-border private-law issues (cf. also Recital 2 DSA). A basic example is a legal action by a user in the EU to request the removal of (allegedly) defamatory online content. The question of the competent court will be resolved by the Brussels I bis Regulation – but what about the applicable law?

The DSA does not resolve such conflicts of laws, but pretends they do not exist. Time and time again, it refers to the “applicable national law”, without giving any indication how this law is to be determined. The Act flies in a high legal stratosphere, hovering over any differences between Member State and other national laws.

Yet, there are instances in which conflicts of laws play a role when applying the DSA (as in all EU regulations dealing with private law issues). The first will be studied in this post and concerns the determination of the applicability of the DSA. The second instance is where the DSA makes reference to a national legal system, for instance with regard to illegal content. This will be the subject of another post.

DSA Scope of Application

In the global digital ecosystem, the application of the DSA, as a uniform body of rules, requires that EU law as such is applicable. This is far from obvious since the vast majority of online platforms are based outside the EU. The DSA’s scope of application focuses on the recipients of the intermediary service – their establishment or location in the EU – “irrespective of where the providers […] have their place of establishment” (Article 2(1) DSA). The recipients are those who simply “use” intermediary services, “in particular for the purposes of seeking information or making it accessible” (Article 3(b) DSA).

The provision on the scope of the DSA presupposes that the providers are “offering” their services to recipients in the EU. Characterising the offering to users in a given territory is a well-known difficulty in private international law. But here the issue is more sensitive than e.g. in Article 17(1)(c) Brussels I bis Regulation as it relates to the scope of the DSA’s regulatory regime.

If the text stopped there, the DSA would have a “global vocation”. Such an approach, which could be described as a kind of “maximalist European unilateralism”, is however unpalatable. It would have large extraterritorial effects, create tensions with third countries and, in practice, would probably be unworkable given the limited capacities of European market supervision.

But the DSA is much more cautious and imposes a “substantial connection” with the EU (Article 3(e) DSA). This is de jure the case when the provider of intermediary services is established in the Union. Otherwise, the text requires that either the provider has a “significant number of recipients of the service” in the EU, or that it “targets” recipients in the EU. The first criterion is based on the economic and societal weight of the foreign operator, the latter on its behaviour. Ultimately, these criteria attenuate the European unilateralist approach and thus make it acceptable on a global scale.

Impact on Conflicts of Laws

The applicability of the DSA has consequences for conflicts of laws in case of international private disputes that fall within its scope. The national law of a third State which would be designated as applicable will be set aside in favour of its provisions, which qualify as overriding mandatory rules. Though the text is silent on this, the DSA certainly is regarded as crucial by the EU for safeguarding its public interests, such as its political, social or economic organisation (cf Article 9(1) Rome I). The DSA thus belongs to the European public policy, which is part of the public policy of the Member States.

Although many of its provisions are of a procedural nature, others may have an incidence on the level of substantive law, for instance tort law. This is in particular the case for those rules that concern liability. They operate in a double-edged sword by excluding liability but only under certain conditions. Where these conditions are not fulfilled, the “free pass” on liability under EU law is suspended.

To illustrate, Art 6 DSA exempts hosting services from liability for the hosted content, but only under certain conditions. One of them is that the provider, upon obtaining knowledge or awareness of illegal content, acts expeditiously to remove or to disable access to it (Article 6(1)(b) DSA). In other words, where the hosting provider does not act expeditiously, the way to liability under the applicable law is open.

Although the rule does not impose liability itself, the underlying policy is that the EU will not countenance hosting service providers that do not honour their duties to remove illegal content expeditiously. This could be interpreted as an overriding mandatory rule, which supersedes foreign rules that give a free pass to all hosting service providers. Of course, this interpretation still needs to be tested in court.

Apostille Handbook – Second Edition

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Marco Pasqua
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The Hague Conference on Private International Law (HCCH) has recently published the new edition of the Practical Handbook on the Operation of the Apostille Convention.

The Handbook provides guidance on the practical implementation and operation of the HCCH Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents, applied tens of millions of times every year to the benefit of individuals, families, and businesses from across the world.

This second edition provides updated information and resources in response to the latest developments in relation to the Convention, including by incorporating advice from recent meetings and reflecting on the experiences of the growing number of Contracting Parties. Key changes include a greater focus on the electronic Apostille Programme (e-APP), further explanation of the role of diplomatic missions, and the incorporation of outcomes of the Working Group on the Authentication of Documents Generated by Supranational and Intergovernmental Organisations, the Experts’ Group on the e-APP and New Technologies, as well as the most recent meetings of the International Forum on the e-APP and the Special Commission on the practical operation of the Apostille Convention.

The Handbook is available here in English, French and Spanish.

EAPIL Working Group on Brussels I bis Regulation Reform: Preliminary Report and Survey

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Gilles Cuniberti
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The EAPIL Working Group on the Reform of the Brussels I bis Regulation has issued a preliminary position paper formulating proposals for reforming the Regulation.

The proposals are based on the opinions expressed by the members of the working group and the participants at the conference held at the Max Planck Institute Luxembourg in September 2022. The proposals of the members of the Members Consultative Committee were also forwarded to the drafters of the position paper.

The chairs of the Working Group (Burkhard Hess and Geert van Calster) now invite all interested members of EAPIL and readers of the blog to participate in a survey on the proposals formulated in the position paper until 13 March 2023. The survey can be accessed here.

EAPIL Working Group on the Law Applicable to Digital Assets

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Gilles Cuniberti
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Matthias Lehmann (University of Vienna) and Gilles Cuniberti (University of Luxembourg) are considering establishing an EAPIL Working Group on the Law Governing Digital Assets.

The first project of the Working Group would be to write a position paper to be filed for the purpose of the online consultation of the Draft UNIDROIT Principles and Commentary on Digital Assets and Private Law. The consultation ends on 20 February 2023.

The EAPIL position paper would focus on the private international aspects of the UNIDROIT proposal.

Any EAPIL Member interested in joining the Working Group should contact either Matthias Lehmann (matthias.lehmann@univie.ac.at) or Gilles Cuniberti (gilles.cuniberti@uni.lu) as soon as possible.

Private International Law in the Proposal by the UNIDROIT Working Group on Digital Assets

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Matthias Lehmann
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UNIDROIT has started an online consultation on its Draft Principles and Commentary on Digital Assets and Private Law, which Marco Pasqua has thankfully posted on this blog.

Principle 5 titled “Conflict of laws” will be of special interest for our readers, yet even experts of the field may have trouble understanding this somewhat complex provision. As an observer in the Working Group, I would like to give some background.

Scope ratione materiae

The subject of Principle 5 is the law applicable to proprietary issues in digital assets. A digital asset is defined in a broad way as an “electronic record which is capable of being subject to control” (Principle 2(2)). This covers all cryptocurrencies and tokens. The term “proprietary issues” is not defined but can be understood as encompassing the existence and transfer of ownership as well as other rights in rem.

Party Autonomy

The law governing proprietary issues in digital assets is defined by a waterfall.

The first two levels are dominated by party autonomy. Principle 5(1)(a) refers to the law expressly specified in the digital asset itself, whereas Principle 5(1)(b) points to the law chosen for the system or platform on which the asset is recorded.

Free choice of law may be seen as a heresy in property law. Yet it must be borne in mind that the blockchain environment is relatively self-contained. A restricted choice of the applicable property law has already been accepted in the Hague Intermediated Securities Convention. This was a door-opener, even though the EU did not sign up.

The problem lies elsewhere. Virtually none of the existing digital assets or systems contains a choice of law. This is by no means a coincidence, but the result of the anti-etatist beliefs of the social circles in which the technology was conceived. Since these beliefs are unlikely to change any time soon (if ever), choice of law for a blockchain will remain as rare as hen’s teeth.

Options A and B

If the governing law is not chosen (i.e. virtually always), the draft provides two options (Principle 5(1)(c)). Under Option A, a state can specify the relevant rules of its forum law which should govern, and to the extent these are insufficient, refer to the UNIDROIT Principles as a kind of gap-filler. Under Option B, it can declare the UNIDROIT Principles to apply directly, without specifying any part of its domestic law.

What is striking is that the conflict-of-laws method is completely ignored here. The law of the forum or the UNIDROIT Principles govern, regardless of the connections of the case.

This may be justified insofar as substantive law harmonisation on the international level is achieved, i.e. in case of Option B. But where a state follows Option A by specifying certain rules of the forum as applicable, these rules would in fact govern all situations world-wide before its courts. Other states following Option A would also specify their own national rules. Divergences between these rules will not only be cast in stone, but exacerbated by substantive rules of PIL (règles matérielles de droit international privé). The result will be a global jumble, leading to the opportunities of forum shopping which PIL experts know so well. 

UNIDROIT Trumps National Law

If the governing law is not chosen, nor the substantive rules or the UNIDROIT Principles on Digital Assets apply, then the law applicable by virtue of the PIL rules of the forum governs (Principle 5(1)(c)). The PIL rules are thus relegated to the last level. What is more, no harmony is achieved, as not a single indication is given on how the states should fashion their PIL. Anything goes – hardly a recipe for global harmonisation.

Joint Project with HCCH

The Hague Conference on PIL has just published a joint proposal with UNIDROIT for a “Project on Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens”. It shall deal specifically with Principle 5 of the UNIDROIT Draft. This is the first joint project between the two institutions. One may nurture the hope that it will result in more precise and elaborate connecting factors. Until then, the need for clearer conflicts rules may be highlighted in the UNIDROIT online consultation, which is open until 20 February 2023.

Draft UNIDROIT Principles on Digital Assets and Private Law – Online Consultation

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Marco Pasqua
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The International Institute for the Unification of Private Law (UNIDROIT) is presently conducting a public consultation regarding a set of Draft Principles and Commentary on Digital Assets and Private Law.

These Principles have been prepared by the Working Group on Digital Assets and Private Law over the course of 7 sessions between 2020-2022. Additional information about the Working Group and its meetings can be found here.

Comments should be provided in English, using this online form. The form is divided into seven sections consistent with the text of the Principles; section II is about private international law.

The deadline to submit comments is 20 February 2023. The Working Group will consider the comments received at its next session (8-10 March 2023).

For further information, please contact Hamza Hameed at h.hameed@unidroit.org.

Should the UK Join the Hague Judgments Convention?

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Marco Pasqua
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On 15 December 2022, the UK Government launched an open consultation on its plan for the United Kingdom to become a Contracting State to the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters (the Hague Judgments Convention).

As part of the decision-making process on becoming a Contracting State, the Government is looking to gather wide-ranging perspectives, especially from who have experience of current cross-border litigation.

Based on the overall analysis, the Government will make a final decision on signing and ratifying and any declarations to be made, and commence the necessary processes to ensure that this can be achieved within a reasonable timescale, in consultation with the Devolved Administrations.

The Convention would be implemented in UK domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. The Convention would enter into force for the United Kingdom 12 months after the date it deposits its instrument of ratification.

The consultation, which consists of 14 questions, is meant to remain open for eight weeks, that is, until 9 February 2023.

Further details concerning submissions are available here.

A paper summarising the responses to this consultation will be published in spring 2023. The response paper will be available on-line at gov.uk.

EU Legislative Priorities for 2023 and 2024: Joint Declaration of the Presidents of the Union’s Political Institutions

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Pietro Franzina
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As reported on this blog by Marco Pasqua, the European Commission adopted on 18 October 2022 its 2023 Work Programme, listing the legislative proposals, including in the area of private international law, that the Commission itself regarded as a priority.

On 15 December 2022, the Presidents of the European Parliament, the Council and the Commission signed a Joint Declaration on EU legislative priorities for 2023 and 2024. The document, as indicated in the official press release, “sets out a shared European vision for a stronger and more resilient Europe in the face of Russia’s unprovoked, brutal aggression against Ukraine and its wide-ranging impact – all the while tackling other serious challenges such as the climate crisis and economic headwinds”.

The joint declaration is accompanied by a working document, which lists 164 “key legislative proposals”, that the three institutions agreed to prioritise.

Some of these proposals either primarily relate to private international law or include provisions that have, or may have, significant private international law implications.

These include the proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence; the proposal for a Directive harmonising certain aspects of insolvency law; the proposal for a Directive on Corporate Sustainability Due Diligence; the proposal for a Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (SLAPPs); the proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters; and the proposal for a Regulation on the law applicable to the third-party effects of assignments of claims.

The recently adopted proposal for a Regulation aimed at harmonising at EU level the rules of private international law relating to parenthood (which Marta Requejo presented here) is not among those listed in the document.

There is also no reference to the expected developments regarding the international protection of adults.

European Commission Proposal for a Regulation on Private International Law Rules Relating to Parenthood

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Marta Requejo Isidro
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On 7 December 2022, as announced through the Commission Press Corner, the European Commission adopted a proposal for a Regulation aimed at harmonising at EU level the rules of private international law relating to parenthood.

The proposal is focused on the best interests and the rights of the child. It will provide legal clarity for all types of families, who find themselves in a cross-border situation within the EU, be it because they move from one Member State to another to travel or reside, or because they have family members or property in another Member State. One of the key aspects of the proposal is that the parenthood established in a Member State of the EU should be recognised in all the other Member States, without any special procedure.

Union law as interpreted by the European Court of Justice, notably on free movement, already provides that parenthood established in a Member State should be recognised in all the other Member States for some purposes: access to the territory, right of residence, non-discrimination with the nationals. However, this is not the case for the rights derived from national law.

Today’s proposal allows children in cross border situations to benefit from the rights derived from parenthood under national law, in matters such as succession, maintenance, custody or the right of parents to act as legal representative of the child (for schooling or health matters).

Background

Commission President von der Leyen said in her 2020 State of the Union speech that “If you are parent in one country, you are parent in every country”. With this statement, the President referred to the need to ensure that the parenthood established in a Member State is recognised in all other Member States for all purposes.

EU citizens can live and work in different EU countries. They travel, move for work, buy houses, start families. At the moment, Member States have varying national laws on the recognition of parenthood, so when a family finds itself in a cross-border situation, it might lose the rights derived from parenthood under national law.  The non-recognition of parenthood puts at risk the fundamental rights of children, including their right to an identity, to non-discrimination and to a private and family life.

The proposal was identified as a key action in the EU Strategy on the rights of the child and the EU LGBTIQ Equality Strategy. The European Parliament welcomed the Commission’s initiative in its Resolution on the protection of the rights of the child in civil, administrative and family law proceedings and in its Resolution on LGBTIQ rights in the EU. The Council conclusions on the EU Strategy on the rights of the child underline that children’s rights are universal, that every child enjoys the same rights without discrimination of any kind and that the best interests of the child must be a primary consideration in all actions relating to children, whether taken by public authorities or by private institutions.

Protecting Children Rights

The proposal aims at protecting the fundamental rights of children, providing legal certainty for the families, and reducing the legal costs and burden for the families and the Member States’ administrative and judicial systems.

The main elements of the proposal include: (a) designation of the jurisdiction: the proposal determines the courts of the Member States that have jurisdiction in matters related to parenthood, ensuring the best interest of the child; (b) designation of the applicable law:as a rule, the law applicable to the establishment of parenthood should be the law of the State of the habitual residence of the person giving birth. Where that rule results in the establishment of parenthood as regards only one parent, alternative options ensure that parenthood can be established as regards both parents; (c) rules for recognition of parenthood: the proposal provides for the recognition of court decisions and authentic instruments establishing or providing evidence of the establishment of parenthood. As a rule, parenthood established in a Member State, should be recognised in all the other Member States, without any special procedure; (d) creation of a European Certificate of Parenthood: children (or their legal representatives) can request it from the Member State which established parenthood, and choose to use it to prove their parenthood in all the other Member States. The Commission proposes a harmonised template, common to the whole EU. The use of the Certificate would be optional for families, but they have the right to request it and to have it accepted all over the EU.

The proposal will complement other EU private international law rules, on matters such as succession. It does not harmonise substantive family law, which remains the competence of the Member States.

Next Steps

The Commission’s proposal has to be adopted unanimously by the Council, after consulting the European Parliament. Five years after the Regulation becomes applicable, the Commission will evaluate its application by Member States and may propose amendments.

The Silent Death of Conflict-of-Law Provisions in EU Directives?

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The Editors of the EAPIL blog
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This post was written by Felix M. Wilke, University of Bayreuth.

The new EU Sale of Goods Directive 2019/771 and its sibling, the Supply of Digital Content and Digital Services Directive 2019/770, understandably have attracted a lot of attention in the field of substantive private law. By contrast, to my knowledge, their (negative) private international law dimension has not been featured in any prominent way yet. In this post, I want to highlight and contextualize this aspect. Any input, e.g. regarding directives I might have missed or explanations different from the ones I offer, is very much welcome.

The Wonderful World of Conflict of Laws in EU Directives

When faced with the term “EU Conflict of Laws”, most people will nowadays immediately think of the different regulations in this area: Rome I to III, the Succession Regulation etc. But this is not the whole story. Some of the Union’s provisions with a direct impact on private international law can be found in directives. Beginning with Article 6(2) of the Unfair Terms Directive 93/13/EEC, many of such instruments on the protection of consumers required the Member States to take “the necessary measures to ensure that the consumer does not lose the protection granted [by the respective legal instrument] by virtue of the choice of the law of a non-Member country as the law applicable to the contract if the latter has a close connection with the territory of the Member States”. Other examples are Article 12(2) of the Distance Marketing of Consumer Financial Services Directive 2002/65/EC and Article 22(4) of the Consumer Credit Agreements Directive2008/48/EC.

Moreover, Article 12(2) of the Time Sharing Directive 2008/122/EC sets forth that, under certain conditions, “consumers shall not be deprived of the protection granted by this Directive, as implemented in the Member State of the forum” where the law of a third country is applicable. (While Articles 17–19 of the new Package Travel Directive 2015/2302 have an obvious connection to conflict of laws, they operate differently.)

All these provisions are still in force. National law of the Member States must contain respective rules – and these rules clearly must be conflict-of-law rules, as they have to affect situations in which the law of a third country would otherwise be applicable (mostly because of a choice by the parties).

A Change of Heart between 2008 and 2011?

Things are different for the new Sale of Goods Directive. While Article 7(2) of the old Sale of Goods Directive1999/44/EC was drafted along the lines of the examples just mentioned, any such provision is now missing from the directive repealing it. (The Supply of Digital Content and Digital Services Directive does not introduce a conflict-of-law provision, either.) The same fate befell Article 12(2) of the Distance Contracts Directive 97/7/EC when the Consumer Rights Directive 2011/83/EU repealed it. From this perspective, EU private international law has actually lost two provisions in the last decade or so.

As the EU legislator seems to have changed its stance on this issue between 2008 and 2011, two possible reasons from this period suggest themselves. The first concerns the new approach to harmonisation of substantive private law by directives, the second the emergence of EU regulations on conflict of laws.

Full Harmonisation

The Distance Contracts Directive and the old Sale of Goods Directive were minimum harmonisation directives. The Member States could maintain or introduce provisions if they ensured a higher level of consumer protection. By contrast, both the Consumer Rights Directive and the new Sale of Goods Directive are full harmonisation directives. Unless otherwise provided, Member States may not maintain or introduce divergent provisions, whether less or more stringent.

Yet no clear link of this changed approach to harmonisation with the present conflict-of-law issue is apparent. True, it is now more or less irrelevant which national law of an EU Member State is applicable to a sale of goods to a consumer. The key rules will be the same across the board (also see Recital 10 Sale of Goods Directive). But this is not with what the respective old provisions and the remaining provisions in other directives were and are concerned. They were and are about protecting the consumer from the application of the (disadvantageous) law of a third country.

Rome I and Choice of Law (in Consumer Contracts)

For anyone interested in EU private international law, the years between 2007 and 2009 have, of course, special significance. In this time frame, the first EU regulations on conflict of laws were passed and became applicable. In particular, Rome I was passed in 2008 and has been applicable to contracts concluded as from 17 December 2009. So, are the rules found in Rome I on consumer contracts and choice of law in general the reason for the lack of conflict-of-law provisions in more recent directives?

As a matter of law, the answer must be negative. This is because the scope of application of Articles 6(2) and 3(4) of the Rome I Regulation on the one hand and of the conflict-of-law rules in the directives on the other hand do not perfectly overlap: The provisions in the directives have not entirely become redundant once Rome I entered into force. For one, Article 6(4) of Rome I excludes certain contracts. For another, even the relatively broad requirement of “directing activities” in Article 6(1)(b) of Rome I only pertains to the Member State in which the consumer is habitually resident. A consumer concluding a contract in another Member State may not be protected even where Article 6 Rome I would encompass a consumer habitually resident in that country. Finally, Article 3(4) Rome I is too narrow to catch all cases subject to the conflict-of-law provisions in directives.

As a matter of policy, however, one can assume that Rome I was a big factor. The Commission’s Proposal for the new Sale of Goods Directive does refer to the protection of consumers under Rome I, although only in the context of compatibility of the draft with EU private international law. (See also Recital 65 Sale of Goods Directive.) When the Commission states that the legislative proposal “does not require any changes to the current framework of EU private international law”, it is not clear whether it took the actual change it proposed to make to EU private international law – eliminating a conflict-of-law provision – into account.

Is there Reason to Mourn?

Life is easier without conflict-of-law provisions in directives, to be sure. Nothing to transpose for national legislators, and no reason for courts to even think about special national conflict-of-law rules favouring consumers. Does this offset the detriments to consumers? One can certainly think so. While the exclusion of some consumers from the protection offered by Article 6 Rome I can lead to some strange results, they only affect a very small number of situations. The practical impact of the conflict-of-law provisions in directives does not seem to have been very big, anyway. As far as I can tell, the Court of Justice only had to deal with any of these provisions once: Case C-70/03 (Commission v. Spain) concerns Spain’s too restrictive transposition of Article 6(2) of the Unfair Terms Directive into its national law.

In any case, the death of conflict-of-law provisions in directives should not be silent. Unlike during the legislative process leading to the Consumer Rights Directive and the new Sale of Goods Directive, the EU legislator should openly communicate that – and preferably also why – it considers such provisions unnecessary. And this not only from a scholarly perspective: In the highly complex realm that is EU (substantive) consumer law, a national legislator might simply miss that a conflict-of-law provision transposing one of the old directives has now lost its base.

HCCH Experts’ Group on Parentage/Surrogacy Issues Final Report

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Gilles Cuniberti
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The Experts’ Group on the Parentage/Surrogacy Project of the Hage Conference on Private International Law (HCCH) has issued its Final Report on The feasibility of one or more private international law instruments on legal parentage  on 1 November 2022.

The conclusions of the report are as follows:

The Group agreed on the desirability of, and urgent need for, further work by the HCCH in the form of a binding PIL instrument on legal parentage in general (a Convention) and a binding PIL instrument on legal parentage established as a result of an ISA specifically (a Protocol).

The conclusions of the Group with respect to the feasibility of some of the key elements of a Convention and a Protocol are set out in boxes throughout (and annexed to) this Report.

The Group concluded on the general feasibility of developing a Convention dealing with the recognition by operation of law of foreign judicial decisions on the establishment and contestation of legal parentage.

The Group also concluded on the general feasibility of rules on recognition by operation of law of legal parentage as a result of an ISA established by judicial decision in a Protocol. Feasibility will depend in particular on how safeguards / standards are addressed.

Owing to the particularly complex and sensitive nature of the topic, the Group noted some key feasibility challenges going forward, which include:

-For a Convention, whether or not to include:
⇒ domestic adoption;
⇒ rules on uniform applicable law for the establishment of legal parentage; and
⇒ rules on public documents.
-For a Protocol, the way to address safeguards / standards.
-For both instruments, scope issues related to legal parentage established as a result of a domestic surrogacy arrangements and / or ART involving a third-party individual (donor) and legal parentage established by domestic adoptions following a surrogacy arrangement.
-Some experts agreed on the feasibility of advancing work on only one instrument, while others did not think that advancing work on one instrument without the other would be feasible.

While different elements to be included in a Convention and / or a Protocol, when taken individually, seemed to be feasible, this assessment might change depending on decisions taken on other elements. For example:

-For some experts, any instrument would only be attractive to States if it also addressed legal parentage established without a judicial decision, given that, in the majority of cases, legal parentage is established by operation of law or following an act. For other experts, this did not seem a key issue and / or those experts questioned the feasibility of agreeing rules on legal parentage without a judicial decision in an instrument.
-Although the Group agreed on the need for safeguards / standards in a possible Protocol, experts had different views as to which safeguards / standards should be included and how they should feature. For many experts, a Protocol would only be feasible if it included uniform safeguards / standards included directly in a Protocol, some of which featuring as conditions for recognition, others as grounds for refusal. For some experts, a Protocol would rather be feasible if it included State-specific safeguards / standards indirectly in a Protocol with a declaration mechanism and grounds for refusal.

The Group finally recommends the establishment of a Working Group to explore the provisions on a possible convention and protocol.

Anachronism as Legislative Art: on the Projected French Codification of National PIL (or What Is Left of It)

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Gilles Cuniberti
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Dominique Bureau (University of Paris II Panthéon Assas) and Horatia Muir Watt (Sciences Po Law school) have published earlier this week in La Semaine Juridique (édition générale) a critique of the desirability of codifying private international law at national level in a field dominated by EU and international norms (Codifier à contretemps… À propos d’un projet français de codification du droit international privé).

The English summary of the article reads:

After the failure of various initiatives towards national codification of private international law in France in the course the first part of the 20th century, a new project was commissioned recently by the ministry of justice and is now (very briefly) open to public comment. Curiously, then, the spectre of a national code has resurfaced once again in an entirely new context – that is, at a time when the majority of rules of the conflict of laws, jurisdiction and judgments currently in force in Member States have been unified by the European Union (largely successfully). Quite apart from any quality assessment of the various substantive provisions thus proposed in the draft text, some of which would no doubt be useful interstitially in the spaces still left to the competence of national authorities, and indeed beyond the symbolic signification of an inward-local turn in an area designed emblematically to respond to the transnational, the main flaw in this proposal is the erroneous nature of its own premises. There is a real discrepancy between the draft text and the very objectives it is designed to pursue : it is far from making the state of the law more manageable for the courts, as it claims to do. Indeed, in the epistemological terms of the French legal tradition, the very phenomenon of a national code suggests that it contains a complete set of legal tools for solving issues that arise in transnational litigation. However the proposal itself reminds its users that it is applicable by default, while leaving the frontiers of local law very unclear. Surprisingly, it has generated very little academic opposition, but even as the short parliamentary deadline approaches, it is still not too late to do nothing..

The journal and article can be accessed here.

Towards a European Digital Identity Wallet? A Private International Law Perspective

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Marion Ho-Dac
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A recent Briefing paper titled Updating the European digital identity framework, authored by Mar Negreiro and Maria Niestadt (from the European Parliamentary Research Services), may be of interest to the readers of this blog.

It deals with the proposal of the European Commission, released in June 2021, to create a “European Digital Identity” (EDI) and a dedicated “Wallet” for citizens and businesses in the European Union (hereafter ‘EDI Regulation proposal’).

General Background of a ‘European Digital Identity’ and its Dedicated ‘Wallet’

The ‘European Digital Identity Wallet’ (EDIW) aims to allow people and companies based in the EU, to store person identification data (e.g. name, address, gender, civil status) and electronic attestations of attributes (e.g. bank account, birth certificate, diploma, company statute) for cross-border use. It should also allow users to authenticate and access online public or private services (Article 6a of the EDI Regulation proposal). According to the European Commission, by means of this digital wallet, proving your identity and sharing electronic official documents across the EU Member States will be possible with ‘one click’ on your smartphone!

This legislative proposal surely is a coherent and necessary continuum of the digitalisation momentum in the Union, both in its economic (i.e. internal market policy) and judicial (i.e. judicial cooperation in civil and criminal) dimension. One of its main political objective is for the Member States and the Union to regain control over the identity of European citizens in the digital ecosystem. Indeed, the dominant tech platforms have been developing private forms of ‘digital ID’, competing with national legal identification schemes. Under the EDI Regulation proposal, the digital wallet should only be issued under the supervision of Member States (i.e. directly by the State or based on a mandate/recognition requirements from the State). The project also aims to support the empowerments of ‘EU digital citizens’ in the same vein as the Declaration on European Digital Rights and Principles recently put forward by the European Commission to ensure a human-centred digital transformation in the Union. Users should be “in full control” of the wallet (Article 6a (7) of the EDI Regulation proposal) based on the key-principles of the GDPR, such as the requirement of data minimisation.

However, the proposal also raises several concerns about, inter alia, the effectivity of data protection, the risk of exclusion of parts of European society, the system’s vulnerability to fraud and data loss. I propose to add to that list uncertainties with regard to private international law rules and their implementation in ‘EDIW context’. The first question that occurs to me is as follows: what will be the legal scope of the cross-border portability of the information contained in this digital wallet?

Legal Outlines of the European Digital Identity Wallet
The Acquis based on the eDIAS Regulation

The EDIW proposal builds on the acquis of the eIDAS Regulation on electronic identification and trust services for electronic transactions in the internal market. This latter lays down the conditions for the mutual recognition, between EU Member States, of electronic identification means of natural and legal persons, based on national notified electronic identification schemes (Article 6). By consequence, the identity – unique by essence – of citizens and businesses based in a Member State can be established throughout the Union (or, at least, in the other Member States that have notified such schemes). Concretely, it should for instance allow a person, domiciled in one Member State, to open a bank account in another Member State remotely, via an electronic identification (eID). The bank should be able to verify the age and the legal identity of the client, his/her financial records and the paperwork could be signed online using e-signatures (see here for other ‘promotional’ examples).

For the proper functioning of the mutual recognition principle, the eIDAS Regulation provides for three “assurance levels” applicable to the electronic identification schemes; they characterise “the degree of confidence in electronic identification means in establishing the identity of a person” (see Recital 16 and Article 8). Against this background, mutual recognition of electronic identification means – used for authentication for an online service – is mandatory for the ‘host State’ only when the public body of the ‘home State’ uses the “substantial” or “high” assurance levels for accessing that service online (Article 6).

‘European Digital Identity Wallet’: What Does It Mean?

The EDI Regulation proposal goes further than the current eIDAS Regulation in making mandatory for all Member States to provide electronic identification means and to recognise the notified electronic identification schemes (eDIs) of other Member States. In that respect, it lays down common requirements for the issuing of European Digital Identity Wallets (EDIW) by Member States (Article 6a of the EDI Regulation proposal). These wallets are understood as “electronic identification means […] containing person identification data and which is used for authentication for an online or offline service” (see Article 1, (3) (a) (2) of the proposal, with the understanding that ‘authentication’ enables the electronic identification as well as the origin and integrity of data in electronic form to be confirmed).

By comparison with a more familiar concept, ID cards issued by EU Member States (following the implementation of Regulation 2019/1157 on strengthening the security of identity cards of Union citizens) are also characterised as ‘electronic identification means’ under the eIDAS Regulation and the EDI Regulation proposal. But the future EDIW is much more than a mere digital ID card. It is both “a product and service” that allows the user “to store identity data, credentials and attributes linked to her/his identity, to provide them to relying parties on request and to use them for authentication, online and offline, for a service […] and to create qualified electronic signatures and seals” (Article 1, (3) (i) point 42 of the proposal).

Legal Scope of the European Digital Identity Wallet

The digital wallet should, inter alia, allow the “validation” of person identification data and electronic attestations of attributes by relying parties. More widely, Member States should provide “validation mechanisms” to ensure that the “authenticity and validity” of the digital wallet can be verified. In that respect, the EDIW should meet the “high level of assurance”, by reference to the eIDAS Regulation (see above), in particular with regard to “identity proofing and verification” requirements. The high level of assurance is based on technical specifications, standards and procedures “the purpose of which is to prevent misuse or alteration of the identity” (Article 8, (2), c).

It is also worth mentioning that the EDI Regulation proposal lays down a minimum list of attributes (e.g. address, age, civil status, family composition, financial and company data), the authenticity of which should be verifiable electronically, at the request of the user, by qualified providers of electronic attestations of attributes, against the relevant authentic source at national level (Article 45d and Annex VI).

Eventually, the proposed EDIW framework does not appear very clear about the normative scope of trans-European data flows via the digital wallet, between (presumption of) authenticity and validity.

Some Private International Law Issues Raised by the EDIW
The Legal Implication of the Mutual Recognition Technique

Beyond the strengthening of a common ‘technological infrastructure’, the ultimate goal of the ‘European Digital Identity Wallet’ (EDIW) is to ensure the cross-border recognition of Europeans’ legal identity and additional information about them (i.e. attestation of attributes such as certificates of birth or diplomas). This brings us to more familiar territory, starting with the core question of the legal significance of the mutual recognition technique in this specific context.

Mutual recognition should provide for a cross-border portability of the data stored within the digital wallet, such as age, gender, nationality or company data. In that respect, the relevant methodology may be based on the international circulation of foreign public documents that have consolidated a legal situation in a first Member State and whose legal consequences are expected in the host Member State (cf. the inspiring work of Professor Ch. Pamboukis). In the case of ‘non-decisional’ public documents (e.g. a professional qualification or a driving licence, ‘crystallised’ in the digital wallet issued by the State of origin), these documents should produce non-normative procedural effects of an evidentiary nature. The data stored in the digital wallet may also be presumed to be formally valid, which allows them to flow across legal borders: the person concerned may use them in the ‘host State digital jurisdiction’ in the same way as in his/her State of origin.

When the data contained in the digital wallet are no longer related to administrative/public aspects (e.g. diploma or driving licence mentioned above) but to personal status and individuality (e.g. name, domicile, civil status, family composition), the mutual recognition technique could take on a different meaning. Indeed, the public documents in question are no longer limited to ‘establishing’ a situation certified by a public authority but are of a ‘receptive’ type. The public authority issuing the public document has ‘received’ the private will expressed by the parties in order to authenticate it. In this context, it could be argued that the digital circulation of such a public document (e.g. a marriage or a name certificate) carries a presumption of validity of the legal situation (i.e. negotium) contained in it (i.e. instrumentum). This distinction is well-known among private international law experts and the suggested reasoning should be the same whether the information is ‘digitised’ or formalised in a paper document. Indeed, electronic attestation of attributes should have “the equivalent legal effect of lawfully issued attestations in paper form”, pursuant to the EDI Regulation proposal (Recital 27).

Critical Assessment

The future ‘European Digital Identity Wallet’ could have a real impact on the international recognition of personal and family status in the Union. The same could be said for the status of legal persons. For citizens and businesses, intra-European free movement would be strengthened and, in practice, greatly simplified.

The main methodological consequence from the private international law perspective should be the ‘eviction’ of the conflict-of-laws rules and reasoning. This is understandable insofar as, in practice, the presumption of probative value of a foreign public document, on the basis of mutual recognition, implies, in our view, a presumption of validity of the legal situation it contains (cf. here).

In the European context, this statement should be even more accurate, because of the remarkable influence of EU citizenship and fundamental rights (such as the right to privacy which applies to the identity of individuals) on conflict-of-laws. Several examples may be found in the caselaw of the CJEU, such as the recent Pancharevo judgment (commented on the blog) raising exactly this issue. For part of scholars and many Member States, this is however the pitfall to be avoided. But actually, the intra-European digital flow of personal data, via this European digital wallet, should instead reinforce this trend.

The Interplay Between the EDIW and Other Legal Instruments

It is important to note that the EDI Regulation proposal, like the current eIDAS Regulation, gives priority to other rules of EU and national law on specific sectors. In that respect, the proposal lays down that the (future) regulation “does not affect national or Union law related to the conclusion and validity of contracts or other legal or procedural obligations relating to sector specific requirements as regards form with underlying legal effects” (Article 2, §3). The issue of normative interplay between the EDIW framework and other important instruments will be crucial. This will be the case, inter alia, in the field of personal status, regarding Regulation 2019/1191 on Public Documents but probably also some ICCS conventions (such as Convention n°34 recently entered into force), as well as national rules on the international legal effects of public documents. This is also true for EU instruments which support the cross-border cooperation between public national authorities and the free movement of citizens and businesses, i.e. the IMI System and the Single Digital Gateway.

The ‘One-click EU Recognition’ is not yet ready to be the revolutionary new tool for private international law partitioners, but the European Digital Identity Wallet is definitively a topic for us!

Five Takeaways from the First Meeting of the Special Commission on the Hague Adults Convention

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The Editors of the EAPIL blog
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This post was written by Pietro Franzina and Thalia Kruger, and is being published simultaneously on Conflictoflaws.net and on the EAPIL blog.

The delegations of more than thirty Member States of the Hague Conference on Private International Law attended the first meeting of the Special Commission charged with reviewing the operation of the Hague Convention of 13 January 2000 on the international protection of adults. The meeting took place in The Hague and online from 9 to 11 November 2022 (for a presentation of the meeting, see this post on Conflictoflaws.net and this one on the EAPIL blog). A dozen organisations, governmental and non-governmental (including the Council of the Notariats of the European Union, the Groupe Européen de Droit International Privé and the European Association of Private International Law), were also in attendance.

The discussion covered a broad range of topics, leading to the conclusions and recommendation that can be found on the website of the Hague Conference (see here). The main takeaways from the meeting, as the authors of this post see them, are as follows.

The Hague Adults Convention Works Well in Practice

To begin with, the Special Commission affirmed that the Convention works well in practice. No major difficulties have been reported either by central authorities instituted under the Convention itself or by practitioners.

Doubts occasionally appear with respect to some provisions. Article 22 for example provides that measures of protection taken by the authorities of a Contracting State “shall be recognised by operation of law in all other Contracting States”, unless a ground for refusal among those listed in the same provisions arises. A declaration of enforceability, as stipulated in Article 25, is only necessary where measures “require enforcement” in a Contracting State other than the State of origin.

Apparently, some authorities and private entities (e.g., banks) are reluctant to give effect to measures of protection that clearly do not require enforcement, such as a judicial measure under which a person is appointed to assist and represent the adult, unless that measure has been declared enforceable in the State where the powers of the appointed person are relied upon. The Special Commission’s conclusions and recommendations address some of these hesitations, so that they should now prove easier to overcome. Regarding exequatur, see para. 33, noting that “measures for the protection of an adult only exceptionally require enforcement under Article 25”, adding that this may occur, for instance, “where a decision is taken by a competent authority to place the adult in an establishment or to authorise a specific intervention by health care practitioners or medical staff”, such as tests or treatments. Other doubts are dealt with in the practical handbook prepared by the Working Group created within the Hague Conference in view of the meeting of the Special Commission. The draft handbook (see here the first version publicly available), which the Special Commission has approved “in principle”, will be reviewed in the coming weeks in light of the exchanges that occurred at the meeting, and submitted to the Council on the General Affairs and Policy of the Conference for endorsement in March 2023).

Situations Exist in the Field of Adults’ Protection that Are Not (Fully) Regulated by the Convention

The Convention deals with measures of protection taken by judicial and administrative authorities, and with powers of representation conferred by an adult, either by contract or by a unilateral act, in contemplation of incapacity. By contrast, nothing is said in the Convention concerning ex lege powers of representation. These are powers of representation that the law of some States (Germany, Austria and Switzerland, for example) confers on the spouse of the adult or a close relative or family member, for the purpose of protecting the adult. Their operation is generally confined to situations for which no measures have been taken and no powers of representation have been conferred by the adult.

The Special Commission acknowledged that ex lege powers of representation fall under the general scope of the Convention, but noted that no provision is found in the Convention that deals specifically with such powers. In practice, ex lege powers of representation may be the subject of cooperation between the authorities of Contracting Parties (notably as provided for under Chapter V), but, where the issue arises of the existence, the extent and the exercise of such powers, the courts and other authorities of Contracting States will rely on their own law, including, where appropriate, their conflict-of-laws rules.

There is yet another gap that the Special Commission discussed. The Commission observed that instructions given and wishes made by an adult in anticipation of a future impairment of their personal faculties (e.g., in the form of advance directives), similarly fall within the general scope of the Convention and are subject, as such, to the cooperation provisions in Chapter V. Whether or not a particular anticipatory act constitutes a power of representation for the purposes of Articles 15 and 16, on powers of representation conferred by the adult, is to be determined on a case-by-case basis. Some unilateral acts plainly come within the purview of Articles 15 and 16, as they actually include a conferral of powers on other persons. Others do not, and may accordingly be dealt with by each Contracting State in conformity with their own law.

States Do Not Currently See an Interest in Modifying the Convention

The question has been raised in preparation of the Special Commission whether the Convention ought to be amended, namely by a protocol to be negotiated and adopted in the framework of the Hague Conference on Private International Law. In principle, a protocol would have provided the States with the opportunity to fill the gaps described above, and address other concerns. However, under international law only those Contracting States that ratify the protocol would be bound by the modifications.

The Special Commission witnessed that, at this stage, no State appears to see an amendment as necessary.

Only one issue remains to be decided in this respect, namely whether the Convention should be modified in such a way as to include a REIO clause, that is, a clause aimed at enabling organisations of regional economic integration, such as the European Union, to join the Convention in their own right. The matter will be discussed at the Council on the General Affairs and Policy of the Conference of March 2023.

The decision lies, in fact, in the hands of the Union and its Member States, as this is currently the only Regional Economic Integration Organisation concerned by such a clause. Their decision will likely be affected by the approach that should be taken in the coming weeks concerning the proposal for a regulation on the protection of adults that the Commission is expected to present in the first half of 2023.

Efforts Should Now Be Deployed Towards Increasing the Number of Contracting Parties

The main problem with the Convention lies in the fact that only relatively few States (fourteen, to be precise) have joined it, so far. Several States stressed the importance of further promoting ratification of, or accession to, the Convention.

It is worth emphasising in this respect that the Hague Adults Convention builds, to a very large extent, on cooperation between Contracting States. This means that a State cannot fully benefit from the advantages of the Convention by simply copying the rules of the Convention into its own legislation, or by relying on such rules on grounds of judicial discretion (as it occurs in the Netherlands and to a large extent in England and Wales), but should rather become a party to it.

Various States expressed an interest in the Convention. The responses to the questionnaires circulated in preparation of the meeting of the Special Commission suggest that at least five States are actively contemplating ratification (Hungary, Italy, Luxembourg, Mexico and Sweden), and that others have considered ratification (Slovakia) or are considering it (Argentina). For its part, Malta signed the Convention on the occasion of the meeting of the Special Commission, and will likely ratify it in the not too distant future.

Tools to Enhance the Successful Operation of the Convention

Some of the practitioners present drew the participants’ attention to practical difficulties in the cross-border protection of adults. To minimise practical difficulties, the Permanent Bureau, in some instances together with the Working Group on the Adults Convention, developed a number of tools.

The first is an extensive country profile, to be completed by Contracting States and made available on the website of the Hague Conference. This profile includes various matters of national law, such as names and content of measures of protection, jurisdiction of courts or other authorities to issue these measures, transfer of jurisdiction, and names, forms and extent of powers of representation.

The second is a toolkit on powers of representation, which contains detailed information about the national laws of States that provided responses, on for instance who can be granted powers of representation, how this granting must take place, and the permitted extent of the representation.

Concluding Remarks

All in all, the issue of the cross-border protection of Adults has rightly gained attention over the past ten years. While States amend their domestic legislation to be in conformity with the UN Convention on the Rights of Persons with Disabilities, they seem to be increasingly aware of the importance of ensuring cross-border continuity. This includes continuity of measures of protection issued by authorities such as courts, as well as the powers of representation granted by adults themselves. These matters of private international law require dialogue on the international and European Union level, more States to join the Convention, and tools to assist practice.

European Commission 2023 Work Programme: A Union Standing Firm and United

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Marco Pasqua
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On 18 October 2022, the European Commission adopted its 2023 Work Programme. As explained in the press release that accompanies the document, the programme aims to set out a bold and transformative agenda in the face of Russia’s aggression against Ukraine, rising energy prices and the knock-on effects on the economy, while defending Europe’s democratic values and pursuing long-term goals and interests.

The initiatives that the Commission plans to take, or pursue with particular interest, in the course of 2023 are listed in three annexes.

Annex I is concerned with the new policy and legislative initiatives that the Commission intends to propose. None of the items in this Annex is based on Article 81 TFUE, on judicial cooperation in civil matters. No reference is made in the document to two topics that formed (and still form) the object of discussion among academics and stakeholder, namely the recognition of parenthood and the protection of vulnerable adults.

Annex II, on REFIT initiatives (i.e., initiatives aimed at making EU law simpler, less costly and future proof), contemplates, among other things, a revision of alternative dispute resolution and online dispute resolution framework to improve enforcement of consumer law. A strong alternative dispute resolution (ADR) framework will enable consumers and businesses to solve their disputes rapidly and at a low cost, out-of-court. The increase in online shopping during the pandemic has shown that there is room for overall simplification notably in cross-border disputes and cost-effective measures, e.g., through digital tools and collective ADR disputes mechanisms. The idea is to modernise the ADR framework in view of the rapid development of online markets and advertising and the need to ensure that consumers have access to fair, neutral and efficient dispute resolution systems.

Various procedures involving aspects of private international law are featured in Annex III, about the pending procedures that the Commission regards as a priority.

The proposed Directive on adapting non-contractual civil liability rules to artificial intelligence (the AI Liability Directive) appears in this list. Liability ranked amongst the top barriers to the use of AI by European companies. This is so because current national liability rules, in particular based on fault, are not suited to handling liability claims for damage caused by AI-enabled products and services. Under such rules, victims need to prove a wrongful action or omission by a person who caused the damage. The specific characteristics of AI, including complexity, autonomy and opacity (the so-called “black box” effect), may make it difficult or prohibitively expensive for victims to identify the liable person and prove the requirements for a successful liability claim. In particular, when claiming compensation, victims could incur very high up-front costs and face significantly longer legal proceedings, compared to cases not involving AI. Victims may therefore be deterred from claiming compensation altogether. Therefore, the objective of this proposal is to promote the rollout of trustworthy AI to harvest its full benefits for the internal market. It does so by ensuring victims of damage caused by AI obtain equivalent protection to victims of damage caused by products in general. It also reduces legal uncertainty of businesses developing or using AI regarding their possible exposure to liability and prevents the emergence of fragmented AI-specific adaptations of national civil liability rules. From a private international law perspective, the impact of the Directive and the (possible) future implementation in national rules and the relationship with the Rome II Regulation shall be investigated.

The list of priority pending procedures also include the proposed Directive on liability for defective products. Directive 85/374/EEC, which the proposal aims to repeal, has the objective to provide an EU-level system for compensating people who suffer physical injury or damage to property due to defective products. Since its adoption in 1985, there have been significant changes in the way products are produced, distributed and operated, including the modernisation of product safety and market surveillance rules. The green and digital transitions are underway and bring with them enormous benefits for Europe’s society and economy, be it by extending the life of materials and products, e.g. through remanufacturing, or by increasing productivity and convenience thanks to smart products and artificial intelligence. Therefore, the revision of the Directive seeks to ensure the functioning of the internal market, free movement of goods, undistorted competition between market operators, and a high level of protection of consumers’ health and property. In particular, it aims to: ensure liability rules reflecting the nature and risks of products in the digital age and circular economy; ensure there is always a business based in the EU that can be held liable for defective products bought directly from manufacturers outside the EU; ease the burden of proof in complex cases and ease restrictions on making claims, while ensuring a fair balance between the legitimate interests of manufacturers, injured persons and consumers in general; ensure legal certainty.

Also in the list of the Commission’s priorities is the proposed Directive on Corporate Sustainability Due Diligence. An overview of the Commission proposal has already appeared on this blog. As suggested in a recommendation of GEDIP that has recently been brought to the attention of the readers of this blog (see here), the Proposal may need to be reconsidered and improved in various respects.

Another priority pending procedure is the proposed Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (“Strategic lawsuits against public participation”, or SLAPPs). The initiative has been the object of a dedicated post on this blog.

Finally, the Commission intends to include among its priorities the initiatives it has taken regarding the digitalisation of judicial cooperation in cross-border civil and commercial matters, i.e., the proposed Directive on digitalisation of judicial cooperation and the proposed Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters. An illustration is found in this post.

The proposed Directive on consumer credits and the proposed Regulation on the law applicable to the third-party effects of assignments of claims equally feature in the list of the priority pending legislative proposals.

Jurisdiction of Courts under the French Draft PIL Code

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The Editors of the EAPIL blog
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This post, written by Pascal de Vareilles Sommières, who is a Professor at the University of Paris 1 Panthéon-Sorbonne, is the seventh in a series concerning the proposed codification of French Private International Law. Previous posts relating to the French Draft Code addressed the issues of renvoi, foreign law, the recognition of marriages, companies and parentage. A German perspective on the draft was also offered here.

Article 15 is the first provision in the title II of the French Project of Code of Private International Law (the Code project), on “Jurisdiction of courts”. It reads as follows:

Unless provided otherwise in this code, jurisdiction of French courts results from the rules on venue in domestic procedural law, which are extended to international matter – subject to their adjustment as it may be required for that matter –, especially the rule on venue based on the domicile or on the habitual residence of the defendant.

Overview of Article 15

Under Article 15, legal bases for jurisdiction of French courts over cross-border disputes are basically to be found in the French rules on venue (place of the lawsuit) as they apply in domestic proceedings, except if a specific rule on jurisdiction has been codified and applies to the case. A striking feature of this rule is that it does not address the jurisdictional issue by itself, but by reference to other rules that were made for domestic litigation. It has been coined as a default rule – or a “principle” in the words of the Report to the Minister of Justice on the project of Code of Private International Law (the Report), recalling (p. 15) that it comes from a former ruling by the Cour de cassation (see the Report, p. 15 at footnote 5, referring to Cass. Civ. 19 October 1959 Pelassa, and Cass. Civ. 30 October 1962 Scheffel). As a default rule, the rule applies in any particular case with the proviso that the case is not covered by a specific rule on jurisdiction within the Code project. As such, it has the importance of a general principle: exceptions may exist, but they keep the status of exceptions, inspired by data specific to the category for which they are provided, and applying only to cases falling in that category.

One particular jurisdiction basis for French courts that draws on this rule is where the domicile or the habitual residence of the defendant is in France: Article 15 expressly mentions the extension of the corresponding venue rule (French Code of civil procedure, Article 42) to disputes arising in an international setting. Such a jurisdiction rule (well known in Latin: Actor sequitur forum rei), is classical in comparative private international law and consequently gained its status as a principle in EU jurisdiction rules in civil and commercial matters (Article 4 of the Brussels I bis Regulation). Needless to say, Actor sequitur… is not the only rule on venue in the French Code of civil procedure, and, under Article 15 of the Code project, others shall extend to international litigation before French courts – at least, each time they are not ruled out by a specific provision on jurisdiction that the Code project enacts.

In some cases, the Code project sets up straightforward specific rules on jurisdiction for international litigation before French courts, as in the field of personal status, where Article 34 provides for jurisdiction of French courts if the domicile or habitual residence of the person whose status is at stake is located in France at the time when the dispute is introduced before the court.

Rules on jurisdiction in the field of contractual and non-contractual obligations (Articles 88 and 91) are good examples of less straightforward jurisdiction rules laid down by the Code project. On the one hand, they draw on rules of venue applying to domestic litigation (French Code of civil procedure, Article 46) and, to that extent, they belong to these venue rules adjusted to international litigation mentioned by Article 15 (see the Report, p. 16). On the other hand, they appear within the Code project as specific legal rules (Article 88 §2; Article 91 §2), proper to international disputes. Under these provisions, in contractual matters, legal bases for jurisdiction of French courts are the place of delivery of the goods and the place of provision of the service; in extra-contractual matters, legal bases for jurisdiction of French courts are the place of the harmful event and the place where the damage is suffered. Of course, in both fields, French rules on jurisdiction apply subject to international convention or EU law (Article 88 §1; Article 91 §1); and we all know that EU law in civil and commercial matters does not rule out the rules on jurisdiction of Member State courts, if the defendant is domiciled in a country which is not a EU Member State (Article 6 of the Brussels I bis Regulation).

General Assessment of Article 15

Is the rule laid down by the Code project in Article 15 a satisfactory one? We must confess our frowning on reading it. The reason is that, in our opinion, the reference to rules on venue in domestic disputes, as default rules on jurisdiction issues in international litigation, made by Article 15 of the Code project, falls beside the point.

The mere fact for the Report to emphasize that the general rule provided by Article 15 belongs to those provisions, in the Code project, intending to consolidate advances previously gained (“acquis”), or to maintain traditional solutions in spite of scholarly criticism (p. 15), remains unsatisfactory to us.

A first reason for scepticism is that the extension of domestic rules on venue to international litigation, when it comes to determining legal bases of jurisdiction of a country’s courts, is enshrined in the Code project, even though this extension principle is said to fall under criticism of commentators: one expects a response to that criticism by the drafters of the Code project prior to have it set aside. A second reason is that it is awkward for the Code project drafters to set up, as a default rule or principle on jurisdiction of courts in international disputes, a mere reference to rules on venue  made for domestic disputes, especially when it is simultaneously admitted that “no one today denies the specificity” of the nature of international jurisdiction of a country’s courts and of the rules laid down to fix it, compared to domestic venue (see the Report, p. 15).

Everyone interested in EU law on jurisdiction in civil and commercial matters knows the huge amount of dissatisfaction left in practice by criteria like the place of performance of obligation, the place of delivery of goods, and the place of provision of service, as grounds for jurisdiction in the field of contracts. The same dissatisfaction stems from criteria like the place of the harmful event and the place of damages, used for the same purpose in the field of torts. Having them endorsed by French rules on international litigation just because they are used as venue grounds in domestic proceedings is at least questionable, as is questionable the assertion by the Report that “the extension principle [of domestic venue provisions] has the advantage that it provides for a connecting factor easy to implement each time one cannot find in the Code project a specific rule for the relevant matter” (p. 15). The sentence would be more correct saying “easy to find” rather than “easy to implement”. But the mere fact, for a criterium used by a provision addressing a given issue, to be easy to find does not make this criterium reasonable and reliable when drafting another provision on a different issue.

So, if the point is to avail of default rules proper to answer the question whether or not a particular case falls within the jurisdiction of French courts (so that they may handle the jurisdiction issue even though there is no jurisdiction rule specific to the matter to which that case belongs), it is suggested here that a good approach would have been to listen to scholarly criticism and to assess counterproposals. Unfortunately, space lacks – due to the format of this blog – to develop here on this issue. This quick overview will only express our disappointment that the only other idea mentioned in the Report (and actually used in the Code project), for assertion of jurisdiction by French court where no ground specific to the matter can be found, is about resorting to the “natural judge theory” (doctrine du juge naturel) and consequently sticking to the French citizenship as a default basis for jurisdiction of French courts (see Code project, art. 17, and the Report, p. 16 to 18).

A Few Suggestions

Beside the well-known usual criticism under which citizenship/nationality of one of the litigants falls as a ground of jurisdiction in civil and commercial matters, another remark finds its way here: why did the Report and the Code project give short shrift to other possible solutions?

Extension of Brussels I reg. recast (2012) rules on jurisdiction, especially where the defendant is not domiciled in a EU Member State, could have been explored: there are pros and cons.

How about the forum legis jurisdiction? Comparative private international law shows a tendency for this ground of jurisdiction, formerly unfashionable, to come back to the forefront. EU jurisdiction law shows that providing for jurisdiction of the courts of a given country over a case, where the law of that country is applicable to that case, may well prove satisfactory (Articles 5 to 7 of Regulation No 650/2012 in matters of succession). An article recently published depicted quite clearly the influence, before common law courts, of the idea that, for a court, applicability of the law in force in its forum is a relevant basis for the jurisdiction of that court (R. Garnett, “Determining the Appropriate Forum by the Applicable Law”, [ICLQ vol 71, July 2022 pp 589–626]). Even in France, voices make the case for a better relation between forum and jus in private international law (see, among others, S. Corneloup, « Les liens entre forum et ius : réflexions sur quelques tendances en droit international privé contemporain », in Mélanges B. Ancel, LGDJ/IPROLEX, 2018, p. 461-475). This tendency probably finds its rationale in this idea that where a country claims applicability of its law through its choice-of-law rule, the best way to increase efficiency of this claim is to support it by an additional claim, made by that country through its choice-of-court rules, that its courts have jurisdiction. This jurisdiction should certainly not be exclusive of jurisdiction of the courts of any other country (at least in principle), but making it available to the parties is good for them, in terms of predictability, and good for the country whose law claims to be applicable, in terms of authoritativeness of its law.

Whether this point is decisive is open to debate, but one may expect from a lawmaker that it addresses such an issue when codifying its private international law.

The Upcoming First Meeting of the Special Commission on the Hague Adults Convention

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Pietro Franzina
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On 9, 10 and 11 November 2022, a Special Commission devoted to the Hague Convention of 13 January 2000 on the international protection of adults will meet in the Hague.

The Hague Adults Convention applies in international situations to the protection of persons aged 18 or more who, by reason of an impairment or insufficiency of their personal faculties, are not in a position to protect their interests. It lays down a comprehensive set of private international law rules in this area: rules on jurisdiction to give measures of protection, on the law applicable both to measures of protection and powers of representation conferred by an adult in contemplation of a possible loss of autonomy, on the recognition and enforcement of measures of protection across Contracting States, and on cooperation between the authorities of such States.

Today, fourteen States are bound by the Hague Adults Convention, the latest to join being Greece (actually, the Convention entered into force for Greece yesterday, 1 November 2022).

Why a Special Commission, and How It’s Been Prepared

While the Hague Adults Convention has generally proved to work well in practice, the Council on General of Affairs and Policy of the Hague Conference on Private International Law considered, in 2019, that the time had come to convene a Special Commission for the purpose of reviewing the practical operation of this instrument.

Preparation work began shortly afterwards, with a questionnaire addressed to States aimed to determine the issues that the Special Commission ought to address (the responses are found here), followed by a questionnaire on the practical operation of the Convention (see here the responses).

Since April 2021, a working group constituted for this purpose has been meeting regularly with the aim to draft a Practical Handbook on the Convention and, more generally, to discuss the various documents that the Special Commission will consider in its meeting (or serve as a background to it). As a member of the working group, the author of this post enjoyed the intense and fruitful exchanges that occurred among the members, and witnessed the amazing job carried out by the Permanent Bureau to assist the group and, generally, to get everything ready for the Special Commission.

The meeting of the Special Commission will only open to delegates designated by States and invited observers (by the way, the European Association of Private International is among the observers: as the readers of the blog may recall, EAPIL received a similar invitation in May 2022 to attend the first meeting of the Special Commission on the Hague Maintenance Convention and Protocol). Of course, the Conclusions that the Special Commission will adopt will be made available once the meeting is over.

What to Expect from the Meeting (1): A Substantial Contribution to the Understanding of the Convention

The November 2022 meeting is the first such meeting devoted to the Hague Adults Convention. In fact, the work carried in preparation of the Special Commission over the last year and a half, and its finalisation by the Special Commission, represents the first major collective exercise of this kind regarding the Convention.

This is in itself remarkable, especially if one considers that, over the years, several Special Commission meetings have taken place to discuss the operation of other Hague instruments. For instance, the Special Commission charged with reviewing the operation of the Hague Convention of 1980 on the civil aspects of international child abduction has met seven times, and the next meeting – due to take place in October 2023 – is already under preparation.

As a matter of fact, some practically important issues regarding the Hague Adults Convention had not been the object of detailed analysis before the working group and the Permanent Bureau engaged in this exercise.

One such issue is whether, and in which manner, the Convention applies to ex lege powers of representation, that is powers of representation that, according to the law of some States, a person close to the adult (e.g., their spouse) is entitled to exercise for the purposes of protecting them. A preliminary document, drawn up by the Permanent Bureau with the assistance of the working group provides an account of the questions that surround these powers, and discusses how they could (or should) be dealt with under the Convention.

Doubts have been raised in literature and among practitioners as regards the way in which the Hague Adults Convention deals with advance directives concerning matters of health, welfare and other personal matters. This topic, too, is the object of a preliminary document.

The Special Commission will offer a unique opportunity to collect the views of States and observers on these and several other issues. The finalised Practical Handbook (the latest revised draft is available here) will eventually help shape a common understanding of the operation of the Convention, notably as regards the issues that have prompted doubts and disputes.

While the Practical Handbook and the Conclusions of the Special Commission will not be formally binding on State courts and other authorities, the consensus that the Commission will be able to record on the various topics under discussion will in fact serve as a guideline for anybody having to do with the Convention.

What to Expect from the Meeting (2): A New Wave of Ratifications

One recurring criticism concerning the Hague Adults Convention is that it is in force only for relatively few States. Admittedly, the pace of ratifications has been disappointing.

Experts generally agree that the Convention significantly facilitates the handling of cross-border cases, and authorities in Contracting States frequently report about the benefits offered by the Convention in cases governed by its rules, compared with cases for which the Convention is of no avail (e.g., when the need arises to coordinate proceedings before local courts with proceedings in a State that is not bound by the Convention). Yet, several States have apparently never considered joining the Convention, and many among those that have expressed an interest in ratifying the Convention have so far contented themselves with taking preliminary steps in that direction.

The Special Commission of November 2022 is likely to encourage new ratifications and accessions. There are various reasons for that.

To begin with, the Convention has slowly come under the limelight, these last years. There has been an increase in the number of scholarly writings and academic initiatives regarding the protection of adults, and the practical importance of the topic is no longer challenged. The Special Commission itself is meant, inter alia, to draw the attention of States and stakeholders on the problems surrounding the international protection of adults, and will further increase the visibility of the Convention. All this will plausibly lead more States to consider joining the Convention, or work at its ratification.

Secondly, the Special Commission will enable States to develop a more thorough understanding of the Convention. The benefits of ratification should in fact prove easier to assess based on the information collected in preparation of the Special Commission. The work that individual Contracting States are expected to carry out in the future should also be of help in this respect. Reference is made to the “Country Profiles” that States are invited to prepare in accordance with a draft that the Commission will discuss. The States that will join the Convention in the future will thus be able to rely on a rich collection of data produced both by the Hague Conference and by the current parties. The will not bear the price, in terms of information, that “pioneer” States must face when joining a uniform regime whose actual functioning has not been fully tested or is not thoroughly documented.

What to Expect from the Meeting (3): A Step Towards a Limited Amendment to the Convention Itself?

So far, the Hague Adults Convention has been ratified only by European States. Apart from Switzerland, Monaco and the UK, all of the States parties to the Convention are also Members of the European Union.

As the readers of this blog know, EU institutions have on various occasions expressed the view that the protection of adults in cross-border deserves greater attention on the part of Member States and the Union itself.

Building on the conclusions adopted by the Council in June 2021, the European Commission launched a public consultation in December 2021 on the measures that the Union should adopt in this field (EAPIL issued a position paper in response to that consultation), and published a study on the matter. The Commission is reportedly working at an impact assessment study that would accompany a possible proposal for a regulation.

One of the hurdles that the Union faces in this area is that the EU cannot itself become a party to the Hague Adults Convention, for this is only open to States. This means that the EU could, at best, authorise the Member States that have not yet done so to ratify the Convention “in the interest of the Union”, as it occurred with the Hague Convention of 19 October 1996 on the protection of children.

At a workshop organised by the Czech Presidency of the Council of the EU in September 2022, the question has been put forward by the First Secretary of the Hague Conference, Philippe Lortie, of whether it would make sense to amend the Convention so as to include a “REIO clause”, i.e., a clause that would enable regional economic integration organisations, such as the EU, to join the Convention. Other provisions in the Convention could be amended on the same occasion: these additional changes would not alter the substance of the Convention, but rather clarify the meaning of provisions whose uniform interpretation could otherwise be difficult to achieve. The possible scope of the various amendments, together with the issues that this move would entail, are outlined in a dedicated preliminary document that has also been prepared in view of the Special Commission.

The prospect of a direct involvement of the EU as a party to the Hague Convention raises some politically sensitive questions, both for the Member States (external action by the Union is a delicate subject) and for the Union itself. One should consider, among other things, that an amendment to the Convention would take several months to complete: if that path were to be taken, the plans of the European Commission regarding new legislation in this area would likely need to be put on hold for some time, and adapted to the changed context.

The implications of the Union becoming a party to the Convention, however, would also be practically significant. Among other things, the Court of Justice would find itself in a position to issue preliminary rulings on the Convention, thereby in fact playing a key role in the uniform interpretation of its provisions.

It remains unclear whether States (not just EU Member States) may in fact have an appetite for this and/or other changes to the Convention. The Special Commission will provide a first opportunity to discuss this prospect. The topic, however, will likely be rediscussed in the broader context of the next meeting of the Council on General Affairs and Policy of the Conference, due to be held in March 2023.

Parentage under the French Draft PIL Code – Part 2

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The Editors of the EAPIL blog
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This is the second and final part of a post contributed by Estelle Gallant, regarding the provisions on parentage in the proposed codification of French PIL. The first part can be found here. 

As explained in the first part of this post, the French draft code of private international law devotes an entire sub-section to parentage. After the presentation of the general choice of law rule related to biological parentage (Article 59), it is proposed to shed light on the two special rules in the same matter (Articles 60 and 61).

As regard the general rule codified in Article 59, the substitution of the national law of the child for the national law of the mother is the most positive contribution of the draft. By contrast, the two special rules of the draft, namely Articles 60 and 61, fall short of expectations, not always providing the expected simplifications or clarifications.

Special Rule on Voluntary Acknowledgement of Children (Article 60)

While innovative in certain respects, Article 60 of the draft Code is – for the most part – a reworking of positive law, resulting from a combination of Article 311-17 of the Civil Code and its interpretation by the courts. Although some of the difficulties pointed out in the literature and not necessarily resolved in the case law have been resolved by the draft, not all have been.

Specifically devoted to the voluntary acknowledgement of a child (i.e. declaration of a person that s/he is the parent of the relevant child), whether paternal or maternal, Article 60 distinguishes between substantive validity and formal validity of the acknowledgement, which is a novelty compared with the current system.

Substantive Validity of Voluntary Acknowledgement

Article 60(1) is innovative since it presents itself as an exception to the general provisions.

The solution of the derogation closes a doctrinal controversy that concerned both the methodological nature of the rule in Article 311-17 of the Civil Code and its scope of application. By making the rule on voluntary acknowledgement a derogation from the general rule, it follows that the general rule is purely and simply put aside as soon as an acknowledgement of a child is concerned. This solution is problematic under the current regime because it contributes to putting aside the law of the mother which may validate voluntary acknowledgement, but it is no longer problematic in the context of the draft: even by derogating from the general rule, the special rule merely offers an additional alternative connecting factor to that contained in the general rule. The derogation thus no longer seems to be contrary to the spirit of favouring the establishment of parentage out of marriage which is the overarching principle of the provisions on voluntary acknowledgement.

The conflict-of-laws rule (Article 60(1)) contains an alternative connecting factor to validate the acknowledgement of a child: the national law of the person making the acknowledgement or the national law of the child on the day of the acknowledgement. This is the same rule as the one currently found in the civil code (Article 311-17). The methodological nature of this rule is unclear: is it a “substance-oriented” choice of law rule, a rule of necessary application, a substantive domestic rule ordering the taking into consideration of foreign laws or perhaps even a rule of recognition of a situation? The drafters of the draft Code have remained deaf to these questions and have reproduced the provision almost identically. This being said, the methodological nature of the text is less important once its scope is clearly established and its implementation clarified.

The draft Code contains (in Article 60(4)) what may again be analysed as a special public policy clause, allowing recourse to French law in cases where neither of the two national laws referred to in Art 60(1) allows the validation of the acknowledgement. The purpose of the provision is to further strengthen the principle of favouring the establishment of parentage by voluntary acknowledgement. The provision is similar to the one that is proposed under Article 59, but the triggering factor is different. In the case of acknowledgement, French law will displace the foreign law that does not allow acknowledgement only in the event that the child is domiciled in France.

Lastly, it is regrettable that the draft code has not cared to define the notion of voluntary acknowledgement of children. Case law has revealed a difficulty of characterisation in situations that would have deserved particular attention, such as the case where the child has a birth certificate mentioning the mother’s name or the father’s name (Civ. 1ère, 28 May 2015, no. 14-18.100). Such cases have been dealt with under Article 311-17 of the Civil Code, whereas such a solution would certainly be worth discussing.

Challenges to Voluntary Acknowledgement

Following on from Article 60(1), Article 60(2) codifies judge made rules accepted since 1999 (Civ. 1ère, 6 July 1999, no. 97-19.453).  Disputes as to the truthfulness of the acknowledgement or to its validity, are subject cumulatively to the national law of the author and the national law of the child on the day of the acknowledgement. While acknowledgement is favoured by alternative connecting factors and the requirement that only one of these laws validates the acknowledgement, challenges to acknowledgements are disfavoured by the requirement that the requirements of two laws are applied cumulatively. Since the solution is not without criticism (in particular, why should preventing a child from destroying a parentage be more protective than the reverse?), it is regrettable that it has not been rethought.

Formal Validity of the Act of Voluntary Acknowledgement.

Article 60(3) provides a rule concerning the conditions of form for validly registering of voluntary acknowledgement of a child.  It adds to the two alternative connecting factors already provided for the substantive conditions of acknowledgement, a third connecting factor involving the law of the State in whose territory the act of acknowledgement is drawn up. This is a traditional solution as regards the form of documents and makes it possible not to penalise excessively for reasons of form a document which would otherwise be valid in substance.

Substantive Rule

As indicated earlier in the commentary on Article 59, Article 60(5) contains a substantive rule specific to conflicts of filiation/parentage and, more specifically, to conflicts of acknowledgements. Based on a chronological principle, the text indicates that “an acknowledgement, as long as it is not annulled, deprives of effect any subsequent acknowledgement of the child in the same line”. It is thus understood that in the presence of two voluntary acknowledgements established in two different States, the first should first be contested in order to be able to rely on the second. The solution is to be approved; it might have deserved to be generalised to all modes of establishment of filiation.

Special Rule on Enjoyment of a Status (Article 61)

Article 61 of the draft code of private international law more or less reproduces the current Article 311-15 of the Civil Code by giving effect to the substantive provisions of domestic law relating to “enjoyment on a status” (possession d’état) a concept specific to French law which draw consequences from the fact that a person raises a child as if s/he was his own. However, two clarifications are made by the draft text.

On the one hand, it limits the scope by referring only to provisions concerning the establishment of filiation (for example, Article 314 of the Civil Code, which allows the restoration of the presumption of paternity of the husband).

On the other hand, it indicates that the provision applies only by way of derogation from the preceding provisions, i.e. both with regard to the general rule and with regard to the special rule on voluntary acknowledgement. The clarification regarding the scope of the exception is interesting, as the solution contradicts that adopted very recently by the Court of Cassation. In a judgment of 23 March 2022, the Court of Cassation ruled that Article 311-15 of the Civil Code constituted a derogation only from Article 311-14 and not from the rule in Article 311-17. In other words, according to this judgment, as soon as Article 311-17 is applicable, it excludes Article 311-15 of the Civil Code.

Even if it has been cleaned up in this way, it is surprising that this provision relating to the French rules on enjoyment of a status has been retained in the draft Code: the complexity of the rule has been denounced many times, its application is extremely rare and its usefulness is unconvincing.

Parentage under the French Draft PIL Code – Part 1

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The Editors of the EAPIL blog
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This post, written by Estelle Gallant, who is a Professor at the University of Toulouse Capitole, is the sixth in a series of posts concerning the proposed codification of French Private International Law. It is split into two parts: part one appears below, whereas part two will be published tomorrow. Previous posts relating to the French Draft Code addressed the issues of renvoi, foreign law, the recognition of marriages and companies. A German perspective on the draft was also offered here.

The French draft code of private international law devotes an entire sub-section to parentage, comprising five subdivisions (labelled ‘paragraphes’ in French). They distinguish various aspects of international parentage, which is certainly a good initiative: biological parentage, medically assisted parentage with a third-party donor, surrogate motherhood carried out abroad, the effects of parentage and adoption are thus covered by Articles 59 to 70 of the draft code.

Currently, the French Civil Code contains fragmented provisions on biological filiation (Articles 311-14 to 311-17), on the one hand, and adoption, on the other (Articles 370-3 to 370-5). Case law has supplemented these provisions.

The draft Code devotes a first subdivision to biological parentage, containing three articles articulated around a general rule (Article 59 of the draft Code) and two special rules (Articles 60 and 61 of the draft Code). These three provisions are presented by the drafters (see page 35 of the report on the draft code) as a recast of the existing system (see above, Articles 311-14 to 311-17 Civil Code). Indeed, analysis shows that the draft takes up the existing legal structure and system. Only the general rule is really recast, the two special rules being merely reworded and clarified at the margin.

This commentary will briefly present the general rule on biological parentage pursuant to Article 59 of the draft code; the special rules laid down in Articles 60 and 61 will be analysed in a later post. Within the general rule, the replacement of the national law of the mother by the national law of the child is the most positive contribution of the draft (see infra).

By stating that “unless the present Code provides otherwise, the establishment and contesting of parentage” are governed by the national law of the child, the rule in Article 59 is presented as a general  principle. It means that the rule applies in the absence of a special rule.

Scope of Article 59

Article 59(1) of the draft Code refers to “the establishment and contesting of parentage”, whereas the provision currently in force refers to “parentage”. The clarification is useful in that it improves the readability of the provisions.

The text contains an unprecedented clarification as regards the inclusion in the scope of the article of the settlement of conflicts of parentage (Article 59(2)). The solution is marked by a certain logic and has to be combined with the special rule in Article 60. This latter provision is specifically concerned with voluntary acknowledgements of children (ie declaration by a person that he is the parent (typically father) of the child) and will be analysed in a later post.

New Connecting Factor

The current Article 311-14 of the Civil Code, by designating the national law of the mother on the day of the child’s birth to govern his or her filiation, is now the subject of unanimous criticism, in particular for its unequal and unspecific nature. The draft thus seeks to respond to the criticism by designating the child’s national law, a proposal that had been made by scholars as early as 1972. That said, the solution will remain relatively isolated, since in comparative private international law it is the connection to the child’s habitual residence that is generally retained.

Like the current text, the draft provides a solution to the change of nationality (conflit mobile) by fixing the connection to the child’s nationality on the day of birth. The solution is to be approved.

Public Policy Clause

One of the strongest criticisms levelled at the connection to the mother’s nationality was that it had the defect of preventing the establishment of the paternal parentage when the mother was of a personal status prohibiting the establishment of paternal parentage out of marriage, even in the presence of a French defendant or a French child or a child residing in France. Although the public policy exception may have been used by case law to cancel this result, its systematic use in such cases is only recent (Civ. 1ère, 26 October 2011, no. 09-71.369 ; Civ. 1ère,  27 September 2017, no. 16-19.654 ; Civ. 1ère, 16 December 2020, no. 19-20.948).

It may be noted that the draft Code provides for precisely this hypothesis in Article 59(3):

If, by reason of discrimination related to the circumstances of his or her birth, the [applicable] law denies the child the right to establish his or her filiation, French law shall apply, provided that the French courts have jurisdiction under the present Code.

The rule can be analysed as a special public policy clause allowing French law to be substituted for the prohibitive foreign law, if the French courts are seised. The link required between the situation and the territory of the forum for the exception to be triggered is fulfilled if French courts have jurisdiction under French rules of international jurisdiction. Pursuant to Article 34 of the draft Code, the courts with jurisdiction in matters of filiation are those of the place of domicile or habitual residence of the child.

The alignment between the criterion of jurisdiction and the criterion of triggering public policy is interesting and will make it possible, more than in the past, to cover all situations that are likely to trigger the public policy exception, i.e in case of strong proximity to France (e.g. French child or child residing in France, but also, above all, French defendant or defendant residing in France).

GEDIP’s Reccommendation on the Proposal for a Directive on Corporate Sustainability Due Diligence

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The Editors of the EAPIL blog
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This post was written by Hans van Loon.

As reported in this blog before the European Commission on 23 February 2022 adopted a proposal for a directive on corporate sustainability due diligence.

At its annual meeting in 2021, the European Group for Private International Law (GEDIP) had adopted a Recommendation to the EU Commission concerning the PIL aspects of corporate due diligence and corporate accountability. The EAPIL blog covered this development, too.

While some of the recommendations proposed by GEDIP are reflected in the Draft Directive, the Draft fails to take into account several crucial recommendations concerning judicial jurisdiction and applicable law. This will detract from its effectiveness.

In particular:

  • The Proposal, while extending to third country companies lacks a provision on judicial jurisdiction in respect of such companies;
  • The Proposal, while extending a company’s liability to the activities of its subsidiaries and to value chain co-operations carried out by entities “with which the company has a well-established business relationship”, lacks a provision dealing with the limitation of the provision on co-defendants in the Brussels I bis Regulation (Article 8(1)) to those domiciled in the EU;
  • The Proposal lacks a provision allowing a victim of a violation of human rights to invoke, similar to a victim of a violation of environmental damage under Article 7 of Regulation 864/2007 (Rome II), also the law of the country in which the event giving rise to the damage occurred, and does not prevent companies from invoking a less strict rule of safety or conduct within the meaning of Article 17 of Rome II;
  • The provision of the Proposal on the mandatory nature of the provisions of national law transposing the Directive (Article 22 (5)) is insufficient because (1) the words “in cases where the law applicable to actions for damages to this effect is not that of a Member State” are redundant and (2) all these provisions of national law transposing the Directive should apply irrespective of the law applicable to companies, contractual obligations or non-contractual obligations.

GEDIP therefore, on the occasion of its meeting in Oslo, 9-11 September 2022 adopted a Recommendation concerning the Proposal for a directive of 23 February 2022 on Corporate Sustainability Due Diligence, following up on its Recommendation to the Commission of 8 October 2021. The text of the Recommendation can be found here.

Update on the French Consultation on the Draft Code of Private International Law

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Marion Ho-Dac
by

A quick update related to the public consultation launched by the French Ministry of Justice last June on the draft code of private international law to gather feedback from all stakeholders (announced here).

The deadline has been extended to 30 November 2022.

More information is available here.

Various posts have been published on this blog regarding the draft: see here for some general remarks, and here as regards specifically renvoi, foreign law, the recognition of marriages and companies. A German perspective on the draft is offered here.

The Brussels II ter Regulation: A Quick Look at Some Significant Innovations

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The Editors of the EAPIL blog
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The author of this post is Francesca Maoli, who is a Researcher at the University of Genova.

The Brussels II ter Regulation on matrimonial matters, matters of parental responsibility and child abduction has become fully applicable on 1 August 2022, meaning that legal proceedings instituted on or after that date, as well as authentic instruments and agreements registered on that date or afterwards, must, in all EU Member States (excluding Denmark), be dealt with in accordance with the Recast Regulation, rather than its predecessor, the Brussels II bis Regulation

Amending Brussels II bis: Improve the Tradition or Face Innovation?

The process that eventually resulted in the adoption of the Recast Brussels II Regulation was launched on the assumption that, overall, the old Brussels II bis Regulation had functioned reasonably well. The 2014 European Commission’s Report on the operation of the latter Regulation stressed that the system was in need of improvement, rather than radical change.

The existing rules have undergone several changes. Some amount to simple refinements and fixings. Others are more meaningful.

The most prominent innovation brought about by the Brussels II ter Regulation is, arguably, the abolition of exequatur for all decisions on parental responsibility. The two-track system envisaged in Brussels II bis, however, remains in place. While the general discipline is now contained in Article 30 and following of the Brussels II ter regulation, ‘override’ return orders and access orders (which the old regime already regarded as ‘privileged’ decisions) keep on benefiting from a special regime. Recognition and enforcement of the latter orders can be refused if they are irreconcilable with a later decision relating to parental responsibility concerning the same child, provided that such a later decision was given (i) in the Member State where recognition is invoked, or (ii) in another Member State or in the non-Member State of the habitual residence of the child, provided that the conditions necessary for its recognition in the Member State are met.

This post does not purport to analyse the new rules in details (a wealth of literature has been produced on the topic: see here for some references). It merely intends to ‘zoom in’ a selection of issues of special practical importance.

Private Divorces

The European Commission set itself the object of retaining the status quo as concerns matrimonial matters (this was, actually, the preferred policy according to the 2016 Recast Proposal). The Recast Regulation has nevertheless introduced, also in this area, some significant innovations.

One such innovation is about ‘private divorces’, i.e., divorces that fundamentally occur out of court, based on an agreement between the spouses.

The Brussels II ter Regulation comes with a definition of authentic instruments and agreements, respectively in Article 2(2) and (3). Authentic instruments and agreements in matrimonial matters, if they are given binding legal effects in the Member State of origin, benefit from recognition ‘without any special procedure being required’ (Article 65(1)), unless one of the grounds for refusal of recognition provided by Article 68(1) apply. The same is true of authentic instruments and agreements in matters of parental responsibility (Article 65(2)).

In practice, as clarified in Recital 70, authentic instruments and agreements are to be treated as equivalent to decisions. For this, they must have been formally drawn up or concluded in a Member State that would have had jurisdiction according to the regulation (Article 64). Where this is not the case, they may still circulate across Member States under domestic PIL provisions, or otherwise.

The EU decided to adopt rules on private divorces in light of developments that have arisen, recently, in domestic legislations. When the Brussels II bis Regulation was adopted, the laws of the Member States did not contemplate out-of-court divorces. This is why the Regulation itself failed to include provisions in this regard. This state of affairs has proved problematic. A case is currently pending before the ECJ (C‑646/20, Senatsverwaltung für Inneres und Sport), concerning a dissolution of marriage by joint declaration of the spouses before an Italian civil registrar, whose duty is to assess whether the conditions for an out-of-court divorce are met (Article 12 of the Italian Decree Law No 132/2014 requires, inter alia, that the spouses do not have minor children). While noting that ‘Regulation No 2019/1111 is inapplicable to the present case ratione temporis’, being therefore ‘not possible to draw any conclusions from it for the purposes of interpreting Regulation No 2201/2003’, AG Collins suggested in its Opinion that Articles 2 and 21(1) of the Brussels II bis Regulation be given a broad interpretation, thereby concluding that Italian private divorces should be treated as ‘divorce judgments’ for the purpose of the Brussels II bis Regulation (just like they will do under the Recast Regulation).

The Best Interests of the Child and the Child’s Participation in Parental Responsibility Proceedings

The most significant changes brought about by the Brussels II ter Regulation concern children. One key goal of the Regulation is to enhance the protection of their fundamental rights, as enshrined in the UN Convention on the Rights of the Child (UNCRC), the European Convention on Human Rights (ECHR) and the Charter oof Fundamental Rights of the European Union. Specifically, Article 24 of the Charter creates a link between children’s rights – as protected by universal and regional systems – and the EU legal order.

The Regulation fosters the principle of the best interests of the child, which underlies both the general ground of jurisdiction of the habitual residence of the child (Recital 20) and the rules on the recognition and enforcement of judgments (Recital 55).

While the overall regime of jurisdiction in parental responsibility matters is left substantially unaltered, some significant revision occurred concerning choice of court. Article 10 of the Brussels II ter Regulation provides the formal and substantial condition that an agreement of the parties must fulfil to be effective: those conditions reflect, in general, a concern for the best interests of the child. Among the other requisites, a ‘substantial connection’ must exist between the child and the State of the chosen forum. The new provision expands the cases in which the aforementioned connection is deemed to exists, thus creating more possibilities to exercise party autonomy. In addition, the choice of court results now disconnected from the existence of a proceeding concerning the dissolution of marriage (even if Recital 23 still mentions this circumstance). Finally, ‘persons who become parties to the proceedings after the court was seised may express their agreement after the court was seised’, with the specification that such acceptance of jurisdiction during the proceedings may also be implicit (Article 10(2)).

Child participation is another key issue. Recital 2 states that the Regulation ‘clarifies the child’s right to be provided with an opportunity to express his or her views in proceedings to which he or she is subject’, thus recognizing the already existing obligations stemming from international and EU law. The hearing of the child finds a comprehensive discipline in Article 21, which sets out a general obligation to hear the child in all proceedings on parental responsibility, in line with Article 12 UNCRC. The same obligation is stated in Article 26 in the context of child abduction proceedings.

All in all, a decision relating to a child may not be enforced if the child concerned was not given the opportunity to express their views in accordance with Article 21 (unless specific circumstances occur, as specified by Article 39(2)). As to ‘privileged decisions’, namely, overriding orders and orders concerning the rights of access, the violation of Article 21 prevents the issuance of the certificate aimed at facilitating recognition and enforcement (Article 47(3)(b)).

In spite of the foregoing, the opportunity for the child to be heard is still subject to ‘the national law and procedure’. Therefore, it remains unclear to what extent national practices of the Member States will be affected by the new provisions. The importance of the described innovations should, however, not be underestimated. The Regulation has built a solid link between EU proceedings on parental responsibility, on the one hand, and the obligations arising from international texts in this area. Against this background, in order for the child to be given a ‘genuine and effective opportunity to be heard’ (Articles 21 and 26), other aspects should be considered, such as the right of the child to receive adequate information, as suggested, inter alia, by the Guidelines of the Council of Europe on Child-Friendly Justice and the recent work of the Committee of experts on the rights and the best interests of the child in parental separation and in care proceedings (CJ/ENF-ISE).

The focus on the child’s best interests is further witnessed by Article 56 of the Recast Regulation. This provides that the enforcement of a decision may be suspended if it ‘would expose the child to a grave risk of physical or psychological harm due to temporary impediments which have arisen after the decision was given, or by virtue of any other significant change of circumstances’. According to Recital 69, this may take the form of a manifest and strong objection of the child voiced after the adoption of the decision (Recital 69).

International Child Abduction

Chapter III of Brussels II ter is about international child abduction. The new instrument confirms the intention to enhance the operation of the 1980 Hague Convention with respect to intra-EU abductions. The overriding mechanism or trumping order, which consents the court of the Member State of habitual residence of the child before the abduction to the return of the child despite a contrary decision issued in the State of refuge, is still operating. However, the recourse to the overriding mechanism is permitted only when the decision of non-return has been issued pursuant Article 13(1)(b) (grave risk of harm) and 13(2) (objection of the child) of the 1980 Hague Convention. Moreover, the court of the child’s habitual residence can issue such a decision only in the context of a proceedings on the merits of parental responsibility, thus reaching a stable assessment on the future of the child. Therefore, the risk of multiple transfers is mitigated.

On other aspects, the discipline is more detailed. Some innovations, inspired to the will to give substantial content to the child’s best interests, are to be welcomed.

The whole Article 24 of the Regulation is dedicated to the celerity of return proceedings: a term of six week after the lodgment of the application is prescribed at each instance, unless ‘exceptional circumstances’ make it impossible to respect this time limit. As concerns appeal proceedings, the term starts to run at the moment in which ‘the required procedural steps have been taken and the court is in a position to examine the appeal’. Similar obligations are placed upon Central Authorities, which shall act expeditiously in processing return applications. The same purpose inspires the possibility to declare return orders provisionally enforceable, notwithstanding any appeal (Article 27(5)). The enforcement proceedings themselves must be fast (Article 28).

The Regulation also provides that the requested court may invite the parties to consider mediation or other ADRs, unless it would result contrary to the best interests of the child, not appropriate in the particular case or would unduly delay the proceedings (Article 25). The explicit mention of this possibility follows the specific attention that the family law scholars and practitioners are devoting to mediation, the potentialities of which are undoubtful. For this reason, the recast could have devoted even more structured discipline to mediation, currently mentioned only in the Chapter dedicated to international child abduction.

The best interests of the child also play a crucial role when it comes to provisional measures aimed at ensuring a contact between the child and the person seeking the return of the child (Article 27(2)). The requested court, while deciding on the return, may also adopt provisional, including protective, measures that are  recognized and enforced in all other Member States until the court with jurisdiction as to the substance intervenes (as results from Articles 27(5), 35(2) and 36(1)(c), as well as Recitals 30, 44-46 and 59).

Autonomy, Flexibility and Protection of the Rights of the Child: The Role of Cooperation

Overall, the approach of the EU lawmaker with the Brussels II ter Regulation has resulted in the will to balance the enhancement of party autonomy, the need to grant judicial and non-judicial authority a certain degree of flexibility and the protection of the fundamental rights of the child.

As already mentioned, the latter has inspired some detailed obligations concerning, inter alia, the hearing of the child and a specific attention towards the discipline of international child abduction proceedings. While party autonomy has been empowered also in the context of parental responsibility, through the new discipline on choice of court agreements and implicit acceptance of jurisdiction, those rules have been surrounded by safeguards aimed at protecting the child’s best interests. The same reasoning applies to authentic instruments and agreements circulating according to Article 65(2) of the regulation, which are subject to the grounds for refusal of recognition or enforcement provided by Article 68(2) and (3). Specific reference is made to the possibility for the child to express his or her own views, which may result compressed in the context of out-of-court proceedings or private arrangements.

At the same time, the objective of protect children and their best interests has sustained the introduction of a certain degree of flexibility to national authorities: for instance, the possibility to issue cross-border protective orders pending an international child abduction proceedings, or to suspend the enforcement of a decision when the physical or the psychological wellbeing of the child is at risk.

In this context – and with a view to those objectives – the new provisions of the regulation dedicated to cooperation are of particular interests. Direct cooperation and communication between courts and between Central Authorities are now subject to a more detailed discipline and, therefore, encouraged. Chapter V is entirely dedicated to the role and obligations of Central Authorities, when cooperating between themselves and with courts. Other provisions are to be found in other parts of the regulation. Article 86 concerns direct judicial communication and provides that courts from different Member States should cooperate and communicate directly in all cases that are appropriate (for instance, when a court takes provisional or protective measures, it shall inform the court of another Member State having jurisdiction). The dialogue between judicial authorities can effectively contribute to the good administration of cross-border situations, as well as support swifter procedures, with positive repercussions on children. Of course, it could provide specialized training for judges, who need to be acquainted with this possibility and perhaps acquire new skills.

Those and other provisions contribute to a more fragmented discipline compared to the Brussels II bis regulation. On the other hand, if well applied, they may contribute to a better enhancement of the child’s best interests in the EU judicial space. As always, the application of the tool in practice will show its fruits.

Companies under the French Draft Code of PIL

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The Editors of the EAPIL blog
by

This post was contributed by Thomas Mastrullo, who is an Associate Professor of Commercial Law at the University  of Luxembourg. It is the fifth in a series of posts on the French draft code of private international law of March 2022 (the previous posts in the series gave a German perspective and discussed the issues of renvoi, foreign law and the recognition of marriages celebrated abroad). 

Background

Title II of Book II of the French Draft Code of Private International Law is devoted to legal persons.

This Title II is divided into two chapters which deal with two major questions of international company law: the first chapter pertains to the recognition of companies (Art. 85), while the second chapter concerns the conflict-of-law rule in corporate matters, through the determination (Art. 86) and the scope (Art. 87) of lex societatis.

By the rules it proposes, the French Draft PIL Code undoubtedly promotes the modernization of French international company law.

Recognition of Companies (Article 85)

Article 85 of the French Draft PIL Code lays down the principle of recognition in France of the legal personality of companies formed in accordance with the law of a foreign State.

The proposed article 85 reads :

L’existence et les effets de la personnalité morale ou de la capacité juridique des sociétés dont le siège statutaire est situé hors du territoire français et qui ont été régulièrement immatriculées sur un registre public d’un État étranger sont reconnus de plein droit sous réserve de la fraude aux droits des tiers.

The Draft PIL Code thus adopts the liberal theory of incorporation with regard to the recognition of foreign companies: as soon as a company is validly incorporated in a foreign State, where by hypothesis it has fixed its statutory seat or registered office, it must be recognised in French territory.

Such a rule “codifies” the traditional position of French law on this subject. Indeed, since the 19th century, it has been accepted in French law that “la régularité de la constitution selon la loi de l’État d’immatriculation est suffisante pour que la société soit reconnue en France” (M. Menjucq, Droit international et européen des sociétés, LGDJ, “Précis Domat”, 6th ed., no. 58), as long as it is established that the company enjoys legal personality in its State of incorporation (See CA Paris, 30 Apr. 1997, BJS 1997, p. 778, note M. Menjucq). Moreover, the solution adopted by the Draft is in line with the jurisprudence of the CJEU, and in particular with Überseering judgment (see here) according to which:

the refusal by a host Member State to recognize the legal capacity of a company formed in accordance with the law of another Member State in which it has its registered office (…) constitutes a restriction on freedom of establishment” and, even worst, an “outright negation of the freedom of establishment.

Beyond these general remarks, three points on the text may be underlined.

Firstly, recognition relates to the “existence and effects” of legal personality. This expression refers to the French doctrinal position which defines recognition as “l’admission sur le territoire nationale de l’existence et des effets d’une personne juridique (physique ou morale) étrangère” (L. Lévy, La nationalité des sociétés, LGDJ, 1984, p. 51). This definition gives precedence to the fiction theory of legal personality, considering that, whatever personality a company enjoys abroad, it is not imposed on the State of recognition, which remains free to decide on its existence. We know that other authors, inspired by the reality theory, define recognition more strictly as “l’autorisation accordée par l’État à la société d’exercer une activité sur son sol” (P. Mayer et V. Heuzé, Droit international privé, LGDJ, « Précis Domat », 11th ed., no. 1106 et s.). The approach adopted by the Draft has the merit of grasping the whole issue of recognition in corporate matters: the recognition of the existence of a foreign company as a legal person logically implies the recognition of the effects resulting from this personality… And it is difficult to imagine that a foreign company whose existence is recognised in a State could be outright refused authorization to carry on its business there.

Secondly, the Draft PIL Code pertains to the recognition of the companies’ “legal personality” but also of the companies’ “legal capacity”. A simple legal capacity granted in the foreign State of incorporation is therefore sufficient to recognize a company’s legal personality in France. Indeed, the condition that the company must have legal personality in its State of incorporation in order to be recognized in France is interpreted broadly. Even if it does not have legal personality in its State of incorporation, a company which enjoys a capacity equivalent to that conferred on companies which have legal personality in France may be recognized as a legal person on French territory, as was decided in the case of a German Offene Handelsgesellschaft (see CA Versailles, 14 janv. 1999, BJS 1999, § 97, p. 466, note M. Menjucq).

Thirdly, the Draft PIL Code provides that recognition can be rejected in case of fraud against the right of third parties. This could be the hypothesis of a letter-box company without any effective connection to the State in which it has its statutory seat or registered office. This international company law’s classic limitation is to be welcomed, especially as it is compatible with EU law. Indeed, it follows in particular from the Inspire Art (see here) and Polbud (see here) CJEU’s judgements that fraud against the rights of third parties may constitute a limit on the companies’ freedom of establishment, provided that such fraud is assessed on a case-by-case basis and in a punitive manner (see Th. Mastrullo in Traité de droit du commerce international, M. Menjucq et J. Béguin (dir.), LexisNexis, 3rd ed., no 711). Obviously, the characterisation of fraud will always be based on an assessment of the facts of the case.

Determination of the lex societatis (Article 86)

The French Draft Code of Private International Law adopts the theory of incorporation and the criterion of the statutory seat or registered office as a connecting factor for determining the lex societatis.

The proposed Article 86 reads :

Les sociétés immatriculées au registre du commerce et des sociétés au titre de leur siège statutaire sont soumises aux dispositions de la loi française.

Les sociétés dont le siège statutaire est situé hors du territoire français sont soumises aux dispositions du droit des sociétés de l’État dans lequel elles sont immatriculées dans un registre public ou, à défaut d’immatriculation, de l’État où est situé le siège statutaire.

The first paragraph uses the unilateralist method, and states the French law’s will to be applicable to companies whose statutory seat or registered office is in France, while the second paragraph contains a bilateral conflict-of-laws rule according to which, when its statutory seat is not in France, the company is ruled by the law of the State where it is incorporated or has its statutory seat.

As the Legal High Committee for Financial Markets of Paris (“Haut Comité juridique de la Place Financière de Paris” – HCJP) which has published a report on the applicable law to companies  (Rapport sur le rattachement des sociétés – see here) on 31 March 2021, the French Draft PIL Code adopts a liberal approach of companies’ connecting factor.

Several arguments may be advanced in support of this proposition.

Firstly, the connecting factor relying the statutory seat or registered office is simpler and, as a consequence, more favorable to legal certainty. Indeed, on the one hand, it eliminates the touchy question of the place of the real seat and, on the other hand, it guarantees respect for the operators’ choice of the law to rule their company. Thus, this connecting factor might reinforce France’s attractiveness. Secondly, the solution is inspired by the comparative private international law which reveals a strong tendency towards the generalization of the incorporation theory or connecting criterion by the statutory seat or registered office. In Belgium, for instance, the connecting criterion by the real seat, which had prevailed since 1873, has been abandoned by the law of 23 March 2019 in favour of the connecting criterion by the statutory seat, the new Article 110 of the Belgian Code of Private International Law now providing that « La personne morale est régie par le droit de l’État où se situe son siège statutaire ». Thirdly, the solution is more suited to the development of EU law which, through the jurisprudence of the CJEU – and in particular the Centros (see here), Überseering (see here), Inspire Art (see here), and Polbud (see here) judgments – and some regulations – such as European Regulation n° 2157/2001 on SE (see here) or Directive (UE) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (see here), tends to promote the statutory seat or registered office as a connecting factor.

It is regrettable that the proposed Article 86 does not provide for the limit of fraud against the rights of third parties, as it is expressly provided for in relation to recognition. One can think, however, that the limit of fraud could be implemented in order to apply the law of the real seat instead of the law of the statutory seat, either on the basis of Article 85, which rejects the recognition of legal personality’s “effects” in case of fraud against the right of third parties (lex societatis may be considered as one of these “effects”), or on the basis of common private international law, knowing that such a limit is envisaged by European case law (see already above).

Scope of the lex societatis (Article 87)

Article 87 of the French Draft Code of Private International Law is dedicated to the scope of application of the lex societatis. The inspiration of this text can be found in Swiss law. The aim is to increase the readability and, as a result, the attractiveness of French law. A list of elements falling within the scope of lex societatis is drawn, this list being non-exhaustive as suggested by the use of the French adverb “notamment” (which can be translated by “in particular”).The list of elements falling within the scope of the lex societatis is not surprising and, mostly, “codifies” the French doctrinal positions and case law’s solutions.For example, the assertion that the lex societatis determines the acquisition and loss of the status of shareholder takes up the solution of the famous Royal Dutch judgment of 17 October 1972 (see here), in the same way that the Africatours judgment of 1st July 1997 admitted the application of the lex societatis with regard to the liability of managers towards third parties (see here).

In conclusion, the project seems relevant to meet the challenges created by the development of freedom of establishment in the European Union and to strengthen the competitiveness of French company law.

ICCS Plurilingual Forms – Present and Future of International Cooperation in Civil Status Matters

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Pietro Franzina
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The International Commission on Civil Status (ICCS) will host a conference, jointly organised with the Société de Législation Comparée, under the title Plurilingual Forms – Present and Future of International Cooperation in Civil Status Matters.

The conference will take place in Strasbourg on 21 September 2022.

Speakers (and chairs) include Hans Van Loon (former Secretary General of the Hague Conference on Private International Law), Paul Lagarde (Emeritus Professor at the University Paris I, former secretary general of the ICCS), Patrick Wautelet (University of Liège), Bojana Zadravec (President of the Slovenian Association of Administrative Staff, EVS -European Association of Registars), Olivier Guillod (University of Neuchâtel), Laura Martinez-Mora (Hague Conference on PIL), Nicolas Nord (Secretary General of the ICCS), Anatol Dutta (University of Munich), Camille Reitzer (Deputy Secretary General of the ICCS), Marie Vautravers (European Commission), Guillermo Palao Moreno (University of Valencia), Alexander Schuster (University of Graz), Andreas Bucher (Emeritus Professor at the University of Geneva).

The working languages will be French and English (presentations made in one language will be simultaneously translated into the other).

Further information can be found here.

The conference comes only a few weeks after the Strasbourg Convention of 14 March 2014 on the issue of multilingual extracts from civil status acts came into force internationally (on 1 July 2022), for Germany, Belgium and Switzerland.

Update on the Insolvency Regulation

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Marta Requejo Isidro
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A quick update related to the insolvency regulation (Regulation 2015/848): on 30 August 2022 the Commission adopted Decision (EU) 2022/1437 confirming the participation of Ireland in Regulation (EU) 2021/2260 of the European Parliament and of the Council amending Regulation (EU) 2015/848 on insolvency proceedings to replace its Annexes A and B.

The Decision takes up the notification to the Commission of 31 May 2022 whereby Ireland notified its wish, in accordance with Article 4 of Protocol (No 21), to accept and be bound by Regulation (EU) 2021/2260 of the European Parliament and of the Council. The preamble explains that there are no specific conditions attached to the participation of Ireland in Regulation (EU) 2021/2260 and there is no need for transitional measures; the measure concerned by the current notification of Ireland merely updates the Annexes A and B to that Regulation containing the list of national insolvency proceedings and the list of national insolvency practitioners, respectively.

The Decision has entered into force the day after its publication in the Official Journal, thus on 1 September 2022.

Unidroit Draft Model Law on Factoring: Online Consultation

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Marta Requejo Isidro
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The International Institute for the Unification of Private Law (Unidroit) is conducting an online consultation on the draft Model Law on Factoring.

The online consultation will run for 12 weeks, from 29 July until 21 October 2022.

The purpose of the consultation is to: (1) Raise awareness about the instrument; (2) Ensure that the instrument is well suited to application in different contexts, including both civil law and common law jurisdictions as well as developing economies, emerging markets, and developed economies; (3) Seek feedback from parties engaged in factoring on whether the instrument sufficiently addresses issues that arise under existing legal frameworks and will improve factoring arrangements in those States that implement the Model Law; (4) Solicit comments on the drafting of the instrument itself.

The public consultation has three aspects:

  1. The launch of this webpage on the UNIDROIT website allowing interested parties to access the draft Model Law on Factoring and facilitating the submission of comments.
  2. The circulation of the draft Model Law on Factoring directly to interested parties.
  3. The organisation of one or more consultation events to discuss the content of the draft instrument with stakeholders.

Further information, including on the draft Model Law on Factoring itself, is available here.

Entry into force of the Evidence Regulation Recast

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The Editors of the EAPIL blog
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This post was contributed by Dr. Vincent Richard, who practices with Wurth Kinsch Olinger in Luxembourg.

The end of the summer is the right time to draw readers’ attention to the recent entry into force in all EU Member States except Denmark of the Evidence Regulation recast on 1 July 2022 (Regulation 2020/1783).

The Evidence Regulation facilitates the cross-border taking of evidence by allowing a court or authority to request a court located in another Member State to take evidence there. The Regulation also allows courts to take evidence directly from another Member State after having asked permission from the central authority of that Member State.

The main goal of the recast is to bring the Evidence Regulation into the digital era by imposing that all communications and exchanges of documents should be carried out through a decentralised IT system such as e-CODEX and by encouraging the taking of evidence through videoconferencing. Additionally, the recast facilitates the direct taking of evidence and it introduces interesting changes to the notion of “court” under the Regulation.

Electronic Transmission of Requests through e-CODEX

The main objective of the recast is to impose an electronic transmission of requests and documents among courts using the Evidence Regulation. To that end, Article 7 (former Article 6 of Regulation 1206/2001) was entirely modified to provide for a fully dematerialised procedure and to allow electronic signatures, governed by Regulation no 910/2014 on electronic identification.

Communication between courts relies on the e-CODEX system, which is a decentralised and interoperable system for cross-border communication, allowing secure communication between preapproved and identifiable users such as judges and clerks. The e-CODEX system has already been used to connect the commercial registers of the Member States and in several pilot projects. The solution has been tested by a limited number of States in the application of the European Payment Order, Small Claims and European Account Preservation Order Regulation. The Regulation on the taking of evidence and the Regulation on the service of documents are the first texts on judicial cooperation in civil matters to require Member States to deploy access points to the e-CODEX system, but the Commission wishes to generalize the method, both in civil and criminal matters. On this issue, the reader may consult a recent blog post by Marta Requejo on the entry into force of the e-CODEX Regulation.

Because of the technical difficulties that this transformation entails, the relevant article (Article 7) did not enter into force in July 2022 with the rest of the Regulation but it will enter into force in 2025, three years after the adoption of the implementing regulation defining technical specifications (Commission implementing regulation (EU) 2022/422 of 14 March 2022).

Taking of Evidence through Videoconferencing

Where the taking of evidence requires the hearing of a person who is not in the territory of the requesting court, the Regulation encourages Member States to use videoconferencing whenever possible (Articles 12 and 20). This technology can be used to hear a party, a witness, an expert or even a child in the context of the application of Regulation 2019/1111. The recast encourages the use of videoconferencing, whether the taking of evidence is carried out by the requested court or directly by the requesting court.

The Notion of “Court” under the Regulation

Article 2 of the recast provides two definitions. One on the “decentralised IT system” and one on the notion of “court”. The latter definition is worth mentioning because it aimed to close the debate as to whether notaries can use the Evidence Regulation. (On the broader issue of notaries in EU PIL, see the post by Martina Mantovani on this blog, here)

Under the recast, the notion of court encompasses not only courts per se but also “other authorities in Member States as communicated to the Commission under Article 31(3), that exercise judicial functions, that act pursuant to a delegation of power by a judicial authority or that act under the control of a judicial authority, and which are competent under national law to take evidence for the purposes of judicial proceedings in civil or commercial matters”.

Hence, Member States are free to delegate the taking of evidence to notaries or court clerks and other Member States must respect this choice as long as it was communicated to the Commission. Recital 5 specifies that this definition includes authorities that qualify as courts under other Union legal acts, such as Brussels I bis, Brussels II ter and the Succession Regulation.

Direct Taking of Evidence

Article 19 to 21 of the recast further encourages requesting courts to use direct taking of evidence after asking permission from the central authority where the evidence is located. If that central body does not answer within 30 days of acknowledgement of receipt of the request, article 19(5) provides that the requesting court may send a reminder. Interestingly, if the requesting court does not receive a reply within 15 days of the acknowledgement of receipt of the reminder, the request for the direct taking of evidence shall be considered accepted. The Regulation, therefore, provides that the silence of the central body is equivalent to implicit acceptance of the taking of evidence on its territory. Exceptionally, the central body may, however, still refuse the taking of evidence after the deadline until the moment of the actual direct taking of evidence.

Conclusion

The Evidence Regulation has never been used much but it remains a useful tool at the disposal of judges and counsels who need to gather evidence abroad in cross-border disputes. The introduction of the e-CODEX system and the use of videoconferencing should speed up the process of obtaining evidence abroad.

Moreover, the recast foreshadows the method that will be followed in judicial cooperation in the coming years and it will be interesting to observe the implementation of e-CODEX in all Member States.

EU and Ukraine Join Hague Judgments Convention

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Gilles Cuniberti
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Afficher l’image sourceThe European Commission has announced that the European Union and Ukraine both joined the 2019 Hague Judgments Convention today. More specifically, the EU has acceded and Ukraine has ratified the Convention on 29 August 2022.

Didier Reynders, EU Commissioner for Justice, said:

Today‘s accession is the culmination of years of intense efforts. By being the first to accede to the Convention together with Ukraine, the European Union paves the way for others to join soon. The wider the accession rate of States to the Hague Judgments Convention, the more powerful an instrument it will become for the benefit of more citizens, more companies, and wider international trade and investment.

The Convention will enter into force for the EU and Ukraine on 1 September 2023.

A delicate question will then be whether EU Member States will apply the Convention to judgments issued by courts located in any part of Ukraine under Russian “control” (whatever that may mean, and if any by then).

Unless Russia, which has signed the Convention, becomes a Contracting State in the meantime.

A German Perspective on the French Draft PIL Code

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The Editors of the EAPIL blog
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This post was written by Stefan Leible and Felix M. Wilke (both University of Bayreuth). It is the fourth in a series of posts on the French draft code of private international law of March 2022 (the previous posts in the series discussed the issues of renvoi, foreign law and the recognition of marriages celebrated abroad). It is based on an article by the authors (in French) forthcoming in the Revue critique de droit international privé. The English manuscript of that article can be found here.

The outlook that France might soon have a full private international law (PIL) code can cause some envy in a German PIL scholar. After all, Germany does not have – nor will it have it in the foreseeable future – such a code. To be sure, a big part of German conflict-of-laws provisions can be found in one place, i.e. the Introductory Act to the Civil Code (EGBGB). But this Act overall is not limited to PIL issues. Moreover, there is no piece of legislation exclusively and comprehensively devoted to questions of cross-border proceedings in civil matters. International jurisdiction outside the scope of EU law typically must be determined by applying the rules for local jurisdiction/venue “double-functionally” (on the prevalence of this concept in the EU, see here). And while the German Code of Civil Procedure (ZPO) expressly addresses other cross-border issues (such as service abroad or recognition and enforcement of foreign decisions), it only does so in the context of the respective subject matter (e.g. service in general and effects of decisions in general). Hence, these provisions are scattered across the Code.

Nevertheless, we hope some remarks from a German perspective may be of interest. At the risk of coming across as stereotypical German (PIL) scholars, we focus on the General Part of the Draft Code in this contribution. The readers may rest assured that our forthcoming article in the Revue critique de droit international privé has a broader approach.

Idea and Scope of the General Part

The general part (Book I: “General Rules” = Articles 1-33) of the Draft Code contains provisions on conflict of laws as well as on procedure, including four “general general” provisions applying to both areas. The idea of “factoring out” provisions in this way obviously speaks to us, with the German Civil Code (BGB) arguably being the pinnacle of this legislative technique. True, to organize provisions in this way can run contrary to the accessibility of a legal instrument and therefore could be detrimental to one of the main goals of the Draft Code (see the Report of the Working Group (“Report”), p. 7). As the level of abstraction is still rather low, however, the advantage of not having to repeat the same provisions over and over (or at least to insert a plethora of references across the code) outweighs this risk. Furthermore, some of the general issues of PIL tend to appear to outsiders as arcane. Hence, it is beneficial for legal clarity to make some of them explicit.

The general part in the field of conflict of laws contains many of the usual suspects. It comes as no surprise in particular that there are provisions on renvoi (Article 8 of the Draft Code) and public policy (Article 11 of the Draft Code); we are not aware of any code of private international law anywhere in the world that fails to address these issues. It is commendable that a provision on characterisation (Article 6 of the Draft Code) has been drafted, following trends in other countries. The basic German approach (characterisation lege fori) is the same as in the Draft Code, but there is no provision to this effect. Of course, one of the main problems with characterisation concerns institutions unknown to the lex fori. Special conflict-of-laws provisions for such institutions make life much easier. It is thus a very good idea to have included provisions on trusts in the special part (Articles 107-114 of the Draft Code).

Renvoi and the Sword of Damocles

Article 8 of the Draft Code on renvoi has already been the subject of an insightful post by Gilles Cuniberti on this blog. We are in agreement with him that the respective reference in the Report to insights from comparative (private international) law are vague and misleading. We can add that Germany would be another example of national PIL allowing renvoi in general (Article 4(1) EGBGB).

We do not think that legal clarity is improved by making renvoi mandatory only if one of the parties so requests (Article 8 cl. 2 of the Draft Code). This would mean that applicable law at least for a considerable time has the sword of Damocles hanging over its head: Assuming that application of renvoi would lead to a different applicable law than if renvoi was excluded, the applicable law ultimately would be subject to one party choosing to “trigger” the application of renvoi or not. And why should one party have the unilateral power to change the applicable law in this way, possibly to the detriment of other parties?

The Conundrum of Overriding Mandatory Provisions

Article 7(1) of the Draft Code contains a definition of lois de police (overriding mandatory provisions). Paragraph 2 sets forth that French overriding mandatory provisions must be applied; pursuant to paragraph 3, foreign overriding mandatory provisions can be applied under certain conditions. The legislative technique thus is rather similar to Article 9 Rome I. There is no comparable provision in the EGBGB (Article 34 EGBGB – implementing the respective provision of the Rome Convention – was abolished at the end of 2009). Again, we consider it beneficial for legal clarity to have a written rule on this issue.

But the function of Article 5(2) of the Draft Code is not clear to us in this regard. It states that a conflict-of-laws rule is “excluded” (écartée) by a material rule for certain international situations or by an overriding mandatory provision. Why is this statement even needed if Article 7(2) and (3) of the Draft Code contain precise instructions of how to deal with overriding mandatory provisions? Additionally, we object to the idea arguably expressed in Article 5(2) of the Draft Code that a rule of substantive law can take precedence over a conflict-of-laws rule. This would mean to conflate two areas of law that – analytically speaking – must be strictly kept apart.

Even More General Provisions?

While the German EGBGB with only four articles in the section on “General Provisions” does not serve as an inspiring example in this context, one might consider addressing even more issues in the general part of the Draft Code. (The Report does not indicate whether this was on the Working Group’s agenda.) In particular, we are thinking of the incidental question and the triad of adaptation, substitution and transposition. All of them concern a stage in the analysis of a case in which the applicable law has seemingly already been determined. There is a certain risk that especially those not well-versed in PIL could overlook that not necessarily all aspects of the case will be governed by the law just determined and/or that some adjustments still must be made under substantive law. To include provisions on these issues, even if phrased rather broadly, could at least draw attention to them. And the French PIL Code could be something of a trailblazer here.

Standard Contractual Clauses and Private International Law: Welcome Clarifications and Lingering Doubts in the Light of the EU Commission’s Q&As

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Martina Mantovani
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On 25 May 2022, the European Commission published a set of Questions and Answers (Q&As) to clarify the practical implementation of the new sets of Standard Contractual Clauses (SCCs), adopted in June 2021 (Decision 914/2021/EU). Contracts based on the earlier sets of SCCs will no longer be a lawful basis for international data transfers after 27 December 2022 (Q&A No. 22).

As a reminder, SCCs are standardised and pre-approved model data protection clauses that allow controllers and processors to comply with their obligations under EU data protection law. They are based on a triangular relationship, whereby the obligations assumed by the data importer and the data exporter (the parties to the contract) by virtue of their contractual agreement can be enforced by the data subject, acting as a third-party beneficiary.

SCCs are, by definition, incorporated within an international contract between a controller/processor of personal data established in the EU (or subject to the GDPR pursuant to Article 3(2) thereof) and a controller/processor established in a third country and placed beyond the scope of application of the GDPR (cf Q&A No. 24). Owing to their congenital “foreign element”, these contracts must speak the language of private international law (PIL), at least in cases where they are concluded between two commercial entities (see Q&A No. 2 for the potential range of users of the SCCs). In this respect, the Commission’s Q&As bring along welcome clarifications concerning some of most recurrent PIL issues arising out of these clauses, such as those regarding the contents and limits of conflict-of-laws party autonomy and the interplay between these contracts and the legal order (notably, the overriding mandatory rules) of the receiving third country.

While being of certain interest for the private international lawyer, the relationship between local laws (objectively applicable to the data importer) and the SCCs remains extremely complex and it deserves its own blogpost. For this reason, Section A of this blogpost will briefly present the major “PIL innovations” brought along by the 2021 SCCs, focusing solely on choice of law and choice of court clauses. Section B will then point to some unresolved issues that presently find no answer in the Commission’s Q&A (nor elsewhere).

A. Modernised SCCs and PIL: What’s New

The first and most evident innovation brought along in 2021 consists in an attempt at simplification of the regulatory environment. The three distinct sets of SCCs adopted under Directive 95/46 [Decision 2001/497/EC (SCCs for controller to controller transfers), Decision 2004/915/EC (alternative set of SCCs for controller to controller transfers) and Decision 2010/87/EU (transfer of personal data to processors established in third countries)] have been replaced by two sets of SCCs: one concerning the relationship between controllers and processors to fulfil the requirements in Article 28(3) and (4) of the GDPR; one dealing with SCCs as a tool for the transfer of data outside the EEA. The latter present an innovative modular structure consisting of 4 “modules”, covering four transfer scenarios (cf Q&A Nos 21 and 27): transfer from EU-based Controller to Non EU-based Controller (Module 1); transfer from EU-based Controller to Non EU-based Processor (Module 2); transfer from EU-based Processor to Non EU-based Processor (Module 3); transfer from EU-based Processor to Non EU-based Controller (Module 4).

The parties have to combine “general clauses” (that are applicable regardless of the specific transfer scenario) with the module(s) that applies to their specific situation.

For the purposes of the present blogpost, only the SCCs as a tool for the transfer of data outside the EEA will be considered, as specifically concerns the Clauses dealing with applicable law (A.1) and jurisdiction over remedies (A.2).

A.1 Applicable law

The regime governing the choice of the applicable law has undergone significant modifications in the 2021 restyling. To fully grasp these innovations, it is useful to briefly present, at the outset, the previous regime(s) established by the SCCs adopted under Directive 95/46/EC.

– Applicable Law under the Previous SCCs Regime

Concerning applicable law, the previous sets of SCCs clearly regarded international data transfers as a dynamic process, consisting of three distinct strands.

First, the processing of personal data by the data exporter, including the transfer itself, were governed, up to the moment of the transfer, by the objectively applicable data protection law [clause 4 of the SCCs set out by Decision 2001/497/EC; clause I(a) of the SCCs set out by Decision 2004/915/EC; clause 4 of the SCCs set out by Decision 2010/87/EU]. The “objectively applicable data protection law” is, in this context, the Member State law applicable to the EU-established controller by virtue of EU law itself (ie the law determined pursuant to Article 4 of Directive 95/46/EC until 23 May 2016, and by Article 3 GDPR after this date. This law now includes the GDPR-complementing provisions issued by the Member States based on the opening clauses scattered throughout the GDPR, whose spatial scope of application remains uncertain in current law).

Second, the processing of personal data by the data importer, occurring after the transfer to the third country, was seen as a separate processing operation, placed beyond the scope of the direct application of EU law, and governed by the law chosen by the parties to the SCCs. There was not, however, an unrestricted freedom of choice, which was limited to:

(1) the law of the Member State where the data exporter was established [clause 5 (b) first indent of the SCCs set out by Decision 2001/497/EC; clause II(h)(i) of the SCCs set out by Decision 2004/915/EC];

(2) the provisions of an adequacy decision applicable to the third country where the data importer is established, even if such adequacy decision was not applicable ratione materiae to this importer, provided that such provisions were of a nature which made them applicable in the sector of that transfer [cf. Clause 5 (b) second indent of the SCCs set out by Decision 2001/497/EC; clause II (h)(ii) of the SCCs set out by Decision 2004/915/EC];

(3) a (more or less) extensive set of “mandatory data protection principles”, set out in the annexes of the SCCs [clause 5 (b) indent of the SCCs set out by Decision 2001/497/EC; clause II(h)(iii) of the SCCs set out by Decision 2004/915/EC].

Evidently, it is not possible to qualify the choices made under (2) or (3) as a veritable “choice of governing law”: said provisions or principles would have been applied in conjunction with a national law (objectively) applicable to the data importer under local PIL.

Finally, all three sets of SCCs contained a provision entitled “governing law”, whereby “the Clauses shall be governed by the law of the Member State in which the data exporter is established” (respectively clauses 10, IV and 9). The actual scope of this choice of law clause shall be read in the light of what has been said regarding the first two strands of the data processing operation: vis-à-vis the first step, there is no room for party autonomy and the chosen law cannot directly govern the processing operations carried out by the exporter within the EU, including the transfer. The processing of the transferred data by the importer in the third country must also be excluded from the scope of the chosen “governing law”, otherwise the (different) choice eventually made under (2) or (3) above would have been deprived of practical significance. In essence, the law appointed under the clause entitled “governing law” was therefore limited to the “contractual issues” posed by the SCCs (validity, form, nullity, consequences of the total or partial breach etc).

– The 2021 SCCs

The 2021 SCCs did not change the approach with respect to the first strand of the data transfer operation, which remains subject to the “objectively applicable law”, ie the GDPR as eventually complemented by the applicable Member State law (see Clause 2).

With respect to the second strand, the new SCCs took away the possibility of choosing between different alternatives as regards the legal regime applicable to the processing operations carried out by the importer in the third state. The obligations of this party vis-à-vis the exporter and the data subjects are now set out in greater detail in the SCCs themselves, without any specific reference to a national governing law. Clause 4 specifies, in any event, that the SCCs shall “be read and interpreted in the light of the provisions of Regulation (EU) 2016/679”.

Finally, there is, just as in the previous sets of SCCs, a clause (Clause 17) titled “Governing law”, which is quite innovative as compared to its predecessors. Consistently with the “modular structure” of the SCCs, this clause presents different wordings depending on the specific transfer operation at stake.

  • For transfers from controller to controller (Module 1), the parties are free to choose the law of one of the EU Member States, subject to the sole requirement that such law allows for third-party beneficiary rights. In particular, neither the clause itself nor the Q&A require an objective connection between the chosen Member State and the transfer operation: the laws of the Member States are deemed perfectly fungible in this respect.
  • This unrestricted freedom of choice disappears for Modules 2 (transfer from controller to processor) and 3 (transfers between processors): the law of the Member State where the exporter is established applies in principle, unless it does not allow for third parties beneficiary rights. In that case, the parties must choose the law of another Member States that allows for such rights (again, no objective connection is required).
  • Module 4 (transfers from processor to controller) deals with the situation of a non EU-established controller that transfers data to a EU-established processor (eg. outsourcing of payroll services to a EU company). This transfer comes under the scope of EU law once the EU-based processor sends the data back to its controller, established outside the EEA. Given that this data was originally placed under a different (and possibly less protective) legal regime, EU law relaxes some of its requirements and the SCCs allow, in this case, for an unrestricted choice of applicable law (cf. Q&A No. 37). It is uncertain as to whether this unrestricted freedom of choice continues to exist if the data transferred by the processor partially originates in the EU: in this case, in fact, the Q&As specify that the relaxation of other requirements no longer applies (cf. Q&A 44). Despite the silence of the Q&As on this specific point, the same solution seems required as concerns the governing law.

A lingering uncertainty concerns the scope of the governing law and, in particular, the question as to whether it extends to directly regulating the processing operations carried out by the data importer in the third country. According to Q&A No. 37, this law “will govern the application of the SCCs”. It is also stressed that Clause 17 shall be read in conjunction with Clause 4, whereby the interpretation and application of the SCCs should conform to, and should not contradict, the GDPR. Nonetheless, throughout the Q&A, the governing law is mentioned with respect to marginal contractual issues such as formal requirements (Q&A No. 6); the formalisation of the parties’ consent within the docking clause (Q&A No 12); the time limits (Q&A No. 37).

A.2 Jurisdiction over Remedies

With respect to jurisdiction for remedies, the previous sets of SCCs were consistent in that they enabled the data subject who invoked third-party beneficiary rights to sue one or both parties to the contract in the Member State where the data exporter was established, without prejudice to any other substantive or procedural rights he may have had under national or international law.

The new SCCs (Clause 18) are, at once, more detailed and more liberal on this point, insofar as they set out, concerning modules 1, 2 and 3, the general principle whereby “any dispute arising from these Clauses shall be resolved by the courts of an EU Member State”. This provision is particularly important from a systemic point of view, as it makes sure that, irrespective of the law governing the processing activities carried out by the importer, the most important principles of EU data protection law would be enforced in any case as overriding mandatory provisions of the forum.

Clause 18 then requires the parties to expressly designate the court of a Member State: again, the freedom of choice seems unrestricted and no longer dependent on the existence of an objective connection between forum and dispute. Letter (c) of that Clause adds the most important innovation, insofar as it allows the data subject to bring legal proceedings against the data exporter and/or data importer before the courts of the Member State in which he/she has his/her habitual residence. This choice of court agreement extends the procedural rights granted to the data subject by Article 79 GDPR, a provision that opens a ground of jurisdiction solely with respect to actions brought against the EU-established data exporter, jurisdiction for any action brought against the third-country data importer being left, under than provision, to national PIL.

It must be stressed on that Q&A No. 33 contains a somewhat confusing reference to national law, as it states, concerning the forum opened by letter (c), that “such actions can be brought before the competent court of the EEA country (as determined by national law) in which you live …”. Nonetheless, the data subject’s possibility of suing the data importer in the Member State of his/her habitual residence should depend not on the (dubious) existence, in national law, of a forum actoris, but rather on the choice of court agreement resulting from the combined reading of letters (c) and (d) of Clause 18 (the latter stating that “[t]he Parties agree to submit themselves to the jurisdiction of such courts”). A totally different question is knowing whether, and under which conditions, the designated court will enforce this choice of court agreement: in case the Brussels I bis Regulation is not deemed applicable to these contracts (see Section B), the answer to this question will indeed depend on the (non uniform and potentially inconsistent) national laws of the Member States.

A derogatory regime is set in place for Module 4, which allows the parties to designate any court, ie even the court(s) of a third country. In this respect, however, Q&A No. 33 specifies that this shall not affect the procedural rights conferred to the data subject vis-à-vis the data exporter under Article 79 GDPR

B. Modernised SCCs and PIL: What’s Unresolved

Despite the useful clarifications brought along by the Commission Q&As, concerning notably the room for manoeuvre given to the parties to the SCCs regarding choice of law and choice of court agreements, there still exists some major open questions regarding the practical operation of these PIL devices, that are liable to impinge on the effectiveness of SCCs as a tool for the effective protection of European personal data in case of extra-EEA transfers.

It must be remembered that the main purpose of the SCCs is to “provide a comprehensive data protection framework that has been developed to ensure continuity of protection in case of data transfers to data importers that are not subject to the GDPR” (Q&A No. 24). Within this framework, the third-party beneficiary rights granted to the data subject play a pivotal role, as evidenced by the importance attached to them during the choice of the governing law (supra, Section A.1). Third-party beneficiary rights are a key-element of the so-called “private enforcement” of EU data protection law, insofar as they allow the data subject to directly invoke the protection vested by the GDPR and the SCCs both against the importer and the exporter, and to do so before a court in the EU.

Intuitively, the effective ability of the data subject to ground the jurisdiction of such courts and to invoke the application of said law will depend on the procedural treatment of these choice-of-law and choice-of-court agreements in the seised/designated courts. In this respect, the applicability of both the Brussels Ibis and the Rome I Regulations to the SCCs remains controversial, and finds no clarification in the Commission’s Q&As. Conversely, both the SCCs and the Q&As seem to simply assume that these choice-of-law and choice-of-court agreements will be enforced by any court in the EU.

B.1 Civil and Commercial Matters?

The Brussels I bis and the Rome I Regulations (as well as the Hague Convention on Choice of Court Agreements) apply in “civil and commercial matters”. A recent and exhaustive summary of the (uniform) meaning of this expression in EU PIL can be found in the Opinion of AG Szpunar and the judgment rendered by the ECJ in Rina. Regard should be had, in particular, to the need of ensuring that the Regulations are broad in scope (§ 31 of the judgment in Rina) and to the “the elements which characterise the nature of the legal relationships between the parties to the dispute or the subject matter thereof” (§ 32). This assessment aims at excluding that one of the parties (or both) is acting in the exercise of “public” powers, ie “powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals” (§ 34).

Against this backdrop, it is worth stressing that the SCCs set up by the Commission can be used by the parties (which, in most cases, will be private commercial operators) without the prior approval by a public authority, the competent DPA. The triangular relationship between the data importer, the data exporter and the data subject heavily relies of private contract law. If it is true that these are all factors that may vouch for the inclusion of SCCs within the scope of “civil and commercial matters”, the fact remains that the Commission’s Q&As stress, on many occasions, the specific “nature” of the SCCs and the ensuing limits placed on the parties’ substantive party autonomy: “if the parties change the text of the SCCs themselves (beyond the adaptations mentioned below) they cannot rely on the legal certainty offered by an EU act” (Q&A No. 7, emphasis added). It will likely be for the ECJ to determine whether the specific nature of “EU act” attached to the SCCs and the limitations it entails for ordinary contract law are enough to exclude a characterisation as “civil and commercial matters” for the purposes of EU PIL.

If the Brussels 1bis Regulation was deemed applicable ratione materiae, it would ensure the effectiveness of the above-mentioned choice-of-court agreements throughout the EU. The fact that said agreements are invoked by a third-party beneficiary should not pose any problem in the light of the Gerling case law. Clearly, the Brussels Ibis Regulation would not be applicable to choice of court agreements concluded under Module 4, in cases where jurisdiction is conferred upon a third-state court.

B.2 A “Free” Choice of Governing Law?

The applicability of the Rome I Regulation to the SCCs elicits more substantial doubts.

To begin with, it is uncertain as to whether the choice of law made by the parties under current Clause 17 can be deemed “free” in the sense of Article 3 thereof. Setting aside the non-problematic case of the (unrestricted) freedom of choice available for Module 4, Module 2 and 3 confer very limited leeway: the parties must choose the law of the Member State where the data exporter is established, deviations being admissible solely if this law does not allow for third-party beneficiary rights (it must be added that the unrestricted freedom of choice which follows from this circumstance is at odds with the limitation set by the general rule: a “cascade” list of options or, even better, a rule turned around a “close(st?) connection” with another Member State would have been a more logical complement to the general rule).

As concerns the requirement that the choice of law made under Article 3 of the Rome I Regulation shall be “free”, it is worth stressing that both the Opinion of AG Campos Sánchez-Bordona and the judgment of the Court in Gruber Logistics started from the assumption that a “choice” of law which is actually imposed by law would be incompatible with this provision (respectively, §§ 97-101 of the Opinion and § 39 of the judgment). In the same case, the Court clarified that regulation does not prohibit the use of standard clauses which are pre-formulated by one of the parties (or, it must be assumed, by a third party). In such a case, freedom of choice, within the meaning of Article 3, can be exercised by consenting to such a clause and is not called into question solely because that choice is made on the basis of a pre-formulated clause.

The compatibility of Clause 17 of the SCCs with the Rome I Regulation teeters along the fine line which separates an ex lege imposition of an applicable law and the sheer pre-drafting by the Commission. It must be stressed, in this respect, that SCCs are established through an Implementing Decision of the Commission, but they can be used by the parties on a voluntary basis to demonstrate compliance with data protection requirements (Q&A No. 1). Nonetheless, if the parties choose to resort to these standard clauses, they are not free to amend the wording of Clause 17, besides the exercise of the freedom of choice (if any) explicitly allowed under that provision. If this provision is amended, the parties need to submit their contract to the DPA for prior approval, to be able to proceed with the transfer. It is highly doubtful that a DPA would approve a contract containing, for example, a choice of third-country law for the transfer scenarios corresponding to Modules 1, 2 and 3. In fact, in the Schrems II, the ECJ attached great importance to the safeguards following from the application of the law of the Member State where the exporter is established, when assessing if the protection granted by the former SCCs was “essentially equivalent” to that guaranteed within the Union (§ 138).

B.3 Universal Application v Restrictions to the Freedom of Choice

More fundamentally, it must be determined whether the Rome I Regulation is compatible with the “geographical” restriction of the parties’ freedom of choosing the applicable law. This problem is shared by Modules 1, 2 and 3: the chosen law shall be, in all of these cases, the law of a Member State, whereas a choice of third-country law would be totally admissible under the combined reading of Articles 2 and 3 of the Rome I Regulation. From the standpoint of the general theory of PIL, behind this asymmetry lie irreconcilable philosophical stances as concerns the international interchangeability of (private) laws. The Rome I Regulation starts from the assumption of a perfect interchangeability between all the (private) laws of this world, irrespective of their specific contents, and subject to a sheer ex post control through the gateway of the public policy exception. Conversely, the Commission’s SCCs (and probably the GDPR itself) adopt a more prudential approach based on an ex ante pre-selection of laws (those of the Member States of the EU) which, because of their contents, can be deemed “essentially equivalent” in terms of the protection granted to personal data. Again, this is a thorny issue that the ECJ might likely have to resolve in the near future, considering that, according to the Commission, SCCs are, at present, “the most popular tool” for transferring personal data outside the EEA in accordance with the GDPR (Q&A No. 3).

ILA Guidelines on Privacy Endorsed

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Marta Requejo Isidro
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On 23 June 2022, the Lisbon Guidelines on Privacy, drawn up by the ILA Committee on the Protection of Privacy in Private International and Procedural Law, have been formally endorsed by the International Law Association at the 80th ILA Biennial Conference, hosted in Lisbon (Portugal).

The Committee was established further to a proposal by Prof. Dr. Dres h.c. Burkhard Hess to create a forum on the protection of privacy in the context of private international and procedural law. It comprised experts from Austria, Belgium, Brazil, France, Germany, Italy, Japan, Luxembourg, Portugal, Spain, the United Kingdom, and the United States of America. Prof. Hess chaired the Committee; Prof. Jan von Hein and Dr. Cristina M. Mariottini were the co-rapporteurs. The documents of the meetings held by the Committee in the past years, and of the Guidelines and commentary as presented in Lisbon, are publicly available here. A related publication on ssrn and in the MPI Luxembourg’s Working Paper Series will follow.

The creation of the Committee was triggered by a simple factual evidence, which is described in the Conception Paper. By reason of the rapid computerisation and automatisation in the handling of personal information, traditional expectations for the protection of one’s privacy have undergone major changes. The dynamics and the dimension of the potential intrusions into one’s personal life have been significantly transformed, bringing forth new challenges for legislators, courts and practitioners. Questions arise concerning jurisdiction, applicable law, recognition and enforcement of judgments, but also legal standing, protection of vulnerable parties, and remedies, among others. Intuitively, it was felt that simply adapting the existing general rules on torts and contracts would not provide satisfactory answers to the new setting. Hence, exploring private international and procedural law issues was considered of utmost significance, with a view to (i) providing a set of principles/framework for regulating privacy in private international and procedural law, and (ii) developing concepts that could constitute a point of reference for legislators, the judiciary and legal counsels.

The document submitted for endorsement in Lisbon is the outcome of several meetings  of experts at ILA conferences (Johannesburg and Sydney) and in-between (Luxembourg), and of many on-line exchanges. It consists of two parts. The introductory one describes the scope and objectives of the Committee and the methodology followed. Then, the Guidelines themselves follow in the form of a Preamble and of 13 so-called articles, each accompanied by a thorough explanatory comment with references to pertinent legal acts and case law of different jurisdictions. The provisions are distributed under the headings General Part (Articles 1 and 2); Jurisdiction (Articles 3 to 6); Applicable Law (Articles 7 to 11); and Recognition and Enforcement of Foreign Judgments (Article 12 and 13).

The Guidelines define their nature and aims in the Preamble: their purpose is multifold in the sense that they may be used as a model for national, regional or international instruments (thus the word “article” in the operative text), but also simply to interpret, supplement or develop rules of private international law.

From the point of view of the scope, it is of interest to highlight that the Guidelines focus only on privacy: after careful reflection (and a conference organized by the Brussels Privacy Hub in collaboration with the MPI Luxembourg, held in Luxembourg in 2017) data protection-related issues were deliberately excluded. Also worth mentioning is the fact that the Committee did not intend to address all procedural and private international law concerns arising out of cross-border litigation in relation to privacy. It preferred rather to concentrate on those aspects which appeared to be more relevant under several considerations, one of them being exclusion from PIL international conventions (the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, Article 2, k) and l)) or regional instruments (the Rome II Regulation, see Article 1, paragraph 2, g)). Against this background, the Guidelines provide rules on jurisdiction, applicable law and the recognition and enforcement of judgments regarding compensatory and injunctive relief (to the exclusion of negative declaration actions), as well as provisional measures, both in contractual and non-contractual claims.

Very briefly, I would like to recall some points of the contents of the Guidelines, which are too rich to be commented in a single post. Most notably, as far as jurisdiction and applicable law are concerned two basic principles permeate the solutions chosen, namely (i) foreseeability, and (ii) parallelism between jurisdiction and applicable law. The limited heads of jurisdiction and the decision to repudiate the so-called Mosaïc principle under Article 3, as well as the forum-ius rule of Article 7, clearly correspond to those principles. In the same lines, choice of court is accepted and presumed to be exclusive except in case the parties agreed to the contrary. Specific attention is paid to provisional measures, with a solution in Article 6 deviating from the Brussels I bis Regulation and the Court of Justice decision in C-581/20, Toto. The choice of the applicable law is also permitted; here, a particular answer is given to the case of disputes among users of social media. In addition, for conflict of law purposes, the right of reply is addressed separately under Article 10. Article 11 allows resorting to the ordre public exception to refuse the application of the law designated under the Guidelines, in particular when the effects of applying said law would be manifestly incompatible with fundamental principles of the forum as regards freedom of expression and information, as well as the protection of privacy and human dignity.

It is clear that some of the solutions finally adopted by the Committee will not be fully convincing from a European perspective, especially against the backdrop of statutory prescriptions currently in force. However, one should not forget that the Guidelines represent a compromise among experts of different legal backgrounds, and that they are meant to talk to a public not necessarily rooted in the European Union. At the same time, they can perfectly work here as a model where no rules exist at all, or where there is a window open to amending partially dysfunctional rules (as it may be contended is the case of Article 7, paragraph 2, of the Brussels I bis Regulation). In this regard, it is submitted that none of the Guidelines run contrary to fundamental principles or values of the European Union, and that all of them have been carefully drafted with a view to their usability in practice – a precious quality in our too much technical field of law.

Recognition of Marriages Celebrated Abroad under the French Draft PIL Code

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The Editors of the EAPIL blog
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This post was contributed by Fabienne Jault-Seseke, who is Professor at University Paris Saclay (UVSQ), and a member of GEDIP. It is the third of a series of posts on the proposed codification of French PIL (previous posts discussed the issues of renvoi and foreign law).

The French draft code of private international law innovates in several areas. The recognition of marriages celebrated abroad is one of them. The draft code breaks with the choice of law method and relies instead on the recognition method. This is the purpose of Article 45.

It is worded as follows:

Unless the present sub-section provides otherwise, a marriage celebrated in a foreign State in accordance with the law of that State shall be recognised in France, subject to its conformity with international public policy and if it does not result in an evasion of [French] law (fraude).

Where, at the time of the celebration of the marriage, one of the spouses was already in a marriage that has not yet been dissolved, the marriage is not recognised:

– if one of the spouses is of French nationality, even if he or she also has the nationality of another State; or

– if the first marriage was celebrated with a spouse whose national law prohibits it.

However, a spouse who has legitimately believed in the validity of his or her marriage may avail himself or herself in France of the effects attached to the status of spouse, insofar as the effects invoked are compatible with the requirements of international public policy. (my translation)

In the French original:

Si la présente sous-section n’en dispose autrement le mariage célébré dans un État étranger en conformité avec le droit de cet État est reconnu en France, sous réserve de sa conformité à l’ordre public international et de l’absence de fraude.

Lorsqu’au moment de la célébration du mariage l’un des époux était déjà engagé dans les liens d’un mariage non encore dissous, ce mariage n’est pas reconnu :

– si l’un des époux est de nationalité française, même s’il a également la nationalité d’un autre État ; ou

– si le premier mariage a été célébré avec un époux dont la loi nationale le prohibe.

Toutefois, l’époux qui a légitimement cru en la validité de son mariage peut se prévaloir en France des effets attachés à la qualité de conjoint, dans la mesure où les effets invoqués sont compatibles avec les exigences de l’ordre public international.

Assessment of the Recognition Methodology

The authors of the draft code have thus decided not to use the choice of law method to assess the validity of a marriage celebrated abroad.

This solution must be approved. It was expected. While it is logical to use a choice of law  rule to determine the conditions to be met by a marriage to be celebrated in France (Article 171-1 of the Civil Code and Article 44 of the draft), it is surprising that this same choice of law rule should be used to assess the validity of a marriage celebrated abroad, perhaps many years ago, as Article 171-1 of the Civil Code does today. The situation gives rise rather to a conflict of authorities than a conflict of laws. One could also envisage treating the marriage certificate, which is a foreign public document, as a foreign judicial decision. More concretely, it would be a question of assessing the effectiveness of a marriage like that of a registered partnership (Article 515-7-1 of the Civil Code provides at the present time for the application of the lex auctoris) or like that of a divorce decision (which, as a decision rendered in matters of personal status, is recognised de plano (automatically).

Thinking for marriages celebrated abroad in terms of recognition is not new. The solution is already that of Article 9 of the Hague Convention of 14 March 1978 on the Celebration and Recognition of the Validity of Marriages or that of Article 45 of the Swiss Private International Law Act.

The advantages of the proposed solution are numerous. It is compatible with the plurality of family models but also with the diversity of nationalities of those concerned. It ensures the continuity of personal status and thus the respect of the parties’ expectations. It is consistent with the solution adopted for registered partnerships. Moreover, the draft Code models the rule for the recognition of registered partnerships (Article 56 paragraph 1 of the draft) on that for marriage.

Its disadvantages are rare. Civil status shopping is not to be feared as recognition is not automatic and there are grounds for non-recognition. Under Article 11 of 1978 Hague Convention on marriages, polygamy, endogamy, age and lack of consent may justify a refusal of recognition. Likewise, Article 45 of the draft reserves the right to refuse recognition on the grounds of breach of public policy and evasion of law. It is not known in which cases courts may find that the marriage was an attempt to evade the application of the law, but one could imagine that the absence of any link between the spouses and the place of celebration could trigger the exception, even if this does not correspond to current positive law, which admits the validity of marriages celebrated in Las Vegas. More certainly, evasion of law will prevent the recognition of a marriage celebrated without matrimonial intention (but this is directly provided for by Article 46, see below). The content of public policy is, in part, clarified. Indeed, Article 45 contains provisions specific to polygamy. In this case, the application of the national law of the spouses in matters of personal status resurfaces. Polygamous marriage is not recognised if one of the spouses is a French national (regardless of whether he or she possesses another nationality) or if the marriage was concluded with a spouse whose national law prohibits this type of marriage.  In the latter case, the hypothesis of dual nationality is not envisaged, which will inevitably raise difficulties. Is it justified to protect the French dual-national spouse against a subsequent polygamous marriage by giving precedence to the nationality of the forum and not a Belgian dual-national spouse? This is questionable.

Limited Scope of the Recognition Methodology

The scope of the method of recognition is partially limited by Articles 46, 48 and 50 of the draft Code, which largely reiterate the current solutions.

The method of recognition is first of all limited by the method of substantive rules. Article 46 specifies that, whatever the State of celebration and whatever the applicable law, marriage requires the free consent and matrimonial intention of each spouse. Here we find the trace of the statutory intervention in the private international law of marriage in 2014 according to which, whatever the applicable personal law, marriage requires the consent of the spouses, within the meaning of Articles 146 and 180 para. 1 of the Civil Code. This requirement of free consent and matrimonial intention can also be seen as specifying the content of international public policy on marriage. In order not to render Article 45 meaningless, it is important that the requirement be assessed in a factual manner (which is logical, see B. Audit et L. d’Avout, Droit international privé, LGDJ 2019, n° 770).

The recognition method is also limited by Article 48, which is the only provision in a section dedicated to ‘Rules of form and competent authority’.

Article 48, which is intended to apply to all marriages, whether celebrated in France or abroad, states that a marriage is validly celebrated if it has been celebrated in accordance with the formalities laid down by the law of the State on the territory of which the celebration took place. It is difficult to understand the usefulness of this provision. In the same way that, in matters of recognition of judgments, it is not verified that the foreign court has complied with its own rules of procedure, it seems inappropriate to verify that the foreign authority that celebrated the marriage complied with its own rules of form. The possibility of denying recognition to a marriage on the grounds of evasion of law or contravention of public policy should make it possible to avoid giving effect to a marriage that has been celebrated in shocking conditions.  Article 48 seems then superfluous.

Finally, Article 50 takes up the current solutions for marriages celebrated abroad involving a French person. By requiring compliance with Articles 146-1, 171-1 to 171-9 of the Civil Code (mainly these provisions set an obligation for the French spouse to be present at the marriage, an interview intended to fight against marriages of convenience with the possibility of the public prosecutor’s office to oppose the celebration of the marriage and then the transcription of the record), it also limits the possibilities for recognition of marriages celebrated abroad when a French national is involved. In methodological terms, Article 50 does not call into question the principle of recognition, but it does provide a stricter framework.

The articulation of Articles 46, 48 and 50 with the principle of recognition of marriages celebrated abroad raises questions. Should it be ensured that the conditions they set out are met before the marriage is given effect? An affirmative answer would render the principle of recognition meaningless. It would be more coherent if, as in the case of recognition of judgments, verification is only carried out if the validity of a foreign marriage is challenged.

Launch of a Public Consultation on the French Draft Code of Private International Law

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Marion Ho-Dac
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Following the release of a draft code of private international law (announced here), the French Ministry of Justice has launched on 8 June 2022 a public consultation to gather feedback from all stakeholders, including academics, “in order to determine the possible next steps”.

The blog has started to contribute to the discussion (see here on renvoi and here on foreign law) and other comments will follow.

Scope of the Consultation

The consultation template is divided into three main parts. The first part concerns the very principle of adopting written codified rules in the field of private international law, as well as the scope of the code (i.e. purely national or including EU and international rules applicable within the French jurisdiction). The second part allows for general comments on the draft Code (eg. its structure, its material scope). Finally, the third part proposes article-by-article comments (among 207 articles).

Conditions for Participation in the Consultation

The French Ministry of Justice invites interested parties to send comments on the draft code of private international law to consultation-codedip.dacs@justice.gouv.fr using the Word document provided for. Comments that do not respect this format will not be taken into account.

The consultation is open until 30 September 2022.

Council Decision on the Signing of the MAC Protocol Published

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Marta Requejo Isidro
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Council Decision (EU) 2022/1022 of 9 June 2022 on the signing, on behalf of the European Union, of the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Mining, Agricultural and Construction Equipment (MAC Protocol), has been published in the Official Journal L 172, of June 29.

Pursuant to the Decision, the signing on behalf of the Union of the Protocol adopted in Pretoria on 22 November 2019 is authorised, subject to its conclusion.

A Declaration is attached to the Decision in compliance with Article XXIV(2) of the MAC Protocol, providing that, at the time of signature, acceptance, approval or accession, a regional economic integration organisation is to make a declaration specifying the matters governed by that Protocol in respect of which competence has been transferred to that organisation by its Member States. It specifies that, in respect of matters governed by the MAC Protocol, the European Union has exercised its competence by adopting 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 (Article IX of the MAC Protocol – ‘Modification of provisions regarding relief pending final determination’), Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (Article X of the MAC Protocol – ‘Remedies on Insolvency’ – and Article XI of the MAC Protocol – ‘Insolvency assistance’) and Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I) (Article VI of the MAC Protocol – ‘Choice of law’).

The Declaration lists the States members to the European Union and excludes from its scope Denmark and certain territories belonging to Member States. It shall be approved on behalf of the Union, subject to the adoption of a decision on the conclusion of the MAC Protocol at a later stage.

Brussels I bis: A Standard for Free Circulation of Judgments and Mutual Trust

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Elena Alina Ontanu
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The JUDGTUST Project (Regulation BIa: a standard for free circulation of judgments and mutual trust in the EU) conducted by the T.M.C. Asser Instituut in cooperation with Universität Hamburg, University of Antwerp and Internationaal Juridisch Instituut has come to its completion. The findings of the this research are available online here.

The project was animated by the aim to identify best practices and provide guidelines in the interpretation and application of the Brussels I-bis Regulation (also known as Brussels Ia). For this the analysis carried across the EU Member states sought to evaluate to what extent the changes introduced (compared to the Brussels I Regulation) achieved their objective, what are the remaining shortcomings, and how can these be overcome by considering future useful changes. Together with this, the research has analysed how legislative projects at global level – e.g. the Hague Judgment Convention – and political developments – e.g. Brexit – influence the way the Brussels I-bis is applied.

In analysing the interaction between the Brussels I bis Regulation and the other EU private international law instruments, the project combines a primarily comparative legal approach with the use of empirical research methods. The comparative legal research relies on the analysis of legislation, case law of national courts in EU Member States and the Court of Justice of the European Union (CJEU), and scholarly writings. This endeavour identifies the difficulties in the application of the Brussels I-bis provisions and best practices in applying the provisions of the Regulation. This is done without neglecting the outcomes of the previous regulation – the Brussels I – and other closely related private international law sources. The empirical research relies on various methods, both qualitative and quantitative. On the basis of a dedicated Questionnaire, the national reporters from EU Member States provided information on relevant domestic case law and legal literature.

With its findings the JUDGTRUST project seeks to enhance the general understanding of the autonomous nature of the EU legal sources. Further it looks to contribute to the uniform interpretation and application of the Regulation and consequently promotes mutual trust and efficiency of cross-border resolution of civil and commercial disputes. Furthermore, the analysis provides suggestions on how to reach a greater degree of consistency of the EU private international law legislation.

The outputs of the Project include various materials available online such as the National Reports, a Consolidated Report, and materials of the Final Conference.

Together with these open access materials a Handbook on the Interpretation and Application of the Brussels I bis is expected in the coming period.

In addition to the comparative and analytical research, the project also contributed to the development of a Moot Court Competition (PAX Moot) for law students. With this the project seeks to contribute to the education of a new generation of practitioners dealing with EU private international law.

HCCH Special Commission Issues Conclusions & Recommendations on Child Support and Maintenance

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The Editors of the EAPIL blog
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This post was contributed by Francesco Pesce, who is an associate professor at the University of Genoa.

The very first meeting of the Hague Conference on Private International Law’s (HCCH) Special Commission (SC) on the Practical Operation of the 2007 Child Support Convention and 2007 Maintenance Obligations Protocol was held from 17 to 19 May 2022. The event was attended by over 200 delegates representing HCCH Members, Contracting Parties and Observers from all regions of the world.

Following an invitation coming from the Secretary General of the HCCH, for the first time EAPIL participated as an Observer to a meeting of the Hague Conference.

The meeting resulted in the adoption of over 80 Conclusions & Recommendations, providing guidance on a wide range of issues relating to the implementation and practical operation of these instruments.

Among other things, the Special Commission took into a specific consideration some issues raised in the Position Paper on Child Support and Maintenance Obligations prepared by the EAPIL Working Group specifically created for that purpose.

More in detail, HCCH Members and Contracting Parties discussed some problems concerning the effective access to legal assistance for children under the Convention, for the recovery of maintenance obligations arising from a parent-child relationship.

Firstly, the interpretation of the concept of ‘residence’ (Article 9) was reaffirmed to be necessarily consistent with Article 53, which prescribes uniformity in the interpretation and application of the Convention, due to its international character. In this perspective, it has been recalled that the intention behind the use of (simple) ‘residence’ is to provide the easiest and the widest access to Central Authorities and make it is as easy as possible to apply for international recovery of child support, so that a child has the possibility to require financial support wherever he or she may be living and should not have to satisfy a strict residence test in order to apply for assistance to receive it (cf. Borrás-Degeling Report, para. 228). Based on this assumption, the SC confirmed that Article 9 does not always indicate a single national Central Authority: when the creditor/child is permanently living in two different Contracting States, then it does not prevent a choice of most appropriate (State, and subsequently) Central Authority to submit the application. The creditor may take into account many factors in making this decision, bearing in mind that support is usually needed for a prolonged period of time. Such a case is considered under para. 7 of the Conclusions & Recommendations, expressly referred to the situation of a child studying abroad, when the debtor habitually resides or has assets in another Contracting Party than the State of either the residence or habitual residence of the creditor.

Secondly, the SC noted that some doubts were raised by the responses to the Questionnaire of August 2019 on the practical operation of the 2007 Child Support Convention, on the concept of ‘creditor’ with reference to the existing difference between those systems where it is the child him/herself who qualifies as ‘creditor’ acting for the protection of his/her own interests (even if procedurally through an adult (parent) acting on his/her behalf) and, on the other hand, those States providing that a dependent child cannot be the creditor, so that the action for the maintenance recovery is brought by the parent on his/her own In this respect, the SC recalled that, in the case where the child is an applicant, information concerning the name of the non-debtor custodial parent should be written under “Other information” in Section 10 of the Recommended Form (cf. Conclusions & Recommendations, para. 8);

Lastly, the SC addressed the issue of family status, with a specific reference to recognition and enforcement of maintenance decisions concerning relationships not provided by the law of the requested State. On this matter, para. 24 of the Conclusions & Recommendations simply reaffirms that, in accordance with Article 19(2) of the 2007 Convention, maintenance obligations arising from these relationships can still be recognised and enforced without recognising such relationships per se. The specific issue of (same-sex) marriages and other relationships – such as cohabitations – that could be equated to marriage in the national law of the State of origin was raised by the Position Paper, but it was not deepened during this first meeting of the SC: in fact, spousal support was not considered a priority at this stage (cf. para. 67).

e-CODEX Regulation Published

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Marta Requejo Isidro
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Regulation (EU) 2022/850 of the European Parliament and of the Council of 30 May 2022 on a computerised system for the cross-border electronic exchange of data in the area of judicial cooperation in civil and criminal matters (e-CODEX system), and amending Regulation (EU) 2018/1726, has been published on the Official Journal of 1 June 2022.

Marion Ho-Dac has reported on this blog on the procedures at the institutional level towards the adoption of the instrument (see here and  here).

The Regulation is based on the TFEU, especially on Article 81(2) and Article 82(1) thereof. It is thus meant to contribute to the overall objective of the EU’s Area of Freedom, Security and Justice of guaranteeing effective access to justice for citizens and businesses and facilitating judicial cooperation between the Member States. More specifically, it concerns communication between parties and courts, as well as between authorities in different Member States,  through the cross-border electronic exchange of data.

The underlying idea of the Regulation is quite basic and definitely not new: technology tools are key for the above-mentioned communication to be effective, but they need to be secure. In this context, e-CODEX (e-Justice Communication via On-line Data Exchange) was launched under the multiannual e-Justice action plan 2009-2013 to promote the digitalisation of cross-border judicial proceedings and to facilitate the communication between Member States’ judicial authorities; it has been working experimentally since then. Simply put, the e-CODEX system consists of a package of software products which can be used to set up an access point for secure communication. Access points using e-CODEX can communicate with other access points over the internet via a set of common protocols, with no central system involved.

During the last years e-CODEX has developed in a way allowing the Commission to define it as ‘the main tool and the gold standard for establishing an interoperable, secure and decentralised communication network between national IT systems in cross-border civil and criminal proceedings’ (COM (2020) 712 final). It could thus receive legislative blessing (and support). Moreover, the system has so far been managed by a consortium of Member States and other organisations, with funds from the participant Member States and from EU grants. For sustainability reasons, the model needed to be replaced.

In keeping with the above, the Regulation has been adopted to establish the legal framework for the e-CODEX system. It lays down rules on the definition, composition, functions and management of the system ; on the responsibilities of the European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA), regarding the e-CODEX system ; on the responsibilities of the Commission, Member States and the entities operating authorised e-CODEX access points; and on a legal framework for the security of the e-CODEX system. It should be noticed that it does not provide for the mandatory use of e-CODEX.

The text, with EEA relevance, shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It will nevertheless take some time until the institutional structure it sets up is into motion (for instance, eu-LISA is not expected to take over the e-CODEX system before July 2023). In as far as civil justice in cross-border cases is concerned, it is important to know that the European e-Justice portal will use e-CODEX to enable citizens to electronically sign and send applications for European payment orders and small claims to competent courts in the Member States. e-CODEX shall also work as digital channel to serve documents and to take evidence abroad under the new service and evidence Regulations, adopted on 25 November 2020.

Foreign Law under the French Draft PIL Code (updated)

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Gilles Cuniberti
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This is the second of a series of posts on the French draft code of private international law of March 2022. The previous post in the series dealt with the issue of renvoi.

The draft code of private international law proposes to reform significantly the regime of choice of law rules before French courts and includes some interesting suggestions with respect to proof of foreign law.

Mandatory Application of Choice of law rules

Article 9, para. 1, of the draft code would establish an obligation for French courts to apply the applicable law. In other words, choice of law rules would become mandatory for courts.

Art. 9, para. 1: “L’application du droit internationalement désigné est impérative pour le juge.”

This would be a significant departure from the current regime. Since 1999, French courts have had the obligation to apply ex officio choice of law rules only in matters where the parties may not dispose of their rights (e.g. parenthood). In contrast, in matters where the parties may dispose of their rights (e.g. an international sale of goods), the application of choice of law rules was not mandatory for courts, unless one of the parties would raise their application.

The explanatory report makes clear that the drafters wanted to discard this regime and abandon the distinction based on whether the parties may dispose of their rights. It is explained that the goal is to make the law clearer and more coherent. The reference to coherence is likely a reference to the general principle that courts ought to apply applicable rules.

Readers might recall that the French Supreme Court for private and criminal matters (Cour de cassation) has initiated an evolution by ruling that it would consider certain EU choice of law rules mandatory (see the reports on this blog here and here). The precedent would obviously lose significance, as all choice of law rules would become mandatory.

Contrary Agreement of the Parties

However, the drafters propose to maintain the rule according to which the parties may agree to avoid the application of foreign law and apply French law instead in matters where they may dispose of their rights. The Cour de cassation has long ruled that such agreement could be reached implicitly by arguing the case under French law only.

In practice, such “agreement” was typically reached by parties (and counsels) unaware of the potential application of foreign law. This was more of a waiver mechanism. The drafters propose to strengthen the conditions for finding such agreement. Article 9, para. 2, provides that the agreement could either be express, or result from written pleadings which would be “concurring and non equivocal.” The explanatory report clarifies that, in this context, “non equivocal” would mean that it should be clear from the pleadings that the parties were aware that the case was international and that foreign law might apply. If the court is not satisfied that the parties were so aware, Article 9 para. 4 further provides that the court should raise the applicability of foreign law and, if necessary, apply it ex officio.

Finally, Article 9, para. 3, provides that such an agreement is valid in divorce cases if it is express. The rationale for this exception is to ensure compliance with Article 7 of the Rome III Regulation.

Art. 9:

(…)

Lorsque les parties ont la libre disposition de leurs droits, elles peuvent, par un accord procédural, soumettre leur litige au droit français. Cet accord est exprès ou résulte d’écritures concordantes et non-équivoques.

En matière de divorce, l’accord procédural doit être exprès.

Lorsque les parties s’abstiennent de s’expliquer sur le droit applicable, le juge les y invite et applique, au besoin d’office, la règle française de conflit de lois.

Proof of Foreign law

Article 14 of the draft code also attempts to incentivise French courts to change the current judicial practice with respect to proof of foreign law.

Article 14 first establishes the burden of establishing the content of foreign law lies in principle with courts. It insists, however, that the assistance of the parties is expected in this respect.

It would indeed be unrealistic to expect that French courts would suddenly become able to conduct extensive research in foreign law.They do not, and thus likely will not in the future. The current judicial practice is to rely on litigants and the evidence that they can adduce. It is admissible for the parties to produce primary materials of foreign law (statutes, cases), or to produce opinions of private experts that they have hired (certificat de coutume).

A number of French scholars have argued that relying on private experts is highly unsatisfactory. The reason why is that such experts will never appear in court and be cross examined on their expert reports, for the simple reason that French courts do not hear anybody (parties, witnesses or experts) in civil and commercial cases. Experts have no serious incentive to faithfully report on the content of foreign law.

Article 14, para. 4, attempts to address the issue by providing that French courts could organise a confrontation of the experts, or invite the parties to do so. The concept of “confrontation” of the experts is not immediately clear, but may be understood as an interrogation of the experts, which could thus be conducted either by the court or by the parties.

S’il l’estime nécessaire, le juge organise une confrontation entre les auteurs des avis ou invite les parties à y procéder elles-mêmes.

On the other hand, French courts routinely appoint judicial experts to report to the court on questions of fact. Such experts conduct investigations in the presence of the parties, hear them (and their private expert) and eventually write an independent expert report. The reason why French courts do not appoint judicial expert to establish the content of foreign law is unclear.

Article 14, para. 2, provides that the content of foreign law can be established by all means, including by opinions produced by the parties or by way of expertise. In a French context, the reference to “expertise” would very likely be understood as a reference to judicial expertise, i.e. court appointed experts. The provision confirms that appointing a judicial expert would be admissible, but does not establish any hierarchy between private and court appointed experts.

Interestingly, Article 14 provides that the relevant expert (implicitly, this part of the provision probably only refers to court appointed experts) could be a “French or foreign specialised institution”. This suggests that French courts could appoint French or foreign institutes to deliver an expert report on the content of foreign law. This would be quite a remarkable development, but most welcome.

La preuve en est rapportée par tous moyens, au besoin par avis produit par les parties ou par expertise, le cas échéant en faisant appel à une institution française ou étrangère spécialisée.

Finally, Article 14, para. 3, provides that French courts may resort to international and European judicial cooperation. Working with foreign academic institutions seems much more promising to me.

Renvoi under the French Draft PIL Code

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Gilles Cuniberti
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This is the first in a series of posts on the French draft code of private international law of March 2022.

The draft code of private international law contains one single provision on renvoi.

The Proposed Rule

Article 8 of the draft code reads:

Unless provided otherwise in this code, the designation of foreign law includes its rules of private international law. However, French courts and authorities have the obligation to apply those rules only if one party requests it.

The explanatory report explains that the working group debated whether to “maintain” renvoi. The doubts of the working group were based on “comparative law” and the facts that the Hague conventions typically exclude renvoi. Nevertheless, the report explains, it was decided to maintain renvoi, because the Cour de cassation has recently applied it, and because the doctrine has benefits when it leads to the application of a law which is easier to apply for French courts (the explanatory report then gives the example of art 34 of the Succession Regulation).

Assessment

According to the explanatory report, the working group considered that the purpose of its work was to improve accessibility and intelligibility of the law. Article 8 is not fully satisfactory in this respect.

Article 8 suggests that French courts should always apply foreign choice of law rules. It does not explain whether this should only be the case where the foreign choice of law rule refers to the law of the forum, and, when it does not, whether the law of the third state designated by the foreign choice of law rule should accept renvoi.  In other words, Article 8 does not distinguish between first degree renvoi and second degree renvoi, and does not clarify whether whether second degree is allowed even if it is third or fourth degree renvoi. In fact, a literary interpretation of Article 8 could lead to the conclusion that the provision introduces the English foreign court theory where foreign choice of law rules are applicable without any further requirement.

The explanatory report suggests that the working group conducted a comparative study which revealed that renvoi is typically excluded. It is true that some modern PIL legislations have excluded it, such as Article 15 of the Belgian Code of Private International Law. Yet, many other legislations in the civil law world allow renvoi broadly. If the working group was going to maintain renvoi, maybe it would have been useful to take a look at these other legislations and see with which precision they regulate the issue.

To only take one example, the working group could have looked at the Italian 1995 Private International Law Act, which allows renvoi, and defines its regime much more precisely.

Article 13 Renvoi

1 Whenever reference is made to a foreign law in the following articles, account shall be taken of the renvoi made by foreign private international law to the law in force in another State if:

a) renvoi is accepted under the law of that State.

b) renvoi is made to Italian law.

2 Paragraph 1 shall not apply: a) to those cases in which the provisions of this law make the foreign law applicable according to the choice of law made by the parties concerned; b) with respect to the statutory form of acts; c) as related to the provisions of Chapter XI of this Title.

3 In the cases referred to in Articles 33, 34 and 35, account shall be taken of the renvoi only if the latter refers to a law allowing filiation to be established.

4 Where this law makes an international convention applicable in any event, the solution adopted in the convention in matters of renvoi shall always apply.

Article 34 of the Succession Regulation is also much more detailed than the draft provision of the French code. Whether it was the perfect example to justify the adoption of first degree renvoi is unclear, however, since Article 34 does not require that the law of a third state refers back to the law of the forum, but to the law of another Member State, and that it will not always be easier for a French court to apply the law of another Member State (say Finland) than the law of a third state (say Switzerland).

Towards a French Code of Private International Law?

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Gilles Cuniberti
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Tableau > une allégorie : Napoléon couronné par le temps écrit le Code civil - napoleon.orgIn July 2018, the French Minister of Justice invited Jean-Pierre Ancel, a former judge of the Cour de cassation (French supreme court for private and criminal matters) to establish a working group for the purpose of reflecting on the codification of French private international law.

In March 2022, the working group handed its work to the Ministry of Justice. It includes a draft code of private international law of 207 provisions, and an explanatory report.

The working group was essentially composed of judges and academics. It included very few members of the bar, and no corporate lawyers (whether from the bar or in house).

National Codification in a Context of EU Harmonisation

As all readers will know, the private international law of EU Member States is dominated by EU legislation. EU Regulations are of universal application in the field of choice law. They occupy a large part of the field of jurisdiction and enforcement of foreign judgments.

Of course, the working group and the draft code recognise this fact, and the working group has abstained to propose rules on issues clearly regulated by EU law.

Nevertheless, one wonders whether it is really worth codifying private international law at national level, and whether it would not be more useful to promote codification at EU level (GEDIP has been reflecting on this for a while and EAPIL has also established a working group).

Interestingly, the Minister of Justice alluded to the issue in its letter inviting judge Ancel to establish the working group (reproduced in annex to the explanatory report). The Minister insisted that a French code would help promoting French law in European and international circles where, the Minister stated, more modern and accessible foreign legislations prevail. This likely explains why the explanatory report states that codification of French private international law will improve the attractiveness of French law.

Presentation of the Code

On 21 October 2022, the French Committee of Private International Law will organise a conference aimed at presenting the draft code.

In the coming weeks, the EAPIL Blog will publish presentations and commentaries of the most salient provisions of the draft code by French and European scholars. The Editors invite readers interested in contributing to this debate to contact them.

Proposal for a Directive on Protecting Persons Who Engage in Public Participation from SLAPPs

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Marta Requejo Isidro
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Strategic lawsuits against public participation, commonly known as ‘SLAPPs’, are a particular form of harassment used primarily against journalists and human rights defenders to prevent or penalise speaking up on issues of public interest.

The term was coined by Professors George W. Pring and Penelope Canan in their book SLAPPs: Getting Sued for Speaking Out (Temple University Press, 1996).

The phenomenon is now well known everywhere, but anti-SLAPP legislation has so far only been enacted in a few countries, such as Australia or Canada. In the Europe Union, action was not officially taken until the assassination of Maltese journalist Daphne Caruana Galizia in 2017, who was famous in and outside Malta due to her regular reporting of misconduct by Maltese politicians and politically exposed persons. When she was murdered, more than 40 lawsuits (most for pretended libel) had been filed in Maltese courts; some of them are still pending against her heirs and her family.

The Council of Europe has acknowledged as well the need for a Recommendation on Combating SLAPPs, and is currently working on it (the picture on the right belongs actually to the website of Dunja Mijatović, the Commissioner for Human Rights).

Since February 2018, European MEPs have been calling on the EU Commission to promote anti-SLAPP EU legislation giving investigative journalists and media groups the power to request a rapid dismiss of vexatious lawsuits.

Several EP Resolutions are worth being mentioned in this regard: Resolution of 28 March 2019 on the situation of the rule of law and the fight against corruption in the EU, specifically in Malta and Slovakia (P8_TA(2019)0328); Resolution of 25 November 2020 on strengthening media freedom: the protection of journalists in Europe, hate speech, disinformation and the role of platforms (P9_TA(2020)0320); Resolution of 11 November 2021 on Strengthening democracy and media freedom and pluralism in the EU: the undue use of actions under civil and criminal law to silence journalists, NonGovernmental Organisations (NGOs) and civil society (P9_TA(2021)0451). In all three, the EP condemned the use of SLAPPs to silence or intimidate investigative journalists and other actors, and called on the Commission to present a proposal to prevent them.

Parliament’s move did not fall on deaf ears. The growing number of physical, legal and online threats to and attacks on journalists and other media professionals over the past years was reflected in the Commissions’ 2020 and 2021 Rule of Law Reports.

In September 2021, the Commission presented a Recommendation on ensuring the protection, safety and empowerment of journalists and other media professionals in the European Union.

More important from the regulatory perspective (not in terms of scope, however) is the adoption, on 27 April 2022, of a proposal on a Directive covering SLAPPs in civil matters with cross-border implications. In addition, on the same day the Commission approved a complementary Recommendation to encourage Member States to align their rules with the Directive also for domestic cases and in all proceedings, that is, not only civil matters; it also calls on Member States to take a range of other measures, such as training and awareness raising, to fight against SLAPPs. Both texts, which show a broad political ambition, can be accessed here.

The proposed Directive will have to be negotiated and adopted by the European Parliament and the Council before it can become EU law.

By contrast, the Commission Recommendation is described in the official press release as ‘directly applicable’: in the understanding of the Commission, ‘Member States will need to report on implementation to the Commission 18 months after adoption of the Recommendation’. It should be noted that recommendations are not binding acts (a different thing is that the subject of a recommendation is expected to oblige the suggestions made). Moreover, regarding this particular Recommendation the guideline in the sense of aligning national law with the Directive in domestic cases and for all types of proceedings is impossible to comply with until the Directive as such is enacted.

In this post I only intend to present the general features of the proposal and to highlight three of its rules. A couple of comments will be added as quick reactions to which more learned readers may in turn respond.

General Features of the Proposed Directive

The proposal is based on Article 81(2)(f) TFEU.

  1. The Union shall develop judicial cooperation in civil matters having cross-border implications, based on the principle of mutual recognition of judgments and of decisions in extrajudicial cases. Such cooperation may include the adoption of measures for the approximation of the laws and regulations of the Member States.
  2. For the purposes of paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures, particularly when necessary for the proper functioning of the internal market, aimed at ensuring …

(f) the elimination of obstacles to the proper functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.

Resistance on the side of the Council to this legal base will not come as a surprise (by the way: it may be claimed as well that the Commission is acting outside of clear competences regarding the Recommendation: the principle of conferred competences also applies to non-binding activities of the Union).

To the best of my knowledge, the point was not addressed in any of the meetings of the Expert Group against SLAPP. The only reference to Article 81 TFUE seems to be by way of an answer from the Commission to an expert who asked ‘whether the solutions envisaged will introduce procedural schemes that are new and difficult to enact in different Member States’ in the 6th (and final meeting) of the Expert Group. The Commission replied that ‘the legal basis is linked to article 81 of TFEU which deals with civil matters having cross-border implications but as the Directive is not too prescriptive, Member States will be able to implement the provisions in a way which is consistent with their national systems’.

The proposed Directive aims at enabling judges to swiftly dismiss manifestly unfounded lawsuits against natural and legal persons (not only journalists and human rights defenders, but also academics or researchers) on account of their engagement in public participation. It also requests from the Member States that they establish several procedural safeguards and remedies, such as compensation for damages, and dissuasive penalties for launching abusive lawsuits.

The text consists of 39 recitals and 23 articles divided into six chapters. Recitals 1 to 19 provide in-depth explanations of the SLAPP phenomenon and of related notions in plain and accessible language. Recitals 20 to 34 (actually, recitals 14 and 15 too) define the cross-border setting for the purpose of the Directive, and describe the specific procedural tools and remedies at the service of defendants in SLAPP cases. Recitals 35 and 36 deal with the relationship between the proposed Directive and other EU law acts (none on private international law). Numbers 37, 38 and 39 refer to Denmark and Ireland.

Chapter I (article 1 to 4) is labelled ‘General provisions’. Chapter II (articles 5 to 8) comprises so-called common rules on procedural safeguards. Chapter III (articles 9 to 13) addresses the early dismissal of manifestly unfounded court proceedings. Chapter IV (articles 14 to 16) focuses on remedies against abusive court proceedings. Chapter V (articles 17 and 18) include two rules on protection against third-country judgments. Chapter VI is devoted to the typical final provisions.

Most of the rules of the proposed Directive are purely procedural. In this regard, the proposal appears at first sight as a direct intrusion into the procedural autonomy of the Member States. In fact, if the outcome of the negotiations is similar to the draft, Member States will enjoy most of the times a large marge of manoeuvre when transposing the Directive; actually, it is to be expected that they will be able to claim that existing rules in the domestic systems comply already with (some of) its mandates. Indeed, such rules are normally conceived for domestic litigation; however, courts in the Member States do not usually follow different procedural tracks depending on whether the dispute is purely domestic or has cross-border implications. National procedural provisions created with cross-border litigation in mind are the exception. Interestingly, should new rules be created to accommodate the Directive’s terms, they may get extended to domestic procedures as a consequence of the accompanying Recommendation.

Articles 17 and 18 – Protection Against Proceedings Outside the Union

Article 17, ‘Grounds for refusal of recognition and enforcement of a third-country judgment’, and Article 18, ‘Jurisdiction for actions against third-country judgments’, may deserve a different assessment, i.e., Member States are likely to need enacting new rules to transpose these provisions. Pursuant to Article 17

Member States shall ensure that the recognition and enforcement of a third-country judgment in court proceedings on account of public participation by natural or legal person domiciled in a Member State is refused as manifestly contrary to public policy (ordre public) if those proceedings would have been considered manifestly unfounded or abusive if they had been brought before the courts or tribunals of the Member State where recognition or enforcement is sought and those courts or tribunals would have applied their own law.

The Directive imposes not only the public policy exception as a ground for non-recognition or enforcement of a third State decision independently of whether the Member State affected is a party to a bilateral or multilateral convention: it establishes as well the conditions for its application. Although with an open-ended clause, the Directive also defines what ‘abusive’ litigation is under Article 3(3), thus limiting the freedom of the Member States to give contents to the public policy exception.

According to Article 18,

Member States shall ensure that, where abusive court proceedings on account of engagement in public participation have been brought in a court or tribunal of a third country against a natural or legal person domiciled in a Member State, that person may seek, in the courts or tribunals of the place where he is domiciled, compensation of the damages and the costs incurred in connection with the proceedings before the court or tribunal of the third country, irrespective of the domicile of the claimant in the proceedings in the third country.

The ground for jurisdiction is a forum actoris based on domicile. Many Member States have given up fora privileging the claimant except in cases of asymmetry of the parties to the litigation, capable of creating procedural imbalances between them. It is submitted that on many SLAPP occasions this will be the case, therefore the head of jurisdiction, albeit exorbitant at first sight, will be justified. However, it should be considered that publishers houses and journals are sometimes involved in these disputes supporting or sharing the side of the journalist or human rights defender. Be it as it may, and more relevant: with the current wording, the forum actoris will work also against defendants domiciled in a Member State, if they have filed a claim with a third State. Article 19 – a compatibility clause regarding the Lugano Convention- does not change this outcome; actually, it creates a (further) situation where the Convention and the Brussels Ibis Regulation will apply differently.

Article 4 – An Enlarged Definition of Cross-border Implications

The Directive includes among other a definition of ‘matters with cross-border implications’, whereby a matter is considered to have such implications unless both parties are domiciled in the same Member State as the court seised. In that case – that is to say, when both parties are domiciled in the Member State of the court seised-, the situation is still cross-border for the purposes of the Directive and the transposing legislation if

(a) the act of public participation concerning a matter of public interest against which court proceedings are initiated is relevant to more than one Member State, or

(b) the claimant or associated entities have initiated concurrent or previous court proceedings against the same or associated defendants in another Member State.

The requirements under (a) will be easy to be met in the era of the internet. As for (b), it describes a situation of lis pendens or of related actions in the sense of the Brussels Ibis Regulation, although only for the purposes of applying the Directive, i.e., without (in principle) any consequence on the rules of Articles 29 to 34 of the Regulation. A ‘without prejudice’ recital would nevertheless be advisable.

Moreover, it is submitted that neither (a) nor (b) should be limited to the involvement of Member States, and that such limitation works against the very aim of the Directive. Moreover, for reasons of consistency relating to Article 18, it would make sense to define ‘cross-border implications’ as including acts of public participation relevant to the Member State of the court seized and third States, as well as the situation of parallel or related litigation in a Member State and a third State. Of course, such extension is likely to increase the doubts as regards the basis of the EU legislative initiative. As an alternative, it can be suggested to the Member States that they adopt national rules similar to the EU ones, to be applied to the situations described above.

— Final note: an open-access paper on strategic litigation (SLAPP and beyond) authored by Prof. B. Hess, MPI Luxembourg, member of the MSI-SLP Committee of Experts on Strategic Lawsuits against Public Participation (Council of Europe), will be published in the days to come. An update will follow.

Study to Support the Preparation of a Report on the Application of Brussels I bis Regulation

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Marco Pasqua
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On behalf of the European Commission (DG JUST), Milieu Consulting is conducting a study on the application of Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I bis Regulation). The aim of the study is to provide solid evidence and analysis of legal and practical issues to assist the European Commission in preparing a report on the application of the Brussels I bis Regulation. To this end, the study will analyse the application of the Brussels I bis Regulation in the Member States and identify the main legal difficulties and practical challenges encountered in practice.

As part of this study, Milieu Consulting is conducting a stakeholder consultation, which includes a series of targeted surveys with key stakeholder individuals and organisations involved in or confronted with the application of the Brussels I bis Regulation. In particular, Milieu developed a technical survey that targets legal practitioners (i.e., judges; lawyers; notaries; bailiffs), academia (i.e., scholars in private international law and relevant sectors, such as consumer protection or business and human rights), and national authorities (i.e., ministries of justice, ministries in charge with consumer protection, ministries of economy) in each Member State. Stakeholders’ views are an important source of information for gaining a concrete understanding of the difficulties in applying rules on jurisdiction, as well as the recognition and enforcement of judgments, in cross-border civil and commercial cases in the EU.

The survey is available here. For more information on the study, please refer to the accreditation letter here.

Children from Ukraine: New EU Information Page about Civil Judicial Cooperation

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Marion Ho-Dac
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On 19 April 2022, the European Commission has launched a new page on the e-Justice Portal concerning children from Ukraine (available here in all EU languages).

It is an operational extension, in a dramatic context, of the work undertaken by the Commission to strengthen the protection of migrant children.

Background

According to the European Commission:

Russia’s military aggression against Ukraine raises questions about the situation of refugee children who are displaced in the European Union from Ukraine. The issue becomes even more complex when these children are separated from their families, either because they have remained in Ukraine or because they are refugees in another Member State.

It is now urgent to be able to ensure that these children are protected against the risk of violence, exploitation, illegal adoption, abduction, sale or child trafficking. For this reason, it is essential to use the instruments that protect the rights of these children.

There are instruments in European and international law to ensure the protection of children, with special provisions for the protection of and assistance to children temporarily or permanently deprived of their family environment, including in emergency situations, such as an armed conflict.

EU and International Rules on Civil Judicial Cooperation 

The new webpage contains clear and practical information on the rules applicable to judicial cooperation in cross-border cases involving Ukrainian children, including issues of jurisdiction, applicable law, recognition of decisions, and cooperation between authorities, in particular via the European Judicial Network in civil and commercial matters (EJN-civil).

It provides for many useful links to key legal instruments and information on Ukrainian law provided directly by the Ukrainian Ministry of Justice.

This page is intended for judges, lawyers, notaries, central authorities, but also for social workers in charge of child protection and staff in charge of registering minors arriving from Ukraine.

More information here.

Brief Overview of the Directive Proposal on Corporate Due Diligence and PIL

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Marion Ho-Dac
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On 23 February 2022, the proposal for a directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence was released.

In recent years, many experts have expressed their views on the Union’s ambition to regulate corporate due diligence comprehensively and in a binding manner at the EU level. The private international law (PIL) aspects have received particular attention (e.g. here and more globally here), including on our blog (e.g. here, here and here) and others (here and here).

Indeed, a first central issue is the spatial applicability of the (forthcoming) EU instrument so that it effectively covers transnational (harmful) conduct of multinational companies, incorporated in the Union or active in the EU market (see Article 2, §1 and §2). Another major issue concerns remedies for the damage caused by companies through their supply chain, to victims and to the environment. The Directive proposal provides for rules on liability for violation of the due diligence requirements laid down by the text.

In this context, what are the main solutions of the Directive proposal on the PIL aspects? Here are some brief elements of the response that experts on the matter will analyse in more detail during the negotiations of the text (see already Geert Van Calster thoughts)

Private Enforcement Scheme

One of the main objectives of the Directive proposal is to “improve access to remedies for those affected by adverse human rights and environmental impacts of corporate behaviour” (p. 3). Remedies and more globally enforcement rules are indeed a key-factor for normative effectiveness. Private parties should be empowered to report concerning behaviours of multinational companies or misconducts (see Articles 9 and 19 of the Directive proposal). As a crucial step, victims should be able to sue the company liable for any damage caused within the Union’s territory or, most frequently, outside the Union through its value chain. The Directive proposal provides for a common civil liability regime (although incomplete). This is a great improvement, in particular for foreign victims who could seek remedies within the EU (Article 22).

Against this background, the private enforcement regime remains dependent on the jurisdiction of a “European forum” (i.e. among national courts of EU Member States) and, then, on the application of EU law.

No Specific Provision on Jurisdiction in the Union

The Directive proposal provides for a private enforcement scheme but without mentioning any specific rules on jurisdiction. Hence, Brussels I bis Regulation will remain the applicable legal framework within the EU judicial area.

EU-based Companies

The jurisdictional rules of the Regulation are, in principle, applicable once the defendant is domiciled in the Union, regardless of whether there is any other connection with the EU legal order (Article 4). When the defendant is a legal person, it lays down a flexible concept of domicile; it may be the statutory seat of the company, its central administration or its principal place of business (Article 63). In the present case, it means that the mother or ordering company located in the Union may be sued by any victims before a “European forum” for compensation of losses suffered in a third country. In that respect, the solution follows the rationale of the home country control.

However, the situation would be less effective if the victims also decide to sue, as co-defendant, other companies of the value chain of the European undertaking (e.g. subsidiaries or business partners), when the former are not established in the Union. In such a case, the Brussels I bis Regulation is not applicable pursuant to its Article 8,(1). It will be for the national laws of Member States to determine the jurisdiction of their courts. This is regrettable; the discrepancies between national rules may weaken the EU provisions on remedies. Some courts will be competent, others not, in equivalent disputes.

Nonetheless, the lack of legal approximation here is not inconsistent with the European enforcement regime, since the latter is limited for now – under Article 22 of the Directive proposal – to civil liability claims against the company in charge of the due diligence requirements pursuant to Article 7 and 8 of the text. Hence, national law remains applicable to the civil liability of “subsidiaries or of any direct and indirect business partners in the value chain” (Article 22, §3 of the directive proposal). The lack of a uniform substantive liability regime in the forthcoming EU instrument, directly applicable to these potential co-defendants, mitigates or, at least, may explain, the absence of a ground jurisdiction based on EU law in such circumstances.

Non-EU-based Companies

A much more problematic situation concerns foreign companies – i.e. domiciled outside the Union – that are economically active in the internal market and, in that respect, covered by an EU due diligence obligation. The jurisdictional rules of the Brussels I bis Regulation are in principle not applicable, even if the losses were suffered on the Union’s territory. Private enforcement will depend on the national laws of EU Member States on the jurisdiction issue. European remedies are therefore likely to remain totally ineffective before certain domestic courts of the Union where no specific ground for jurisdiction, such as a forum necessitatis, exists. Victims will be treated differently in the European judicial area; some of them will not be able to benefit from remedies. It also creates a severe discrepancy between European and foreign companies. The latter may avoid private enforcement as a result of this lacuna in the European legal system.

A solution may be found in the obligation of foreign companies to have a representative in the Union pursuant to Article 16 of the Directive proposal. It could be argued that the European domicile of this representative, set up for the public enforcement of the EU due diligence regime should also apply for private enforcement, based on the civil liability regime of Article 22 (see Article 16, §4 on public enforcement, mentioning the cooperation with supervisory authorities). In that regard, the preliminary explanation of the Directive proposal describes quite broadly the role of those mandated authorised representatives; they may be addressed by a competent authority of a Member State on all issues necessary inter alia for “[the] enforcement of legal acts issued in relation to this Directive” (page 25).

In a more effective way, a specific ground of jurisdiction could be introduced. It could be the forum of the Member States “in which the company generated most of its net turnover in the Union in the financial year preceding the last financial year” (Article 16, §3). This is the criterion laid down by the Directive proposal for the designation of the authorised representative in the Union. Therefore, it could be easily transposed to international competence, linking public and private enforcement schemes, as already suggested above.

No Specific Choice of Law Rules (either)

The extraterritoriality of the forthcoming EU substantive rules on due diligence is not enough (legally speaking) to guarantee their application before “European fora” when damage was suffered in third countries. In that respect, the Directive proposal opts for the mandatory nature of the civil liability regime laid down in Article 22: it is “of overriding mandatory application in cases where the law applicable to claims to that effect is not the law of a Member State” (Article 22, 5).

From a PIL perspective, this formulation may be seen as ambiguous. First, the mandatory nature under EU law of all the text on corporate due diligence should be made explicit (even if it may be seen as obvious). Second, regarding the civil liability regime it is about its overriding mandatory dimension, whatever law is applicable, since this technique applies ex ante, before any conflict-of-laws reasoning. At the same time, it will still be necessary for the national courts (in EU Member States) to determine the law applicable to the case. Indeed, the Directive proposal does not lay down a complete and fully uniform regime of liability. More protective regimes under national law could prevail (recital 59) and some questions are referred to national law (for instance, the burden of proof of the absence of misconduct of the company, see recital 58).

Against this background, the Rome II Regulation will remain applicable for cross-border disputes concerning non-contractual obligations. The Regulation lays down a provision on overriding mandatory provisions (Article 16). It could therefore provide for the unilateral application of the national law of the competent court (its lex fori), which contains the EU due diligence duty and its attached civil liability regime (as already proposed by Giesela Rühl). However, it remains to be expressly clarified in the proposal whether the European provisions concerned – including (where appropriate) their implementation in the national laws of the Member States – have such an international mandatory nature.

In any case, PIL issues are crucial and condition the effectiveness (and therefore the success) of EU law (including EU values) beyond the Union’s borders in this area.

EU Commission Draft EU-UK Bilateral Judgments Treaty

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Gilles Cuniberti
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On 31 March 2022, the EU Commission disclosed that it has been working on a proposal for a bilateral treaty to be concluded with the UK focused on recognition and enforcement of foreign judgments.

The purpose of the treaty would be to facilitate the circulation of judgments between the EU and the UK. It would not be a double convention and thus would not include rules governing the (direct) jurisdiction of the courts of the Contracting States.

Scope

At the present time, the material scope of the treaty would be limited to civil and commercial matters. It would not, therefore, extend to family law.

Jurisdiction of the Foreign Court

The (indirect) jurisdiction of the foreign court would be assessed by a single flexible text. Foreign courts would be considered to have jurisdiction if there was a meaningful connection between the foreign court and the dispute. The French presidency might have pushed for adopting this test, which is currently applied in the French common law of foreign judgments.

In addition, a provision of the treaty would clarify that the test would not be satisfied if the foreign court had retained jurisdiction on the basis of a number of exorbitant rules of jurisdiction that would be identified. This list seems to be clearly inspired for the red list of the Brussels instruments.

Public Policy Exception

The public policy clause is probably the most innovative provision of the treaty. It would be applicable in principle, unless “actual mutual trust” could be found to exist between the relevant EU Member State and the UK.

A provision would then identify cases where such “actual mutual trust” would be presumed.

No scrum, no trust

This would be the case for all judgments circulating between France and the UK, because France participates in the 6 Nations Rugby Championship (so-called “scrum proviso”).

The scrum proviso would apply between Italy and the UK for judgments rendered 32 days after Italy would win its first Championship or would win in Twickenham by more than 20 points.

More details on the draft treaty are available here.

France Amends Rule on Effect of Foreign Birth Certificates

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The Editors of the EAPIL blog
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This post was contributed by Christine Bidaud, who is Professor at the University Jean Moulin – Lyon 3, co-director of the Family Law Center and member of the Research team Louis Josserand.

French Background on Recognition of Foreign Birth Certificates of Children Born Abroad by Surrogacy

If there is one subject that divides not only jurists but also States, it is certainly surrogacy. Legal in some countries, prohibited in others, and unregulated in still others, each State develops its own law according to the social mores, values, and history of its society. But it is one thing to prohibit the practice of surrogacy on one’s own territory and another to consider the parenthood of a child born abroad by surrogacy. The French Cour de Cassation has well understood this.

Without going back over the details of the evolution of its case-law, it should be remembered that at first, the Cour de cassation refused to recognise or authorise the recognition in France of the parenthood of children born abroad by surrogacy (see Cour de Cassation, 1st Civil Chamber, 6 April 2011, n° 10-19053, Mennesson, n°09-66486, Labassée & n° 09-17130 and Cour de cassation, 13 September 2013, n°12-18315 & n°12-30138). The Court then accepted the partial transcription of the child’s foreign birth certificate in French civil status registers by limiting it to the biological parent (see Cour de Cassation, Plenary session, 3 July 2015, n°14-21323 & n°15-50002). The second parent, whether a man or a woman, had to adopt the child to establish his or her parenthood. Until the law of 21 February 2022, a requirement for such adoption was that the couple be married.

The Cour de Cassation then decided to go further. Even if in its opinion of 10 April 2019, the ECtHR did not require it, the Cour de Cassation decided to authorise the full transcription of the child’s foreign birth certificate in the French civil status registers. Initially presented as an exceptional solution justified by the circumstances of the Mennesson case, the Cour de Cassation finally generalised this solution (see Cour de cassation, 1st Civil Chamber, 18 December 2019, n° 18-11815 & n° 18-12337 and recently Cour de cassation, 1st Civil Chamber, 13 January 2021, n° 19-17929). The French case law seemed to be well established and yet…

2021 Reform of Article 47 of the French Civil Code

The law on bioethics of 2 August 2021 reformed Article 47 of the Civil Code, which governs the evidentiary value of foreign civil status documents. Even if the evidentiary value of foreign civil status documents must be distinguished from the recognition of parenthood, the two issues are “dangerously” intertwined in the case-law and obviously in the mind of the legislator too. Wishing to put a stop to the case law of the Cour de Cassation, the French Senate had proposed an amendment to introduce a new Article 47-1 into the Civil Code. In essence, the text provided for a return to the previous case law of the Cour de Cassation: partial transcription of the biological parenthood link and adoption of the child by the other parent.

The French National Assembly rejected this amendment and instead amended Article 47 of the Civil Code. The text, which already provided that

‘All civil status records of French citizens and foreigners made in a foreign country and drawn up in the forms used in that country are considered as proof unless other records or documents held, external data, or elements drawn from the record itself establish, if necessary after all useful verifications, that this record is irregular, falsified, or that the facts declared therein do not correspond to reality’,

has been supplemented by the precision that

‘This (reality) is assessed in the light of French law.

The change seems minor at first glance, but it nevertheless calls for a whole series of observations.

The Purpose of the New Provision

The Senate amendment only concerned the transcription of birth certificates of children born abroad by surrogacy into French civil status registers. The new version of Article 47 of the Civil Code does not concern the transcription, but the evidentiary value of all foreign civil status records: birth certificates, as well as others (e.g. marriage, recognition, death, and certificates of stillborn babies). The text introduces a problematic confusion between evidentiary value and transcription of foreign civil status records. A foreign civil-status record does not need to be transcribed into French registers to have evidentiary value. It must only have been established following “the usual forms” of the foreign country (as laid down by the first sentence of Article 47 of the Civil Code). Moreover, it is impossible to require transcription in all cases because transcription of foreign records is only possible when the person(s) concerned by the record have French nationality.

The Lack of Legitimacy of the New Provision

The amendment proposed by the Senate was expressly aimed at surrogacy, which is a bioethical issue. However, Article 47 of the Civil Code relates to the evidentiary value of all foreign civil status records, whether they relate to French citizens or to persons of foreign nationality. What is thus the legitimacy of a new law relating to bioethics to reform this provision? For example, what link can exist between bioethics and a foreign marriage record?

In our opinion, the legal context of the reform of Article 47 is therefore inappropriate and even instrumentalised.

An Incoherent Provision?

There is still one condition for foreign documents to be evidentiary: they must have been drawn up following the local rules of form. And there are still three grounds for overturning this presumption of evidentiary value: irregularity, falsification, and inconsistency of the facts contained in the document to reality. There is no change for the first two grounds of challenge pursuant to the new version of Article 47. “Irregularity” means that the act respects the foreign local forms. The “absence of falsification” implies that there must be no documentary fraud (e.g. erasure, pasting, or fraud carried out with different computer software), but also more elaborate fraud, sometimes carried out with the complicity of local authorities (one can think of ‘true-false’ records drawn up deceptively and inserted into foreign registers by unscrupulous foreign civil registrars).

The third ground for challenging the evidentiary value – “the lack of conformity of the facts with reality” – has been completed by the strange precision that this reality must be “assessed in the light of French law”. Until now, this condition was interpreted in terms of accuracy or inaccuracy: was the person born in that town? Did the person die on that date? It is logical, facts are true or false. What sense can be given to the requirement that the facts must be conform with reality “assessed in the light of French law”?

Keeping in mind that the goal of the text was to put an end to the case law of the French Cour de Cassation, we can only observe that the legislator makes a confusion between what is a fact and what is not. Parenthood is not a fact: it may result from the effect of the law, from a recognition act, from a possession of status, or from a judicial decision. The new version of Article 47, therefore, invites reasoning in terms of equivalence between what French law allows and what it does not allow. It is no longer a question of factual reality but of legal reality.

An Incoherent System of Reception of Foreign civil status records?

Reasoning in terms of legal reality means that we must check if the element of personal status established or constituted abroad has an equivalent in French law. And that must be done for each element that may compose the status of a person: facts such as dates and place of birth, but also everything else, i.e. marriage and parenthood. And how far should this research of equivalence be pushed? Should we, for example, require that marriages celebrated abroad have a civil form because it is the only one that exists in France? Such research would not make sense because it would be the same as considering that a foreign record relating to a marriage celebrated only in the religious form has no evidentiary value in France, even though this marriage would be considered valid. Since 1955, French case law has considered that this question belongs to the conditions of form of marriage and is therefore governed by foreign law (see Cour de cassation, 22 June 1955, Caraslanis). This rule is now written into the Civil Code.

The formulation of the text causes confusion between the evidentiary value of the records and the recognition of the status of persons. The civil status record is used to prove that an event concerning personal status occurred abroad, but this does not mean that this personal status will produce effects in France. With the new version of Article 47 of the Civil Code, everything is mixed up: the element of personal status is checked to ensure that it corresponds to the definition given by French law to give evidentiary value to the foreign civil status record.

The New French Legal Reality of Female Parenthood

The law on bioethics has opened up medically assisted procreation to women couples and single women (Art. 342-10 of the Civil Code). The new Article 342-11 of the Civil Code provides that “At the time of the consent [by the notary] provided in Article 342-10, the couple of women jointly recognises the child”. For the woman who gives birth, parenthood is established in accordance with Article 311-25 which lays down that “‘Regarding the mother, parenthood is established by her designation in the child’s birth certificate”. For the other woman, it is established by the joint acknowledgement provided in the first paragraph of this Article. This is given by one of the two women or, where applicable, by the person responsible for declaring the birth to the civil registrar, who indicates this in the birth certificate. Regarding the woman of the couple who is not carrying the child, she will therefore be the legal mother of the child from the moment of its birth because of prenatal recognition.

So today, it is possible under French law to be the legal mother of a child without having given birth to that child and without the need to use adoption.

What Consequences for the Reception in France of Foreign Birth Certificates of Children Born Abroad by Surrogacy?

When the couple who had recourse to surrogacy abroad is heterosexual, most of the time, the indications written in the foreign birth certificate will only specify “mother:…” and “father:…”. It will not mention whether the woman has or has not given birth. It will only give the identity of the mother. Therefore, the foreign record will not contain any factual inaccuracies. To check if the indications are in conformity with the legal reality assessed in the light of French law, it is then necessary to verify whether French law allows the registration of a woman as a mother without having given birth and without having adopted the child. And this is now possible since the Bioethics Law of 2 August 2021…

The Cour de Cassation is therefore not required to change its case law in this situation. It can continue to transcribe these birth certificates in the French civil status registers. The situation is more problematic regarding men’s couples. In this case, there will be two fathers in the foreign birth certificate. To ensure that this record corresponds to the legal reality assessed under the light of French law, the Civil Code should contain a provision that allows the establishment of a double link of paternal parenthood from the child’s birth, without using adoption. And this provision does not exist. Therefore, it should no longer be possible to transcribe these foreign birth certificates in French civil status registers!

What Perception will the ECtHR have of such differential treatment?

The ECtHR does not systematically condemn States that do not allow the recognition or reconstruction of a parenthood link towards the non-biological parent who has had recourse to surrogacy abroad if the child has a family life with his or her parents. However, special circumstances are required and in its advisory opinion of 10 April 2019, the ECtHR stated that the parenthood link between the child and the intended mother must be established, including through adoption, but that there was no obligation for States to transcribe the child’s full birth certificate. This opinion was issued to surrogacy carried out by a different-sex couple but is perfectly transposable to same-sex couples.

If the French Cour de Cassation only allows the transcription of foreign birth certificates of children born from surrogacy when the parents are of different genders, there would certainly be discrimination between heterosexual and homosexual couples and even more between children who are all born abroad by surrogacy. It is difficult to see how France could not be condemned again by the ECtHR… And the recent Pancharevo Case of the CJEU (analysed here on the blog) can only add arguments in the direction of maintaining the current case law of the French Cour de Cassation.

The US Signs the Hague Judgments Conventions

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Pietro Franzina
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On 2 March 2022 the US signed the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters. Five more States have already signed the Convention, namely Costa Rica, Israel, the Russian Federation, Ukraine and Uruguay.

So far, none of the above States has ratified the Convention. According to Article 28, two ratifications are needed for the Convention to enter into force.

In July 2021, the European Commission presented a proposal for a Council decision on the accession to the Convention by the European Union. In December 2021, the Council forwarded the draft Council decision to the European Parliament, the consent of which is a precondition for the adoption of the decision pursuant to Article 218 of the TFEU.

New Annexes A and B for Regulation 2015/848

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Marta Requejo Isidro
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Annexes A and B to the insolvency Regulation list, respectively, the national insolvency proceedings and national insolvency practitioners (as notified by Member States) to which that Regulation applies. They have been replaced by Regulation (EU) 2021/2260 of 15 December 2021.

The new Annexes are operative as of 9 January 2022

The reasons for the amendment are explained given in Recital 2 of the Regulation:

In October 2020, the Netherlands notified the Commission of recent changes in its national insolvency law which introduced a new preventive insolvency scheme, as well as new types of insolvency practitioners. That notification was followed in December 2020 by notifications from Italy, Lithuania, Cyprus and Poland relating to recent changes in their national law which introduced new types of insolvency proceedings or insolvency practitioners. Following the submission by the Commission of its proposal for an amending Regulation, further notifications were received from Germany, Hungary and Austria relating to recent changes in their national law which introduced new types of insolvency proceedings or insolvency practitioners. Subsequently, Italy clarified the date of entry into force of its new provisions on insolvency and restructuring which it had notified to the Commission in December 2020, and notified an amendment to a previous notification. Those new types of insolvency proceedings and insolvency practitioners comply with.

Neither Ireland nor Denmark are taking part in the adoption of the Regulation. Accordingly, they are not bound by it or subject to its application.

European Commission Proposal for a Regulation on Digitalisation of Judicial Cooperation

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Elena Alina Ontanu
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At the beginning of December 2021 the European Commission launched a new initiative aiming to digitalise cross-border judicial cooperation – the Proposal for a Regulation on Digitalisation of Judicial Cooperation and Access to Justice in Cross-Border Civil, Commercial and Criminal Matters, and Amending Certain Acts in the Field of Judicial Cooperation.

The proposed regulation does not establish new European procedures, but focuses on electronic communication in the context of cross-border judicial cooperation procedures and access to justice in civil, commercial and criminal matters in the EU. With the adoption of this regulation the European legislator seeks to create the necessary legal framework to facilitate electronic communication in the context of the cross-border judicial cooperation procedures in civil, commercial and criminal matters.

The present text follows a proposal from December 2020 for a Regulation on a Computerised System for Communication in Cross-Border Civil and Criminal Proceedings (mentioned earlier in other blogs available here, here, and here) – and two recast regulations from November 2020 – the Service of Documents Regulation and the Taking of Evidence Regulation (see earlier blogposts here and here). The Service of Documents and Taking of Evidence Regulations establish a first comprehensive legal framework for electronic communication between competent authorities in cross-border judicial procedure, and will rely – as the present proposal – on the e-CODEX decentralized IT system to exchange standardized forms, documents, and certifications (more on the e-CODEX decentralized system pilots can be read here, here, and here).

The proposal is based on Articles 81(1) and 82 TFEU and follows an identical approach to the solutions chosen in the recasts of the Service of Documents and Taking of Evidence Regulations for the use of electronic communication means. However, the text of the present proposal will not become applicable in relation to the aforementioned regulations.

The EU Regulations covered by this initiative are listed in two annexes: one concerning legal acts in civil and commercial matters and the other the legal acts in criminal matters (available here).

The present development comes after a number of instruments have been adopted over the years to enhance judicial cooperation and access to justice in cross-border civil, commercial and criminal cases. These instruments had been developed with a paper-based format in mind, an approach followed by most national procedures within the EU. This characteristic of the European instruments and the lack of interconnection of the national electronic systems (where available for judiciaries) meant that national authorities and individuals have not been able to rely extensively on the developments of digital communication or security mechanism offered by electronic documents, signatures and seals in cross-border proceedings. Given this situation, during the COVID-19 pandemic many technical solutions were developed in an ad-hoc manner to limit disruption of justice services and judicial cooperation. However, such solutions may not always satisfy the highest level of security and guarantee of fundamental rights.

For this reason further steps were considered necessary by the European legislator. Rules on digitalisation are becoming desirable to improve access to justice as well as the efficiency and resilience of the communication flows inherent to the cooperation between judiciaries and other competent authorities in EU cross-border cases. The pandemic increased consideration for creating a framework that is able to secures access to justice and facilitate communication of authorities in charge of delivering justice services during long lasting disruptive events.

The Explanatory Memorandum of the proposal emphasizes the importance to achieve the following goals: efficient cross-border cooperation, resilience in force majeure circumstances, and contributing to securing access to justice within ‘a reasonable time’ as crucial element for the right to a fair trial.

Aims of the Proposal

The proposed regulation aims to ‘ensure an adequate and holistic infrastructure for electronic communication between individuals, legal entities or competent authorities with the authorities of another Member State’. This common approach should:

  • Ensure the availability and broad use of electronic means of communication in cross-border cases between Member States’ competent authorities including the Justice and Home Affairs and EU bodies;
  • Enable the use of electronic means of communication in cross-border cases between individuals and legal entities, and courts and competent authorities (except for situations covered by the Service Regulation);
  • Facilitate the participation of parties in oral hearings through videoconference or other distance communication technology in cross-border civil and criminal proceedings for reasons other than the taking of evidence (taking of evidence by videoconference or other distance communication technology fall under the Evidence Regulation);
  • Ensure that documents are not refused or denied legal effect solely on the grounds of their electronic form (this is not to touch upon courts’ powers to decide on the validity, admissibility and probative value as evidence under national law); and
  • Ensure the validity and acceptance of electronic signatures and seals in electronic communication in cross-border judicial cooperation and access to justice.

When adopted the text is set to coordinate Member States’ efforts in digitalising judicial services and establish a coherent framework for the existing EU rules, leading to simplification and speeding up of communication between Member States authorities and individuals and legal entities.

The e-CODEX system will secure the interoperability of national and EU access points, while the European e-Justice Portal is expected to undergo some modifications to support the interaction between natural and legal persons and courts and competent authorities in cross-border proceedings.

Overview of the Text of the Proposal

The first articles (Articles 1-2) establish the scope of the act, the limitations to its application and defines the concepts used within its provisions. Article 3 is dedicated to the rules concerning the decentralised system consenting electronic communication between courts and competent authorities. The use of the system is to be compulsory, except in case of disruption of the system or in other specific circumstances. Article 4 establishes the European electronic access point. The European electronic access point is to be part of the e-CODEX decentralised IT system and may be used by natural and legal persons for electronic communication with the courts and competent authorities in civil and commercial matters having cross-border implications. This is to be located on the European e-Justice Portal. Article 5 sets a duty on the EU Member States’ courts and competent authorities to accept electronic communication from natural and legal persons in judicial procedures, but leaves the choice of the electronic means of communication at the discretion of the natural and legal persons (e.g. European electronic access point, national IT portals were available for participation in judicial procedures). Article 6 recognises an electronic submission to be equivalent to a paper one and requires national authorities to accept such communications from natural and legal persons. Article 7 provides the legal basis and sets out the conditions for using videoconferencing or other distance communication technology in cross-border civil and commercial proceedings under the legal acts listed in Annex I and in civil and commercial matter where one of parties is present in another Member State. Additionally, special rules are set by this article for hearing children. Article 8 addressing the same aspect for criminal matters, including special rules for hearing a suspect person, an accused, convicted person or children. Article 9 focuses on using trust services (i.e. electronic signatures and seals) in electronic communication. Article 10 requires that electronic documents are not denied legal effects solely on the ground that they are in electronic form. This provision is similar to provisions on the matter included in the Recast Service of Documents and Tacking of Evidence Regulations as well as the eIDAS Regulation. Article 11 provides the legal basis for electronic payment of fees, including through the European e-Justice Portal. This point is of high significance in cross-border procedures as it proved to be a problematic aspects in the application of the European uniform procedures in several Member States (e.g. the European Order for Payment, the European Small Claims Procedure). Article 12 lays the framework for the Commission to adopt the necessary implementing acts, while Articles 13-14 mandate the Commission to create, maintain, and develop the reference implementation software and deal with the matter of cost bearing for various IT developments. Article 15 addresses the aspects related to the protection of personal data exchanged through the digital means. Articles 16-18 set the rules for collecting data and evaluation of the effectiveness of the proposed Regulation. This is followed by a number of articles focusing on the amendment of several regulations in civil, commercial and criminal matters. Articles 19-22 introduce a number of amendments to Regulations in civil and commercial matters included in Annex I, while Article 23 seeks to amend criminal matters side related to the Regulation on mutual recognition of freezing orders and confiscation orders.

Regulations to be Amended by the Proposal

The European uniform procedures regulations – European Order for Payment, European Small Claims Procedure and the European Account Preservation Order – will be amended by the present proposal. The rules seek to create the legislative format to: (1) recognise the submission of the applications or other forms of the procedures by electronic communication means provided by the present proposal or any other means of communication, included electronic, accepted by the Member State of origin or available to the court of origin, (2) secure the recognition of electronic signatures, (3) make available means of electronic payment of court fees (i.e. for the European Small Claims Procedure), (4) secure the communication by electronic means of communication between the authorities and the parties involved.

Another regulation to be amended is the Insolvency Regulation. The proposal introduces provisions related to the cooperation and communication between courts for secondary insolvency proceedings in the sense that these should be carried out via the decentralised electronic means referred to by the present proposal – e-CODEX. Additionally, any foreign creditor should be able to lodge claims in insolvency proceedings by any means of communications accepted by the State of opening of the proceedings or by the electronic means provided by Article 5 of the proposal.

In criminal matters, the Regulation on the mutual recognition of freezing orders and confiscation orders will also be amended when the proposed regulation will be adopted. The e-CODEX decentralized system consenting electronic communication between courts and competent authorities will have to be used for a number of actions, namely: (1) by the issuing authority to transmit the freezing order to the executing authority, or central authority; (2) for the executing authority to report on the execution of the freezing order; (3) to inform the issuing authority on any decision to recognise and execute or not to recognise and execute an issued freezing order; (4) for the executing authority to report the postponement of the execution to the issuing authority and subsequent measures taken for its execution; and (5) for the execution authority to make a reason request to the issuing authority to limit the period for which the property is to be frozen. The same applies for similar provisions related to confiscation orders.

Concluding Remarks

When adopted this regulation will achieve one of the goals set out in last year’s Communication on the Digitalisation of Justice: making ‘digital communication channels the default channel in cross-border judicial cases’. If properly applied this will address two main problems of cross-border judicial cooperation: inefficiencies affecting this cooperation and barriers to access to justice in cross-border civil, commercial and criminal cases.

Now, it remains to be seen how the adopted text of the regulation will look like and how long it will take for achieving its full deployment in cross-border civil, commercial and criminal cases.

EC’s Initiative on Recognition of Parenthood – An Update

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Anna Wysocka-Bar
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The European Commission (EC) set out an initiative Recognition of parenthood between Member States. As underlined by the EC, the initiative aims to ensure that parenthood, as established in one EU country, is recognised across the EU, so that children maintain their rights in cross-border situations, in particular when their families travel or move within the EU. Currently, in certain circumstances they might see the parenthood not recognised, which in turn might result in adverse consequences for the child (for example, obstacles in obtaining a passport or an identity card).

These problems might be easily illustrated by the background of the case, which resulted in a very recent judgement of the Court of Justice in Stolichna obshtina, rayon “Pancharevo” (C-490/20). See posts on this blog on the attitude of administrative authorities of some Member States, on the example of Bulgaria and AG Kokott’s opinion as to its implications in EU law, especially the Charter of Fundamental Rights of the EU – respectively – here and here.

Inception Impact Assessment

As reminded in the inception impact assessment published in Spring 2021, there is currently no instrument on the recognition of parenthood at the international level. The Hague Conference on Private International Law (HCCH) is engaged in exploring the possibilities of tackling this issue (information about these works might be found at HCCH website here). In the EU, each Member State applies its own law on the recognition of civil status records/judgements on parenthood handed down in another Member State. On the one hand, under EU treaties, substantive family law falls within the competence of Member States. Their substantive rules on the establishment and recognition of parenthood differ. On the other hand, the EU has competence to adopt measures concerning family law with cross-border implications pursuant to Article 81(3) TFEU. These measures can include the adoption of common conflict rules and the adoption of common procedures for the recognition of judgments issued in other Member States. The EC plans to present a proposal of the regulation by the third quarter of 2022.

Public Consultation

The EC has also lunched a public consultation. The outcome of the consultation was recently published (and is available here). Although collected answers are not necessary representative for the whole EU (interestingly, out of 389 answers 112 come from Slovakia), they indicate that indeed there are instances where parenthood was not recognised as between Member State.

(…) the cases mainly involved a child born out of surrogacy (37% or 116 responses), followed by a child born out of assisted reproductive technology (ART) (23% or 73 responses) and second parent adoption by the partner of the biological parent (21% or 65 responses). Other cases in which parenthood was not recognised included parenthood established by operation of law (14% or 45 responses) and adoption by two parents (10% or 30 responses). Adoption by one single parent and establishment of parenthood over an adult were not recognised according to 6% (or 18 responses) and 3% (or 8 responses) respectively.

As specified by respondents, the primary reason for not recognising parenthoods established in another Member State is that the recognition of parenthood is contrary to the national law of the Member State [or rather a public policy of that Member State? – AWB] where recognition is sought (72% or 184 responses) (…)

Expert Group

The Expert Group was set up to advise EC on the preparation of this new legislative initiative. The Group has met already on several occasions. As  minutes of these meeting reveal (see here for details), the Group was discussing, inter alia, the very notion of “recognition” with respect to parenthood, which often is confirmed by an administrative document, for example the birth certificate.

(…) existing Union instruments address the circulation of authentic instruments under three possible forms: acceptance, only enforcement and recognition and enforcement, and that by definition enforcement is not applicable to the status of persons. The group considered that acceptance may refer only to the evidentiary effects of the facts recorded in the document but not to the existence of a legal relationship, such that only recognition would be relevant for the purposes of the planned regulation on parenthood. 

It was thus agreed that the term ‘recognition’ should be used in the proposal as it refers not only to the factual elements but also to the legal effects of the authentic instrument. 

Enhanced Cooperation?

It might be added that adoption of a regulation under Article 81(3) TFEU requires unanimity. As a result, so far regulations aimed at unifying international family law were adopted within enhanced cooperation, due to lack of such unanimity (for example, the Divorce Regulation). The side effect is that these regulations are applied only in participating Member States, which undermines the unification efforts of the EU. Hence, there is a risk that non-participating Member States could be the ones, in which the problem of non-recognition of parenthood established in another Member State is more pressing than in other ones.

Law Commission of England and Wales’s New Project on Conflict of Laws and Emerging Technology

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The Editors of the EAPIL blog
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The author of this post is Burcu Yüksel Ripley, who is a Senior Lecturer in law and the Director of the Centre for Commercial Law at the University of Aberdeen.

On 25 November 2021, the Law Commission of England and Wales announced, as part of an update on its work on smart contracts, that it has agreed with the Government to undertake a project on conflict of laws and emerging technology. This project will look at conflict of laws rules as they apply to emerging technology (including smart legal contracts and digital assets) and consider whether law reform is required. The Commission hopes to be able to begin work in the first half of 2022.

Conflict of laws and emerging technology was among the ideas for potential areas of law reform within the scope the Law Commission’s 14th programme of law reform. In the area of commercial and common law with a focus on emerging technology, the Commission has been working on three projects on smart contracts, digital assets and electronic trade documents which are, to some extent, interconnected. Its work on these projects has identified certain difficulties with the application of conflict of laws rules (covering both jurisdiction and applicable law rules in this context) in relation to emerging technology, including distributed ledger technology (DLT):

  • In the context of its work on smart contacts, which the Commission concluded with a confirmation that the existing law of England and Wales is able to accommodate and support smart legal contacts, it devoted Chapter 7 of its advice to Government on smart legal contacts (published on 25 November 2021) to ‘Jurisdiction and smart legal contracts’. The Commission considered various issues concerning jurisdiction and applicable law in relation to smart contacts and assessed that “the problem of digital location – that is, the difficulty of ascribing real-world locations to digital actions and digital objects – is amongst the most significant challenges that private international law will have to overcome in relation to emerging technology, including smart legal contracts.” (see paragraph 7.145 of the advice).
  • In the context of its work on digital assets, which seeks to support and facilitate the development of digital assets and ensure that the law recognises and protects them in a digitised world, conflict of laws is mentioned in the call for evidence (published on 30 April 2021) as an area which is likely to be affected by the issues covered by the call for evidence. The Commission therefore sought to hear more details from respondents on conflict of laws issues relating to digital assets (see para 2.80 of the call for evidence on digital assets). The digital assets project is currently at the pre-consultation stage, with the expectation that the consultation paper will be published in mid-2022. An interim update paper on this project is available here.
  • In the context of its work on electronic trade documents, which seeks to make recommendations for law reform to allow for legal recognition of electronic trade documents (eg bills of lading and bills of exchange), some conflict of laws issues relating to electronic trade documents were highlighted in the consultation paper (published on 30 April 2021, see in particular pp.124-127 of the consultation paper on digital assets: electronic trade documents). There were two main questions specifically mentioned in the consultation paper: 1) “Where is an electronic trade document located at any given time (and related questions such as where does a transfer take place)?” and 2) “How will an electronic trade document issued in England and Wales be treated in a country that does not recognise the validity of electronic trade documents?”. The Commission, in this consultation paper, provisionally proposed to consider the private international law aspects of digital assets, including electronic trade documents, as part of a separate project that could be taken as part of its 14th programme of law reform. The electronic trade documents project is currently at the policy development stage.

The Commission’s new project on conflict of laws and emerging technology is a very timely project. The Law Commission of England and Wales can only make recommendations for the law of England and Wales. However, some of its recommendations might have a UK-wide impact. This project should also be seen as an opportunity to help facilitate the development of internationally widely accepted private international law rules in relation to emerging technology given the current work of the Hague Conference on Private International Law concerning private international implications of the digital economy, including DLT and its applications (including digital assets).

EU Parliament Briefing on the UK’s possible re-joining of the Lugano Convention

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Gilles Cuniberti
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The European Parliamentary Research Service of the European Parliament has issued on November 18th, 2021, a Briefing on The United Kingdom’s possible re-joining of the 2007 Lugano Convention.

The summary of the briefing reads as follows:

The 2007 Lugano Convention is an international treaty that regulates the free movement of court judgments in civil cases between the Member States of the EU, on one hand, and the three EFTA states (Switzerland, Norway and Iceland), on the other. The convention effectively extends the regime of quasi-automatic recognition and enforcement of judgments that was applicable between EU Member States at the time under the Brussels I Regulation (No 44/2001).

Whereas the EU rules currently in force regulating the free movement of judgments in civil cases between the EU Member States – the 2012 Brussels I-bis Regulation (1215/2012) – bring about an even higher level of integration and presume, therefore, a very high level of mutual trust between the national judiciaries of the Member States, relations between the EU and EFTA Member States remain at the level of integration prescribed in 2001 by the Brussels I Regulation.

Following the expiry of the transition period provided for by the Withdrawal Agreement between the United Kingdom (UK) and the EU, the UK is no longer bound by either the Brussels I-bis Regulation or the 2007 Lugano Convention. Given the fact that the latter is open not only to EU and EFTA Member States, but also explicitly to third countries, the UK has made a bid to re-join the Lugano Convention. For a third country to become part of this legal regime, all parties to the convention must give their explicit consent. Whereas this has been the case with Switzerland, Norway and Iceland, the European Commission, acting on behalf of the EU as a party to the 2007 Lugano Convention, has indicated that it is not prepared to grant such consent, effectively blocking – for the moment – the UK’s reintegration within the Lugano regime of mutual recognition of civil judgments.

For the Commission, accession to the Lugano regime is bound up with the notion of close economic integration with the EU, presupposing a high level of mutual trust. Participation in the Lugano system should not therefore be offered to any third country that is not part of the internal market.

European Commission 2022 Work Programme: Making Europe Stronger Together

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Marco Pasqua
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On 19 October 2021, the European Commission adopted its 2022 Work Programme, setting out its key initiatives and the next steps in the agenda for the year ahead towards a post-COVID-19 Europe greener, fairer, more digital and more resilient.

The Commission Work Programme, by informing how political priorities will be coped to turn them into concrete action, is composed of four Annexes: the first addresses new policy and legislative initiatives; then, the second is in charge of simplifying existing legislation; it follows the third, focused on pending priority legislative files the Commission would the co-legislators to take the swiftest action on; finally, as consequence of the previous ones, the forth, based on intended withdrawals of pending proposals.

Among the new policy initiatives under the Annex I, the one dealing with private international law and having Article 81 TFUE as legal basis to be relied upon relates to the recognition of parenthood between Member States.

While the establishment of this civil status governing the legal relationship between a child and another person is disciplined by the domestic family law, the recognition of the parenthood already established abroad, crucial in cases of acquisition of nationality, residence, EU citizenship, maintenance and succession, is dealt with by private international law rules. Because currently parenthood established in one Member State may not be recognised in another, problems when travelling or moving to another Member State arise, endangering the child’s rights resulting from parenthood.

This is why, in the absence of uniform private international law rules on this issue, both on applicable law and on procedures for the recognition of judgments, a Commission Proposal aimed to ensure that parenthood, as established in one Member State, is to be recognised across the EU is expected in the 2022, so that children maintain their rights in cross-border situations, in particular when their families travel or move within the Union. Surely, if this initiative combines the work to ensure that the Union of equality becomes a reality for all and the need for a less bureaucracy, in so far as promoting the free movement of public documents and recognition of the effects of civil status records, the crux of the matter, politically speaking, will relate to the recognition obstacles new forms of parenthood day-by-day face in the EU when exercising their parenthood-based rights. A tough challenge? Yes, but the Union is full of colors and “if you are parent in one country, you are parent in every country” is urgent to come a reality from a legal point of view too.

Another private international law issue pointed out to be dealt with will be to strengthen judicial cooperation on the protection of vulnerable adults in cross-border situations.

The absence of uniform private international law rules on this field of law, the diversity of Member States’ law on jurisdiction, applicable law and the recognition and enforcement of protection measures, and the limited accessions to the key international instrument in this area, mainly represented by the Hague Convention of 13 January 2000 on the international Protection of Adults, raise considerable problems. However, it remains to be discovered how this will be pursued since no specific legislative initiative is expected to be addressed in the 2022, at least at EU level by the European Commission. A missed opportunity? Given the need, it seems so.

Finally, the new policy initiatives across the six headline ambitions put forward by the President von der Leyen in the Political Guidelines, building on her 2021 State of the Union speech (i.e. “The European Green Deal”, “A Europe fit for the digital age”, “An economy that works for people”, “A stronger Europe in the world”, “Promoting our European way of life”, “A new push for European democracy”) will affect lots fields of law, private international law included; on the other, Annexes II, III and IV will not.

Therefore, the European Commission will start discussions with the Parliament and Council to establish a Joint Declaration on the EU’s legislative priorities the co-legislators agree upon to take swift action.

Overview of the European Parliament Proposal on a Statute for a European Association

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The Editors of the EAPIL blog
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This post was written by Thomas Mastrullo, Associate Professor at University of Luxembourg.

Background

The European Commission has for several years expressed its desire to increase the range of supranational structures. Thus, the creation of a European Association has been considered since the beginning of the 2000s (Communication from the Commission to the Council and the European Parliament, Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward, p. 26).

This project, which has made no progress in 20 years, has now been given new relevance.

Indeed, on 15 September 2021, the European Parliament has published a Draft Report with recommendations to the Commission on a statute for European cross-border associations and non-profit organisations. This Proposal of Regulation on a statute for a European Association is furthermore complemented by a Proposal for a directive on common minimum standards for non-profit organisations in the EU (so called “Minimum standards” Directive).

This initiative is part of a wider project of integration and development of democracy in the European Union.

According to the Proposal, cross-border projects and other forms of cooperation involving civil society in particular contribute in a decisive way to the achievement of the Union’s objectives. In these conditions, the Proposal of Regulation seeks to promote cooperation across borders between citizens and representative associations because such a cooperation is “essential for creating an overarching European civil society, which is an important element of European democracy and European integration” (Prop. Reg., Recital 1 and 2).

More widely, European Parliament wants to incitate citizens to “actively participate in the democratic life of the Union” thanks to Associations which “play a key role in helping and encouraging individuals” (Prop. Reg., Recital 5).

However, economic considerations are also present in the Proposal of Regulation: European Parliament points out that “many associations play a significant role in the economy and in the development of the internal market, by engaging on a regular basis in economic activity” (Prop. Reg., Recital 3).

The main objective of the Proposal of Regulation is therefore to provide a supranational instrument to facilitate the pursuit of transnational objectives and activities by associations within the internal market.

Several reasons explain why this proposal is now being made.

Firstly, a legal policy element: the need to defend associations and associative freedom in the Union, at a time when these may appear to be under threat from the governments of some Member States. In this sense, the Proposal of Regulation expressly refers to the Judgment of the Court of Justice of 18 June 2020, C-78/18, European Commission v Hungary, from which it follows that Article 63 TFEU and Articles 7, 8 and 12 of the Charter of Fundamental Rights of the European Union protect non-profit organisations against discriminatory, unnecessary and unjustified restrictions to access to resources and the free movement of capital within the Union.

Secondly, an element of legal technique is invoked: the existing supranational structures, i.e. the European Company (SE) based on Regulation (EC) No. 2157/2001, the European Cooperatives Society (SCE) based on Regulation (EC) n° 1435/2003, the European grouping of territorial cooperation (EGTC) based on Regulation (EC) No. 1082/2006 and European Economic Interest Grouping (EEIG) provided by Regulation (EEC) No. 2137/85 either do not address associations, or do not meet the specific needs of civil society associations.

Hence the need, for the European Parliament, to establish at Union level appropriate rules which will permit the creation of European Associations.

Subject Matter and General Provisions (Prop. Reg., Articles 1 to 5).

The Regulation would lay down the conditions and procedures governing the formation, governance, registration and regulation of legal entities in the form of a European Association (Prop. Reg., Article 1).

The European Association would be defined as “an independent and self-governed cross-border entity established on a permanent basis within the territory of the Union by voluntary agreement between natural or legal persons for a common non-profit purpose” (Prop. Reg., Article 1(2)).

Several key notions would be clarified (Prop. Reg., Article 2). For instance, “non-profit” purpose would mean that “it is not the primary aim of the association to generate a profit, while it may still exercise economic activities”. And when profit would be generated, it would not be distributed among members, founders or private parties but invested in the organisation for the pursuit of its objectives. Another example: the “independence” would mean that the European Association must be free from State interference and not part of government or administrative structure.

In a general way, The European Association would be governed by freedom in the frame of European requirements:  freedom to determine its objectives and activities, provided that respect and support the promotion of the objectives and values on which the Union is founded; freedom to determine its membership in respect of the principle of non-discrimination (Prop. Reg., Article 1(3) to (5)).

Concerning the applicable law, Proposal of Regulation is based on a classical combination between material rules laid down at the European level and conflict-of-law rules designating national applicable law. Thus, on the well-known model of European entities such as SE, European Association would be ruled in priority by Regulation’provisions. For matters not dealt with the Regulation, it would be governed by the law of the Member State in which the European Association would have its registered office (Reg., Article 3(1)). As a consequence, Member States would have to identify the legal entity or the category of legal entities to which a European Association would be deemed (Prop. Reg., Article 3(2)). Therefore, like the others European structures, European Association would be conceived as a hybrid entity.

The application of the Regulation, and thus the regime of European Association, would be monitored by two authorities.

First, at a national level, the Regulation would provide the creation of a national supervisory authority defined as “an independent public authority” designated by each Member States. The aim of the authority would be to protect the fundamental rights and freedoms of European Associations while acting across borders (Prop. Reg., Article 4). These supervisory authorities would cooperate within the framework of a European Association Authority.

Second, at a supranational level, the Regulation would create a European Association Authority (Prop. Reg., Article 5). Certainly, it is one of the most remarkable provision of the Proposal. European Association Authority would be thought as a body of the Union with legal personality. The role of the European Association Authority would be to ensure that the Regulation is applied “in a consistent manner”.

Several important tasks would be given to the European Association Authority, such as (Prop. Reg., Article 5(6)):

  • develop a single e-registration procedure for European Associations and manage a digital e-Registry of European Associations at Union level;
  • process notices of registration, dissolution and other relevant decisions concerning European Associations for the purpose of publication in the Official Journal of the European Union;
  • process applications for the granting of “public benefit status” (cf. infra Reg., Article 19);
  • assess the adequacy of the identification of the comparable legal entities by the Member States concerning the applicable law (cf. supra Reg., Article 3(2));
  • receive, examine and follow-up on complaints concerning the application of the Regulation
  • take binding decisions;
  • examine any question relating to the application of this Regulation and issue guidelines, recommendations and best practices for national supervisory authorities and European Associations;
  • advise the Commission on any issue related to European Associations;
  • consult the Commission regarding structuring and operationalising funds aimed at financing civil society as well as protecting and promoting Union rights and values, sustaining and furthering the development of open, rights-based, democratic, equal and inclusive societies based on the rule of law;
  • promote the cooperation and the effective bilateral and multilateral exchange of information and best practices between national supervisory authorities and with the European Associations Authority;
  • promote common training programmes and facilitate personnel exchanges between national supervisory authorities.

The dialogue and exchanges between national supervisory authority and the European Association Authority would be one of the main features of the new status of European Associations.

Formation and Registration (Prop. Reg., Articles 6 to 17)

A European Association would be formed by three means, either contractual or corporate. In all cases, the European Association should have a strong legal link with the EU (Prop. Reg., Article 6). That is said, the European Association would be created:

  • by agreement of at least three founding members. The founding members would be natural persons, that are citizens or residents of at least two Member States, or legal persons that have their registered office in at least two Member States, or
  • by a conversion into a European Association of an existing entity formed under the law of a Member State and which would have its registered office within the Union, or
  • by a merger between at least two entities belonging to the categories identified pursuant to Article 3(2) of the Regulation proposed (cf. supra). These entities would have to be formed under the laws of Member States and would have to have their registered office within the Union, provided that at least two of them would be governed by the law of different Member States.

The formation of the European Association would need the signature of statutes whose mentions of the statutes would be listed by the Regulation (Prop. Reg., Article 8). The statutes would provide, inter alia, for the rights and obligations of members (Prop. Reg., Article 7)

Concerning the registered office of a European Association, two conditions would be required: on a formal aspect, the place of the registered office would be indicated in the statutes; on a material aspect, the registered office would be within the territory of Union. Moreover, following the material rule providing by model of the European company, the registered office would be located at the place where the European Association has its central administration (Prop. Reg., Article 9).

For registration of a European Association, the Regulation would rely on digital tools. Within 30 days of the date of its formation, a European Association would submit an application for registration in the digital e-Registry of European Associations (Prop. Reg., Article 10). Registration would occur via a standardised registration procedure to be developed and set up by the European Associations Authority. Besides, the registration procedure would be electronic and free of charge. The applicants would be allowed to use the official language or one of the official languages of the Member State where the European Association would have its registered office. A national “registering authority” would be designated by each Member States for processing applications for registration of European Associations that have their registered office in its territory.

European Association would be given two main prerogatives. First, on the model of others European entities, it would be able to transfer its registered office without creation of a new legal person to change its applicable law (Prop. Reg. Article 11). Second, it would have the legal personality acquired on the day of the publication of its registration as a European Association in the Official Journal of the European Union (Prop. Reg. Article 12). This legal personality would give European Associations “the capacity to exercise, in their own name, the powers, rights and obligations that are necessary for the pursuit of their objectives”, under the same conditions as a legal entity among those identified pursuant to Article 3(2) of the Regulation and formed in conformity with the law of the Member State in which the European Association would have its registered office. But some prerogatives would be expressly guaranteed at the European Level, no matter where the registered office is located, such as: conclude contracts, receive donations and legacies, employ staff, be a party to a legal proceedings and access financial services.

A European Association would be free to determine its internal management structures and governance in its statutes, provided that it would be rule by at least two bodies (Prop. Reg., Article 13): the Board of Directors, which would manage the European Association in the interests of the European Association and in pursuit of its objectives (Prop. Reg., Article 14), and the General Assembly which would gather all members (Prop. Reg., Article 15) and would be competent for amendments of the statutes (Prop. Reg., Article 17).

To pursue its objectives within Union, and give a real supranational dimension to its activities, a European would be able to have regional chapters which would not be considered as possessing a distinct legal personality but could organize and manage activities on behalf of the association (Prop. Reg., Article 16).

Provisions Concerning the Treatment of European Associations in Member States (Prop. Reg., Articles 18 to 21)

The treatment of European Associations in Member States is framed by several cardinal principles.

Firstly, the principle of non-discrimination from which it follows that any discrimination based on the place where the European Association would have its registered office would be prohibited and that (Prop. Reg., Article 18).

Secondly, a European Association could be granted public benefit status if four conditions would be met (Prop. Reg., Article 19):

  • the organisation’s purpose and actual activities would pursue a public benefit objective which would serve the welfare of society or of part of it, and is thus beneficial for the public good (arts, culture, environmental protection, social justice, humanitarian assistance, protection of animals, science, research and innovation, education and training, protection of health, consumer protection, amateur sports, for instance);
  • surplus from any economic or other income-earning activity generated by the non- profit organisation would be used solely to promote the organisation’s public benefit objectives;
  • in the case of dissolution of the non-profit organisations, statutory safeguards would guarantee that all assets would continue to serve public benefit objectives;
  • members of the organisation’s governing structures that are not employed as staff would be not eligible to remuneration beyond adequate expense allowance.

Thirdly, the principle of national treatment, from which it follows that European Association registered in a Member State would be subject to the provisions applicable to the legal entity or the category of legal entities to which a European Association would be deemed comparable by the Member State in application of Article 3-2 (Prop. Reg., Article 20). This principle seems very close to the principle of non-discrimination.

Fourthly, the principle of non-arbitrary treatment from which it follows that A European Association “would not be subjected to differential treatment by Member States based solely on the political desirability of its purpose, field of activities or sources of financing” (Prop. Reg., Article 21).

Financing and Reporting (Prop. Reg., Articles 22 and 23)

Two texts are dedicated to this issue.

The first text concerns the fundraising and free use of assets (Prop. Reg., Article 22). It is provided that European Associations would be able to solicit, receive, dispose of or donate any resources, and solicit and receive human resources, from or to any source (public bodies, private individuals or private bodies, in any Member State of the Union and in third countries). In return, European Associations would be subject to the provisions of Union and national law concerning customs, foreign exchange, money laundering and terrorist financing, as well as to the rules regulating the funding of elections and political parties. We can see here that Democratic considerations are at the heart of the Proposal of Regulation’s preoccupations.

The second text concerns accounting and auditing (Prop. Reg., Article 23). It provides that rules on accounting would be regulated by the statutes, subject to the provisions of the Regulation and to the provisions applicable to the legal entities identified pursuant to Article 3(2) in the Member State in which the European Association would have its registered office. Besides, the Regulation would demand that European Association draws up at least once a year: annual accounts, consolidated accounts, if any, and a budget estimate for the forthcoming financial year. This text underline the hybrid nature of the European Association which would be governed by the Regulation, its statutes and the law of the Member State where its registered office would be located. It confirms also that Proposal of Regulation is based on a combination between material rules and conflict-of-law rules.

Supervision and Liability (Prop. Reg., Articles 24 and 25)

The supervision of a European Association would be assumed by a national supervision authority within the framework of European Associations Authority (Prop. Reg., Article 24). The Proposal of Regulation draws up a complete scheme of supervision. The supervisory authority would consult the supervisory authorities of other Member States within the framework of the European Associations Authority on any substantial issues regarding the lawfulness and liability of European Associations registered in the Member State’s territory. The recommendations of supervisory authorities would be communicated and reviewed by the European Associations Authority. If the supervisory authority would fail to reconsider its recommendation in the light of the European Associations Authority’s recommendation, the European Associations Authority could adopt a binding decision. In case of the supervisory authority would fail to comply with a decision taken by the European Associations Authority, the latest would inform the European Commission, which would take action as appropriate. European Associations would have the possibility to obtain judicial review of any decisions taken by the supervisory authority.

Concerning liability, Proposal of Regulation provides once again a combination between of a conflict-of-law rule and a material rule. On a conflictual point of view, the liability of the European Association would be governed by the provisions applicable to the legal entities deemed comparable in application of Article 3(2) by Member State in which the European Association would have its registered office. On a material point of view, the Proposal of Regulation states that the members of the Board would be jointly and severally liable for loss or damage sustained by the European Association as a result of a breach of the obligations attaching to their functions. Proceedings against the members of the Board would be laid down by the statutes.

Dissolution, Insolvency, Liquidation (Prop. Reg., Articles 26 to 29)

First of all, the Proposal of Regulation provides a voluntary dissolution (Prop. Reg., Article 26). More precisely, the European Association could be dissolved by decision of the Board pursuant to provisions in the European Association’s statutes, with the agreement of the General Assembly, or by decision of the General Assembly – with a possibility to annul such decision before any dissolution or liquidation of a European Association. The supervisory authority would inform the European Associations Authority of any dissolution and The European Associations Authority would, immediately after such notification, publish a notice of dissolution of the European Association in the Official Journal of the European Union and remove the European Association from the digital e-Registry of the Union.

The Regulation would also lay down an involuntary dissolution (Prop. Reg., Article 27). In that circumstance, the dissolution would result from a binding decision of the European Associations Authority, taken on its own initiative or at the request of the supervisory authority of the Member State in which the European Association would have its registered office. Three kind of circumstances could justify such a binding decision: the transfer of the registered office outside the territory of the Union; the conditions for the formation of the European Association, as set out in the Regulation, would be no longer fulfilled; the activities of the European Association would cease to be compatible with the objectives and values of the Union or would “pose a serious threat to public policy, public security or public order”. The binding decision would be taken after the national supervisory authority has communicated a reasoned opinion concerning the European Association’s dissolution. The European Association would be granted a “reasonable period of time” to regularize its position before the decision takes effect. The decision to dissolve the European Association would be reflected in the digital e-Registry of European Associations and publish it in the Official Journal of the European Union.

Finally, the Proposal of Regulation deals with liquidation and insolvency of European Associations (Prop. Reg., Article 28). The Proposal states that the winding up of a European Association would entail its liquidation. Such liquidation would be governed by the law applicable to the legal entities identified pursuant to Article 3(2) in the Member State in which the European Association would have its registered office.

GEDIP Recommendation on the PIL Aspects of the Future EU Instrument on Corporate Due Diligence and Accountability

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The Editors of the EAPIL blog
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This post was contributed by Hans van Loon, a member of GEDIP and of the Institut de Droit International and a former Secretary General of the Hague Conference on Private International Law. 

The European Group for Private International Law at its annual – virtual – meeting in September 2021 adopted a Recommendation to the EU Commission concerning the PIL aspects of corporate due diligence and corporate accountability.

The GEDIP adopted this Recommendation although the Commission has not yet published its legislative initiative on mandatory human rights and environmental due diligence obligations for companies, to which EU Commissioner for Justice, Didier Reynders, committed on 19 April 2019. Meanwhile, however, on 10 March 2021 the European Parliament adopted a Resolution “with recommendations to the Commission on corporate due diligence and corporate accountability”.  As the Commission will likely draw inspiration from this document, the GEDIP considered the EP Resolution when drafting its Recommendation. The GEDIP also took into account various legislative initiatives taken by Member States such as the 2017 French Loi sur le devoir de vigilance and the 2021 German legislative proposal for a Sorgfaltsplichtengesetz (see II Background to the Proposal, 3), as well as recent case law in the UK and the Netherlands (See II Background to the Proposal 2).

The Recommendation starts from the premise that the future EU Instrument (whether a Regulation or a Directive) will have a broad, cross-sectoral scope, and will apply both to companies established in the EU and those in a third State when operating in the internal market. In order to accomplish its aim, the Instrument, in addition to a public law monitoring and enforcement system, should create civil law duties for the relevant companies. Since such duties may extend beyond Member States’ territories, they will give rise to issues of private international law. To be effective, the Instrument should not leave their regulation to the differing PIL systems of the Member States. Ultimately, the proposed rules may find their place in revised texts of EU regulations, including Brussels I recast, Rome I and Rome II. But since revisions of those regulations are unlikely to take place before the adoption of the Instrument, and as these rules are indispensable for its proper operation, the proposal is to include them in the Instrument itself.

The Recommendation therefore proposes that the Instrument extends the current provision on connected claims (Art. 8 (1) Brussels I) to cases where the defendant is not domiciled in a Member State, creates a forum necessitatis where no jurisdiction is available within the EU, determines that the Instrument’s provisions have overriding mandatory effect whatever law may apply to contractual and non-contractual obligations and companies, and extends the rule of Art. 7 of Rome II to claims resulting from non-compliance in respect of all matters covered by the Instrument, while excluding the possibility of invoking Art. 17 of Rome II by way of exoneration (The Annex to the Proposal contains suggestions concerning the form and the substantive scope of the future EU instrument).

European Parliament Report on the Proposal for a Regulation on e-CODEX System

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Marion Ho-Dac
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On 15 October 2021, the two Rapporteurs of the European Parliament, Emil Radev and Nuno Melo (following a Joint committee procedure, i.e. Committee on Legal Affairs and Committee on Civil Liberties, Justice and Home Affairs) released a Report on the Proposal for a Regulation of the European Parliament and of the Council on a computerised system for communication in cross-border civil and criminal proceedings (e-CODEX system, already mentioned on the blog here and here), amending Regulation (EU) 2018/1726 eu-LISA (see the Regulation Proposal here).

The Explanatory Statement presenting the main reasons for the proposed amendments on the Regulation Proposal reads as follows:

Introduction

E-Justice is one of the cornerstones of the efficient functioning of judicial systems in the Member States and at the European level. It is an essential instrument to facilitate the access to justice and provide legal protection to European citizens and companies in the digital era. It is thus important that appropriate channels are developed to ensure that justice systems can efficiently cooperate in a digital way.

The Commission’s Communication on the digitalisation of justice, A toolbox of opportunities, of 2 December 2020, sets out a new approach to the digitalization of justice based on a comprehensive set of financial and IT legal instruments to be used by various actors in the judicial systems. The Commission also presented the “Proposal for a Regulation on a computerised system for communication in cross-border civil and criminal proceedings (e-CODEX system)”, the e-CODEX Regulation.

On 29 April 2021 it was announced that the file shall be dealt with jointly by two committees – the Civil Liberties, Justice and Home Affairs Committee (LIBE), and the Legal Affairs Committee (JURI). MEP Emil Radev (JURI) and MEP Nuno Melo (LIBE) were appointed rapporteurs for the referred Regulation. E-CODEX is a golden standard/key technological enabler for modernising, through digitalisation, the communication in the context of cross-border judicial proceedings. Since the start of the project in December 2010, e-CODEX has transformed from an ambitious project to an operational Digital Service Infrastructure (DSI) in the judicial domain. Currently, the focus lies on the transition of the e-CODEX project towards a long-term sustainable and secure solution for the maintenance of e-CODEX.

The Rapporteurs believe that this Regulation, as an instrument which is directly applicable in all Member States and binding in its entirety, will guarantee a uniform application of the rules on e-CODEX across the EU and their entry into force at the same time. They welcome the aim to offer legal certainty by avoiding divergent interpretations in the Member States, thus preventing legal fragmentation. By establishing the e-CODEX system, the adoption of the Regulation will contribute to the uptake of e-CODEX by more Member States for procedures in which the system is already used as well as for future ones. The E-CODEX project aims to improve the cross-border access of citizens and businesses to justice in European Union as well as to improve the interoperability between judicial authorities within the European Union. It is designed as a decentralized system based on a distributed architecture that enables connectivity between national systems.

The rapporteurs believe that the e-CODEX system should be seen as a preferred solution for the establishment of interoperable and secure decentralised communication networks between national IT systems in cross-border judicial cooperation in civil and criminal  matters. The Proposal aims to entrust the further development and maintenance of e-CODEX to the European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA) as of July 2023.

  1. Scope

The scope of this Regulation is the electronic exchange of data in the context of cross-border judicial cooperation in civil and criminal matters (Article 2). The e-CODEX system should be viewed as the preferred solution for an interoperable, secure and decentralised communication network between national IT systems in this field.  The rapporteurs are of the opinion that Annex I, containing a list of instruments providing for judicial procedures subject to eCodex, should be deleted. The scope of the Regulation should instead be established by reference to the judicial cooperation in civil and criminal matters (Article 2). This allows for avoiding any risk of leaving out of the scope judicial procedures for which it is appropriate to foresee the possibility to use e-Codex. Moreover, a simple reference to Article 81 and 82 TFEU would have not been sufficient as instruments predating the Lisbon Treaty would not have been covered. Finally, the Regulation should only deal with the use of e-Codex for procedures in civil and criminal matters. Other uses of e-Codex that may be established by future legislative acts should not be addressed by this Regulation as they would require adaptations that cannot be foreseen at present (Recital 11; Article 2).

  1. Definitions

The Commission proposal does not contain clear and concrete provisions regarding the operating conditions of access points. The rapporteurs further developed the terminology of e-Codex to give more clarity to the following expressions: “authorised e-Codex Access point”, “e-Codex correspondents” and “digital procedural standards” (Article 3).

  1. Allocation of responsibilities

It is necessary to ensure the long-term sustainability of the e-CODEX system and the efficiency of its governance while ensuring the independence of the national judiciaries; therefore, an appropriate entity for the operational management of the system is to be designated. The proposal provides for the creation of an e-CODEX Advisory Group and a Programme Management Board for e-CODEX (Article 12). Safeguards have been introduced for the independence of the judiciary that shall never be negatively impacted on by the e-CODEX system (recitals 7 and 9; Article 12a new). For a sound and clear operation of the eCodex system, further amendments have been tabled to precisely delineate the roles of the Commission, the Member States and eu-Lisa (Recitals 5, 12, 15, 21; Articles 3(1)b, 3(1)ba new, 6(4)a new, 7, and 16a new).

  1. Optimisation of the e-CODEX system

The rapporteurs introduced, for the sake of efficiency of e-Codex, some specifications on the authorized access points and on the designation of correspondents by Member States (Article 3(1)b, Article 3(1)ba new and Article 7).

  1. Delegation of powers to COM

Since the scope of the eCodex Regulation should be limited to the judicial cooperation in civil and criminal matters, but given that in the future it could be appropriate to make other procedures subject to the eCodex system, the two Rapporteurs are of the view that a certain flexibility is needed when it comes to the scoping of the Regulation itself. This is why provisions on delegated acts have been introduced. These provisions allow for further expanding the operation of eCodex while fully preserving the prerogatives of the Parliament on the scoping of the Regulation (Article 5(3a) new and 16a new). 

In the Commission Financial Statement, reference is made to the expansion of the eCodex system to other procedures via implementing acts (point 2.2.3). This would be neither desirable nor legally appropriate. However, since the Financial Statement cannot be amended by the co-legislators, the insertion of the provisions empowering the Commission to adopt delegated acts is sufficient to keep parliamentary scrutiny intact.

  1. Private entities operating the access points and data protection

Judicial authorities and public prosecutors in many Member States usually have recourse to the services of contractors. Therefore, providing for the involvement of private entities and limiting it to the functioning of the e-Codex system does not set a dangerous precedent. However, safeguards should be in place given the sensitivity of the administration of justice and of the data and information dealt with by judicial authorities. This is the reason why the two Rapporteurs have foreseen that private entities can operate the access points only if authorised by Member Stated and provided that they fully comply, like public authorities possibly charged with that same task, with existing legislation on data protection (Recital 15, 15a new, 17; Article 12a new).

  1. e-Justice Core Vocabulary

With a view to strongly and thoroughly encourage judicial cooperation and mutual trust, interoperability should be ensured not only as regards Information and Communication Technology, but also in relation to terminology. Otherwise, even the most efficient system of interconnection would not be sufficient to make judicial authorities, legal practitioners, citizens, businesses and stakeholders properly understand each other. It is in the light of this that the two rapporteurs have chosen to insert the reference to the e-Justice Core Vocabulary in the definition of the “digital procedural standard” (Article 3, paragraph 1, point ga, new).

Conclusion

The two rapporteurs find that the proposal put forward by the Commission goes in the right direction by putting the question of interoperability at the heart of the EU efforts to stimulate and enhance the judicial cooperation across the continent.The proposal itself can be considerably improved to find a delicate and vital balance between interoperability and judicial independence, efficiency and data protection, speed and fundamental rights, technology and the rule of law.

More information here.

European Parliament Proposes to Regulate Private Funding of Litigation

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Gilles Cuniberti
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In June 2021, the Committee on Legal Affairs of the European Parliament issued a Draft Report with recommendations to the Commission on Responsible private funding of litigation.

The Report was accompanied by a Study on Responsible private funding of litigation of the European Added Value Unit (authors: Jérôme Saulnier with Ivona Koronthalyova and Klaus Müller) of the European Parliament, issued in February 2021. Such studies are mandatory for proposals made by the European Parliament under Art. 225 TFEU.

The opinion of the Parliament is that, while Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers identifies certain safeguards relating to litigation funding, they are limited to representative actions on behalf of consumers taken under that Directive, and therefore exclude many other types of action or categories of claimants. The Parliament proposes to establish effective safeguards to all types of claims.

Regulatory Scheme

The Parliament proposes first to regulate the activities of litigation funders within the EU by establishing an authorisation system by supervisory autorities. Individual Member States could decide that funding litigation would be prohibited for proceedings in their Member State, or “for the benefit of claimants or intended beneficiaries resident within their Member State”.

Funders should conduct business from a registered office in a Member State, from which they would have to seek the authorisation.

Funding agreements entered into by unauthorised funders would be invalid.

Rules Governing Third Party Funding Agreements

The Parliament then proposes to adopt rules governing the content of third party agreements and disclosure obligations.

In particular, the following mandatory rules would apply:

  • Any clause in third party funding agreements granting a litigation funder the power to take or influence decisions in relation to proceedings would have no legal effect.
  • Agreements in which a litigation funder is guaranteed to receive a minimum return on its investment before a claimant or intended beneficiary can receive their share, would have no legal effect.
  • Absent exceptional circumstances, where a litigation funding agreement would entitle a litigation funder to a share of any award that would dilute the share available to the claimant and the intended beneficiaries to 60% or below of the total award (including all damages amounts, costs, fees and others expenses), such an agreement should have no legal effect.
  • Provisions that purport to limit a litigation funder’s liability for costs should have no legal effect.
Applicable Law

While the proposed directive does not include express choice of law rules, it provides that funders would commit to submit funding agreements to the law of the Member State of the intended proceedings “or , if different, of the Member State of the claimant or intended beneficiaries”.

Article 5(1) of the proposed Directive reads:

Member States shall ensure that supervisory authorities only grant or maintain authorisations, whether for domestic or cross-border litigation or other proceedings, to litigation funders who comply with the provisions of this Directive, and who meet, in addition to any suitability or other criteria as may be set out in national law, at least the following criteria: 

(b) they commit to concluding third-party funding agreements subject to the laws of
the Member State of any intended proceedings, or, if different, of the Member
State of the claimant or intended beneficiaries;

So, it seems that the law of the claimant (or intended beneficiaries) should always apply. Since the competence to allow the activity is attributed to the State where the claimant would be resident (see above), it seems that the intent of the drafters of Art. 5(1)(b) was to designate the law of the residence of the claimant (or intended beneficiaries).

The obvious problem with this rule is that there could be several claimants, and that the text expressly contemplates the possibility that there would be intended beneficiaries, who could also have their residence in a different State.

Another problem is that the rule seems to exclude claimants based outside of the EU (would at least a branch in the EU suffice?).

Finally, it would quite remarkable that a Member State prohibits third party funding, but then would have to accept it for claimant based in more permissive States, under the law of those other States.

Overall assessment on choice of law: peut mieux faire.

The Rise (and Incipient Decline?) of the EPO Regulation in Spain

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The Editors of the EAPIL blog
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The author of this post is Carlos Santaló Goris, research fellow at the MPI Luxembourg and Ph.D. candidate at the University of Luxembourg.

Regulation (EC) No 1896/2006 establishing the European Payment Order (‘EPO’) introduced the first EU uniform civil procedure. The EPO Regulation aimed at facilitating the cross-border recovery of debt within the EU.

According to statistics published by the Spanish General Council of the Judiciary, in 2017, Spanish courts issued a total 655 EPOs. In 2018, the number of EPOs increased 898,32%, up to 5.884 EPOs. In 2019, the number of EPOs continued increasing, skyrocketing to the gargantuan number of 29.120 EPOs. In 2020, though there was a decrease with respect to the previous year, Spanish courts still issued 21.636 EPOs.

Just for the sake of comparison: during the same period there were much fewer applications for EPOs. in Germany: 3.706 applications in 2018, 3.577 in 2019, and 3.582 in 2020.

What is the reason behind the abnormal increase in the number of EPOs issued by Spanish courts between 2017 and 2019? In my view, the answer is to be found in the difference between the EPO and the Spanish payment order regarding the courts’ possibility (obligation) to assess the fairness of contractual terms in consumer claims under Directive 93/13 on unfair terms in consumer contracts.

Under the Spanish payment order, a court receiving an application for a payment order involving a consumer party had to evaluate the fairness of the contractual terms of the relation between the creditor and the consumer. Mandatory review was the conequence of the ECJ judgment, C‑618/10, Banco Español de Crédito. According to the ECJ, “Directive 93/13 must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, which does not allow the court before which an application for an order for payment has been brought to assess of its own motion, in limine litis or at any other stage during the proceedings, even though it already has the legal and factual elements necessary for that task available to it, whether a term concerning interest on late payments contained in a contract concluded between a seller or supplier and a consumer is unfair, in the case where that consumer has not lodged an objection” (para. 57).

Unlike the Spanish payment order procedure, the EPO follows a non-documentary procedure. Creditors do not have to provide any documents – only the application standard form. In particular, they do not have to provide the contract on which the claim is based; they are only required to describe “the circumstances invoked as the basis of the claim” and a “description of evidence supporting the claim” (Article 7(2) EPO Regulation). The ECJ had made it clear “that Article 7 of Regulation No 1896/2006 governs the requirements exhaustively to be met by an application for a European order for payment can ensure that the objective of the regulation is attained” (C-215/11, Szyrocka, para. 32). Furthermore, according to the Spanish act implementing the EPO Regulation any documents other than the standard form would be inadmissible when applying for the EPO (23rd final provision of Spanish Code of Civil Procedure). Based on the information that creditors provide in the EPO application, Spanish courts could not examine the fairness of the contractual terms as they would in the national payment order. Aware of this, more creditors started to apply for EPOs, thus provoking the increased number of applications.

Since the EPO Regulation only applies to cross-border claims, many claims which initially had a purely domestic origin had to be “transformed” into cross-border ones. According to Article 3 of the EPO Regulation, the cross-border dimension of a claim is established when “at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised.” To satisfy this prerequisite, domestic creditors assigned the debt to a new creditor in another Member State (often vulture funds or companies specialized in debt recovery).

The flood of EPO applications in consumer claims did not pass by unnoticed by Spanish judges. Three Spanish courts submitted requests for preliminary rulings to the ECJ asking whether judges could ask the EPO applicant for additional documents in order to conduct an ex officio review of the fairness of the contractual terms. Two of those preliminary references led to the ECJ judgment C‑453/18 and C‑494/18, Bondora. In this decision, the ECJ determined that “a ‘court’, within the meaning of that regulation, seised in the context of a European order for payment procedure, to request from the creditor additional information relating to the terms of the agreement relied on in support of the claim at issue, in order to carry out an ex officio review of the possible unfairness of those terms and, consequently, that they preclude national legislation which declares the additional documents provided for that purpose to be inadmissible” (para. 54).

Bondora opened the door the examination of the fairness of the contractual terms in the context of the EPO procedure. From the creditors’ perspective, this judgment put a virtual end to the comparative advantage that the EPO Regulation had over the Spanish payment order in claims against consumers.

But, has the Bondora decision already impacted the number of EPO applications? Difficult to say. The decision was published in December 2019. In 2020, there was a decrease of 7.515 EPOs rendered by Spanish courts as compared to 2019. However, the number of EPOs still remained highly superior to the average amount of yearly EPOs issued by Spanish courts before 2018. More likely, the COVID-19 pandemic explains the decline. It is only in the coming years where we might see whether Bondora has caused the EPO Regulation to lose its charm among Spanish creditors or not.

French Parliament Adopts Mandatory Law to Enforce Reserved Share in Succession Matters

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The Editors of the EAPIL blog
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The author of this post is Christelle Chalas, who is an Associate Professor at the University of Lille. 

Background

The French law on the compliance with the Republican Principles (projet de loi confortant le respect des principes de la République) introduces a new paragraph in Article 913 of the French Civil Code aiming at re-establishing a right of ‘compensatory levy’ (droit de prélèvement compensatoire) on property situated in France for the benefit of children who would not benefit from a reserved share of inheritance.

Its scope is limited to cases where either the deceased or one of his or her children is a national of a Member State of the European Union or a person whose habitual residence is in such a State.

The new text reads:

Lorsque le défunt ou au moins l’un de ses enfants est, au moment du décès, ressortissant d’un État membre de l’Union européenne ou y réside habituellement et lorsque la loi étrangère applicable à la succession ne permet aucun mécanisme réservataire protecteur des enfants, chaque enfant ou ses héritiers ou ses ayants cause peuvent effectuer un prélèvement compensatoire sur les biens existants situés en France au jour du décès, de façon à être rétablis dans les droits réservataires que leur octroie la loi française, dans la limite de ceux-ci.

The law was eventually adopted by the National Assembly on 23 July 2021. The bill had been rejected twice by the Senate in April 2021 (see here) and then on 20 July 2021, but the National Assembly had voted twice in favour of its adoption (in February and July 2021, see here). Under the French legislative system, the Assembly’s deliberations ultimately prevail. The constitutionality of the bill was immediately challenged before the Constitutional Council (Conseil constitutionnel) (see below).

A compensatory levy was instituted in French inheritance law by the law of the 14 July 1819 but it was found to be unconstitutional by the Constitutional Council in 2011 (see here) on the ground that it disregarded the principle of equality by establishing an inequal treatment based on nationality between the heirs designated by the foreign inheritance law.

Although the new text avoids this obvious violation of the principle of equality by granting this right to all heirs whatever their nationality or residence, it raises several problems that threaten its validity.

These problems are interesting because they illustrate the small margin of freedom that national legislators still enjoy in particular with regard to European law. From a domestic perspective, issues of constitutionality also arose.

Is the New Provision Unconstitutional?

Regarding the conformity of Article 913 with the French Constitution, it is submitted that the main concern is the appropriateness of the “droit de prélèvement” with regard to the purpose of the law. It was said during the discussion in the Senate, and shown in French doctrine (Revue critique de DIP 2021, issue 2, announced here) that there is a high risk that the provision misses its target.

The purpose of Article 913 is to steer against the effects of an applicable foreign inheritance law that would discriminate between heirs according to their sex or religion. More specifically, the government did not hide that the provision aims at protecting female heirs from the inheritance laws of Muslim countries. But, since Article 913 does not limit its application to discriminatory foreign laws, but is concerned with foreign laws which “do not permit any reserved share mechanism”, the provision could reach situations that in no way threaten “Republican Principles” (here, equality) and, conversely, Article 913 could miss situations that do threaten these principles. Indeed, the laws of common law countries could be concerned as they do not provide for reserved shares, while, on the contrary, Article 913 could possibly not apply to Muslim laws since they might provide for a reserved share.

One can also be very critical about the weakness of the required connection with France: by rendering the mechanism available to all children heirs as long as only one of them, or the deceased, is a national of a Member State of the EU or is resident in one of theses states, it is very easy to imagine situations in which the protection of the French law will appear inappropriate, if not illegitimate. The real object of the law remains unclear and this raises concerns about the adequacy of the compensatory system set in place. This could be a reason for unconstitutionality.

Furthermore, if the only purpose of Article 913 is to fight against discriminatory foreign laws, the public policy exception should be efficient enough. The French Supreme Court for civil and criminal matters (Cour de cassation) could transpose its own jurisprudence on repudiation to the context of reserved share in inheritance law.

The other advantage of the public policy exception is that it allows a concrete and factual assessment of the result produced by the application of the foreign law.  For example, the family provisions of English law would be spared by the public policy exception while it is not sure that the new text would not receive application in this case.

Unfortunately, it does not seem that any of the parties who participated in the challenge of the constitutionality of the law raised any argument with respect to the new provision. On August, 13th, 2021, the Constitutional Council delivered its decision without addressing the issue.

A Risk of Euro-Incompatibility?

The conformity of Article 913 with the European Succession Regulation could also be questioned on several grounds.

Article 23 of the Regulation provides that “the law determined pursuant to Article 21 and Article 22 shall govern the succession as a whole. That law shall govern in particular, … the disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death as well as claims which persons close to the deceased may have against the estate or the heirs”. By putting in place a right of compensatory levy on property situated in France, Article 13 sets a new exemption on the applicable law designated by the Regulation.

The European Court of justice might not accept this type of circumvention of the applicable law, in particular when the deceased person has chosen its national law in accordance with Article 22. Recital 38 of the Preamble to the Regulation specifies that the choice of law is limited to the national law of the deceased precisely with the objective “to avoid a law being chosen with the intention of frustrating the legitimate expectations of persons entitled to a reserved share”. A limited and voluntary infringement to the reserved share is thus admitted by the Succession Regulation.

Article 913 would also possibly run against Recital 37 that states that the succession should be govern by a predictable law with which it is closely connected. Predictability and necessity of a close connection between the applicable law and the succession are clearly challenged by the French draft provision. Recital 37 also recommends that “for reasons of legal certainty and in order to avoid the frag­mentation of the succession, that law should govern the succession as a whole”. On the contrary, the compensatory levy instituted by French law results in the application of several inheritance laws.

The only solution would be to consider that the French compensatory levy right falls under the public policy exception set out in Article 35 of the Regulation. But neither here can there be certainty. As is well known, the Court of Justice supports a very restrictive application of the public policy exception, which is reinforced by the requirement in Article 35 that the application of a provision of the law specified by the Regulation should be “manifestly incompatible” with the public policy of the relevant State. Through its control, The European Court of Justice limits any misuse of the concept of public policy that would have the effect of impeding the effectiveness of European regulations.

In this respect, it seems that the nuanced jurisprudence of the French Supreme Court, which limits the exclusion of foreign law to cases where a child heir is in a situation of economic insecurity or need, is more in line with the requirement of Article 35.

EU Commission Proposal to Accede to Hague Judgments Convention

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Gilles Cuniberti
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On 16 July 2021, the EU Commission has issued a Proposal for a Council Decision on the accession by the European Union to the Hague Convention of 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

Under the Proposal, the EU would make two declarations.

External Competence

The European Union declares, in accordance with Article 27(1) of the Convention, that it exercises competence over all the matters governed by this Convention. Its Member States will not sign, ratify, accept or approve the Convention, but shall be bound by the Convention by virtue of its conclusion by the European Union. 

For the purpose of this declaration, the term “European Union” does not include the Kingdom of Denmark by virtue of Articles 1 and 2 of the Protocol (No 22) on the position of Denmark annexed to the Treaty on the Functioning of the European Union.

Commercial Tenancies

The European Union hereby declares under Article 18 of the Convention that it will not apply the Convention to commercial leases (tenancies) of immovable property situated in the European Union.

The declaration is explained as follows:

a declaration is needed in order to ensure that the achievement of the policy objectives of the Brussels Ia Regulation is not affected by the accession to the Convention. More specifically, in cases involving commercial tenancies, the Brussels Ia Regulation affords exclusive jurisdiction to courts in a Member State where the immovable property is located. The Judgments Convention does not include such exclusive jurisdictional rules for commercial tenancies. Therefore, under the Convention, Member States would be obliged to recognise and enforce third-country judgments on commercial leases of immovable property that is situated on their territory. This would be in contradiction to the policy objective behind the Brussels Ia Regulation to attribute exclusive jurisdiction to courts in the EU for disputes related to immovable property situated in the EU.

No Declaration Pursuant to Articles 18 and 19

The Commission will not make declarations pursuant to Articles 18 and 19 of the Convention.

On the possibility to make declarations, Member States opposed a declaration based on Article 19 of the Convention and did not express clear views on declarations under Article 18. Only a small number of stakeholders favoured accession with a declaration under Article 19 while there was no clear tendency detected for Article 18 declarations.

E-Commerce Meets Justice

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Elena Alina Ontanu
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According to Frank Woud (e-CODEX Community and External Relations Manager, Ministry of Justice and Security, The Netherlands):

The full potential of the European e-commerce market has not yet been reached. While consumers feel safer buying from online stores within the borders of their own country rather than from other European countries, European traders experience a range of challenges of their own, such as the lack of a level playing field and the overwhelming complexity of the legal and judicial system. Justice is the sine qua non for trade, and e-commerce will only be able to reach its full potential in Europe when justice permeates the digital realm. e-CODEX, the digital platform for cross-border legal data exchange within the European Union (EU), plays an important role in this regard. The mission of e-CODEX is to make cross-border justice accessible for all citizens and businesses within the EU.

To further this pursuit, e-CODEX hosted on 25 November 2020 an online roundtable discussion about e-justice as an enabler for cross-border e-commerce in Europe. The webcast of the roundtable discussion can be viewed here.

The e-Commerce Meets Justice White Paper is a representation of the facts and opinions expressed by the panel members. The panel was composed of Margarita Touch (Information Officer at DG JUST), Luca Cassetti (Secretary General of Ecommerce Europe), Marco Velicogna (Researcher at Institute of Legal Informatics and Judicial Systems of the National Research Council of Italy), and Hans van Grieken (Senior Technology Researcher at Capgemini, Gartner and Deloitte).

Their contributions to the White Paper discuss: e-commerce and developments triggered by the pandemic, the SMEs heavy reliance on platforms for cross-border e-commerce, the legal aspects of inter-European e-commerce, alternative dispute resolution means, and the role of e-justice in supporting cross-border e-commerce and building consumers’ trust.

More information on e-CODEX can be found here.

The Use of SLAPPs to Silence Journalists, NGOs and Civil Society

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Marta Requejo Isidro
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Strategic Lawsuits Against Public Participation (SLAPP) can be defined as lawsuits intended to intimidate and silence critics by burdening them with the cost of a legal defense, until they abandon their criticism or opposition.

Some jurisdictions have already passed anti-SLAPP laws. In its Action plan for democracy, of 2020, the Commission had already announced its intention to present an initiative to protect journalists and civil society against SLAPPs in 2021. An Expert group was created in December 2020.

The topic is of course not new. It has gained momentum again – possibly following the assassination of Daphne Caruana Galizia in October 2017- also at the Council of Europe, and within the civil society (see, for instance on the need for a EU legislative proposal to protect public watchdogs from legal harassment  here and here.)

On 5 July 2020, a study commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the JURI Committee on SLAPP and PIL instruments was published, authored by J. Borg-Barthet (who is one of the members of the Expert Group mentioned above), Benedetta Lobina and Magdalena Zabrocka.

The document analyses legal definitions of Strategic Lawsuits Against Public Participation (SLAPP), assesses the compatibility of anti-SLAPP legislation with EU law, and recommends that an anti-SLAPP Directive be adopted.

Of special interest for PIL is that it also recommends that the Brussels I bis Regulation and Rome II Regulation be recast to limit the incidence of SLAPPs. The final conclusion in this regard reads as follows:

In addition to the adoption of an anti-SLAPP Directive, it is recommended that the Brussels Ia Regulation be recast with a view to adopting a bespoke rule concerning defamation claims and thereby to distinguish jurisdiction in defamation cases from ordinary torts. To this end, it is recommended that jurisdiction should be grounded in the forum of the defendant’s domicile unless the parties agree otherwise. This would enable public interest speakers to foresee where they will be expected to defend themselves, and would be in keeping with the core values of the Brussels Ia Regulation, namely predictability and the limitation of forum shopping.
Greater predictability as to the outcomes of choice of law processes is also needed to dissuade meritless litigation intended to suppress public participation. Accordingly, it is recommended that a new rule be included in the Rome II Regulation which would harmonise national choice of law rules in defamation cases. It is recommended that this rule should focus on the closest connection with the publication and its audience, namely the law of the place to which the publication is directed.

I  expect comments – here or elsewhere- to both proposals and their underlying rationale.

The first impression is a little bit disappointing. The proposal regarding the applicable law is a general one for defamation cases, i.e., it is not SLAPP-specific. On jurisdiction, I would be cautious to spouse the assertion on page 39:

(…), the Court of Justice has developed a body of case law whose net effect is to afford further opportunities for forum shopping and vexatious litigation strategies in defamation cases, particularly where the claimed defamatory content is posted online.

Moreover  a solution which entails giving up eDate and Martinez looks unrealistic to me (in this regard, though, C-800/19 is worth considering; the Opinion was available in February 2021). Vexatious claims have always existed. The lis pendens and related actions rules provide a solution at the jurisdictional level for a plurality of claims within the EU: a word on why they would (or not) be fit in an anti-SLAPP scenario is missing. In addition, and more important, the Brussels regime does not prevent reacting against vexatious claims with the procedural tools available at the national level, such as abuse of process. That is why I am not convinced either by the following sentence, on page 42:

‘In particular, judgments concerning the deployment of antisuit injunctions reveal a Court that is reluctant to replace the ex ante general analysis deployed by the legislator with its, or a national court’s, judgement of the merits of jurisdictional justice in individual cases‘

Even if the bottom line was correct, antisuit injunctions would not have provided the pertinent example.

Beyond the EU borders, with the exception of Articles 33 and 34 of the Brussels I bis Regulation, which have no parallel in the Lugano Convention, the situation is left to the Member States; simultaneous proceedings before the courts of the UK and the USA is simply a situation that cannot be solved by the European lawmaker.

There is indeed a need to balance the interests of the claimants and of the defendant (the target of the strategic lawsuit) also in relation to international jurisdiction and to the conflict of law rule.

In my opinion, achieving the goal requires a more grounded examination; also, and mainly, to acknowledge that the problem is to be addressed at a different level – something that the Study does in its 5th part devoted to an anti-SLAPP directive.

But, just like the authors say, the adoption and implementation of such a directive may take too long. The time to react is now, and it is not imperative (not even for reasons of distribution of competences) to wait for Brussels to take the lead.

(Photo: The use of SLAPPs © Image used under the license of Adobe Stock)

The EU’s Upcoming Regulatory Framework on Artificial Intelligence and its Impact on PIL

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The Editors of the EAPIL blog
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This post was contributed by Alexia Pato, who is Postdoc Research Fellow at the University of McGill (Montreal, Canada).

The present post provides an overview of the legal initiatives on artificial intelligence (AI) recently launched at the EU level and the questions they generate from a private international law (PIL) perspective.

The analysis starts with the 2021 Proposal for a Regulation on harmonised rules on AI and continues with the EU Parliament’s detailed recommendations for drawing up a Regulation on liability for the operation of AI systems.

Overview of the Proposed AI Regulation

On 21 April 2021, the EU Commission published its much-awaited Proposal for a Regulation laying down harmonised rules on AI, following explicit requests from the Council and the Parliament (see, in particular, the AI-related resolutions of the Parliament of October 2020 on ethics, civil liability and intellectual property). The proposed Regulation’s goal is to promote the free movement of AI-related goods and services, while ensuring the protection of fundamental rights.

If enacted, the Regulation would create a horizontal regulatory framework for the development, placement on the market and use of AI systems in the Union, depending on the risks that those systems generate for people’s health and safety or fundamental rights. In particular, Article 5 forbids AI practices which create an unacceptable risk (some exceptions may nevertheless apply). The prohibition extends to AI systems deploying subliminal techniques beyond a person’s consciousness to induce a particular behaviour and to those exploiting the vulnerabilities of a group of people (e.g., a doll integrated with a voice assistant that encourages children to play dangerous games in order to maximise their fun).

Real-time remote biometric identification (e.g., facial recognition) and social scoring are deemed to create an unacceptable risk as well. As regards high-risk AI systems (Title III), they must undergo an ex ante conformity assessment in order to be placed on the EU market (Articles 19 and Title III, Chapter 5).

The proposed Regulation imposes a series of requirements in relation to data, documentation and recording keeping, transparency and information to users, human oversight, robustness, accuracy and security (Articles 8 to 15). Examples of high-risk AI systems include medical assistants (e.g., IBM’s Watson assistant), chatbots and automated recruitment applications. Lastly, AI systems which create a low or minimal risk are permitted.

For a general assessment of the Proposal, see the CEPS Think Thank with Lucilla Sioli (DG CONNECT) available here, as well as the Ars Boni podcast available here.

The Extraterritorial Reach of EU law

As Article 2 of the proposed AI Regulation would confer the Regulation an extraterritorial reach, PIL questions emerge. In particular, the EU rules on AI are meant to apply to (1) providers placing AI systems on the EU market or putting them into service there, irrespective of their place of establishment; (2) users located in the EU; (3) providers and users located in a third state, when the output produced by the AI system is used – but not marketed – in the EU.

Remarkably, Article 2 bypasses the traditional choice of law methodology and unilaterally delineates the Regulation’s territorial scope of application.

This legislative technique has been used on other occasions: the most recent example is perhaps Article 3 of the General Data Protection Regulation (GDPR). Literature on the latter provision shows that the extraterritorial application of laws creates a fertile ground for overlaps and high compliance costs. The same observation could apply to AI if other states chose to exercise their (legislative) jurisdiction extraterritorially. How private (or public) international law will tackle that concern remains to be seen.

Moreover, interpretative issues are likely to arise, as the wording of Article 2 is vague. In particular, when is a user “located” in the EU – does the temporary presence on the territory trigger the application of the Regulation? What is the “output” of an AI system? And finally, when is an AI system “placed on the EU market” or “put into service” there?

The Law Applicable to Civil Liability

It is acknowledged that the misuse of AI systems may be harmful, despite the great potential of technologies to significantly improve our lives in many sectors. Traffic accidents involving either autonomous – i.e. driverless – or driver-assist vehicles are a telling example in that regard.

Currently, the law applicable to civil liability in such a scenario essentially depends on the actors involved – the driver, the manufacturer of the car, the designer of the software, etc. Several PIL systems applying different connecting factors might come into play, namely the Rome II Regulation, the 1971 Hague Convention on the Law Applicable to Traffic Accidents and the 1973 Hague Convention on the Law Applicable to Products Liability. Considering the fact that national civil liability regimes vary (sometimes significantly) from one state to another, the outcome of a case might be different depending on the court seized.

For a thorough PIL analysis, see T. Kadner Graziano, “Cross-Border Traffic Accidents in the EU – The Potential Impact of Driverless Cars” (Study for the JURI Committee, 2016), available here.

The EU Commission announced that a new piece of legislation addressing civil liability should soon complement the proposed AI Regulation, following the EU Parliament’s detailed recommendations for drawing up a regulation on liability for the operation of AI systems. If followed by the Commission and adopted, the text would partially harmonise national laws on civil liability in the EU. These shall however not be replaced; only adjustments would be provided.

The object of the future Regulation is to hold the operators of high-risk AI systems strictly liable, while operators of other AI systems would be subject to a fault-based liability regime. Finally, the drafting of the future Regulation should go hand in hand with the necessary review of the Product Liability Directive in order to build up a consistent liability framework in the EU.

According to Article 2 of the Parliament’s Draft Proposal, the liability rules enacted at the EU level would apply “on the territory of the Union where a physical or virtual activity, device or process driven by an AI system has caused harm or damage to the life, health, physical integrity of a natural person, to the property of a natural or legal person or has caused significant immaterial harm resulting in a verifiable economic loss”.

I find the wording of this provision unclear: shall the future Regulation apply where a court of a Member State is seized with a dispute involving damages caused by AI systems (as the terms “on the territory of the Union” suggests) or must the damage, the operator, the activity or the victim additionally be located in the EU?

Additionally, even though the future Regulation bypasses the Rome II Regulation according to Article 27 of the latter, traditional choice of law rules would still be needed to designate the law applicable to questions falling out of the future Regulation’s scope (such as the law applicable to multiple liability where non-operators are involved, just to mention one example). Fragmentation would therefore not be completely avoided.

For an analysis of the Draft Proposal from a PIL perspective, see J. von Hein, “Liability for Artificial Intelligence in Private International Law” (online presentation, 25 June 2020), available here.

Conclusion

The interaction of AI with the PIL field brings interesting research questions on the table for legal scholars. As things currently stand, however, the EU’s legislative initiatives do not overcome the sempiternal difficulties experienced in PIL, namely the fragmented application of laws, and the difficulty to manage interactions between multiple legal texts because of their overlapping and extraterritorial effect.

The Law Applicable to Electronic Securities: A New German Conflicts Rule

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The Editors of the EAPIL blog
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This post has been drafted by Dr. Felix M. Wilke, University of Bayreuth, Germany.

A new contestant has entered the ongoing debate about the law applicable to Electronic Securities and/or in the blockchain context. On 10 June 2021, the new German Act on e-Securities (Gesetz zur Einführung von elektronischen Wertpapieren, eWpG) entered into force. Its § 32 contains a special conflict-of-laws rule.

The following is a sketch of my first impressions and potential implications of the new rule. Any input is very much welcome!

The German E-Securities Act in General

The substantive scope of the eWpG somewhat belies its broad title. Far from being about all types of e-securities one can imagine, it only concerns bearer bonds (§ 1 eWpG). The act introducing the eWpG, however, also contains changes to the Capital Investment Code (Kapitalanlagegesetzbuch, KAGB), providing for the possibility of issuing electronic shares in investment funds.

It should also be noted that the e-Securities Act is no genuine piece of blockchain legislation. The word “blockchain” does not appear in it. The Act is not limited to securities recorded in a blockchain, nor would all blockchains necessarily meet the requirements of the Act.

Indeed, parts of the act merely concern centralized registers for e-securities to be maintained, e.g., by central securities depositories. Here, the main difference to current practice seems to consist in dispensing with the need for the depository to safekeep even only one paper (global) certificate.

Yet when other parts of the eWpG mention registers which are supposed to be decentralized as well as forgery-proof (sic) and to offer protection against any subsequent modification of recorded information (§§ 16(1), 4(11) eWpG), it becomes obvious that blockchain/distributed ledger technology can play an important role for so-called “crypto securities”. If one looks closely at the changes to the KAGB, one comes across an opening for distributed ledger technology for shares in investment funds, as well: § 95(5) KAGB.

Core aspects of the Act are the publicity, the contents, and the conditions for changes of registers for e-securities. A litany of (technical) details are delegated to the German Federal Ministry of Justice and Consumer Protection and the German Federal Ministry of Finance. One provision that will certainly raise an eyebrow or two is § 2(3) eWpG: It sets forth that e-securities are to be considered “things” within the meaning of the German Civil Code (Bürgerliches Gesetzbuch, BGB). Thus, in principle, the rules for corporeal objects will apply to an incorporeal asset.

The New Conflict-of-Laws Rule

32 eWpG concerns the applicable law. I would tentatively translate it as follows, sticking closely to the structure and word order of the German original:

(1) To the extent that § 17a Securities Account Act does not apply, rights regarding an e-security and dispositions about an e-security are governed by the law of the State under whose supervision the register office is in whose e-securities register the e-security is recorded.

(2) If the register office is not under supervision, its seat is decisive. If the seat of the register authority cannot be determined, the seat of the issuer of the e-security is decisive.

The Subject Matter

32 eWpG applies to rights regarding and dispositions about e-securities. Due to the limitation of the entire Act, one might assume that the conflict-of-laws rule will only apply to electronic bearer bonds (under German law). Yet as the provision has clearly been designed as an omnilateral provision, and considering that the definition of an e-security is much broader (§ 2 eWpG), it is conceivable that the conflict-of-laws rule encompasses more securities than that the Act in which it is found. This, of course, would be a phenomenon well-known to private international law scholars, but perhaps not-so-well-known in other circles.

In any case, the express reference to § 17a Security Account Act (Gesetz über die Verwahrung und Anschaffung von Wertpapieren, DepotG) has a limiting effect – whose impact is not obvious. The bill had not included this proviso.

§ 17a DepotG is Germany’s transposition of Article 9(2) of the Settlement Finality Directive (SFD). If the rule(s) of SFD were to be interpreted broadly to encompass modern digital assets (not an easy task: see Matthias Lehmann’s thoughts on this blog), a rule like Germany’s would likely have to be interpreted in conformity with the SFD. Not that we did not already have enough discussions about § 17a DepotG, including about its conformity with the SFD, in the first place…

What is more, the Security Account Act itself was changed along with the introduction of the eWpG, extending the meaning of securities for the purposes of the former to e-securities under the latter. This should affect the scope of § 17a DepotG, shaping the understanding of § 32 eWpG in turn.

My first idea is that § 17a DepotG will be the relevant conflict-of-laws provision for e-securities in a collective deposit, and that § 32 eWpG will apply to the rest.

The Connecting Factors

The law of the State with supervision over the respective e-securities register office governs rights in and dispositions about an e-security under paragraph 1.

At first sight, this might seem to be a rather easy rule. I would submit, however, that it actually implicates a tricky analysis. In order to correctly apply the rule, one seems to have to look for (typically unilateral) rules of competence for financial supervision authorities.

First, it will not always be easy even to ascertain the respective rules (at least for foreign States).

Second, their connecting factors are likely to differ from State to State: e.g. seat of an institution to be supervised vs. place where it carries out business activities. This could lead to an accumulation of applicable laws that somehow would have to be resolved.

And what if a foreign register without State supervision is at issue? Under the bill, this was an open question. The final version now has a second paragraph, making the seat of the register office a subordinate connecting factor. But why does the provision not again refer to “State” supervision?

If the seat of the register office cannot be determined, either (also in cases where there is no register office?), the second clause of the second paragraph employs the seat of the issuer of the e-security as the connecting factor. The substantive part of the eWpG contains a similar approach, in that the issuer of an e-security will be treated as the register office if the issuer does not designate such an office in relation to the bearer (§ 16(2) cl. 2 eWpG).

Outlook

The new Act and its conflict-of-laws rule offer plenty of food for thought. Expect the first articles and even rule-for-rule commentaries to pop up in the near future. Because of the obvious connections between the conflict-of-laws rule to the substantive provisions of the Act, it will not always be easy to tell apart where private international law is supposed to be limited and where it can strike out on its own.

IDI Draft Resolution on Human Rights and Private International Law

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Marta Requejo Isidro
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In spite of the numerous studies and decades of analysis, the interface between private international law and human rights keeps scholars busy.

No surprise, thus, that the (current) 4th Commission of the Institut de Droit International is presenting a new Draft Resolution next August, on the occasion of the IDI biannual meeting, held on line.

The Resolution, whose reporter is Fausto Pocar, will be based on the preparatory documents – including the
Report of Jürgen Basedow, Rapporteur until The Hague session in 2019 -, the previous draft resolutions, the written proposals of amendments submitted at The Hague that could not be discussed, and the plenary discussions as they result from the minutes of the Hague session.

The text in its version of 27 January 2021, is available on line. It is preceded by a thorough introduction to the work done until that date and to the general and specific issues dealt with. For a proper understanding of the Draft Resolution, it is worth noting that it addresses, without necessarily espousing, the two main points of criticism at the Hague session: “the Draft Resolution then discussed did not capture sufficiently the relationship between private international law and the public international law dimension of human rights protection, sometimes indulging in technical descriptions of private international law issues that had no or a too limited human rights component”; and “it was observed that the consideration of human rights in that Draft Resolution might appear to the reader exceedingly influenced by western values rather than focused on a global vision which would better suit an Institute’s Resolution” (NoA: Having read the documents available online regarding the first draft resolution I personally fail to understand the first reproach, but I am probably too much familiar with PIL technicalities myself. No opinion on the second ground for criticism).

The current Draft Resolution consists of 20 provisions. In a nutshell, like the former one it addresses the impact of human rights on international jurisdiction, applicable law and recognition: the tripartite division typical to cross-border settings underlies indeed the narrative of the Resolution – although not in the unsophisticated way I am describing it. Also like the former text, the present one includes provisions devoted to specific heterogeneous areas (name, identity, marriage, parentage, property, corporate social responsibility…), to explicitly tackle human rights concerns germane to each area. By way of example: under the heading “Marriage” the following is written:

(1) Child marriage and marriage agreed upon in the absence of the free and full consent of the two spouses infringe upon human rights and shall not be recognized

Or, under the heading “Protection of property”:

(2) Where a change of the applicable law resulting from private international law is conducive to the loss of such right, the forum State shall grant the holder an equivalent right to the extent possible.

The Resolution is short; so are its articles, separately taken. The wording is clear, attention is paid to stay in the realm of PIL and, I believe, to avoid assertions that may not be palatable to the IDI majority of Public International Law members. The scholarly distinction still exists (not only at the IDI), whether one likes it or not, and the gap does not seem to be without consequences.

I fear human rights activists will feel a little bit deceived by the Draft Resolution, should it be adopted as it stands. It may indeed be in the nature of this kind of document not to be too ambitious. This one remains to a large extent programmatic; it defers to other instruments or fora; it openly prefers to promote the accession to, and the respect of existing international conventions instead of coming up with detailed, statutory-like proposals. It is soft in the proper sense of the word. However, to my mind, it is no less relevant because of this character, which is obviously a conscious choice following in-depth analysis and reflections. It may be the only one possible to date.

– Picture: Session of The Hague 2019. ©Marieke Wijntjes)

French Committee Proposes to Abandon Real Seat as a Connecting Factor in Company law

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The Editors of the EAPIL blog
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This post was contributed by Thomas Mastrullo, who is a lecturer at the Sorbonne Law School (Paris 1)

On 31 March 2021, the Legal High Committee for Financial Markets of Paris (“Haut Comité juridique de la Place Financière de Paris” – HCJP) has published a report on the applicable law to companies  (Rapport sur le rattachement des sociétés – see here). This report is of great interest for those who are interested in the evolution of international company law.

Context

For several years, there has been a reflection in France about the conflict-of-law rule in corporate matters.

We know that two theories coexist in international company law: the theory of incorporation, which consists in applying to the company the law of the State where it was incorporated and where its registered office, or statutory seat, is located; the real-seat theory, which submits the company to the law of the State where its head office, or central administration, is localised.

In French law, the conflict-of-law rule in corporate matters is laid down in unilateralist terms, with almost the same drafting, in Article 1837 of the Civil Code (see here) and in Article L. 210-3 of the Commercial Code (see here).

The doctrine is divided on the interpretation of these texts, which have been bilateralized by French Cour de cassation (e.g. Com. 9 mars 1993, n° 91-11.003, Bull. civ. IV, n° 94 ; see here). The traditional view among French writers is that the connecting factor is in principle the real seat, because the statutory seat is not enforceable against third parties in case of dissociation of the registered office and the head office. But the modern view is that the connecting factor is in principle the statutory seat, considering that third parties have an option between the registered office and the head office in case of dissociation.

In this context, by letter dated 18 February 2020, the HCJP was jointly seized by the Ministry of Justice and the Ministry of the Economy with a request for a study on the “Opportunity, feasibility and conditions of turning to the theory of incorporation”. This initiative takes place in an environment of increased economic and legal competition: the adoption of the theory of incorporation might strengthen the legal attractiveness and economic influence of France. But the referral letter does not ignore that such a liberal conflict-of-law rule might also encourage opportunistic behaviors by economic actors and departure of French companies abroad.

Several questions were therefore raised in the referral letter: Consequences of adopting the theory of incorporation in terms of attractiveness? Experience of other EU Member States? Compatibility with EU law? Risks of forum and law shopping? Consequences for matters related to company law?

Finally, the letter requested that “the necessary legislative and regulatory changes” be proposed.To meet this demand, a working group was set up under the chairmanship of Professor Hervé Synvet, composed of academics and legal practitioners.

The result of the working group’s reflection is the report under consideration, which is divided into two parts.

Impact of a New Conflict-of-law Rule in Corporate Matters on Other Matters

In the first part, the HCJP studies the impact that the evolution of the French connecting factor in corporate matters would have on other branches of law. Several matters are taken into consideration: tax law, insolvency law, social law, capital market law, regulation of foreign investments, banking and financial law. The conclusion is that the adoption of the theory of incorporation would have little impact on these different branches of the law, and in any case no negative effects likely to prevent a reform. Indeed, these different disciplines have their own conflict-of-law rules and the connecting categories are quite clearly defined in French private international law. In addition, each of these matters has a specific approach to the company seat.

Proposed Reform

In the second part, the working group argues in favor of an evolution of the French conflict-of-law rule. More precisely, it proposes to adopt a new connecting factor relying exclusively on the statutory seat – or registered office, and to abandon any reference to the real seat.

Arguments in favor of the adoption of the connecting criterion by the statutory seat

Several arguments are advanced in support of this proposition.

Firstly, this conflict-of-law rule would be simpler and, as a consequence, more favorable to legal certainty. Indeed, on the one hand, it would eliminate the touchy question of the place of the real seat and, on the other hand, it would guarantee respect for the operators’ choice of the law to rule their company or even their group of companies. Thus, France’s attractiveness might be reinforced. Secondly, the solution is inspired by the comparative private international law (German, Irish, Luxembourg, Dutch, British, Swiss and Delaware law are studied) which reveals a strong tendency towards the generalization of the theory of incorporation or connecting criterion by the registered office. Thirdly, the solution is presented as more suited to the development of EU law which, through the jurisprudence of the CJEU – and in particular the Centros, Uberseering, Inspire Art and Polbud judgments – and some regulations – such as European Regulation n° 2157/2001 on SE (see here), tends to favor the registered office as a connecting factor.

Although it is not unaware of the risk of law shopping, the HCJP considers that this risk should not be overestimated since the laws of the EU’s Member States have “a common base” because of the European directives adopted on corporate matters, which is likely to prevent a “race to the bottom”. Moreover, the transfer of registered office from one Member State to another is still difficult, which is an obstacle to law shopping.

Proposed new texts

The HCJP recommends amending the Civil Code, and in particular Article 1837, and repealing Article L. 210-3 of the Commercial Code.

The new bilateral conflict-of-law rule, applicable to all companies with legal personality, is set out in Article 1837, paragraph 1, of the Civil Code. It provides that the company would be governed by the law of the State in which it has its statutory seat – or registered office. Rather than a reference to the company’s incorporation, this formulation is chosen because it would ensure terminological continuity with the current Article 1837 and would model the French conflict-of-law rule on that of the European Regulation on the SE.

Besides, the HCJP devotes paragraph 2 of Article 1837 to companies without statutory seat. For these companies, the conflict-of-law rule would be inspired from the solutions provided by the Rome 1 Regulation: the applicable law would be the law chosen by the partners or, in the absence of choice, the law of the country with which the company is most closely connected.

The proposed Article 1837 reads:

Article 1837 du Code civil

La société est régie par la loi de l’État dans lequel elle a son siège statutaire.

À défaut de siège statutaire, la société est régie par la loi choisie par ses associés ou, à défaut de choix, par la loi de l’État avec lequel elle présente les liens les plus étroits.  

The HCJP proposes also to introduce a new article 1837-1 of Civil Code devoted to the lex societatis’ scope of application, inspired from Swiss law. The aim is to increase the readability and, as a result, the attractiveness of French law. A list of questions falling within the scope of lex societatis would be drawn, this list being non-exhaustive as suggested by the use of the French adverb “notamment” (which can be translated by “in particular”).

The proposed Article 1837-1 reads:

Article 1837-1 du Code civil

La loi applicable à la société en vertu de l’article précédent régit notamment : a) la nature juridique de la société ; b) la capacité juridique de la société ; c) la dénomination ou la raison sociale ; d) la constitution de la société ; e) la nullité de la société, ainsi que celle des délibérations sociales ; f) la dissolution et la liquidation de la société ; g) les opérations emportant transmission universelle de patrimoine et le transfert du siège statutaire ; h) l’interprétation et la force obligatoire des statuts ; i) la modification des statuts, en particulier la transformation de la société ; j) l’organisation et le fonctionnement de la société, ainsi que sa représentation ; k) les droits et obligations des associés ; l) la preuve, l’acquisition et la perte de la qualité d’associé ; m) la détermination des titres susceptibles d’être émis par la société ; n) la détermination des personnes responsables des dettes sociales et l’étendue de leur responsabilité ; o) la responsabilité civile encourue en cas de violation des règles gouvernant la constitution, le fonctionnement ou la liquidation des sociétés, ou d’obligations statutaires. 

In addition, the HCJP considers the introduction of an Article 1837-2 which includes a substantive rule aiming at protecting “French” contracting parties of foreign companies. More precisely, the legal or statutory restrictions on the capacity or the powers of the representatives of a company under foreign law, which would produce effect in external relations according to the foreign law, would be unenforceable against “French” co-contractors, as long as they are of good faith. This rule aims mainly to protect the co-contractors of companies incorporated outside EU – such as American companies which apply the ultra vires doctrine ; the risk is indeed lower in EU, thanks to the protective regime of directive 2017/1132/UE (see here).

The proposed Article 1837-2 reads:

Article 1837-2 du Code civil  

Les restrictions légales ou statutaires à la capacité juridique ou aux pouvoirs des représentants d’une société de droit étranger concluant un acte juridique en France qui, selon la loi régissant la société, produiraient effet dans ses relations externes, sont inopposables au cocontractant ayant légitimement ignoré ces restrictions. 

In conclusion, the HCJP’s “Report on the connecting factor of companies” appears to be a stimulating contribution for the modernisation of French international company law.

European Parliament Briefing Paper on Computerised System for Communication in Cross-border Judicial Proceedings (e-CODEX)

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Marion Ho-Dac
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On 14 June 2021, the Research Service of the European Parliament released a briefing paper related to the proposal for a regulation on a computerised system for communication in cross-border civil and criminal proceedings (e-CODEX system), authored by Rafał Mańko (EP Research Service).

The abstract reads:

The e-CODEX system is the digital backbone of EU judicial cooperation in civil and criminal matters. e-CODEX comprises a package of software products that allow the setting up of a network of access points for secure digital communication between courts and between citizens and the courts, while also enabling the secure exchange of judicial documents.

The project, which was launched in 2010 with EU grant funding, is managed by a consortium of Member States and other organisations and is coordinated by the Ministry of Justice of the German Land of North Rhine-Westphalia. Even though it is currently used by 21 Member States, e-CODEX lacks a clear, uniform and EU-wide legal basis. To remedy this situation, on 2 December 2020 the Commission put forward a proposal for an e-CODEX legal instrument (a regulation) to formally establish the e-CODEX system at EU level. The management of the project would be entrusted to eu-LISA (the EU Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice).

Within the European Parliament, the LIBE and JURI committees are jointly in charge of the file, and the draft report is expected shortly.

The Briefing can be freely downloaded here.

Thanks to Jorg Sladic for the tip-off.

Council Conclusions on the Protection of Vulnerable Adults across the European Union

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Pietro Franzina
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On 7 June 2021, the Council of the European Union has adopted a political document titled Conclusions on the Protection of Vulnerable Adults across the European Union.

The document sets out the views of the Council in this area with respect to both civil and criminal matters.

As regards civil matters, the document stresses the importance of the Hague Convention of 13 January 2000 on the international Protection of Adults, which is currently in force for ten Member States, and some third countries, such as Switzerland and the UK (albeit only with respect to Scotland).

The Council invites the Member States for which the Hague Convention is already in force to promote greater awareness of the  Convention among courts and practitioners.

Member States that are engaged in procedures procedures to ratify the Convention, are invited to advance such procedures with a view to finalising the ratification as swiftly as possible, in particular in view of the 2022 Special Commission on this Convention organised by the Hague Conference on Private International Law.

Finally, the Council invites all other Member States to commence and/or advance domestic consultations on a possible ratification of the Convention as swiftly as possible.

The document highlights the relevance of the (international) protection of adults, as understood by the Convention, to the implementation of the EU Strategy for the Rights of Persons with Disabilities (2021-2030).

It also notes that both the number and proportion of older people are growing across Europe. According to the Ageing Report 2021 issued by the European Commission on 20 November 2020, the total population of the EU is projected to decline in the long term, and the age structure will change significantly in the coming decades. The EU population is projected to decline from 447 million people in 2019 to 424 million in 2070 and, during this period, Member States’ populations will age dramatically given the dynamics in fertility, life expectancy and migration. The median age is projected to rise by five years over the coming decades.

A significant number of adults – the document observes – face limitations. Eurostat expects a fifth of the EU population to have some form of disability by 2050. Many of these adults are or will become vulnerable and, by virtue of the multiple barriers that are still in place for persons with a serious mental and/or physical disability, are not or will not be in a position to protect their own interests without adequate support.

This situation impacts the legal capacity of vulnerable adults, who face challenges and difficulties in protecting their rights, defending their interests and accessing justice, both in national and in cross-border situations. In cross-border situations, for instance in the case of citizens residing in a State other than that of their nationality, these existing difficulties may be exacerbated by additional obstacles with respect to language, representation or access to the judicial system and to public services in general.

Today, there are no uniform private international law rules applicable in the field of judicial cooperation in civil matters regarding the protection of vulnerable adults in cross-border situations across the EU, and there are disparities between Member States’ laws on jurisdiction, applicable law, and the recognition and enforcement of protection measures.

The Council acknowledges in its Conclusions that diversity of the rules on these issues might impair the exercise of the right of vulnerable adults to move freely and reside in the Member State of their choice, and might also hinder the possibility for these citizens to obtain adequate protection regarding the administration of their property in a cross-border context.

The document further recalls that the right to self-determination is a fundamental right, and powers of representation through which an adult has made arrangements in advance for his or her care and/or representation should be respected within the EU. The Hague Convention, among other things, ensures that such a power of representation has legal force in a Contracting Party.

Finally, the Council takes note that at the ‘High-Level Conference on the protection of vulnerable adults across Europe: the way forward’, held on 30 March 2021, some panelists stressed that, while it is important to build experience and assess the results of implementing the 2000 Hague Convention, the EU should be more ambitious and go further in seeking the approximation of private international law rules to ensure the effective protection of vulnerable adults on the basis of the principle of mutual recognition.

The Conclusions, however, do not include any indication as to whether and when the political institutions of the Union might consider the adoption of such additional measures.

Online Conference on Child-Friendly Procedures in Cases of International Child Abduction, 24-25 June 2021

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Anna Wysocka-Bar
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The conference titled Child-friendly procedures in cases of international child abduction will take place online on 24 and 25 June 2021. The conference will present the results of research conducted with the INCLUDE project on what is considered to be ‘good practice’ for professionals in a context of child abduction as seen by children themselves. You can consult the agenda of the conference here, and register for it here.

The INCLUDE project, as explained by its coordinators, aims to enhance the wellbeing of children at all stages of an international child abduction by providing guidelines and good practices to legal and other professionals.

The deliverables of the project (including an International Child Abduction – Legal Framework and Literature Study) are available on the project’s website.

EU Council to Vote on Regulation on Third Party Effects of Assignment of Claims

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Gilles Cuniberti
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The Council of the European Union will aim at establishing a general approach on the regulation on assignments of claims on 7 June 2021 in Luxembourg.

The text which should be adopted is an amended version of the 2018 proposal of the European Commission for a Regulation on the law applicable to the third-party effects of assignments of claims, which was adopted by the European Parliament  in 2019 with 24 amendments.

The main features of the new text are as follows.

Law of the Habitual Residence of the Assignor

One of the most debated issues was whether the principle should be that third party effects of assignment of claims should be governed by the law of the habitual residence of the assignor or the law of the assigned claim. The Commission had proposed to retain the former, with certain exceptions.

In line with the Commission proposal, the law of the assignor’s habitual residence received more support than the assigned-claim law as it would lead to more predictability for third parties. The law of the assignor’s habitual residence was deemed suitable for bulk assignments subject to different laws and future claims and consistent with Regulation (EU) 2015/848 (Insolvency Regulation).

Law of the Assigned Claim

The list of exceptions, however, has slightly increased. The law of the assigned claim would apply to a longer list of claims in financial markets, but also to credit claims. This last exception will not doubt be criticised. Recital 27(b) clarifies its scope, which seems extensive:

The third-party effects of assignments of claims arising out of agreements whereby credit is granted in the form of a loan should be governed by the law of the assigned claim. This should include credit claims as defined in point (o) of Article 2(1) of Directive 2002/47, often used as financial collateral within the Eurosystem. In order to facilitate the cross-border assignment of claims arising out of syndicated loans and lending-based crowdfunding on secondary financial markets, the third-party effects of the assignment of claims arising out of syndicated loans and lending-based crowdfunding should also be subject to the law of the assigned claim.

Scope

It was also thought that the scope of the instrument should be further clarified and restricted. In particular, three matters are excluded from the scope of the future regulation:

– the transfer of financial instruments, including securities and derivatives;
– the transfer of crypto-assets; and
– the assignment of claims where the claims are not in intangible form but incorporated in a certificate or represented by a book entry.

SIFoCC Multilateral Memorandum on Enforcement, Now with Commentary

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Marta Requejo Isidro
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As reported by Pietro Franzina last January, the Standing International Forum of Commercial Courts (SIFoCC), which brings together the commercial courts of several countries across the world, launched the second edition of its Multilateral Memorandum on Enforcement of Commercial Judgments for Money.  Last April, SIFoCC’s Second International Working Group, co-chaired by Sir William Blair and Judge François Ancel, has produced a Commentary to accompany the Multilateral Memorandum setting out an understanding of the procedures for the enforcement of a money judgment by the courts of one jurisdiction obtained in the courts of another jurisdiction, written by judiciaries from across the world.

The Multilateral Memorandum with the commentary is available here. The non-binding character of the Memorandum is highlighted from the outset; so is its purpose , which does not intend to “signal” the enforceability of the judgments of commercial courts, but to explain to how the courts which have contributed to the Memorandum approach requests for the enforcement of judgments of other courts. In turn, the commentary added to the second edition does not purport to state common principles arising form the contributions (see the statement in para. 31, “this seems unnecessary now that the Hague Conference has concluded its work on the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters”); it rather describes common themes that arise from the contributions, identifying significant differences of approach and indicating how far the contributions appear to show a tendency towards convergence.

An interesting reading by all means.

New Tripartite Legal Guide for International Commercial Contracts

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Marion Ho-Dac
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A joint publication of the Secretariats of UNCITRAL, UNIDROIT and the HCCH, titled Legal Guide to Uniform Instruments in the Area of International Commercial Contracts, with a Focus on Sales, has just been released.

As explained on the HCCH website, the Legal Guide “offers an overview of the principal legislative texts prepared by each organisation, such as the United Nations Convention on Contracts for the International Sale of Goods, the HCCH Principles on Choice of Law in International Commercial Contacts and the UNIDROIT Principles on International Commercial Contracts. It also illustrates how these texts interact to achieve the shared goals of predictability and flexibility. The Legal Guide will be a user-friendly resource for those interested in the adoption, application, and interpretation of uniform contract law.”

Following the UNIDROIT website, “it aims at creating a roadmap to the existing uniform law texts in the area of international sales law prepared by each organization […]. It is an effort to clarify the relationship among them, promoting uniformity, certainty and clarity in this area of the law”.

A significant contribution towards the preparation of the Legal Guide is due to Professors Neil Cohen (USA), Lauro da Gama e Souza Jr (Brazil), Hiroo Sono (Japan), Pilar Perales Viscasillas (Spain) and Stefan Vogenauer (Germany).

The Legal Guide is available in English and will soon be released in other United Nations languages (as it is the case of the previous joint publication of the three organisations on Security Interests, 2012).

More information on the Legal Guide here (video announcement) and here (recording of the International Conference on the forthcoming Tripartite Legal Guide, 22 September 2020).

European Commission Explains Rejection of UK’s Application to Lugano Convention

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Gilles Cuniberti
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On May 4th, 2021, the European Commission issued a Communication offering its Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention.

The Communication offers the Commission’s analysis on the application and explains why it considers that the EU should not give its consent to the accession of the United Kingdom to the Lugano Convention.

Nature of the Lugano Convention

The Communication explains that the Lugano Convention represents an essential feature of a common area of justice and is a flanking measure for the EU’s economic relations with the EFTA/EEA countries.  Thus, the Lugano Convention supports the EU’s relationship with third countries which have a particularly close regulatory integration with the EU, including by aligning with (parts of) the EU acquis. Though the Convention is, in principle, open to accession of “any other State” upon invitation from the Depositary upon unanimous agreement of the Contracting Parties, it is not the appropriate general framework for judicial cooperation with any given third country. The Convention is based on a high level of mutual trust among the Contracting Parties and represents an essential feature of a common area of justice commensurate to the high degree of economic interconnection based on the applicability of the four freedoms.

International framework for the EU’s civil justice cooperation with third countries

As a consequence, the European Commission argues that the appropriate framework for cooperation with third countries in the field of civil judicial cooperation is provided by the multilateral Hague Conventions, i.e. the 2005 Hague Choice of Court Convention and the 2019 Hague Judgments Convention.

Conclusion

The Commission concludes:

In view of the above, the Commission takes the view that the European Union should not give its consent to the accession of the United Kingdom to the 2007 Lugano Convention. For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom. Consequently, the Hague Conventions should provide the framework for future cooperation between the European Union and the United Kingdom in the field of civil judicial cooperation.

The Commission then advises:

Stakeholders concerned, and in particular practitioners engaged in cross-border contractual matters involving the European Union, should take this into account when making a choice of international jurisdiction.

European Group of Private International Law’s 2020 Meeting: Minutes and Proposals

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Gilles Cuniberti
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The European Group of Private International Law (EGPIL-GEDIP) has published the minutes (in French) of its 2020 Meeting.

The topics discussed during the meeting included a proposal for a regulation concerning the applicable law to in rem rights, the codification of the general part of EU private international law and the accession of the European Union to the Hague Judgments Convention.

The EGPIL has also published separately a draft proposal for a regulation on the law applicable to rights in rem in tangible assets and Observations on the possible accession of the European Union to the Hague Convention of 2 July 2019 on the Recognition of Foreign Judgments.

Kyoto Guidelines on Intellectual Property and Private International Law

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The Editors of the EAPIL blog
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The following text has been kindly provided by professors Toshiyuki Kono, Pedro de Miguel Asensio and Axel Metzger.

The International Law Association’s Committee on Intellectual Property and Private International Law has finished its work with the adoption and publication of the Kyoto Guidelines on Intellectual Property and Private International Law.

The Guidelines are the outcome of an international cooperation of a group of 36 scholars from 19 jurisdictions lasting for ten years under the auspices of ILA. The Kyoto Guidelines have been approved by the plenary of the ILA 79th Biennial Conference, held (online) in Kyoto on 13 December 2020.

The Guidelines provide soft-law principles on the private international law aspects of intellectual property, which may guide the interpretation and reform of national legislation and international instruments, and may be useful as source of inspiration for courts, arbitrators and further research in the field. Different from older regional projects, the Kyoto Guidelines have been prepared by experts from different world regions.

The Guidelines have now been published with extended comments as a special issue of the Open Access journal JIPITEC.

The ILA Committee on Intellectual Property and Private International Law was created in November 2010. Its aim was to examine the legal framework concerning civil and commercial matters involving intellectual property rights that are connected to more than one State and to address the issues that had emerged after the adoption of several legislative proposals in this field in different regions of the world. The work of the Committee was built upon the earlier projects conducted by the Hague Conference of Private International Law as well as several academic initiatives intended to develop common standards on jurisdiction, choice of law and recognition and enforcement of judgments in intellectual property matters.

In the initial stages of the activities of the Committee it was agreed that its overall objective should be to draft a set of model provisions to promote a more efficient resolution of cross-border intellectual property disputes and provide a blueprint for national and international legislative initiatives in the field. Therefore, the focus of its activities has been the drafting of a set of guidelines with a view to provide a valuable instrument of progress concerning private international law aspects raised by intellectual property.

Furthermore, the Committee conducted a number of comparative studies and monitored the developments in different jurisdictions around the world.

The Committee also worked in collaboration with several international organizations, particularly the World Intellectual Property Organization and the Hague Conference on Private International Law.

The final text of the Guidelines consists of 35 provisions, which are divided in four sections: General Provisions (Guidelines1-2), Jurisdiction (3-18), Applicable Law (19-31) and Recognition and Enforcement of Judgments (Guidelines 32-35).

As suggested by the term “Guidelines”, this instrument contains a set of provisions intended to guide the application or reform of private international laws in this field. The Guidelines restate certain well-established foundational principles such as the lex loci protectionis rule and aspire to provide concrete solutions for pressing contemporary problems, in areas such as multi-state infringements and cross-border collective copyright management.

In order to make explicit the influence of the previous projects in the field and to facilitate the comparison with them, the short comments are preceded by the reference to the similar provisions adopted previously in the ALI Principles (American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law and Judgments in Transnational Disputes, ALI Publishers, 2008), CLIP Principles (European Max Planck Group on Conflict of Laws in Intellectual Property, Conflict of Laws in Intellectual Property (Text and Commentary), OUP, 2013), Transparency Proposal (Japanese Transparency Proposal on Jurisdiction, Choice of Law, Recognition and Enforcement of Foreign Judgments in Intellectual Property, see the English text in J. Basedow, T. Kono and A. Metzger (eds.), Intellectual Property in the Global Arena – Jurisdiction, Applicable  Law, and the Recognition of Judgments in Europe, Japan and the US, Mohr Siebeck, 2010, pp. 394-402) and Joint Korean-Japanese Principles (Joint Proposal by Members of the Private International Law Association of Korea and Japan, see The Quarterly Review of Corporation Law and Society, 2011, pp. 112-163).

As an additional instrument to facilitate the uniform interpretation of the Guidelines, the Committee has prepared a set of extended comments to all the provisions.

The Guidelines have now been published together with extended comments written by members of the ILA Committee which explain the background and application of the Guidelines.

UK Accession to Lugano Convention: Commission Backtracks from Approval

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Matthias Lehmann
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Oft expectation fails, and most oft there
Where most it promises…

William Shakespeare

Yesterday has been an emotional rollercoaster for those interested in European judicial cooperation. After initial reports in the Financial Times about an impending recommendation in favour of the UK’s accession to the Lugano Convention, the journal later reported that the Commission has (again) changed its mind. It now opposes the UK’s application to join the Convention.

Apparently, the decision was made behind closed doors. The only formal ground reported is the missing membership of the post-Brexit UK in either the European Economic Area (EEA) or the European Free Trade Association (EFTA), to which all other members of the Lugano Convention are parties. This is however a specious argument because judicial cooperation has a much further reach than economic cooperation and builds on other criteria, such as trust in the quality of the other state’s judiciary (see Matthias Lehmann and Eva Lein, ‘L’espace de justice à la carte? La coopèration judiciaire en Europe à géométrie variable et à plusieurs vitesses’, in: Marie-Elodie Ancel et al. (eds.), Le Droit à L’Èpreuve des Siècles et des Frontières – Mélanges en l’honneur du Professeur Bertrand Ancel, Paris 2018, p. 1093 – 1120).

It is to be hoped that this is not the end of the story. The Commission has merely issued a recommendation; the final decision lies with the European Parliament and the Council. Even though especially France seems to be very reserved about the British accession, it remains to be seen how these bodies will act. Moreover, the Lugano Convention’s Art 72(3) only says that the signatories “shall endeavour” to give their consent within one year after an application to join, without setting any hard deadline. The EU thus has ample time to make up its mind. Should it reject the UK’s application, the latter is free to file it again under more favourable political conditions.

The above quote, by the way, is from Shakespeare’s play “All’s Well That Ends Well”. Let us hope that this will also be true for the UK and the Lugano Convention.

Lugano Convention: Commission Poised to Give Green Light to UK Application

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Matthias Lehmann
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On 8 April 2020, the UK formally applied to accede to the Lugano Convention. The one year period recommended for deciding on this application in Article 72(3) of the Convention has thus expired on 8 April 2021, causing harm for judicial cooperation.

However, things seem to start moving. According to a report in the Financial Times, the European Commission wants to give today (12 April 2021) a positive assessment of the British application, despite its earlier reluctance to grant the UK’s application. This change of mood seems to be the result of technical analysis carried out on the consequences of the British accession or non-accession. The article cites an unnamed EU diplomat who emphasises the Union’s awareness of the “practical benefits of having Britain in a co-operation pact that prevented legal disputes from being unnecessarily messy”.

This is a hopeful sign that judicial cooperation in civil and commercial matters may continue after Brexit. But let us not rush to quick conclusions. The final decision on the EU’s position lies with the European Parliament and Council under Articles 81(1), (2) and 218(5), (6)(a)(v) TFEU. It will be particularly interesting how Member States will vote in the Council.

Update (13 April 2021) – The European Commission changed its mind and now opposes the UK’s application to join the Convention: see more here.

International Action Plan of the French Court of Cassation: Key Aspects Relevant to PIL

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Marion Ho-Dac
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In September 2020, the First President of the French supreme court for private and criminal matters (Cour de Cassation), Ms Chantal Arens, presented the main aspects of the Court’s international strategy for 2020-2022.

The report of this presentation (available here, in French) may be of interest to practitioners and academics dealing with private international law (PIL) issues connected to France.

Here are the key elements of the report and some personal comments.

This “international action plan” of the Cour de Cassation is the result of discussion within the Court and exchanges with institutional partners worldwide. It is based on three main objectives: international reputation, promotion of fundamental values and judicial cooperation.

International Reputation

The first objective is for the Cour de Cassation to gain an international recognition of its qualities as a judicial institution, in particular regarding its working methods (see here) and caselaw. This ambition is also part of a broader goal of promoting the civil law tradition and the French-speaking community worldwide.

Against this backdrop, the website of the Court will be accessible in foreign languages and its landmark judgements will be translated into various languages and accessible online (see, for now, the very few documents available in English). It will be a great advantage for non-French-speaking PIL experts to be able to access the French “living law” in civil and commercial matters. In this respect, the international commercial chamber at the Paris Court of Appeal (ICCP-CA) established in 2018 may surely be seen as a pioneer within the French legal landscape, since its judgements are translated into English (see here).

Fundamental Values

The second objective is the promotion of the fundamental values and principles of the French judicial system (i.e. independence of justice, legal certainty, “dialogue” between judges, fundamental freedoms). However, these are not specific to France since they are inherent to the European legal order, within the Council of Europe and the European Union.

Regarding transnational judicial dialogue, it can be noticed that the Cour de Cassation is more and more likely to refer to European case law in its own decisions (for a recent example reported on this blog, see here). It may also be noted that the Court submitted to the ECtHR, in October 2018, the first request under Protocol No. 16 in the field of international family law. A PIL issue was at stake, namely the compliance with article 8 of the ECHR of the non-recognition of a foreign birth certificate of a child born abroad as the result of a surrogacy – prohibited in France – (for the request see here and for the advisory opinion see here).

Within the EU legal order, however, one could expect the Cour de Cassation to reinforce its involvement by referring to the CJEU requests of interpretation of EU law (and EU PIL in particular). With respect to judicial Cooperation in civil matters, only two cases submitted by the French Court are currently pending before the Court of justice (and three altogether for France in this field; two were reported here and here), whereas, at the same time, around fifteen preliminary questions from German Courts are pending (following a quick research via the curia case-law search form). A recent judgment of the Cour de Cassation on the scopes of Brussels II bis Regulation and 1996 Hague Convention (reported here) may be seen as an illustration of the reluctance of the French Supreme Court to submit preliminary questions to the CJEU, despite the existence of serious doubts on the interpretation of EU (PIL) law (and its duty to do so pursuant to article 267, §3, TFEU).

International Judicial Cooperation

The third objective is to learn from other legal systems in order to enrich French law. It implies, in particular, the development of transnational exchanges on common legal issues. In this context, international judicial cooperation is crucial.

The Cour de Cassation is a member of various European and international networks such as the Association of the French-speaking Supreme Courts (AHJUCAF) and the network of The Presidents of the Supreme Judicial Courts of the Member States of the European Union.

The latter network serves as a forum for exchanges between the European institutions and the national Supreme Courts.

A common portal of case law is also accessible to facilitate the search (and the translation) of national case law within the legal orders of the EU Member States. It should not be confused with the Judicial Network of the European Union (Réseau judiciaire de l’Union européenne, “RJUE”) created more recently on the initiative of the President of the CJUE and the Presidents of the Constitutional and Supreme Courts of the Member States in 2017.

It also provides for a collection of decisions delivered by national courts and tribunals, which are of particular interest for EU law. The creation of such online compendiums of transnational case law is surely of great interest for PIL experts and more efforts (and funds) should be put in their developments (see, by comparison, the unalex and the Lynxlex databases).

 

*Thanks to my colleague Lukas Rass-Masson (University of Toulouse), a recorded conference on the international strategy of the French Court of Cassation, with Ms First President Chantal Arens, is available here.

Indonesia to Accede to the Hague Apostille Convention

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The Editors of the EAPIL blog
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The author of this post is Priskila P. Penasthika, Ph.D. Researcher, Erasmus School of Law, and Lecturer in Private International Law at Universitas Indonesia.

For almost ten years I have been closely observing the discussions taking place between Indonesia and The Hague Conference on Private International Law (HCCH) on the matter of Indonesia becoming a contracting state to the 1961 Hague Apostille Convention. This endeavor has finally materialized at the beginning of 2021 when Indonesia decided to accede to The Hague Apostille Convention. The instrument of accession – Presidential Regulation Number 2 of 2021 – was signed by President Joko Widodo on 4 January 2021, and issued on 5 January 2021.

Entrance into Application of the Hague Apostille Convention

Although the Presidential Regulation required at national level to seal the accession has been signed and published, this good news will not lead to an immediate application of the Hague Apostille Convention in Indonesia. It will take some more months before this Convention enters into force for Indonesia. The latest update informs that the instrument of accession is at the moment being recorded in the Indonesian state gazette to comply with the enactment and publication requirement of a presidential regulation according to the Indonesian law. After the completion of this process, according to Articles 12 and 15 of the Convention, the instrument of accession needs to be deposited with the Ministry of Foreign Affairs of the Netherlands. Subsequently, there will be six months period for the other contracting states to the Convention to raise any objection to the Indonesian accession to the Convention. The 1961 Hague Apostille Convention will enter into force between Indonesia and the contracting states which have raised no objection to its accession on the sixtieth day after the expiry of the six months period. Even if this last part of the process is expected to run smoothly, it is likely that the interested parties will have to wait until the end of 2021 for the Convention to become applicable for Indonesia.

Present Process of Legalization of Indonesian Documents to Be Used Abroad

The accession to this Convention brings good news for many interested parties because the current legalization process for public documents in Indonesia is a lengthy, complicated, time-consuming, and a costly procedure.

As an illustration and based on my personal experience, there are at least four different institutions in Indonesia involved in the legalization process. We can take the example of an Indonesian birth certificate that would need to be used before a foreign authority. The first step in this process would be the legalization by the Indonesian Civil Registry Office that issues the document. Then, a second legalization is performed by the Ministry of Law and Human Rights of the Republic of Indonesia. This is to be followed by a subsequent legalization by the Ministry of Foreign Affairs of the Republic of Indonesia. Lastly, the birth certificate should also be legalized by the Embassy or the Representative Office in Indonesia of the foreign country in which the birth certificate is to be used. After all these steps, the birth certificate can finally be used in the designated foreign jurisdiction.

Changes the Convention Will Bring in the Process of Legalization of Documents

By the accession of the 1961 Hague Apostille Convention, the above lengthy procedure will be limited to one step and will involve only one institution – the designated Competent Authority in Indonesia. Although, there is not yet an official announcement about which institution will be appointed as the Indonesian Competent Authority, it is very likely that the Ministry of Law and Human Rights of the Republic of Indonesia will be entrusted with the task.

Limitations Made to the Application of the Hague Apostille Convention

When it comes to its accession to the Hague Apostille Convention, Indonesia made a reserve declaration to exclude from the definition of public documents (Article 1(a) of the Convention) the documents issued by the Prosecutor Office of Indonesia.

Additional Significance of the Accession to the Hague Apostille Convention

Beyond facilitating and speeding up the process of recognition of documents, the decision to join the 1961 Hague Apostille Convention represents an important step for Indonesia.

The 1961 Hague Apostille Convention is the first HCCH’s convention that Indonesia accedes to. Given the fact that Indonesia is not yet a member to the HCCH, the accession to the Hague Apostille Convention will mark the first official connection Indonesia has with the organization. It is anticipated that this will lead to more accessions to the HCCH’s conventions by Indonesia in the coming future.

The other significance of this accession is related to the Visi Indonesia 2045 (Vision of Indonesia 2045). The Government of Indonesia has launched this Vision to commemorate the centenary of the Indonesian independence which will take place in 2045. This Vision aims to portray Indonesia as a strong sovereign, developed, fair, and prosperous country. To achieve this, one of the targets is to simplify procedures in order to boost public service, international cooperation and investment. A simplified legalisation procedure for public documents is thus a strategy that would contribute to an easiness of doing business, and eventually for the accomplishment of the Vision of Indonesia 2045’s targets.

A more in-depth analysis (in Indonesian) explaining the current legalization process in Indonesia and the urgency to accede to The Hague Apostille Convention 1961 can be accessed here.

The Court of Justice on Jurisdiction in Maintenance Claims Brought by Public Bodies

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Anna Wysocka-Bar
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On 17 September 2020 the Court of Justice of the EU issued a judgement in the case of WV v Landkreis Harburg (C-540/19) concerning the interpretation of the jurisdictional rules of the EU Maintenance Regulation, in particular its Article 3(b). An opinion in this case was prepared by AG Sánchez-Bardona.

Factual Background

WV’s mother lived in a residential care home for the elderly in Germany. In accordance with § 1601 of the German Bürgerliches Gesetzbuch, WV, the son, was required to provide maintenance to his mother. However, he failed to do so. As the mother did not have adequate means to cover expenses, she received, under the German Sozialgesetzbuch, social assistance from a public body – the Landkreis Harburg. Pursuant to § 94(1) Sozialgesetzbuch, maintenance claims are by way of statutory subrogation transferred to the public body providing social assistance. Relying on this provision, the Landkreis Harburg lodged an application with the Amtsgericht Köln (Germany) claiming from WV the payment of maintenance arrears and regular maintenance for the future.

WV submitted that German courts lack jurisdiction. The lower instance court shared this view, noting that, according to Article 3(b) of the Maintenance Regulation, jurisdiction lies with the court for the place where the creditor is habitually resident. At the same time the concept of “creditor” is defined in Article 2(1)(10) of this Regulation as meaning “any individual to whom maintenance is owed or is alleged to be owed”. Hence, only the creditor personally can make use of the ground listed in Article 3(b). The dispute reached the Bundesgerichtshof, which referred a preliminary question to the CJEU.

Previous Jurisprudence of the CJEU

As reminded in the opinion and in the judgement, the Brussels Convention and Brussels I Regulation included jurisdictional rules for maintenance claims (until Maintenance Regulation has started to be applied on 18 June 2011). Pursuant to these rules, jurisdiction lies with the courts of the defendant’s domicile (based on general rule – Article 2 Convention; Article 4 Regulation) and with the courts for the place where the maintenance creditor is domiciled or habitually resident (Article (5)(2) of both acts).

The CJEU ruled on the interpretation of Article (5)(2) of the Convention in Blijdenstein (C- 433/01), a case similar, as to its factual background, to the one considered in Landkreis Harburg. The Court stated in Blijdenstein that Article 5(2)

cannot be relied on by a public body which seeks, in an action for recovery, reimbursement of sums paid under public law by way of an education grant to a maintenance creditor, to whose rights it is subrogated against the maintenance debtor.

The CJEU explained on that occasion that the general principle is that the courts of the State in which the defendant is domiciled are to have jurisdiction “and that rules of jurisdiction which derogate from this general principle cannot give rise to an interpretation going beyond the cases expressly envisaged.” (24)

The “derogation provided for in Article 5(2) of the Convention is intended to offer the maintenance applicant, who is regarded as the weaker party in such proceedings, an alternative basis of jurisdiction (…) that specific objective had to prevail over the objective of the rule contained in the first paragraph of Article 2 of the Convention, which is to protect the defendant as the party who, being the person sued, is generally in a weaker position.” (29).

Then, it submitted that “a public body which brings an action for recovery against a maintenance debtor is not in an inferior position with regard to the latter. Moreover, the maintenance creditor, whose maintenance has been covered by the payments of the public body, is no longer in a precarious financial position.” (30) Additionally, “the courts of the defendant are better placed to determine the latter’s resources.” (31)

AG’s Opinion Arguing the Need to Depart from Blijdenstein

The AG’s Opinion submitted numerous reasons for which the CJEU should depart from Blijdenstein. The AG underlined the differences between Brussels Convention and Maintenance Regulation, analyzed the CJUE’s “new” jurisprudence relating to the latter (namely: Sanders and Huber, C-400/13; V, C-499/15; R, C-468/18), in particular as regards the regulation’s overarching principles, like protection of maintenance creditors or the effective recovery of maintenance claims in cross-border situations. Additionally, with reference to the Hague Protocol on the law applicable to maintenance obligations, the advantages of the coincidence between ius and forum were sketched.

Departure from Blijdenstein and its Justification

The CJEU shared the views of the AG and departed from Blijdenstein jurisprudence. In practical terms, it means that public bodies like Landkreis Harburg might file claims against maintenance debtors at the place of maintenance creditor’s habitual residence, which in most instances would coincide with their own.

The CJEU underlined that Article 3 of the Maintenance Regulation:

contains neither a general principle, such as jurisdiction of the court for the defendant’s domicile, nor derogating rules which would have to be interpreted strictly (…) but rather a number of criteria which are equal and alternative (…). (29)

and

does not specify that the claim must be brought by the maintenance creditor himself or herself before the courts identified in paragraphs (a) and (b) [and therefore does not] preclude a claim relating to a maintenance obligation from being brought by a public body, to which the claims of that creditor have been transferred by way of statutory subrogation, before one or the other of those courts. (31)

Consistent with the opinion, the CJEU also pointed to the fact that the Maintenance Regulation, as opposed to Brussels Convention and the Brussels I Regulation, does apply no matter domicile or habitual residence of the defendant. Hence:

refusing to allow a public body subrogated to the claims of a creditor to bring an action before the courts where that creditor is habitually resident in circumstances where the maintenance debtor is domiciled in a third State is most likely tantamount to requiring that public body to bring its action outside the European Union. (35)

This would result in legal and practical difficulties, which go against the objective of the effective recovery of maintenance claims.

The CJEU convincingly added that:

The transfer of the maintenance creditor’s claims to such a public body impairs neither the interests of the maintenance debtor nor the predictability of the applicable rules of jurisdiction; that debtor must, in any event, expect to be sued either before the court for the place where he or she is habitually resident or before the courts for the place where that creditor is habitually resident. (38)

The CJEU also referred to Hague Protocol, underling that its Article 10 provides that the right of a public body to seek reimbursement of a benefit provided to the creditor in place of maintenance is governed by the law to which that body is subject. This:

ensures, in the vast majority of cases – which are those in which the seat of the public body and the habitual residence of the creditor are in the same Member State – a parallel between the rules on jurisdiction and those concerning the applicable substantive law. (43)

Court of Justice of the EU on the Concept of Habitual Place of Work

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Anna Wysocka-Bar
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On 24 February 2021 the Court of Justice of the EU issued a judgement in the case BU v Markt24 GmbH (C-804/19) following a request for a preliminary ruling from the Landesgericht Salzburg (Austria). The case concerns jurisdictional rules for employment contracts in Brussels I bis Regulation, in particular its Article 21. The opinion in this case was prepared by AG Øe.

Background

BU whose place of residence is in Salzburg (Austria) signed the employment contract for carrying out cleaning work in Munich (Germany) for Markt24 GmbH, whose registered office is also located in Munich. BU signed the contract with an employee acting as intermediary of Markt24. The contract was signed in a bakery in Salzburg, even though Markt24 had an office in this city at that time. It was agreed that BU would start working on 6 September 2017, but she was never allocated any work, even though she could be contacted by telephone and was prepared to work. BU has not received remuneration, but she was registered with the Austrian social security institution as an employee. On 15 December 2017, the defendant terminated the employment contract. On 27 April 2018, BU filed a claim to the Landesgericht Salzburg (Austria) asking for outstanding wage and other payments for the period of her employment.

Since the documents initiating the action could not be served on the defendant, a procedural representative in absentia was appointed. The representative contested jurisdiction of the Austrian court. It seems that, in accordance with domestic law in place in Austria, namely § 4(1)(a) Arbeits- und Sozialgerichtsgesetz (“ASGG” – Law on the labour and social courts), Landesgericht Salzburg would have jurisdiction, based on the place of residence of the employee and also the place where the remuneration was to be paid. At the same time there were doubts whether jurisdiction exists under Brussels I bis Regulation, in particular its Article 21(1)(b)(i), which grants jurisdiction to courts for “the place where or from where the employee habitually carries out his work”. Landesgericht Salzburg decided to refer a preliminary ruling to the CJEU asking few alternative questions.

Is Section 5 of Chapter II Brussels I bis Applicable at All, If No Work Was Actually Performed?

The Court reminded that the concept of an “individual contract of employment” referred to in Brussels I bis Regulation must be given an autonomous interpretation (point 24). As flows from its previous jurisprudence, this concept “presupposes a relationship of subordination of the employee to the employer; the essential feature of an employment relationship is that for a certain period of time one person performs services for and under the direction of another in return for which he or she receives remuneration” (point 25). If the above conditions are met, parties are bound by a “contract of employment” within the meaning of the Regulation, “irrespective of whether the work which is the subject of that contract has been performed or not” (point 26).

Hence, the CJEU stated that Section 5 of Chapter II Brussels I bis (namely, its special jurisdictional rules for employment contracts) “must be interpreted as applying to a legal action brought by an employee domiciled in a Member State against an employer domiciled in another Member State in the case where the contract of employment was negotiated and entered into in the Member State in which the employee is domiciled and provided that the place of performance of the work was located in the Member State of the employer, even though that work was not performed for a reason attributable to that employer.”

Does Brussels I bis Allow for the Application of Domestic Rules on Jurisdiction If More Beneficial to the Employee?

As rightly underlined in the opinion, the fact that the rules of the ASGG are more favorable to the employee is irrelevant, as section 5 of Chapter II Brussels I bis does not provide for certain minimum standards of the protection of employees, which might be further developed by the national legislation (points 43-44 of the opinion). Instead, this Regulation provides for a unified system of jurisdictional rules. If a dispute falls within the scope of application of Brussels I bis, its rules of jurisdiction must take precedence over national ones (points 30-32 of the judgement). Hence, the CJEU ruled that the provisions set out in Section 5 of Chapter II Brussels I bis preclude the application of national rules of jurisdiction, irrespective of whether those rules are more beneficial to the employee.

How to Understand Article 21(1)(b)(i) Brussels I bis, If the Work Was Never Actually Performed?

As underlined in the opinion, the Court has never before had a chance to explain how to understand the concept of the “place where the employee habitually carries out his work”, in case no work was actually performed (point 23 of the opinion). The Court noted that this concept refers to “the place where, or from which, the employee in fact performs the essential part of his or her duties vis-à-vis his or her employer” (point 40). The Court shared also the view presented in the opinion that:

in the case where the contract of employment has not been performed, the intention expressed by the parties to the contract as to the place of that performance is, in principle, the only element which makes it possible to establish a habitual place of work (…) That interpretation best allows a high degree of predictability of rules of jurisdiction to be ensured, since the place of work envisaged by the parties in the contract of employment is, in principle, easy to identify (point 41).

The Court had no doubt that in the case at hand that place is Munich (Germany).

At the same time, the Court underlined that in accordance with Article 20 Brussels I bis Regulation, section 5 of its Chapter II applies without prejudice to, inter alia, Article 6 point 5, which provides that a person domiciled in a Member State may be sued in another Member State, “as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated”. The Court noted that Landesgericht Salzburg should determine whether that provision may also be applicable in the case given that Markt24 had an office in Salzburg at the beginning of the employment relationship.

CJEU stated that Article 21(1)(b)(i) of Brussels I bis must be interpreted as meaning that an action may be brought before the court of the place where or from where the employee was required, pursuant to the contract of employment, to discharge the essential part of his or her obligations towards the employer. This is however without prejudice to Article 7(5) of the Regulation.

Is Article 7(1) Brussels I bis Applicable to an Employment Relationship, If No Work Was Actually Performed?

One of the questions was not answered either in the opinion or in the judgement, as there was no doubt that Section 5 of the Chapter II Brussels I bis does apply to the case at hand. By this question Landesgericht Salzburg wanted to clarify whether Article 7(1) Brussels I bis might apply to the employment relationship, in such specific circumstances, when no work was actually performed and whether § 4(1)(a) or (d) of the ASGG could be applied. It is not clear whether the ASGG was supposed to be applied instead of Article 7 Brussels I bis or somehow indirectly by the intermediation of it.

UNIDROIT Makes Progress on Best Practices for Effective Enforcement

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Gilles Cuniberti
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Since 2018, UNIDROIT has been studying the prospect of working on the enforcement of claims.

In September 2020, it eventually established a Working Group on the Best Practices for Effective Enforcement. The Working group held its first meeting between 30 November and 2 December 2020, based on an Issues Paper.

The purpose of the project will be to adopt a soft instrument proposing solutions that States would be free to adopt (best practices followed by comments, on the model of the ELI-UNIDROIT Rules of civil procedure). It would focus on the enforcement process, and would not cover the process of obtaining a judgment against a defaulting party or the process of declaring enforceable foreign judgments in the forum. It would include the enforcement of provisonal and protective measures.

During the first meeting, the participants discussed a variety of issues, including the concept of enforcement, the types of claims that should be covered and the impact of technology. The Report of the meeting is available here.

The next meeting will be held in April 2021. Three sub-groups were established: Subgroup 1 on  “post-adjudication” enforcement; Subgroup 2 on enforcement of secured claims (collateral); Subgroup 3 on the impact of technology on enforcement.

Asian Principles for the Recognition and Enforcement of Foreign Judgments

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The Editors of the EAPIL blog
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The post below was provided by Catherine Shen, Project Manager at the Asian Business Law Institute.

Readers of the EAPIL blog are well aware that in Europe, harmonisation in the field of private international law has been enormously successful with efforts encompassing both the civil and commercial, as well as family, spheres. In relation to foreign judgments in civil and commercial matters, the Brussels I bis Regulation is a double convention comprising of rules on both jurisdiction and foreign judgments. Apart from harmonising the rules under which a court in one European Union (“EU”) Member State would assume jurisdiction, it enables the free circulation of judgments from one EU Member State within the EU.

In Asia, however, harmonisation efforts in this field have been relatively lacking. That was until recently. The Asian Business Law Institute (“ABLI”), set up in 2016 with the aim of promoting the convergence of business laws in Asia, identified among its first batch of projects an undertaking to advance the convergence of foreign judgments recognition and enforcement rules in Asia (“Foreign Judgments Project”).

ABLI released its first publication, Recognition and Enforcement of Foreign Judgments in Asia (“Judgments Compendium”) in the beginning of 2018. This compendium contains 15 short and concise country reports which provide lawyers and businesses with an overview of how foreign judgments in civil and commercial matters are recognised in different jurisdictions in Asia and the requirements which would need to be met for a foreign judgment to be enforced in those jurisdictions. The jurisdictions studied are all ten member states of the Association of Southeast Asian Nations or ASEAN (i.e., Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and their major trading partners, including Australia, China, India, Japan and South Korea.

In fact, the Judgments Compendium marks the first time when the rules of several ASEAN member states on the recognition and enforcement of foreign judgments are made available in the English language. Its release concluded the first phase of ABLI’s Foreign Judgments Project and set the stage for the second phase where both the similarities and the differences of the rules of these 15 jurisdictions are distilled to formulate a set of common principles.

That set of principles has now been released under the title of Asian Principles for the Recognition and Enforcement of Foreign Judgments (“Asian Principles”). This ambitious piece of work is a sequel to the Judgments Compendium and includes a total of 13 principles that among other things, cover the rules on international (or “indirect”) jurisdiction, reciprocity, the enforcement of non-monetary judgments, public policy, due process and inconsistent judgments. Each principle is accompanied by a commentary which fleshes out how the various countries apply that principle and also includes a way forward section, where applicable, to suggest the desired directions of law development.

A detailed write-up on the Asian Principles and the Foreign Judgments Project in general can be found at Adeline Chong, “Moving towards harmonisation in the recognition and enforcement of foreign judgment rules in Asia” (2020) 16 Journal of Private International Law 31-68. Associate Professor Chong is the general editor of both the Judgments Compendium and the Asian Principles.

ABLI is delighted to offer all members of EAPIL and all readers of this blog an exclusive discount to purchase both the Judgments Compendium and the Asian Principles. Interested members and readers can enjoy 10% off by following the steps listed at the end of this post.

Both the Judgments Compendium and the Asian Principles are available in PDF softcopies. Three hardcopies remain in stock for the Judgments Compendium. Please contact Catherine Shen, Project Manager of ABLI, for any query at catherine_shen@abli.asia.

How to enjoy your 10% discount as an EAPIL member or EAPIL blog reader (offer ends on 1 March 2021): (1) Go to https://payhip.com/b/e0md (for Judgments Compendium) or https://payhip.com/b/hACJ (for Asian Principles); (2) Click on the purple icon “buy now”; (3) After entering your name and email address, click on “Have a coupon code? Add coupon“ (right below the data protection terms) and enter promo code “EAPIL”, and then proceed to check out; (4) Once payment is processed by PayPal, an email will be sent to your indicated address for you to download the purchased copy instantly.

Please contact Catherine Shen if you wish to pay by credit card instead of PayPal.

Brexit and the Brussels Convention: It’s All Over Now, Baby Blue?

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Matthias Lehmann
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Update — In light of the interest triggered by this post, an on-line symposium has been organised on this blog to discuss the fate of the 1968 Brussels Convention. The first contribution, by Andrew Dickinson, can be found here.

Brexit has dealt a major blow to judicial cooperation in Europe. With the end of the transition period, the Brussels I bis Regulation became inapplicable in the relation between the UK and the EU. Some authors, however, took the view that the Regulation’s predecessor, the Brussels Convention of 1968, would continue to apply (see e.g. here and here). The main argument was that the Brussels Convention is an international treaty and not an instrument of EU law. Moreover, and contrary to the Rome Convention on the law applicable to contractual obligations, the Brussels Convention had not been fully replaced by a regulation and continued to apply with regard to some overseas territories.

This debate seems now to come to a close. On 29 January 2021, the British government informed the European Council of its view that the Convention has ceased to apply to the UK and Gibraltar with the expiry of the transition period on 1 January 2021. The unofficial document was posted on Twitter by Steven (“Steve”) Peers from the University of Essex (thanks to Felix Krysa for sharing the tweet with me). It reads in relevant part:

The Government of the United Kingdom hereby notifies the Secretary-General of the Council of the European Union that it considers that the Brussels Convention 1968 and the 1971 Protocol, including subsequent amendments and accessions, ceased to apply to the United Kingdom and Gibraltar from 1 January 2021, as a consequence of the United Kingdom ceasing to be a Member State of the European Union and of the end of the Transition Period.

Does this finally close the argument? Not for sure. The communication merely reflects an opinion by the British government, which as such is of no legal consequence. The Vienna Convention on the Law of Treaties enumerates the cases in which an international convention is terminated. A unilateral denunciation is not among them. Absent an impossibility of performance, a fundamental change of circumstances or a breach by one party, an agreement by the parties is required to suspend the operation of a treaty.

Since the Brussels Convention bound the UK to no less than 14 EU Member States, it may take some time and effort to reach agreement that the Brussels Convention is all over. The mere information of the European Council by the British government is certainly not sufficient. Of course, the EU and the UK could also enter into a new treaty. The British government has lodged an application to join the Lugano Convention, but it is still awaiting an answer from the EU.

Luxembourg Passes Law on Nuclear Liability

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Gilles Cuniberti
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In July 2020, Luxembourg eventually adopted a statute on Civil Liability for Harm related to a Nuclear Accident. The statute imposes strict liability on operators of nuclear installations for any damage that a nuclear accident might cause.

There is, however, no nuclear installation in Luxembourg, and there will not be anytime soon. A constant source of disagreement and discussion between the Grand Duchy and France is the French nuclear power plant of Cattenom, which sits a few kilometers away from the border (France has the curious habit of sitting its nuclear plants on the border with neighbouring states). In other words, the new Luxembourg law is solely concerned with foreign nuclear facilities, and indeed essentially with the one in Cattenom (there are also nuclear plants in Belgium, but farther from the border with Luxembourg).

Cattenom: A view from Luxembourg (Picture: Paperjams News)

1960 Paris Convention

The first question arising from the adoption of this statute is why luxembourg did not join instead the 1960 Paris Convention on Nuclear Third Party Liability (Luxembourg signed the Convention, but did not ratify it). The Luxembourg lawmaker explained that it felt that the goal of the Convention was only to limit the liability of nuclear operators, and that it was therefore not in the interest of a country which did not have any nuclear facilities to join the Convention.

In particular, the Luxembourg lawmaker wanted to avoid the numerous limitation of the liability of nuclear operators laid down by the Convention (maximum amount for compensation, time limits, limitation to certain types of losses), but also the exclusive jurisdiction of the court of the place of the operation of the nuclear facility, which would obviously exclude the jurisdiction of Luxembourg courts.

The Luxembourg lawmaker noted that Austria had also adopted its own legislation, and that the goal was to follow this path. It also noted that major nuclear powers such as the U.S., Russia or Japan never joined the 1960 Convention anyway.

Jurisdiction

Article 5 of the statute provides that Luxembourg courts have jurisdiction to entertain

actions related to nuclear losses resulting from nuclear accidents insofar as the Luxembourg territory, Luxembourg residents or person on Luxembourg territory at the time of the torts are concerned.

Parliamentary procedure in Luxembourg includes a review of bills by an independent body, the Council of State (Conseil d’Etat). In its opinion, the Council of State remarked that the Brussels I bis Regulation applied, and therefore requested (but did not demand) that the provision clarifies that it would only apply subject to the Regulation. The opinion of the Council was not followed.

It is likely that the Regulation would grant jurisdiction to Luxembourg courts anyway on the ground of the place of the damage, but only if direct damage was suffered in Luxembourg. The first draft of the bill expressly provided that it would apply to “losses caused directly or indirectly” by nuclear accidents, but, after the Council of State pointed out that this would be hard to reconcile with the concept of causation under the Luxembourg law of torts (which would apply: see below), the referrence was eventually omitted.

This being said, it is a bit problematic that the Brussels Ibis Regulation could limit the power of a Member State to develop its nuclear policy. This was the goal of the exclusion of public matters from the scope of the Regulation, but in this context it seems quite narrow. The Rome II Regulation allows Member States to adopt overriding mandatory provisions, but who will apply them if the Member States may not grant jurisdiction to their courts to apply them?

Of course, the Regulation would not apply if the defendant was domiciled in a third state (say, Ukraine…).

Picture : Les Echos

Applicable Law

Article 6 of the statute provides that “In case of nuclear accidents, actions for civil liability are governed by Luxembourg law“.

Unlike jurisdiction, the Rome II Regulation expressly excludes from its scope nuclear liability. Even if it had not, the statute could certainly have qualified as an overriding mandatory provision.

Enforcement of Luxembourg Judgments Abroad

The statute is silent on the enforcement of Luxembourg judgements abroad. Quite obvious, isn’t it? How could Luxembourg possibly think about regulating enforcement of judgments abroad?

Not as obvious in Luxembourg, it seems. The bill initially included an additional provision stating that “Any judgment from a Luxembourg court which is res judicata cannot be reviewed on the merits“. Fortunately, the Council of State explained in its opinion that it understood that the purpose of the provision was to bind foreign courts, and formally opposed its adoption on the ground that it would violate the sovereignty of foreign states and public international law.

Sovereign Immunity

The statute is silent on sovereign immunity. The initial bill was silent as well, but defined “operators” as including “international organisations” and “states or any other public authority”. The Council of State wondered what was the goal of the drafters of the bill, and whether they genuinely intended that foreign states could be sued in Luxembourg courts and their nuclear policy challenged, and if so on which basis. These express references were eventually omitted from the statute, which defines operators as any person who has a power of decision with respect to, or benefits economically from, a nuclear facility.

Irrespective of whether the final definition of operators excludes states and international organisations (the Nuclear Energy Agency?), it is easy to imagine that private operators could be closely linked to states, and thus appear as emanations of states and benefit from sovereign immunities.

Conclusion: Preparing Future Negotiations?

Source: antiatomnetz-trier.de

France and Luxembourg established a Franco-Luxembourg Commission on Nuclear Safety in 1994 which has met 18 times since then. In the last meeting in February 2020, France made clear that Cattenom would not be closed before 2035. The Luxembourg government has long expressed its disagreement with the facility being further maintained in operation.

The Luxembourg press has reported that some Luxembourg politicians hope that the law will increase the costs of neighbouring states, including insurance premiums, to operate nuclear facilities near Luxembourg. Will this change the dynamics of future negotiations between France and Luxembourg?

European Parliament Study on Cross Border Nuclear Safety, Liability and Cooperation in the EU

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Gilles Cuniberti
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EPIn February 2019, Michael G. Faure (Maastricht University and Erasmus Law School Rotterdam) and Kévine Kindji (Maastricht University) presented to the European Parliament a Study on Cross-border nuclear safety, liability and cooperation in the European Union.

The abstract reads:

This study, commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the PETI Committee, aims at gaining deeper insights into the legal aspects of cross border nuclear safety and cooperation in the European Union. It analyses the legal framework of nuclear safety as well as the liability and insurance schemes for nuclear accidents. The study examines the current liability and insurance framework and formulates possibilities for a further involvement of the EU in the liability regime. Specific attention is paid to citizen and NGO involvement in decision-making concerning nuclear power plants. The study analyses the case law in that respect and formulates various recommendations to improve the regime concerning cross-border nuclear safety, liability and corporation in the EU.

The study can be freely downloaded here.

The Recast Service Regulation to Apply to Denmark

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The Editors of the EAPIL blog
by

Pursuant to Protocol No 22 to the Treaty on European Union and the Treaty on the Functioning of the European Union, Denmark is not bound by the measures enacted by the EU in the area of freedom, security and justice, including as regards judicial cooperation in civil matters.

However, an agreement was concluded in 2005 between the European Community, as it was then, and Denmark to ensure the application in Denmark, and in respect of Denmark, of the EU rules concerning the service of judicial and extrajudicial documents in civil and commercial matters, i.e., at that time, the rules laid down in Regulation 1348/2000.

According to Article 3(2) of the 2005 agreement, whenever amendments to the latter Regulation are adopted, Denmark shall notify to the Commission of its decision whether or not to implement the content of such amendments.

This occurred when the 2000 Service Regulation was replaced by Regulation 1393/2007, and has now occurred for Regulation 2020/1784 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters, which was adopted on 25 November 2020 (as announced on this blog by this post by Apostolos Anthimos) and is set to apply in full from 1 July 2022.

In accordance with Article 3(2) of the 2005 agreement, Denmark has by letter of 22 December 2020 notified the Commission of its decision to implement the contents of Regulation 2020/1784. In accordance with Article 3(6) of the agreement, the Danish notification creates mutual obligations between Denmark and the Community. Thus, Regulation (EU) 2020/1784 constitutes an amendment to the agreement and is considered annexed thereto.

In accordance with Article 3(4) of the agreement, the necessary administrative measures enter into force on the date of entry into force of Regulation 2020/1784.

The Child Perspective in the Context of the 1980 Hague Convention

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Elena Alina Ontanu
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Marilyn Freeman (University of Westminster, London) has written an in-depth analysis on the Child Perspective in the Context of the 1980 Hague Convention at the request of the Committee on Legal Affairs (JURI Committee) of the European Parliament.

The abstract reads as follows:

This in-depth analysis, commissioned by the Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the Committee on Legal Affairs in the context of the Workshop to mark the 40th Anniversary of the Hague Convention on the Civil Aspects of International Child Abduction, examines the way in which subject children feature within Convention proceedings. It considers the aims of the Convention, and the lack of supranational control of its application. It draws on empirical research relating to the effects and consequences of child abduction to discuss the opportunities for children and young people to participate within Convention proceedings, and highlights the international obligations for such participation within the United Nations Convention on the Rights of the Child, The Charter of Fundamental Rights of the European Union, and other regional instruments. Different jurisdictional approaches are explained, and the role of culture in this context is probed. The impact of COVID-19 on abducted children is also explored.

Here’s an overview of the analysis.

The 1980 Hague Convention considers as paramount children’s interest in matters relating to their custody as well as their protection from the harmful effects of their wrongful removal or retention, and the procedures to secure their prompt return to the State of habitual residence. According to Article 12(1) of the Convention an abducted child under the age of 16 should be returned in less than one year since his/her wrongful removal or retention unless one of the limited exceptions to return under the Convention is established (see Articles 12(2), 13 and 20), and there are opportunities for children’s involvement in the far-reaching decisions which are taken in those proceedings.

The way in which these relevant provisions are interpreted and applied within the 101 Contracting States determine both the extent to which children’s rights are recognised and upheld under the Convention, as well as the success of the Convention in its aim of protecting children from the harmful effects of child abduction.

The present in-depth analysis relies on a small-scale qualitative study based on 34 interviews carried out by Professor Freeman (more about this can be read here). The empirical research sought to reveal more about ‘the lived experiences of those who had been through an abduction many years earlier’ and ascertain ‘whether, and how, the participants felt that the abduction had affected their lives, and if those effects had continued long-term’.

The results indicate that there is often still a lack of awareness by children and young people, and their families, about the opportunities to participate in the proceedings, as well as on how to ensure that their rights are recognised and protected. Furthermore, to observe the right of the children to benefit from meaningful opportunities to participate in the proceedings and prevent harm, it appears that a closer integration of children’s rights’ principles in the application of the Convention is desirable.

The impact of COVID-19 on children subject to abduction proceedings is also discussed. The international nature of these cases and the difficulties and limitations created by the pandemic meant that children had to spend an undesirable period after the decision waiting for return to be carried out. Additionally, a procedure of return can involve periods of quarantine, a situation that can exacerbate the child’s distress due to the separation from the abducting parent who may be a primary or joint primary carer and who may choose not to return with the child or be unable to do so. According to the analysis, the emotional effect of a return ordered in these circumstances may be very difficult for the child to manage. The remote conduct of return hearings can also create challenges for subject children and reflect on their decision about participating in a hearing that concerns them. According to Professor Freeman ‘children should have opportunities to express their views within abduction proceedings whether or not an objection to return has been raised, and regardless of whether or not the jurisdiction involved is governed by a regulatory regime, like Brussels IIa and the upcoming Recast, which specifically address the rights of children to be heard within a specific jurisdictional area’. Thus, to protect children from the harmful effects of child abduction, it is paramount to give children who wish to participate in the proceedings about their abduction the opportunity to be heard when the decision has the potential to impact significantly on their lives.

The analysis concludes that further discussions are necessary in this area as well as a ‘closer incorporation of children’s rights’ principles in the 1980 Convention framework’.

International Commission on Civil Status (ICCS) Adopts New Internal Regulation

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Marion Ho-Dac
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2021 will be a milestone for the International Commission on Civil Status (ICCS). Driven by a powerful internationalisation movement, the new internal regulation of ICCS entered into force on 1 January 2021.

I have interviewed Nicolas Nord, the Secretary General of ICCS, on the Commission’s work, functioning and challenges.

— Can you remind us what the ICCS is and the scope of its activities?

The ICCS is an international organisation created in 1949. The seat is in Strasbourg, in France. Its objectives are to facilitate international co-operation in civil-status matters and to further the exchange of information between civil registrars. A practical approach has always been privileged. The idea is to deal with concrete issues that arise in the daily activity of national authorities.

To achieve the general aims, the ICCS draws up normative instruments. 34 international conventions and 11 recommendations have been adopted till today. Comparative law studies are also carried out. The goal is always the same: harmonizing the provisions in force in the member States on matters relating to the status and capacity of persons, to the family and to nationality and improving the operation of civil-status departments in those States.

It materializes in different ways and has given rise to the creation of original methods. This is the case with multilingual civil status forms which allow any State authority to understand an act issued in another State Party, without having to face the problem of translation. It is an essential tool that also makes life easier for individuals. This is why Convention n° 16 has been so successful. It is in force in 24 States. Uniform acts such as certificates of matrimonial capacity (convention n° 20) or of life (convention n° 27) have also been created. There are the same in all the States parties. Another aspect is cooperation between authorities. Different conventions allow a direct international communication between the civil registrars. This allows for simplified updating of civil status documents in the various States Parties (convention n°3, 23 and 26).

The ICCS also compiles and keeps up to date a documentation on legislation and case-law setting out the law of the member States on the matters falling within its field of competence and provides, on the basis of that documentation, information to the national authorities.

— The ICCS recently adopted a new internal regulation. Can you tell us more about it?

The will of the member States is to modernize the organisation, to adapt it to new challenges and to make it more attractive. Some essential reforms have thus been introduced. Three examples may be given. English becomes the second official language of the organisation, alongside French. Membership is no longer reserved for states but also open, from now on, to any international organisation, any regional economic integration organisation and any other international entity. Membership procedure has been simplified. An approval by the General Assembly is the only requirement.

— What’s in it for the European Private International Law community?

The birthplace of ICCS is in Europe. Most of our members are European. Our instruments are in force in many European countries, although there is of course no geographical limitation. Our desire by introducing a second official language is to allow non-French speaking countries, European or not, to join us in order to work together. We also want to allow the EU to join us.

We have been working with the European Commission for many years now. The cooperation agreement between our two institutions was concluded in 1983. The adoption of the “public documents” regulation, now in force, clearly reflects this cooperation since the methods invented by the ICCS, such as multilingual forms or the coding of civil status forms, have been used in it. However, the instruments of the EU and the ICCS now coexist in Europe. It is a source of complexity and is not always well understood by practitioners. That is why we would like to strengthen our links with the EU.

— Some scholars have recently expressed their worries about the future of the ICCS (here). What do you think?

We fully understand their concern. It is a reaction to the surprising withdrawal of France. There is a risk of disappearance of the organisation if all the States adopt the same attitude of course.This would be prejudicial for the States themselves and for the practitioners of civil status. The reform of the ICCS internal regulation is precisely a reaction to such concerns, in order to make the organisation more attractive and to ensure its sustainability. Our wish is to convince new member states, new international entities to join us and to allow a return of our former members. 

— What are the ICCS’ work forecasts and challenges ahead?

 In September 2021, we are organising a conference on our flagship convention, the convention n° 16. Our wish is to establish a kind of diagnosis and to see what works well, gives satisfaction to the practitioners but also to detect the problems which appeared since 1976, date of its adoption. This is an exciting prospect. Having such feedback will be very enriching, both for the States Parties, the civil registrars and the organisation itself.

In addition to working on the substance of the matter, we want to make our organisation known, highlight its instruments which have demonstrated their effectiveness in practice and convince new States and international organisations to join us, by becoming members or by adopting our instruments.

As a conclusion, I would like to thank Nicolas for the very interesting light he has shed on the ICCS central mission for States and regional organisations such as the European Union to pursue and perhaps even step up their work on the key-issue of civil status for mobile citizens. Let us wish that the ICCS’ makeover will lead to a greater European and international cooperation in the field of civil status in the near future!

Please note that Nicolas is available to answer any questions that fellow blog readers may have on the ICCS.

EAPIL Position Paper on the EEO Regulation

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The Editors of the EAPIL blog
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The EU has developed a common judicial area where judgments given in one EU Member State are recognised and can be enforced in all others. To this end, the EU has adopted a number of legal instruments that regulate and ease cross-border enforcement, ensuring legal certainty for all parties and making these processes easier. One of them is Regulation (EC) 805/2004 creating a European Enforcement Order for uncontested claims (the EEO Regulation).

When it was adopted, the Regulation was a ground-breaking instrument that was the first to abolish the need for obtaining a declaration of enforceability in the requested state (the so-called ‘exequatur’). The EEO certificate has replaced it.

Other similar legal instruments were adopted in quick succession, leading to the ‘exequatur’ being abolished by Regulation (EU) 1215/2012 (the Brussels I bis Regulation), although with different conditions than those in the EEO Regulation.

In 2020, the Commission decided to evaluate the EEO Regulation, and to carry out a consultation as a part of the evaluation process. The Commission sought opinions on how the Regulation is working, also with regard to the Brussels Ibis Regulation. It also aimed to collect practical experiences with the EEO Regulation and views on its use in the future.

Upon an invitation by the Commission, the EAPIL formed a Working Group chaired by Jan von Hein (University of Freiburg/Germany). This Working Group presented a position paper in November 2020 that is now available here.

Members of the Working Group will also participate in the upcoming Commission’s online workshop on the revision of the EEO Regulation in January 2021.

Second Edition of the SIFoCC Multilateral Memorandum on Enforcement of Commercial Judgments for Money

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Pietro Franzina
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In December 2020, the Standing International Forum of Commercial Courts (SIFoCC), which brings together the commercial courts of several countries across the world, launched the second edition of its Multilateral Memorandum on Enforcement of Commercial Judgments for Money.

The memorandum is the result of a collaborative effort from judges sitting in the courts involved, and outlines the way in which the judgment of one jurisdiction can be enforced in another. Over 30 jurisdictions have contributed, including Australia, Brazil, Canada, France, Germany, Hong Kong, Japan, Kenya, Malaysia, New York, Singapore, South Korea and the United kingdom.

More information available here.

The Directive on Representative Actions for the Protection of the Collective Interests of Consumers Published

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Marta Requejo Isidro
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Directive (EU) 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC was published on 4 December 2020 (OJ L 409/1).

It consists of 79 recitals, 26 provisions (some of them actually looking as recitals, and vice-versa), and two Annexes, the second being a correlation table of provisions – to my mind, a good lawmaking practice. It will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union; transposition shall be ready by 25 December 2022; the national measures will apply from 25 June 2023.

The Key Features of the Directive in a Nutshell

The Directive is based  on Article 114 TFEU (see nevertheless Recital 76, arguing that the intervention of the EU is necessary due to the relevance of the cross-border element).

Having regard to its overarching objective, the Directive joins the group of measures aiming simultaneously at the protection of the consumer, the promotion of fairer competition and the creation of a level playing field for traders operating in the internal market (in other words, this piece of legislation has not been conceived only for the sake of consumers; therefore, it is here submitted that it should not be interpreted only with them in mind).

The Directive  takes up the failures of precedent legal acts in relation to the enforcement of consumer law, particularly Directive 2009/22/EC on injunctions for the protection of consumers’ interests. As in other fields of EU law, it clearly endorses private enforcement.

According to the Directive, a consumer is any natural person who acts for purposes outside that person’s trade, business, craft or profession, independently of how she is referred to (data subject, traveler, retail investor, etc) in the legal act allegedly infringed.

The Directive covers infringements of the provisions of Union law referred to in its Annex I, to the extent that they protect the interests of consumers, and provided the natural person involved acts as such.

For those willing to get the whole picture as to the scope of the Directive it is worth noticing that it does not substitute the enforcement mechanism contained in the EU legal acts listed in Annex I (by the way: keep in mind that Annex is subject to be amended each time that a new Union act relevant to the protection of the collective interests of consumers is adopted). In addition, Member States are able to retain or introduce national legislation that corresponds to provisions of this Directive in relation to disputes that fall outside the scope of Annex I. My understanding is that this possibility relates only to subject matters, and not to the subjective scope of the Directive.

The impact of the Directive on national systems will depend on the Member State concerned. National procedural mechanisms for the protection of collective or individual consumer interests – where they exist – do not need to be replaced. It is for the Member States to decide whether the procedural mechanisms for representative actions required by the Directive are part of an existing procedural mechanism for collective injunctive measures or redress measures, or a distinct procedural mechanism.

What matters is that at least one national procedural mechanism for representative actions complies with the Directive in every Member State, and, as a consequence, at least one effective and efficient procedural mechanism for representative actions, for injunctive measures and for redress measures, is available to consumers in all Member States.

In terms of contents, the Directive does not address every aspect of the proceedings. Already whether these should be judicial or administrative, or both, is to be decided by the Member States considering the area of law or the economic sector at stake.

The provisions eventually adopted focus on legal standing (and its mutual recognition), remedies (injunctive relief, redress measures), funding, settlements, allocation of costs, information about representative actions, effects of final decisions, limitation periods, disclosure of evidence, and penalties.

It is for the Member States to lay down the rules complementing those of the Directive under the principle procedural autonomy, subject to the requirements of effectiveness and non-discrimination.

Aspects of the Directive of Interest for PIL

The Directive does not intend to affect the application of rules of private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law, nor establish such rules (in other words, the well-known shortcomings of the existing PIL instruments are not remedied).

This intention has not prevented the lawmaker from shaping two cross-border categories: ‘cross-border infringements’, and ‘cross-border representative actions’.

The former covers ‘in particular’ the case of consumers affected by an infringement who live in Member States other than the Member State in which the infringing trader is established; what else is included is unclear. The latter designates the situation of a qualified entity bringing a representative action in a Member State other than that in which it is designated; conversely, if a qualified entity brings a representative action in the Member State in which it is designated, that representative action will qualify as a domestic representative action, even if it is brought against a trader domiciled in another Member State and even if consumers from several Member States are represented within that representative action. I would argue here that those categories have no meaning beyond the Directive itself; in other words, they should be accorded no significance in terms of application of PIL instruments.

Recital 22, according to which ‘It should be noted that Regulation (EU) No 1215/2012 does not cover the competence of administrative authorities or the recognition or enforcement of decisions by such authorities’, deserves a similar assessment. In my view, whether a representative action filed by an administrative authority falls under the scope of the Brussels I Regulation or not still depends on the autonomous characterization of the dispute as ‘civil and commercial’.

In addition to the clarification regarding PIL instruments, the following issues of interest for cross-border disputes are addressed in the Directive (not necessarily in the operational part).

Useful information for the courts – When bringing a representative action, a qualified entity should provide sufficient information on the consumers concerned by the representative action to the court or the administrative authority, thus allowing the court or administrative authority to determine whether it has jurisdiction and to determine the applicable law.

Useful information for the consumers – Member States should be able to set up national electronic databases that are publicly accessible through websites providing information on the qualified entities designated for the purpose of bringing domestic representative actions and cross-border representative actions, as well as general information on ongoing and concluded representative actions.

Legal standing criteria – For the purposes of cross-border representative actions, qualified entities should be subject to the same criteria for designation across the Union. Examples are listed – non exhaustively – under recital 25. Moreover, qualified entities that have been designated on an ad hoc basis are not allowed to bring cross-border representative actions.

Mutual recognition – Member States should ensure that cross-border representative actions can be brought before their courts or administrative authorities by qualified entities that have been designated for the purpose of such representative actions in another Member State. The identity of qualified entities enabled to sue abroad will be communicated to the Commission, who will compile a list and make it publicly available. Inclusion on the list serves as proof of the legal standing of the qualified entity bringing the representative action.

Opt-in – In order to ensure the sound administration of justice and to avoid irreconcilable judgments, where the consumers affected by an infringement do not habitually reside in the Member State of the court or administrative authority before which the representative action is brought, an opt-out mechanism is excluded regarding representative actions for redress measures. In other words, consumers have to explicitly express their wish to be represented in that representative action in order to be bound by the outcome of the representative action.

Cooperation and the exchange of information between qualified entities from different Member States is encouraged, in order to increase the use of representative actions with cross-border implications.

The HCCH Service Convention in the Era of Electronic and Information Technology

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Elena Alina Ontanu
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In December 2019 the Hague Conference on Private International Law (HCCH) convened experts and stakeholders from around the world to discuss technology developments in cross-border litigation in an a|Bidged event dedicated to the 1965 Service Convention.

The contributions by the various speakers to The HCCH Service Convention in the Era of Electronic and Information Technology are now available in video format online.

Additionally, the discussions of the event resulted in a dedicated publication – a|Bridged – Edition 2019: The HCCH Service Convention in the Era of Electronic and Information Technology. The ebook released on 24 November 2020 can be downloaded from the HCCH website.

The a|Bridged – Edition 2019 focuses on the use of modern technology in the context of the Service Convention. Although the text of the convention itself does not contain specific references to technology in the service of documents, contributors show that the provisions’ neutrality allow them to adjust to new developments and technologies of the present time.

The book is structured in four parts.

The first part – The Prism: The Tech Battle for e-Service – examines all kind of technology supported developments from secured e-mail, electronic submission and transmission platforms to distributed ledger technology and artificial intelligence. These options are discussed from the perspective of appropriate solutions for end-to-end digitisation of transmission and execution procedures to be used under the HCCH Service Convention.

In the second part – The Lab: All Across the World – judicial representatives from different regions (i.e. England and Wales, South Korea, Brazil) discuss how their own national service procedures currently make use of information and communication technology, or are taking steps to develop in this direction in the near future. Solutions already in place or projects that are currently been developed are presented.

The third part – The Open Lab: The Text of Tomorrow – focuses on how the Service Convention could be operating in the future based on technology developments facilitating judicial cooperation, relying on blockchain technology, and options to ‘update’ the applicable provisions.

The fourth part – HCCH Unplugged – addresses specific topics that can arise from the use of information technology in the operation of the HCCH Service Convention such as security of transmissions and data protection, guarantees in the e-service of process, use of electronic email, social media, blockchain and Distributed Ledger Technology (DLT) for transmitting and handling legal records, the transmission of scanned documents via cloud computing to be served abroad, and localising the defendant via his email address for direct service purposes.

So Long, Savigny? The Case of Jurisdiction over External Directors’ Liability in Belgian Private International Law

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The Editors of the EAPIL blog
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The author of this post is Michiel Poesen, PhD candidate at KU Leuven.

This post tells a short story about the fate of European private international law’s neutrality paradigm… Our story starts where you probably would not expect it: the 2019 Belgian company law reform.

In 2019, the Belgian legislature reformed the Company Law Code in a bid to attract more investors to Belgium. (For the record, the previous government also launched the idea of offering businesses an interesting venue for transnational litigation–the Brussels International Business Court or BIBC, which did not make it through).

One of the reform’s key elements was to make company law leaner and more flexible. Facilitating this flexibilisation, the legislature also revised the Belgian private international law provisions pertaining to company law. In sympathy with the well-known CJEU case law on the freedom of establishment in the EU, the legislature traded the seat principle for the incorporation principle as the connecting factor for the law applicable to and adjudicatory jurisdiction over companies (Articles 109–110 Code of Private International Law; Article 111 contains a list of legal questions governed by the lex societatis).

Clearly, the incorporation principle gives up on the traditional idea that the connecting factor for companies should be based on a physical element such as the presence of a company’s place of administration (see R Michaels, ‘Globalizing Savigny? The State in Savigny’s Private International Law and the Challenge from Europeanization and Globalization’ in M Stolleis & W Streeck (eds), Aktuelle Fragen zu politischer und rechtlicher Steuerung im Kontext der Globalisierung (Nomos 2007) 142).

Interestingly, the statute provides for one carve-out concerning adjudicatory jurisdiction (I should thank Professor Joeri Vananroye and Professor Stijn De Dier for bringing it to my attention). Claims relating to the personal liability of directors towards third parties can be brought in the Belgian courts if the company has its ‘main establishment’ in Belgium and has a merely formal connection the state where it is incorporated:

… the Belgian courts have jurisdiction over actions concerning the liability of directors of corporations resulting from Article 2:56, §1, of the Corporations and Associations Code towards third parties other than the corporation that arose out of acts committed in the performance of their administrative function, provided that the main establishment of the legal person is in Belgium, while the legal person is incorporated outside if the European Union [or indeed an EFTA state that ratified the Lugano II Convention] and has a merely formal connection to that state [Translation by the author, the authentic text is available in Dutch and French in the Belgian state gazette].

The main establishment ‘is determined by taking into account primarily the place of administration, as well as the centre of its business and activities, and in subsidiary order the statutory seat’ (Article 4, §3 Code of Private International Law, available in English here – although not yet reflecting the 2018 overhaul). This, in fact, is a special tort jurisdiction rule that seeks to shield Belgian residents from companies who operate in Belgium but are incorporated outside of the EU (e.g. for fiscal or organisational purposes).

The Belgian legislature enacted this provision to strike a balance between a company’s freedom to choose the forum pursuant to the incorporation principle and the protection of general interests in Belgium, such as environmental protection or the fight against tax fraud (see here, at 144–145).

Private international lawyers will be interested to know that finding the physical ‘seat’ (Sitz in classical Savignyan terms) of the tortious relationship between a director and a third party, however, was not part of the legislature’s motives. This is quite interesting. For it demonstrates how the legislature sought to balance material interests through the law of conflict of jurisdictions (see Michaels, supra, 140–141).

Hence, the legislature was not enticed by European private international law’s traditional focus on finding the legal relationship’s geographical connection (which one American realist provocatively called ‘transcendental nonsense’ long before the Belgian company law reform; FS Cohen, ‘Transcendental Nonsense and the Functional Approach’ (1935) 35 Columbia Law Review 811).

December 2020 at the Court of Justice of the European Union

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Marta Requejo Isidro
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December 2020 will be quiet at the Court (regarding private international law cases).

The judgment in C-774/19 Personal Exchange International will be delivered (6th Chamber: Bay Larsen, Safjan, Jääskinen; no opinion, no hearing) on Thursday 10. The question was referred on September 5, 2019, by the Vrhovno sodišče Republike Slovenije (Slovenia):

Must Article 15(1) of Regulation No 44/2001 be interpreted as meaning that an online poker playing contract, concluded remotely over the internet by an individual with a foreign operator of online games and subject to that operator’s general terms and conditions, can also be classified as a contract concluded by a consumer for a purpose which can be regarded as being outside his trade or profession, where that individual has, for several years, lived on the income thus obtained or the winnings from playing poker, even though he has no formal registration for that type of activity and in any event does not offer that activity to third parties on the market as a paid service?

On Thursday 17, AG Campos Sánchez-Bordona’s opinion on C-709/19 Vereniging van Effectenbezitters, will be published. The Hoge Raad (the Netherlands) asked the Court to interpret once more Article 7(2) Brussels I bis in a case of patrimonial damage. The preliminary reference was lodged September 25, 2019; a hearing had been scheduled for last September, rescheduled, and eventually replaced by questions for written answer.

1.(a)  Should Article 7(2) of [the Brussels Ia Regulation] be interpreted as meaning that the direct occurrence of purely financial damage to an investment account in the Netherlands or to an investment account of a bank and/or investment firm established in the Netherlands, damage which is the result of investment decisions influenced by globally distributed but incorrect, incomplete and misleading information from an international listed company, constitutes a sufficient connecting factor for the international jurisdiction of the Netherlands courts by virtue of the location of the occurrence of the damage (‘Erfolgsort’)?

(b)    If not, are additional circumstances required to justify the jurisdiction of the Netherlands courts and what are those circumstances? Are the additional circumstances referred to [in paragraph 7 below] sufficient to found the jurisdiction of the Netherlands courts?

2. Would the answer to Question 1 be different in the case of a claim brought under Article 3:305a of the BW (Burgerlijk Wetboek: Netherlands Civil Code) by an association the purpose of which is to defend, in its own right, the collective interests of investors who have suffered damage as referred to in Question 1, which means, among other things, that neither the places of domicile of the aforementioned investors, nor the special circumstances of individual purchase transactions or of individual decisions not to sell shares which were already held, have been established?

3. If courts in the Netherlands have jurisdiction on the basis of Article 7(2) of the Brussels Ia Regulation to hear the claim brought under Article 3:305a of the BW, do those courts then, on the basis of Article 7(2) of the Brussels Ia Regulation, also have international and internal territorial jurisdiction to hear all subsequent individual claims for compensation brought by investors who have suffered damage as referred to in Question 1?

4. If courts in the Netherlands as referred to in Question 3 above have international, but not internal, territorial jurisdiction to hear all individual claims for compensation brought by investors who have suffered damage as referred to in Question 1, will the internal territorial jurisdiction be determined on the basis of the place of domicile of the misled investor, the place of establishment of the bank in which that investor holds his or her personal bank account or the place of establishment of the bank in which the investment account is held, or on the basis of some other connecting factor?

The hearing in C-30/20 Volvo e.a., also on Article 7(2) of the Brussels I bis Regulation, will be held on the same day. The preliminary reference, from a commercial court in Madrid (Spain), was lodged on January 22, 2020. It will be decided by the 1st Chamber (Bonichot, Bay Larsen, Toader, Safjan, Jääskinen, with M. Safjian as reporting judge), with the opinion of the French AG, M. Richard de la Tour. At first sight, the question looks like a simple one:

Should Article 7(2) of [the Brussels I bis Regulation] be interpreted as establishing only the international jurisdiction of the courts of the Member State for the aforesaid place, meaning that the national court with territorial jurisdiction within that State is to be determined by reference to domestic rules of procedure, or should it be interpreted as a combined rule which, therefore, directly determines both international jurisdiction and national territorial jurisdiction, without any need to refer to domestic regulation?

That the reference has been allocated to a chamber of five judges, together with the fact that the AG’s view has been requested, certainly means that the decision will go beyond choosing one or the other alternative interpretations.

The Recast Service Regulation Published

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Apostolos Anthimos
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On 2 December 2020, following a lengthy procedure, the Recast Service Regulation (Regulation (EU) 2020/1784 of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters) was finally published in the Official Journal of the European Union (the Position of the Council at first reading in view of the adoption of the Recast had appeared a few days earlier: see it here).

The contents of the Regulation were known, in substance, since an agreement was reached, in June 2020, between the Council and the European Parliament as a result of the trilogue consultations.

Previous posts in this blog illustrated the envisaged innovations and the challenges posed by the recast, and discussed some of the issues raised by the current rules.

The Recast will apply from 1 July 2022.

Towards a German Supply Chain Act? Comments from a Choice of Law and Comparative Perspective

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Elena Alina Ontanu
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Following a lecture delivered in September 2020 at the Max Planck Institute for Comparative and Private International Law in Hamburg, Giesela Rühl (Humboldt University of Berlin) published a paper on SSRN – Towards a German Supply Chain Act? Comments from a Choice of Law and Comparative Perspective – analysing the project for a legislative proposal expected to shape Germany’s legislation in the field of corporate responsibility.

The project for a Supply Chain Act (Lieferkettengesetz) comes as a response to a second national survey published in July which analysed the implementation of the National Action Plan on Business and Human Rights (NAP). According to the results presented by the Federal Labour Minister Hubertus Heil and Federal International Development Minister Gerd Müller only a few companies are voluntarily taking responsibility to ensure that human rights are respected in their supply chain. Consequently, the coalition considered that the idea of a national supply chain law needs to be pursued. A hearing by the Committee for Human Rights and Humanitarian Aid of the German Bundestag that took place on 28 October 2020 under the leadership of Gyde Jensen (FDP) showed that many experts in Germany are in favour of a Supply Chain Law. Experts from business, politics and society predominantly supported the federal government’s plan for such a law, which is intended to improve compliance with human rights and environmental standards in the global environment.

As the subject remains a hot topic for the German legislator and it will have consequences beyond the German territory, Prof. Rühl’s addresses some of these relevant aspects from a private international law and comparative perspective. The abstract of the paper reads as follow:

The protection of human rights in global supply chains has become one of the most hotly debated issues in public and private (international) law. In a number of countries, including the United Kingdom, France and the Netherlands, these debates have led to the introduction of domestic human rights legislation. In other countries reform plans are under way. In Germany, for example, the federal government recently announced plans to adopt a German Supply Chain Act, which, if passed as suggested, will introduce both mandatory human rights due diligence obligations and mandatory corporate liability pro-visions. The following article takes this announcement as an opportunity to look at the idea of a German Supply Chain Act from both a choice of law and from a comparative perspective. It argues that that any such Act will necessarily be limited in both its spatial and in its substantive reach and, therefore, recommends that Germany refrains from passing national legislation – and supports the adoption of a European instrument instead.

From Direct Application of European Uniform Procedures to Implementation Legislation in Romania

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Elena Alina Ontanu
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The European Order for Payment (EOP, Regulation (EC) No 1896/2006), the European Small Claims Procedure (ESCP, Regulation (EC) No 861/2007) and the European Account Preservation Order (EAPO, Regulation (EU) No 655/2014) applied for several years in Romania without any specific implementation legislation being adopted to coordinate their interaction with the national procedural rules.

As generally regulations do not require any specific additional legislative action from the Member States to be applied at national level, Romanian authorities relied on the principle of direct application of the three instruments. However, the referral to national procedural rules in several articles of the regulations (e.g. existence of an appeal mechanisms, costs of proceedings, assistance) as well as reliance on national rules when no specific provisions are contained in the European legislation (Article 26 EOP, Article 19 ESCP, and Article 46 EAPO) can create disparities and give rise to variations in the application of these instruments even within one Member State.

Recently, this direct application approach changed. In December 2019 the Romanian Government and, subsequently, the Parliament initiated acts to amend national laws. These legislative amendments were aimed at facilitating the application of these regulations and clarifying particular procedural aspects in order to ease judicial cooperation between Member States for the EOP, ESCP, and EAPO procedures. The new national rules dedicated to the EOP, ESCP, and EAPO focus mainly on issues of jurisdiction of Romanian courts, identifying the national authorities involved in the application of the Regulations, and establishing the applicable procedural fees.

EAPO: A Guided Implementation Process to Avoid an Infringement Procedure

The amendment of national legislation regarding the EAPO has been triggered by the initiation of an infringement procedure by the European Commission. A letter of formal notice (letter C(2019) 6729 final) was sent to the Romanian authorities in 2019 – more than two years since the regulation became applicable – because the Government failed to communicate relevant information for the application of the regulation as required by Article 50 EAPO Regulation.

Following this formal notice, the Romanian Government acted expediently to avoid a possible referral to the Court of Justice of the European Union in an infringement procedure. The Government’s Note proposing the legislative amendment as well as in the Statement of Reasons for the law approving the Government Emergency Ordinance containing implementation provisions refer to this risk as well as that of hefty fines for the national budget due to non-compliance with EU law. Based on these reasons the Government moved quickly in December 2019 to adopt an Emergency Ordinance – Ordonaţa de urgenţă nr. 75 din 13 decembrie 2019 pentru completarea Ordonanţei de urgenţă a Guvernului nr. 119/2006 privind unele măsuri necesare pentru aplicarea unor regulamente comunitare de la data aderării României la Uniunea Europeană, precum şi pentru modificarea Ordonanţei de urgenţă a Guvernului nr. 80/2013 privind taxele judiciare de timbre.

Based on the Government’s Note, the Emergency Ordinance No. 75/2019 was meant to address information that had not been clearly provided for the application of the EAPO in Romania. This concerned:

  • the methods that could be used to obtain account information regarding a debtor holding a bank account in Romania (Article 50(1)(c) EAPO Regulation) and
  • which courts were competent to handle EAPO requests, the available means of appeal, the national authority competent to receive requests for obtaining account information about bank accounts and to provide such information, and the methods applicable to receive this information (by Romanian and authorities in other Member States).

The new article Article I8 of the Government Emergency Ordinance No 119/2006 regarding certain measures necessary for the application of some Community Regulations after the date of accession of Romania to the European Union explicitly addresses the information requirements contained in Article 50(1) letters (a)-(d), (l) and (m) EAPO Regulation.

Based on this legislative amendment, the courts competent to issue Preservation Orders in Romania based on an authentic instrument would be the ones having jurisdiction to handle the claim at first instance (Article 1(1) Government Emergency Ordinance No 119/2006 in conjunction with Articles 6(4) EAPO Regulation). Further, any appeal against a decision to reject in whole or in part an application for a Preservation Order would be handle by the hierarchical higher court to the one that issued the initial decision (Article 1(2) Government Emergency Ordinance No 119/2006 in conjunction with Articles 21 EAPO Regulation). This means that different type of courts can have jurisdiction to receive an application for an EAPO based on the threshold of the claim. These would be either the district courts (judecătorii) for requests of up to 200.000 RON (approx. 42.000 euros) or the general courts (tribunale) for applications above this threshold. Similarly, any request to revoke or modify a Preservation Order based on Article 31(1) EAPO Regulation will be handled by the hierarchical higher court to the one that issued it (Article 1(3) Government Emergency Ordinance No 119/2006).

The remedies available to the debtor against the enforcement of a Preservation Order according to Article 34 EAPO Regulation will rest with the enforcement court (Article 1(4) Government Emergency Ordinance No 119/2006). Again any appeal against the remedies available to the creditor and the debtor based on the provisions of Articles 33-35 EAPO will lie with the hierarchical higher courts to the courts that issued the Preservation Order (Article 1(3)-(4) Government Emergency Ordinance No 119/2006 in conjunction with Articles 33(1), 34 and 35 EAPO Regulation). In such circumstances, the appeal would have to be introduced within a period of 30 days from the date of communication of the decision challenged, unless the law establishes otherwise. This last part gives rise to some uncertainty, especially for foreign parties which are presumed not to be familiar with the Romanian legal system and its particularities. Hence, relying on a local practitioner would remain necessary although representation is not mandatory in the EAPO procedure (Article 41 EAPO Regulation).

Any request to obtain information and identify a debtor’s potential bank accounts in Romania according to Article 14 EAPO Regulation will be dealt with by the National Union of Judicial Enforcement Officers (Uniunea Naţională a Executorilor Judecătoreşti, UNEJ). The National Union of Judicial Enforcement Officers is the designated information authority competent to provide this information upon request. For this purpose, the Union has been granted direct and free of charge access to the Ministry of Public Finance IT system – PatrimVen (Article 2 Government Emergency Ordinance No 119/2006).

With regard to procedural costs related to the issuance of a European Account Preservation Order, the court fees are fixed at 100 RON (approx. 21 euros) (Article 11(1) Government Emergency Ordinance No 80/2013 regarding the judiciary stamp fees). The EAPO court fee is similar to fees applicable in other national procedures concerning protective measures. Its low value is certainly convenient, especially for high-value EAPOs.

EOP and ESCP: Implementation Legislation A Decade into their Application

The EOP and ESCP have been the testing ground for direct application of ‘second-generation’ European regulations into national procedure. This has led to interpretation difficulties (e.g. amount of court fees to be paid, appeal and review mechanisms, lack of legal assistance) and mixed results according to previously published research findings (e.g. further Luxembourg Report on Mutual Trust and Free Circulation of Judgments and Cross-Border Debt Recovery in the EU). During this initial period, the only legislative provision implicitly referring to these instruments was Article 636 New Code of Civil Procedure. The article states that European enforceable titles for which the exequatur procedure is not required are immediately enforceable in Romania without any preliminary formality.

The legislative change for these two European procedures came in July 2020. A law – Law No 132 of 15 July 2020 – was adopted by the Parliament. The law amended one more time the Government Emergency Ordinance No 119/2006 regarding certain measures necessary for the application of some Community Regulation after the date of accession of Romania to the European Union and the Government Emergency Ordinance No 80/2013 regarding the judiciary stamp fees. Two new articles were added to facilitate the application of the EOP and ESCP Regulation in Romania – Articles I9 and I10 (see Statement of Reasons). As for the EAPO Regulation, these articles address only some of the elements that require coordination between the European rules and national legislation, namely: the requirements of Article 29(1)(a)-(b) EOP Regulation and Article 25(1)(a), (c) and (g) ESCP Regulation

For the EOP, the jurisdiction will rest with the courts that would be competent to handle the claims on the merits at first instance (Article 1 Government Emergency Ordinance No 119/2006). These would be either the district courts (judecătorii) or the general courts (tribunale). The district courts have competence for claims up to 200.000 RON (approx. 42.000 euros). The claims above this threshold will be handled by the general court as first instance court.

Any review request in the framework of the EOP Regulation will be examined by the same court that issued the EOP but in a panel of two judges (Article 2 Government Emergency Ordinance No 119/2006). Although this legislative step clarifies some organisational aspects of the review proceeding, it does not solve how the review should be handled based on various national means (see here also). The national procedures according to which the review should be handled are broader in scope than the provisions of Article 20 EOP Regulation and require some legal knowledge. This keeps the proceeding rather complex for a first-time user with little legal training.

With regard to the ESCP, the Romanian courts competent to issue the ESCP judgment are the district courts (judecătoriile) according to Article 2(1) Government Emergency Ordinance No 119/2006. The ESCP judgment will be subject only to appeal before the competent general court (tribunal) and will have to be filed within 30 days from the moment the judgment was communicated to the party (Article 2(2) Government Emergency Ordinance No 119/2006 in conjunction with Article 17 ESCP Regulation).

A request for review – as for the EOP procedure – will rest with the court that issued the ESCP judgment. However, unlike for the EOP, the provisions related to the ESCP do not expressly indicate that the review will be handled by a panel of judges. This difference in the drafting of the legal text is regrettable as it gives rise to potential confusions and interpretations per a contrario given the special nature of the rules.

Both EOP and ESCP provisions related to the competent courts to receive the application forms do not change the practice of the Romanian courts but confirm the already existing interpretation followed by practitioners.

For court fees, the Romanian legislator opted for a fixed court fee as for similar national procedures (ordonanţa de plată and procedura cu privire la cererile de valoare redusă). Hence, an application for an EOP will cost the applicant 200 RON (approx. 41 euros) (Article 6(2) Government Emergency Ordinance No 80/2013 regarding the judiciary stamp fees). While the ESCP claims will vary between 50 RON (approx. 10,5 euros) for claims below 2.000 RON (or their equivalent) and 200 RON (approx. 41 euros) for claims above this threshold (Article 6(2) Government Emergency Ordinance No 80/2013). The procedure following opposition to an EOP and review requests will involve an additional fixed fee of 100 RON (approx. 21 euros) (Article 6(21) Government Emergency Ordinance No 80/2013 regarding the judiciary stamp fees. This legislative action is welcomed as it puts an end to the different approaches followed by Romania courts. These varied between a fixed cost identical to the equivalent national procedures and a court fee based on the value of the claim submitted.

The most important legislative development related to the application of the ESCP concerns the implementation of specific provisions regarding the assistance to the provided to the parties (Article 11 ESCP Regulation).

According to Article 1 Government Emergency Ordinance No 119/2006, practical assistance for filling in the Claim Form (Form A) will be provided by the lawyers designated for this purpose by each local Bar Association for periods of three months (on a rotation basis). The list of lawyers to provide legal assistance and their contact details will be published online by the Union of National Bar Associations in Romania and each local Bar Association. This list is also to be communicated to each district court for publication at its premises as well as online on the website of the Romanian Courts. Finding the necessary details will remain certainly more challenging for foreign users as the information on the websites is generally available only in Romanian.

The costs for this assistance will be fixed based on a protocol of understanding establishing the representation fees for ex officio legal representation. No fee will have to be paid by the party receiving assistance in accordance with Article 11 ESCP Regulation. Although a welcomed legislative clarification such lists do not appear to have been published for the time being with the indicated national websites or their whereabouts are not easy to spot (even for a legally trained subject). Given that the legislative changes were only introduced four months ago, practical application and technical adjustments may take some time to be calibrated by the local Bar Associations and district courts.

These legislative steps undertaken by the Romanian authorities are certainly a good development for facilitating the interaction between the European and national procedural rules and the application of the EOP, ESCP, and EAPO. Domestic rules have an important influence on the manner in which the European procedures are applied and represent a key prerequisite for certainty, visibility of the procedures, and their subsequent success.

European Parliament to Vote on Collective Redress, Taking of Evidence and Service of Documents

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Marta Requejo Isidro
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On 16 November 2020, the JURI Committee of the European Parliament will vote on the draft recommendations for second reading on the proposed directive on representative actions for the protection of the collective interests of consumers, the proposed regulation amending Regulation No 1206/2001 of 28 May 2001 on cooperation in the taking of evidence in civil or commercial matters, and the proposed regulation amending Regulation No 1393/2007 on the service of judicial and extrajudicial documents in civil or commercial matters.

During the afternoon session, the JURI Committee will hold a Workshop on ”The 40th Anniversary of the Hague Convention on the Civil Aspects of International Child Abduction”, in the presence of the EP Coordinator of Children’s’ Rights, Ms Ewa Kopacz.

The workshop will mark the 40th anniversary of the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction and is aimed at examining assessing the success and importance of the Convention in ensuring the prompt return and thus the best interests of the abducted children. Against this background, the workshop will bring together Members of the European Parliament and a number of experts, practitioners and academics with a view to presenting the functioning of the Convention from the child’s rights dimension and pointing out ongoing issues with its implementation. The programme and two in-depth analysis on the topic can be downloaded here.

Both the voting and the workshop will be webstreamed.

Towards UNIDROIT Transnational Principles of Effective Enforcement

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Marta Requejo Isidro
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Complaints about the inefficiency of enforcement mechanisms at national and transnational level are not new. The insufficiency of existing national and international legal frameworks is a growing cause for concern at all levels. Academics and practitioners acknowledge the fundamental importance of procedures and mechanisms for the effective enforcement of creditors’ claims both in domestic and in cross border situations. They also agree on the existence of numerous obstacles for enforcement in most jurisdictions, and on the need for a comprehensive and  detailed international instrument providing for guidance for national legislators to overcome such challenges.

In the agenda UNIDROIT (the International Institute for the Unification of Private Law) has published for the triennial period 2020 – 2022, transnational principles of civil procedure are included with
– high priority:  Formulation of regional rules;
– medium priority : Principles of effective enforcement (NoA: priority was moved to “high” by the UNIDROIT Governing Council at its 99th session);
– low priority:  International Civil Procedure in Latin America.

As a matter of fact, UNIDROIT has been actively working towards a soft harmonisation of civil procedural rules – mainly to be applied in transnational disputes but also meant to provide guidance in domestic law reforms- already for a while. In 2004, the Governing Council of UNIDROIT adopted the so-called ALI/UNIDROIT Principles of Transnational Civil Procedure (ALI=American Law Institute), which the organization itself defines as its “landmark instrument in this area”.

The ‘Principles’ consist of 31 provisions accompanied by a commentary. They aim to reconcile differences among various national rules of civil procedure, taking into account the peculiarities of transnational disputes as compared to purely domestic ones. They are intended to serve as guidelines for code projects in countries without long procedural traditions; also, as a basis for reform in countries with long and high-quality procedural traditions. They may also be applied by analogy in international commercial arbitration.

In 2013, UNIDROIT and the European Law Institute (ELI) started working together towards the development of European Rules of Civil Procedure. The ELI – UNIDROIT Rules were presented in an International Workshop Webwinar held as a closing event of the 99th session of the UNIDROIT Governing Council, on 25 September 2020.

In addition, UNIDROIT Work Programme 2017-2019 envisaged the preparation of Transnational Principles of Effective Enforcement to bridge the gaps of the ALI/ UNIDROIT Principles of Transnational Civil Procedure in this regard. A preliminary feasibility study was conducted by Rolf Stürner, Emeritus Professor at the University of Freiburg (Germany) and former co-reporter of the ALI/UNIDROIT Principles of Transnational Civil Procedure, and submitted to the Governing Council at its 95th session (2016). According to its final conclusion

Principles will set common minimum standards of enforcement, they will motivate legislatures to evaluate and improve the quality of their laws and thereby strengthen the efficiency of enforcement in foreign countries. Common minimum standards will be a source of increasing harmonization of enforcement laws, as well as predictability of the results of enforcement measures in foreign countries and facilitation of enforcement in cross border cases. A certain degree of harmonization is a necessary precondition of international cooperation in the field of cross border enforcement, which is designed to avoid conflicts of sovereignty and conflicting or superfluous parallel and cost intensive enforcement measures. Worldwide, there is sufficient common ground for specific principles of individual modes of enforcement and for overarching general principles of an overall system of efficient civil enforcement. The variety of organizational structures should not be considered a decisive obstacle to harmonizing principles. It will be possible to develop principles, which define managerial standards to be met by the enforcement mechanisms and the individual enforcement authorities and which at the same time leave necessary leeway for successful regional traditions and local needs. Co-operation with other organizations dealing with the harmonization of law could result in a helpful increase of human and financial resources. The experience of the first joint project with the American Law Institute was very encouraging.

At the time, the topic was nevertheless accorded low priority, which meant the work would only commence after the completion of the preparation of European Rules of Civil Procedure. In this context, the Secretariat received in December 2018 a proposal for the 2020-2022 Work Programme by the World Bank regarding a project on the “Development of a Working Paper to Outline Best Practices on Debt Enforcement”, which it presented on the occasion of the discussion of the 2020-2022 Work Programme at the 98th Session of the Governing Council. The proposal was discussed as a continuation, and a refinement, of the scope of the  “Principles of Effective Enforcement”, and eventually included in the new Work Programme by the General Assembly.

On 21 September 2020, the UNIDROIT Secretariat, as mandated by the Governing Council at the first meeting of the 99th  session, convened an internal consultation workshop on the project on Best Practices of Effective Enforcement. The UNIDROIT Governing Council, at its 99th session, approved the guidelines provided by the Secretariat regarding the proposed scope of the project, and authorised the establishment of a Working Group, to meet in Rome and on Zoom on 30-November – 2 December 2020. The composition of the group has not yet been disclosed; the MPI Luxembourg will be represented as an observer.

If the initial schedule is kept, the project will be a quick one, coming to an end already in 2022. No doubt it is worth to follow its development and to reflect on its potential impact on the law and practice of cross-border enforcement within the EU and beyond.

The EU Succession Regulation and Foreign Law Applied by Tax Authorities

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Anna Wysocka-Bar
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On few occasions Polish tax authorities made references to the EU Succession Regulation and applied foreign law designated by its provisions, even though revenue and other administrative matters are explicitly excluded from its scope. This post presents shortly the inheritance taxation rules in Poland, explains why tax authorities felt the need to look into foreign succession laws for tax purposes and how the content of foreign law was ascertained.

Exclusion of Taxes from the scope of the EU Succession Regulation

The EU Succession Regulations states in its Article 1(1) that it does not apply to revenue, customs or administrative matters. Recital 10 makes reference to taxes in particular. It explains that it is for national law to determine how taxes are calculated and paid. The question is how to proceed if national tax law makes a direct reference to succession law concepts.

It might be reminded that inheritance taxes in Member States were once subject to an EU-sponsored study (which might be consulted here).

Inheritance Taxation in Poland

Inheritance taxation in Poland is regulated by a separate statute (available here – in Polish only). It provides that the acquisition of goods located in Poland and rights exercised in Poland by an individual as a result of inter alia succession is subject to taxation. Acquisition of goods located abroad or rights exercised abroad is subject to taxation, provided that at the moment of opening of the succession the beneficiary was a Polish national or had habitual residence in Poland. The acquisition of ownership of movable property located in Poland or rights exercised in Poland is not subject to taxation, provided that neither the beneficiary, nor deceased were Polish nationals and had habitual residence in Poland.

There are numerous exemptions from inheritance tax, including the one for the closest family members. The beneficiary is the taxpayer. The tax point arises at the moment of the acceptance of the succession. If the acquisition was not reported to tax authorities the tax point (re)arises at the moment when a document in writing is produced. If it is a court decision the tax point arises at the moment the decision becomes final. The tax base is the net worth of the estate calculated in the prescribed manner. The tax due depends on the degree of affinity or kinship between the deceased and beneficiary and varies between 3% to 20% of the tax base exceeding certain thresholds. Taxpayers are obliged to file a tax return, based on which tax authorities issue a decision indicating tax to be paid.

Tax Point Linked to the Acceptance of the Succession

As mentioned above, the tax point with respect to succession arises at the moment of its acceptance. This clearly refers to the acceptance of the succession, an institution known in the substantive succession law regulated by the Polish Civil Code (here). It states that an heir acquires the estate at the moment of the opening of the succession. Nevertheless, the heir may accept the estate without limitation of liability for debts, with limitation of that liability or may renounce the succession. The time limit for such statement is six months counting from the moment when an hair have learned about his/her title of acquisition.

It is simple to indicate a tax point for inheritance taxation in a purely domestic case. However, inheritance taxation comes into play also in cases which are less intensively connected to Poland. For example, acquisition of an immovable property located in Poland is taxed, even if both the deceased and the beneficiary are foreign nationals with habitual residence abroad. In those cases, in accordance with the EU Succession Regulation, succession is governed by foreign law. The doubt as to the tax point might occur in instances when lex successionis does not know the concept of an acceptance of succession.

Acceptance of Succession when Foreign Law is Applicable

While assessing the tax point tax authorities stated that the concept of an acceptance of succession used for tax purposes must take into account the law applicable to civil law aspects of the particular case. This law should be designated in accordance with the EU Succession Regulation.

In the recent tax ruling of 27 August 2020 (signature: 0111-KDIB2-3.4015.112.2020.1.AD) the tax authority analysed English law (as the deceased was habitually resident in the UK). It was explained that in the UK succession case is dealt with differently than in Poland. It is an appointed executor, who is responsible for assessing the value of the estate, payment of debts and payment of inheritance taxes in the UK. The executor is responsible also for sending documents to the probate court. Once the decision of the probate court is delivered, the estate might be transferred to heirs. As a result a final decision of the probate court may be perceived as an equivalent to the acceptance of succession. In an earlier tax ruling of 31 December 2019 (signature: 0111-KDIB4.4015.114.2019.2.MD) the tax authority analysed US succession procedure and also stated that the decision of the court is conclusive for tax purposes in Poland.

Please note that the above are not decisions in particular tax proceedings, but tax rulings, which only interpret the law on the taxpayer’s application and are issued based on information and explanations provided by the taxpayer. Hence, while issuing a tax rulings tax authorities are not establishing the content of foreign law. Tax rulings may be found by their signatures in the public database (accessible here – in Polish only).

Ascertainment of the Content of Foreign Law

In the tax proceeding concerning succession governed by Australian law tax authorities went even further and lined the tax point to the actual transfer of funds from Australia to Poland. The taxpayer was arguing that the tax point have arisen earlier, at the moment of the opening of succession (as the foreign exchange rate used for calculating tax due was more favourable at that time). The decision resulted in a dispute and the tax decision was appealed to the administrative court. The court in its judgement of 26 June 2018 (signature: I SA/Wr 164/18; it may be found by its signature in the public database here – in Polish) set aside the tax decision due to procedural faults, in particular when it comes to ascertainment of the content of foreign law.

The court stated that it is not enough that the tax authorities have asked Polish Consulate in Sidney for information on Australian law and that the decision has indicated provisions of the South Australia Administration and Probate Act 1919 as the basis for conclusions. The court suggested that indeed the tax point arose earlier than at the moment of the bank transfer, but in order to indicate this moment a careful analysis of Australian succession law must be made. For this purpose tax authorities should ask Ministry of Finance for guidance, which might in turn, within the framework of legal aid procedure, contact Australian tax authorities. Australian succession law should be applied as it would be applied by Australian tax authorities in similar cases. Also an expert witness may be appointed.

The above shows the relevance of private international law for the work of administrative authorities, influence of lex successions designated by the EU Succession Regulation on tax matters, but also reveals that tax authorities are not necessarily competent to proceed with the ascertainment of the content of foreign law.

Meidanis on the Enforcement of Mediation Settlement Agreements in the EU and the Need for Reform

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Apostolos Anthimos
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Haris Meidanis’ new article on international mediation has just appeared at the current issue (2020/2) of the Journal of Private International Law under the title Enforcement of mediation settlement agreements in the EU and the need for reform.

In this article he discusses the current status of EU law on cross-border enforcement of Mediated Settlement Agreements (MSAs) focusing mainly on non-family law matters. Directive 2008/52 states the form an MSA may take under the national legislation, as the basis of cross-border enforcement. Given (a) the polyphony of national legislation as to the form an MSA may take for enforcement purposes and (b) the meaning of “judgment” under EU private international law and the Solo Kleinmotoren case, it is suggested that a level playing field as to cross-border enforcement of MSAs in the EU is not guaranteed. Further, it is suggested that MSAs constitute the outcome of a third distinct dispute resolution category, next to judgments and awards, and are also distinct to contracts. It is concluded that a reform of EU law seems necessary in order to mitigate the above lack of an equal level playing field and to take into account the special character of MSAs.

This is the third recent article on international mediation by the same writer, following the one published with Arbitration (the law review of CIArb) on Vol 85-Feb 2019, pp. 49-64, under the title International Enforcement of Mediated Settlement Agreements – Two and a half models, and the one published with ICC’s Dispute Resolution Bulletin (Issue 1, 2020, pp. 41-52) under the title International Mediation and Private International Law.

The CIArb article presents the various models regarding international enforcement of Mediated Settlement Agreements (namely the ones of the Singapore Convention of 2019 of the EU and of the New York Convention of 1958 (the “half model”) and makes the related comparison, while the ICC article presents the basic issues that may appear in an international mediation, from a PIL perspective.

OHADA Commissions a PIL Act

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Gilles Cuniberti
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The Organisation for the Harmonisation of Business Law in Africa (OHADA) has selected a team to prepare a draft Uniform Act of Private International Law. After a 10 month selection process, it has chosen a team led by the Paris office of Shearman & Sterling (see the announcement of the firm here).

The  mandate consists of drafting a Uniform Act on conflict of laws, conflicts of jurisdictions and the circulation of judicial and extrajudicial documents. The Act should contain an exhaustive set of PIL rules, which will be directly applicable in the 17 OHADA States and replace any local PIL rules currently applicable in those States. This would be the tenth Uniform Act adopted by OHADA.

OHADA was established in 1993 with the goal of harmonizing the business laws of its member States in order to foster economic development in the region. It comprises States mostly from francophone Central and Western Africa.

The team is composed of attorneys from the Paris office of the firm, but also several academics and practitioners from France and OHADA states (Cameroon and Ivory Coast, in particular).

One is hopeful that the team will want to identify the best solutions for Africa not only by considering the recent codifications of PIL drafted in French (Belgium Code of PIL, Swiss PIL Act, Quebec legislations, in particular), but also the PIL of other legal traditions, including those of neighbouring states such as Nigeria and Ghana.

Luxembourg Introduces Bill to Adopt Collective Redress Procedure Ahead of EU Directive

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The Editors of the EAPIL blog
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This post has been written by Vincent Richard, Senior Research Fellow at the MPI Luxembourg, Department of European and Comparative Procedural Law.

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On 14 August 2020, the Luxembourg government introduced a bill before the Parliament aiming to introduce a collective redress procedure (file 7650) into Luxembourg Law.

This objective was set out in the coalition agreement of 2018 where the Democratic Party, the Luxembourg Socialist Workers’ Party and The Greens defined the policy outline for the  following five years.

The government’s intention is firstly to set up a collective redress mechanism for violations of consumer law and secondly to extend it afterwards to other areas such as environmental law, unlawful discriminations, abuse of dominant position and unfair competition.

While inspired by the proposal for a European directive on representative actions for the protection of the collective interests of consumers, the bill had been finalised before an agreement was reached by the European Parliament and Council negotiators (reported here). The text of the bill may therefore evolve to reflect the latest progress of the EU negotiations.

The collective redress scheme proposed so far is heavily inspired by the corresponding mechanisms adopted in France and Belgium. The procedure is divided into three phases with a first judgment on admissibility, a second one assessing the professional’s liability and an enforcement phase to allocate compensation.

Admissibility Phase

The whole procedure takes place before the district court of Luxembourg and it can be initiated by a single consumer or a qualified entity. The first interesting aspect of the proposal is that qualified entities are not only Luxembourg and European consumer organisations but also non-profit organisations or a sectorial regulatory authority such as the banking sector regulator or the Data Protection Commission. For the action to be declared admissible, individual consumers and qualified entities must show that they have legal expertise and sufficient financial and human resources to adequately represent several consumers. They will also need to prove that a collective redress is more efficient than a typical individual action. Time will tell how much of an obstacle these thresholds will constitute. If the action is financed by a third party, the court has to verify that this third party is not a competitor of the professional and that it may not influence decisions taken by the representative. If the claim is declared admissible, the court rules on the publicity of the judgment and the procedure enters its second phase.

Judgment on Liability and Mediation

The second phase starts with a mandatory meeting between the representative and the professional where parties must decide if they want to resort to mediation. The bill is quite detailed on this mediation process which may be conducted by specially approved mediators. Mediation last six months and parties may ask the court to extend this delay by another six months. If an agreement is reached, it has to be approved by the court. If there is no agreement, the procedure continues before the court for a ruling on the professional’s liability.

This judgment on liability is a two parties’ procedure between the professional and the representative where the latter may ask for injunctive and compensatory relief. The court rules on the liability of the professional and on the criteria for the constitution of the group of consumers. As is the case in Belgium, the group may be constituted via an opt-in or an opt-out procedure. The opt-out procedure may not be used to compensate bodily harm or moral damages. Opt-out is also excluded if the group involves consumers located outside of Luxembourg which may be a significant limitation in practice. In the judgment on liability, the court also rules on the publication of the judgment, on the time limit given to consumers to opt-in or out and on the time limit given to the professional to compensate the group. Finally, the court decides whether it is necessary to appoint an administrator to handle the enforcement of the judgment.

 Enforcement of the Judgment

If enforcement is not handled directly by the professional, it is conducted under the supervision of an administrator who is paid by the professional. A supervising judge is appointed to handle procedural issues related to enforcement. At the end of the enforcement process, the administrator submits a report to the supervising judge who must approve it to bring the proceedings to an end. If a consumer belonging to the group has not been compensated, the supervising judge refers their individual claims to the court.

Preliminary Assessment

As it stands now, the bill is rather well drafted and it could have a real impact on the Luxembourg legal landscape. Although it is hard to be very optimistic when considering the relative failure of collective redress in France, Belgium and more generally in Europe, Luxembourg may have some encouraging distinctive features. The country hosts the seats of some of the biggest companies in Europe and it features a dense network of highly creative lawyers. Besides, if full contingency fees are forbidden under the ethical rules of the Luxembourg Bar Association, success fees whereby a limited part of the lawyers’ fees depends upon the result of the litigation are possible. Third party litigation funding is also allowed in Luxembourg and expressly taken into account in the collective redress bill. The main areas of concern are, on one hand, the potential length of the procedure considering that each phase gives rise to a judgment that could be appealed and, on the other hand, the overall cost of such actions.

The bill still needs to receive opinions from the Conseil d’État, professional associations and the main consumer organisation before public debate takes place in Parliament. Readers of this blog will be informed in due course of the content of the law once it becomes final.

ELI Webinar on EU Conflict of Laws for Companies

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Gilles Cuniberti
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In the context of the 2020 Annual Conference of the European Law Institute, the feasibility study on EU Conflict of Laws for Companies: The Acquis and Beyond will be presented by Chris Thomale (proposer), Luca Enriques, Jessica Schmidt and Georg Kodek (Chair) today, 11 September 2020, from 15:15 until 16:15 CET.

International company mobility as well as regulatory competition of company laws depend on clearly cut out rules designating the applicable substantive company law. It would thus seem an integral part of a functioning internal market to provide such conflict of laws rules. Regrettably, however, a ‘Rome IV’ Regulation, ie an EU conflict of laws code for companies, despite manifold initiatives, has not been adopted yet. Instead, the stage has been left to the Court of Justice of the European Union (CJEU), which in well-rehearsed case law from the Daily Mail (C-81/87) until the Polbud (C-106/16) decisions has developed a certain framework for corporate mobility, culminating, of late, in Directive 2019/2121 on cross-border conversions, mergers and divisions. One big shortcoming of the European status quo is that the piecemeal harmonisation acquired through these developments still leaves a fundamental question unanswered: which company law regime by default is applicable to a given company?

This feasibility study will aim at laying the foundations for a prospective project that fully restates EU law on the matter implicit in conflict of laws legislation on adjacent topics like contract, tort, successions, insolvency and capital markets. Further, it will aim at foundations that go beyond CJEU case law and include national adjudicative practice and academic research into the picture. Based upon this acquis communautaire, the project of a future Rome IV Regulation can be investigated, notably putting to use techniques of private international law in order to address Member State reticence towards such an instrument as expressed hitherto.

To register for the webinar free of charge, please contact the ELI Secretariat at secretariat@europeanlawinstitute.eu.

Pathological Clauses in International Sports Arbitration and Return to Civil Proceedings

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Apostolos Anthimos
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It is widely known that disputes related to sports are most of the times referred to arbitration. Football is of course in the forefront. Usually cases referred to either the CAS or the FIFA Dispute Boards lead to an award. Not so in the case at hand. As a result, the creditor was left with the sole option, i.e. to return civil litigation. However, the road was not paved with roses…

1. The facts

The Appellant, a resident of the Netherlands, is a professional football player’s agent of Dutch nationality, licensed by the Royal Dutch Football Association. The Respondent is a Greek football société anonyme, which runs a professional football team participating in the Greek Super League. The Club is affiliated with the Hellenic Football Federation (the “HFF”), which in turn is a member of the Fédération Internationale de Football Association (“FIFA”). It has its seat in Thessaloniki, Greece.

In May 2012, the Appellant represented the professional football coach D. and three coach assistants as their agent in the contractual negotiations with the Respondent. In this context, the Parties signed a Private Agreement setting out, in essence, the terms and conditions on which the Respondent should pay the Appellant for his services in facilitating the signing of the contracts between the Respondent and the Coach, and the Assistant Coaches.

The Agreement stated, inter alia, the following: ‘the parties also expressly agree that the competent Committee of FIFA will have jurisdiction to decide for any and all disputes that might arise from or in relation to the present agreement and that the FIFA Regulations will apply to any such dispute’.

Owed to a negative result, the Team lost its chance to qualify for the Greek cup final. As a consequence, a clash was provoked between the Team and the Coach, which resulted in the discontinuation of their cooperation, and the non-payment of the second tranche to the Agent by the Team.

Stage A: FIFA

On September 2014, the Appellant filed his claim with FIFA, claiming the Respondent’s payment of 70.000 € in accordance with the Agreement. FIFA informed the Appellant of the following:

We would like to draw your attention again to art. 1 of the Players’ Agents Regulations, which stipulates that “These regulations govern the occupation of players’ agents who introduce players to clubs with a view to negotiating or renegotiating an employment contract or introduce two clubs to one another with a view to concluding a transfer agreement within one association or from one association to another”. Moreover, art. 1 par. 2 of the Regulations stats that “The application of the regulations is strictly limited to players’ agents activities described in the paragraph above”. In light of the aforementioned and by way of clarification, it would rather appear that your claim lacks legal basis, since the services provided by you and which are object to your claim i.e. providing services on behalf of the coaching staff are outside the scope of the abovementioned provisions’.

Stage B: CAS

On December 2014, the Appellant filed an appeal with the Court of Arbitration for Sport. He sought, inter alia, to: (1) set aside the decision issued on by the FIFA; (2) issue a (new) decision condemning Respondent to pay Appellant an amount of 70.000 € on outstanding commissions.

The Sole Arbitrator noted that Article R47 of the CAS Code states as follows: ‘An appeal against the decision of a federation, association or sports-related body may be filed with CAS if the statutes or regulations of the said body so provide or if the parties have concluded a specific arbitration agreement and if the Appellant has exhausted the legal remedies available to it prior to the appeal, in accordance with the statutes or regulations of that body’.

Based on the foregoing, the Sole Arbitrator stated that it is undisputed that the CAS has jurisdiction to hear appeal cases only under the condition that a ‘decision’ has been rendered, in which connection the Appellant argued that the FIFA Letter satisfies the requirement for constituting a ‘decision’, whereas the Respondent denied that this is the case.

The Appellant did not deny the accuracy of FIFA’s (alleged) decision regarding lack of jurisdiction and did not really want to have this issue verified by the CAS. As stated in the appeal that he rather sought ‘an award on the basis of the merits and essentials of the case here presented, despite the fact that the appealed decision did not entail an elaboration on the essential content of the dispute’.

The Arbitrator regarded the appeal as an attempt to circumvent FIFA’s lack of jurisdiction – which was not contested by the Parties – and, in this manner, to make the CAS, as an appeals body, hear and decide on the substantive aspects of the dispute, notwithstanding that FIFA, as the first-instance body chosen by the Appellant, did not consider itself to have jurisdiction. Since it neither is, nor should be possible to circumvent a first-instance judicial body’s undisputed lack of jurisdiction to hear and decide on a substantive issue by merely attempting to refer such a decision to the CAS through a more or less fictitious appeal, the Sole Arbitrator ruled that the CAS had no jurisdiction to hear the ‘appeal’. In addition, the Arbitrator stated that an appeal to the CAS filed under the rules governing appeal proceedings set out in the Code therefore cannot merely be ‘transformed’ into a request for arbitration.

Based on the above, the Sole Arbitrator found that the CAS did not have jurisdiction to hear and decide the present dispute.

Stage C: Swiss Supreme Court

In accordance with the CAS Statutes, the agent challenged the CAS ruling before the Swiss Supreme Court. However, the latter did not render a ruling, because the agent requested discontinuance of the proceedings. Hence, the CAS decision became final and conclusive.

Stage D: Thessaloniki Court of 1st Instance

As a consequence, the agent returned to the path of ordinary civil and commercial court jurisdiction. He filed a claim before the Thessaloniki Court of First Instance. The team challenged the jurisdiction of Greek courts, invoking the arbitration clause stipulated in the agreement. In a rather superficial fashion, the Thessaloniki court ordered the stay of proceedings, and referred the case to the FIFA Dispute Resolution Chamber. The agent lodged an appeal.

2. The Ruling of the Thessaloniki Court of Appeal of 7 May 2020

The Thessaloniki Court of Appeal quashed the first instance judgment by applying domestic rules of arbitration. It considered that, under the circumstances above, the arbitration clause has lost its validity.

In addition, it dismissed a fresh plea by the Team, by virtue of which the dispute should be tried by the Financial Dispute Resolution Committee of the Hellenic Football Federation (HFF). The court invoked Article 1 Para 3 of the HFF Football Agents Statutes, which has a similar wording to that of Art. 1 of FIFA Players’ Agents Regulations (see above under I).

As a next line of defence, the Team pleaded a set off the claim by way of defence with respect to two costs orders issued against the agent by the CAS and the Swiss Supreme Court respectively. The Thessaloniki CoA dismissed the defence, stating that a set off is not possible, because the orders were not declared enforceable in Greece. Following the above, the court examined the case on the merits, applying Greek law. It recognized that the Team ought to compensate the Agent in full satisfaction of the claim.

3. Remarks

Notwithstanding that, in light of the evidence produced, the outcome of the judgment was correct, the court started and finished its examination by omitting any reference to provisions of International Commercial Arbitration and Private International Law. This proves yet another time that courts prefer to stick to their national comfort space, defying any international rules applicable in Greece by virtue of ratification or direct application.

In particular, the court failed to refer to the rules of the 1999 Greek law on International Commercial Arbitration, i.e. the UNCITRAL Model Law on Arbitration, although the case was falling under its scope.  In addition, the reasoning concerning the costs orders is not free of doubt: Incidental recognition of foreign judgments is regulated under the Lugano Convention; hence, the Swiss Supreme Court costs order should have been taken into account. Things are a bit complicated in regards to the CAS costs order. Incidental recognition of foreign arbitral awards is not regulated in the 1958 New York Convention. However, Article III of the Convention states that ‘Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon’. Article 903 Greek Code of Civil Procedure states that a foreign arbitral award is recognized automatically, if the requirements set for recognition are met. Hence, incidental recognition of the CAS costs order was also possible.

Finally, bearing in mind the cross-border nature of the dispute, the court could have examined the issue of applicable law under the scope of the Rome I Regulation. In fact, Article 4(1)(b) provides that, in similar cases, the law applicable is the law of the country of the habitual residence of the service provider. However, it appears that both litigants referred to provisions of Greek law in their briefs. Hence, the court considered that the parties tacitly agreed for the application of domestic law.

Public Consultation on the European Enforcement Order

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Marion Ho-Dac
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On 10 August 2020, the European Commission launched a public consultation on Regulation 805/2004 creating a European Enforcement Order for uncontested claims (“the EEO Regulation”).

The consultation is carried out in the framework of an ongoing evaluation of the EEO Regulation.

In this context, the European Commission “seeks opinions on how the Regulation is working, also with regard to the revised Brussels I Regulation (Regulation 1215/2012). It also aims to collect practical experiences with the EEO Regulation, and attitudes towards its use in the future”.

The consultation is open until 20 November 2020 (midnight Brussels time) and can be found here.

Portugal to Become a Party of CISG

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Pietro Franzina
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On 16 July 2020, the Government of Portugal decided to start the process whereby Portugal will, in due course, become a party to the United Nations Convention on Contracts for the International Sale of Goods (CISG).

Today, the Convention is internationally in force for 91 States. Once in force for Portugal, it will be binding on all the current members of the European Union, with the exception of Ireland and Malta.

UPDATE (7 August 2020) — On 7 August 2020, the decree approving the accession was published on the Diário da República, the official journal of Portugal, together with the Portuguese official translation of the Convention. Many thanks to Dário Moura Vicente for drawing the attention of the blog editors on this development.

The Unidroit Principles and the Covid-19 Crisis

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Pietro Franzina
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On 21 July 2020 the Unidroit Secretariat released a Note on the UNIDROIT Principles of International Commercial Contracts and the COVID-19 health crisis.

As stated in the website of Unidroit, the Note is to be considered as work in progress, and the Secretariat welcomes any comments or suggestions.

The Note’s presentation reads:

In the context of the outbreak of COVID-19, UNIDROIT has prepared this note as a form of guidance as to how the Principles could help address the main contractual disruptions caused by the pandemic directly as well as by the measures adopted as a consequence thereof. The note analyses whether parties may invoke COVID-19 as an excuse for non-performance, and if so, based on which concepts and under what conditions. The analysis also covers the scenario, likely to be common in practice, where performance is still possible, but has become substantially more difficult and/or onerous under the circumstances.

The document aims to guide the reader through the process, leading her to ask appropriate questions and to consider the relevant facts and circumstances of each case. Naturally, solutions will vary according to the particular context of the pandemic in each jurisdiction and there is no one-size-fits-all approach. In particular, the document, considering the different ways the Principles have so far been used in practice, aims to: (i) help parties use the Principles when implementing and interpreting their existing contracts or when drafting new ones in the times of the pandemic and its aftermath; (ii) assist courts and arbitral tribunals or other adjudicating bodies in deciding disputes arising out of such contracts; and (iii) provide legislators with a tool to modernise their contract law regulations, wherever necessary, or possibly even to adopt special rules for the present emergency situation.

The open nature of the Principles furnishes the parties and interpreters with a much-needed flexibility in such an extreme context, constituting an efficient tool to offer a nuanced solution that can help preserve valuable contracts for the parties. Especially in mid-to-long term contracts, and in view of the – apparently – temporary nature of the impediment, mechanisms that allow for an adequate renegotiation and proportionate allocation of losses could ultimately help preserve the contract and maximise value for the jurisdiction(s) involved.

Arguably, the world of contracts has never suffered such an unforeseeable, global, and intense interference. Extraordinary situations require extraordinary solutions, and there is a global need to ensure the economic value enshrined in commercial exchanges is not destroyed. The Principles offer state-of-the-art, best-practice tools to deal with the problem; a set of rules that result from years of study and analysis, with the participation and consensus of the most prominent academics and practitioners in the field, from civil law and common law traditions.

— Many thanks to Carmen Tamara Ungureanu (Alexandru Ioan Cuza University of Iasi, Romania) for drawing the editors’ attention to this development.

Austria Ratifies the Hague Service Convention

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Pietro Franzina
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On 14 July 2020, Austria ratified the 1965 Hague Service Convention. The Convention is set to enter into force for Austria on 12 September 2020. All EU Member States will then be be bound by the Convention. In practice, the latter will apply in  the relationship between the (Members States of the) EU, one the one hand, and some fifty more States worldwide, on the other.

The Austrian ratification comes more than four years after the Council of the European Union issued a decision authorising Austria to sign and ratify, and Malta to accede to, the Convention ‘in the interest of the European Union’.

The Council decision reflects the fact that, as stated in the preamble, the Union ‘has external competence with regard to the Convention in so far as its provisions affect the rules laid down in certain provisions of Union legislation or in so far as the accession of additional Member States to the Convention alters the scope of certain provisions of Union legislation’, such as Article 28(4) of the Brussels I bis Regulation. Still, the Convention ‘does not allow for participation by regional economic integration organisations such as the Union’, meaning that, to make sure that the Convention is in force for all Member States, the Union had no other option but to authorise (and in fact request) the Member States that had not yet done so, to ratify – or accede to, depending on the circumstances – the Convention in the interest of the Union itself.

The Convention is already applicable to Malta as of 17 July 2018.

European Parliament to Vote on Representative Actions for the Protection of the Collective Interests of Consumers

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Marta Requejo Isidro
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OIP[2]On 7 July 2020, the Members of the Committee on Legal Affairs will vote on the provisional agreement resulting from the interinstitutional negotiations on representative actions for the protection of the collective interests of consumers. The text is available here.

Here are some points of interest (and a few on-the-spot comments).

1. The resulting document will be a directive not intended to replace the enforcement mechanisms contained in previous legal acts listed in Annex I, among which the GDPR.

2. The Directive will cover both domestic and crossborder infringements, in particular when consumers affected by an infringement live in one or several Member States other than the Member State where the infringing trader is established.

3. As announced in the Commission’s proposal (referred to here), the Directive should not affect the application of nor establish rules on private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law (NoA: how long have academics and the CJEU, AGs included, been warning about the PIL rules being utterly inadequate for collective redress? Apparently not enough).

4. Qualified entities should be allowed to bring representatives actions in the Member State where they have been designated as well as in another Member State.

5. When a qualified entity brings a representative action in another Member State than the one of its designation, that action should be considered a cross-border action.

6. When a qualified entity brings a representative action in the Member State where it is designated, the action is considered a domestic representative action even if that action is brought against a trader domiciled in another Member State or even if consumers from several Member States are represented within that action. (NoA: if I am understanding this correctly, the action against a trader domiciled in another Member State is domestic for the purposes of the Directive, although from a PIL perspective it is definitely not domestic).

7. Principle of origin: for the purpose of cross-border representative actions, qualified entities should comply with the same criteria across the Union. It should be for the designating Member State to ensure that the qualified entity designated for the purpose of cross-border representative actions fulfils the criteria, to assess whether it continues to comply with them and, if necessary, to revoke the designation of the qualified entity.

8. Legal standing: Member States should ensure that cross-border representative actions can be brought in their courts (or administrative authorities) by qualified entities designated for the purpose of such representative actions in another Member State.

9. Qualified entities from different Member States should be able to join forces within a single representative action in front of a single forum, subject to relevant rules on competent jurisdiction (NoA: usually who the claimant is has no impact on jurisdiction, so the caveat has to refer to something different. In any event, is this a lost opportunity to reflect on extended rules for related claims?).

10. The mutual recognition of the legal standing of qualified entities designated for the purpose of cross-border representative actions should be ensured

11. When bringing a representative action, the qualified entity should provide sufficient information on the consumers concerned by the action to the court or the administrative authority. The information should allow the court (or the administrative authority) to establish its jurisdiction and the applicable law.

12. Cooperation and exchange of information between qualified entities from different Member States have proven to be useful in addressing in particular cross-border infringements (NoA: has it?). There is a need for continuing and expanding the capacity-building and cooperation measures to a larger number of qualified entities across the Union in order to increase the us representative actions with cross-border implications.

13. The Commission should draw up a report, accompanied if appropriate by a relevant proposal, assessing whether cross-border representative actions could be best addressed at Union level by establishing an European Ombudsman for collective redress (NoA: not sure what his/her role would be).

Provisional Agreement Reached on the Modernisation of the Evidence and Service Regulations

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Pietro Franzina
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The Presidency of the Council of the European Union and the European Parliament reached on 30 June 2020 a provisional agreement on the modernisation of Regulation 1206/2001 on the taking of evidence abroad, and Regulation 1393/2007 on the service of judicial and extra-judicial documents (see here and here for contributions appeared on this blog regarding the reform).

The provisional agreement now needs to be submitted for endorsement by Member States’ representatives.

The purpose of the amendments under discussion is, generally, to improve the efficiency and speed of cross-border judicial proceedings by taking advantage of digitalisation and the use of modern technology, and by these means advance access to justice and fair trial for the parties.

Changes include the mandatory use of an electronic decentralised IT system, composed of interconnected national IT systems, for the transmission of documents and requests between Member States. The new regulations will also task the Commission with the creation, maintenance and future development of a reference software which Member States can choose to apply as their back end system, instead of a nationally-developed IT system.

As to the service of documents, the envisaged new rules provide that documents can be served electronically and directly on an addressee with a known address in another Member State, when his or her express consent is given in advance. The service can be performed through qualified electronic registered delivery services or, under additional conditions, by e-mail.

The new rules also aim to promote the use of videoconferencing or other distance communication technology in the taking of evidence.

Agreement on EU-Wide Rules on Collective Redress

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Marta Requejo Isidro
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On 22 June 2020, Parliament and Council negotiators reached a deal on the first EU-wide rules on collective redress.

The new rules introduce a harmonised model for representative action in all member states that guarantees consumers are well protected against mass harm, while at the same time ensuring appropriate safeguards from abusive lawsuits. The new law also aims to make the internal market function better by improving tools to stop illegal practices and facilitating access to justice for consumers.

Background

The Representative Action Directive is a part of the New Deal for Consumers, launched in April 2018 by the European Commission, to ensure stronger consumer protection in the EU. It includes stronger consumer rights online, tools to enforce rights and compensation, penalties for violating EU consumer law and improved business conditions.

The Agreement

The main elements of the agreement are as follows.

1. Each Member State will name at least one qualified entity (an organisation or a public body) that will be empowered and financially supported to launch actions for injunction and redress on behalf of groups of consumers and will guarantee consumers’ access to justice.

2. On designation criteria for qualified entities, the rules distinguish between cross-border cases and domestic ones. For the former, entities must comply with a set of harmonised criteria. They have to demonstrate 12 months of activity in protecting consumers’ interest prior to their request to be appointed as a qualified entity, have a non-profit character and ensure they are independent from third parties whose economic interests oppose the consumer interest;

3. For domestic actions, member states will set out proper criteria consistent with the objectives of the directive, which could be the same as those set out for cross-border actions.

4. The rules strike a balance between access to justice and protecting businesses from abusive lawsuits through the Parliament’s introduction of the “loser pays principle”, which ensures that the defeated party pays the costs of the proceedings of the successful party-

5. To further avoid abusive lawsuits, Parliament negotiators also insisted that courts or administrative authorities may decide to dismiss manifestly unfounded cases at the earliest possible stage of the proceedings in accordance with national law.

6. Negotiators agreed that the Commission should assess whether to establish a European Ombudsman for collective redress to deal with cross-border representative actions at Union level.

7.  The scope of collective action would include trader violations in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health, as well as air and train passenger rights, in addition to general consumer law.

Next steps

Parliament as a whole and the Council will now have to approve the political agreement. The directive will enter into force 20 days following its publication in the Official Journal of the EU. Member states will then have 24 months to transpose the directive into their national laws, and an additional six months to apply it.

Click here to access the procedure file.

EU Public Consultation on Cross-border Investment within the EU

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Marion Ho-Dac
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European_CommissionOn 26 May 2020, the European Commission launched a public consultation on cross-border investment within the EU.

Why this initiative?

First, the Commission is currently working on a new regulatory framework for intra-EU investments in order to make the internal market more attractive for foreign investors. The main objective of the future legislation will be to better protect and facilitate cross-border investments (see communication COM/2020/102, A New Industrial Strategy for Europe).

Second, following the Achmea judgment of the European Court of Justice (Case C-284/16), an agreement for the termination of intra-EU bilateral investment treaties has recently been adopted by a broad majority of Member States. At the same time, many investors but also arbitration practitioners have raised concerns because of this brutal change in the regulatory framework. They principally  invoke the loss of effective enforcement of their rights within the EU.

The main topics of the consultation are as follows: the first section contains some general questions aimed at gaining inputs on respondents’ familiarity with cross-border investments and linked issues; the second seeks feedback from stakeholders on rules to protect intra-EU investments; the third invites views on enforcement of intra-EU investment protection rules, including dispute resolution mechanisms and remedies when issues related to cross-border investments arise; the fourth section contains some general questions to assess the overall EU investment protection framework (as presented in section two and three); the fifth section seeks views of stakeholders on measures to facilitate and promote cross-border investment.

The consultation is open until 8 September 2020 and can be found here.

European Parliament Study on Blockchain for Supply Chains and International Trade

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Gilles Cuniberti
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EPBertrand Copigneaux, Nikita Vlasov and Emarildo Bani of IDATE DigiWorld, Nikolay Tcholtchev and Philipp Lämmel of Fraunhofer Institute for Open Communication Systems, Michael Fuenfzig, Simone Snoeijenbos and Michael Flickenschild from Ecorys, and Martina Piantoni and Simona Frazzani from Grimaldi Studio Legale, have written a Study on Blockchain for supply chains and international trade at the request of the European Parliament.

The study was commissioned by the Panel for the Future of Science and Technology (STOA) and managed by the Scientific Foresight Unit, within the Directorate-General for Parliamentary Research Services (EPRS) of the Secretariat of the European Parliament.

The abstract reads:

This study provides an analysis of blockchain technology in the context of international trade. It analyses the potential impacts of blockchain development and applications in eight use cases for supply chains and international trade. It also provides an analysis of the current legislative framework and existing initiatives.

Based on this analysis, and following a broad consultation of relevant organisations, the study identifies several challenges in international trade documentation and processes, and presents a range of policy options for the European Parliament.

The Study concludes by developing 20 policy options, which are organised in six themes.

Customs facilitation through blockchain

1. The European Commission could act as a bridge between EU customs authorities interested in employing blockchain technology for the digitalisation of customs, with a view to jointly developing further proofs of concept.

2. EU Single Window working groups could run through the blockchain key questions to be addressed within the guidelines developed by the World Economic Forum by means of consultations with authorities, private sector groups and mixed focus groups, to explore whether there is a business case for its development.

3. The European Commission could look to its partners in mutual recognition agreements to explore the possibility of sharing Authorised Economic Operator information via blockchain.

Involvement of small and medium-sized enterprises in the blockchain sphere

4. The European Commission could be encouraged to help SMEs keep abreast of blockchain applications relevant for their particular role in the value chain.

5. Funds could be made available to support collaboration between SMEs as both suppliers of solutions and end-users of global value chains. 

Sustainable trade through blockchain

6. The European Commission could be provided with the budget to scale up the solutions being developed under Blockchain for Social Good, particularly those relating to fair trade.

7. The European Commission could include blockchain technology solutions in the considerations for designing the practical aspects of an EU carbon border tax.

Leadership in standardisation of blockchain technology

8. The European Commission could continue to play a leading role in the standardisation process, continue its close collaboration with international partners and strive to provide a platform to enable the various actors working on pilots and standards to engage with each other in order to avoid fragmentation.

9. The European Commission could make use of the Multi-Stakeholder Platform on ICT Standardisation to further collaborate with various stakeholders on blockchain standardisation.

10. Beyond dialogue with third countries on standardisation, the EU could lead by example and set standards itself by introducing blockchain-based services for example in customs or financial transparency, based on which private actors, third countries, and international standardisation organisations could orient themselves.

11. Support could be given to the work of the European Blockchain Partnership, and collaboration encouraged with the International Association for Trusted Blockchain Applications, in order to work towards a comprehensive ecosystem of international supply chains using blockchain technology.

Evidence-based policymaking in the area of blockchain

12. Parliament could engage more actively in the work already going on at EU level with regard to blockchain technology and international trade by observing relevant organisations such as the European Blockchain Partnership or asking the European Commission for regular updates on their work.

13. Networks, such as the European Blockchain Partnership, the Observatory and others could be promoted. To this end the Parliament could also promote and fund further research in the area, including a mapping of regulatory readiness in the EU, its Member States and international partners.

14. The European Commission could be made aware that solutions should include reporting indicators and specific plans on how results will be measured, communicated and developed into lessons learned. 

15. Progress of work already being done in piloting blockchain at EU level could be monitored closely and support given for setting up future use cases and pilots under the European Blockchain Services Infrastructure and the Connecting Europe Facility.

16. Use could be made of funding schemes for research and business to support the EU’s efforts in the early stage development of blockchain-related projects in trade and supply chains.

17. In the context of the International Association for Trusted Blockchain Applications, the European Commission could be supported and encouraged to establish a public–private partnership in the area of blockchain for international trade and supply chains.

Awareness raising for the use of blockchain

18. Regarding blockchain’s potential to improve efficiency and support EU values such as transparency, fair trade, and social and environmental responsibility, the EU could promote recognition of the technology and its use in trade and supply chains.

19. Successful proof of concepts, pilots and the available building blocks on the Connecting Europe Facility platform could be promoted among Member States, private stakeholders and citizens to increase familiarity among stakeholders with the technology and its uptake.

20. The European Commission and Member States could be encouraged to make use of their roles as members of international organisations such as the World Trade Organization, the World Customs Organization and the United Nations Centre for Trade Facilitation and Electronic Business to promote trade digitalisation and the use of blockchain technology.

The Study can be freely downloaded here. A Briefing summarizing the findings of the Study is available here.

Applicable Law in Insolvency Proceedings at UNCITRAL

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Marta Requejo Isidro
by

At its fifty-second session, in 2019, UNCITRAL considered a proposal from the European Union on applicable law in insolvency proceedings (A_CN.9_995_E).

UNCITRAL agreed on the importance of the topic, which complemented the significant work already done by UNCITRAL in the area of insolvency law, in particular cross-border insolvency.

However, UNCITRAL also observed that the subject matter was potentially complex and required a high level of expertise in various subjects of private international law, as well as on choice of law in areas such as contract law, property law, corporate law, securities and banking and other areas on which it had not worked recently. Therefore, UNCITRAL agreed that it was essential to delineate carefully the scope and nature of the work that it could undertake.

UNCITRAL requested the Secretariat to organize a colloquium, in cooperation with other relevant international organizations, with a view to submitting concrete proposals for UNCITRAL’s possible future work on such topic, for consideration by the Commission at its fifty-third session, in 2020. The Colloquium is to be conducted on an informal basis, that is, not as an intergovernmental group.

The Colloquium was to be held in New York on 15 May 2020 (see the draft programme here), in cooperation with the Hague Conference on Private International Law.

Due to the postponement of the Working Group V session originally scheduled for 11-14 May 2020, the Colloquium on Applicable Law in Insolvency Proceedings is also postponed. Information on the new date will be communicated by the UNCITRAL Secretariat when possible.

COVID-19 Response from The Hague Conference

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Marta Requejo Isidro
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In response to the COVID-19 pandemic and following a video message of the Secretary General, the Permanent Bureau (PB) of the Hague Conference on Private International Law has developed a COVID-19 Toolkit.

The COVID-19 Toolkit spots situations covered by Hague instruments on which the pandemia may have a particular impact, and compiles references to specific HCCH resources and publications thereto relevant in light of the current global situation. It is designed to assist users of the HCCH Conventions and other instruments in these challenging times and beyond.

The HCCH COVID-19 Toolkit is divided into two main categories: International Child Protection and Family Matters, covering, inter alia, child abduction, family maintenance and intercountry adoption, and International Legal Cooperation, Litigation and Dispute Resolution, concerning, among other things, service of documents and the taking of evidence abroad.

Within each category, a short description is made on the presumable effect of the pandemia, followed by a quick access to the most pertinent instruments or guides connected, such as the Guide to good practice on the “grave risk exception” to prompt return under Article 13(1)(b) of the 1980 Child Abduction Convention.

The PB has expressed its hope that “the Toolkit will continue to encourage the effective operation of the HCCH instruments, ultimately ensuring better access to justice for individuals, families and companies across the globe, as well as facilitating cross-border trade, investment and dispute resolution, even in these uncertain times”.

It is indeed a worthy initiative with a helpful, user-friendly outcome (which, when it comes to putting legal rules into practice, is more than welcome).

Brexit and Private International Law – Views from the Joint Brussels Office of the Law Societies

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Apostolos Anthimos
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The latest edition of the Brussels Agenda, published by the Joint Brussels Office of the Law Societies, features three interesting contributions concerning the impact of Brexit on Private International Law: Will the UK rely more on private international law in the future?, by Michael Clancy; Cross Border Mediation in a Post Brexit World, by Peter Causton; and Recognition and Enforcement of judgments in Civil and Commercial Matters, a note on the UK accession to the Lugano Convention and on further possible developments, namely with respect to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters.

The three papers are a very reliable source for the upcoming developments in the UK, given that they’re coming straight from the horse’s mouth.

With respect to the developments on a future access of the UK to the Lugano Convention, Matthias Lehmann has posted recently a piece on this blog (UK Applies for Accession to Lugano Convention). In addition, Giesela Rühl has uploaded an article on Private International Law Post-Brexit on SSRN, which was reported by Marion Ho Dac here.

The COVID-19 Crisis and Employment Contracts: the Italian Emergency Legislation on Dismissals

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The Editors of the EAPIL blog
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The author of this post is Caterina Benini, a PhD student at the Catholic University of the Sacred Heart in Milan. This is the fourth in a series of posts aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself (see the previous contributions by Giovanni Chiapponi, Matthias Lehmann and Tomaso Ferando). The EAPIL blog welcomes further contributions on these topics, either in the form of comments to the published posts or in the form of guest posts. Those interested in proposing a guest post for publication are encouraged to contact the blog’s editorial team at blog@eapil.org.  

Article 46 of the Italian Decree-Law of 17 March 2020

The Italian government enacted on 17 March 2020 a Decree-Law, i.e. a piece of urgent legislation, in an effort to mitigate the economic and social consequences of the Covid-19 pandemic. The Italian Parliament later endorsed the Decree-Law and converted it into Law.

The Decree-Law sets forth a broad range of measures, some of which relate to employment contracts. In particular, Article 46 of the Decree-Law provides, among other things, that, for a period of 60 days after its entry into force (that is, between 17 March 2020 and 18 May 2020), no employment contract may be terminated on grounds of a failure by the employee to perform his or her obligations, or on objective grounds such as a drop in the demand for the employer’s goods or services.

From the standpoint of private international law, Article 46 gives rise to a set of interpretative problems whenever employment contracts featuring a cross-border element are concerned.

A mandatory rule providing a minimum standard of protection for employees

Article 46 of the Decree-Law applies in principle to all employment relationships governed by Italian law, regardless of whether Italian law is the law chosen by the parties or rather applies to the contract objectively.

In the Member States of the European Union, Article 46 may also come into play, by virtue of Article 8(1) of the Rome I Regulation, in contracts that the parties agreed to submit to a law other than Italian law.

In fact, if the contract would have been governed by Italian law pursuant to Article 8(2), (3) or (4) of the Regulation, the choice of a different law by the parties may not have the result of depriving the employee of the protection afforded to him or her by Article 46. This means, for example, that if an employee who habitually carries out his work in Italy is dismissed during the above stated period, he or she will be able to rely on Article 46, regardless of whether the employer is entitled, under the law chosen by the parties, to terminate the contract.

Given that Article 46 finds hardly any equivalent in other legal systems, Article 8(1) of the Rome I Regulation will almost invariably interfere with the chosen law whenever the issue arises, in a Member State, of an employment contract connected with Italy in the way described in Article 8(2), (3) or (4).

An overriding mandatory provision?

Article 46 of the Decree-Law, it is submitted, further qualifies as an overriding mandatory provision of the Italian legal order within the meaning of Article 9(1) of the Rome I Regulation.

The characterisation of Article 46 as an overriding mandatory provision stems from the fact that it satisfies the two requirements mandated under Article 9(1) of the Regulation: (i) it aims to protect a public interest, and (ii) it is meant to apply to any situation within its own scope, irrespective of the law otherwise applicable to the contract.

As to the first requirement, it is argued that, through the prohibition set out in Article 46, the Italian government aims to protect the stability of social and economic relationships of Italy. Indeed, as mentioned in a press release of 16 March 2020, by adopting a set of measures in support of employment, the government intended to prevent businesses from reacting to the pandemic and any related restriction by suddenly terminating a large number of employment contracts, as this might result, in turn, in social unrest. The fact that in the draft of the new Decree-Law Article 46 is extended for three further months, appears to confirm that the ban on dismissals is part of a broader strategy aimed at preventing conflicts which could possibly arise throughout the coronavirus crisis.

Turning to the second requirement, it is submitted that Article 46 implicitly provides its own scope of application, within which it intends to be applied irrespective of the law otherwise applicable under the relevant conflict-of-law rules.

Lacking any geographical limitation in Article 46 itself, regard should be given to other provisions of the Decree-Law which suggest that the various measures adopted therein are in principle meant to apply only territorially.

The preamble, for instance, makes it clear that the Decree-Law addresses the impact of Covid-19 on the “national social-economic reality”, meaning business, workers and households located in Italy. Furthermore, the scope of some provisions is explicitly limited to the territory of Italy. This holds true for provisions on social security, featured in Chapter I of Title II (“Measures in support of employment”). Article 46, though included in a different chapter of the same title, presents itself as part of the overall strategy adopted to support workers. Arguably, its scope should be geographically limited to situations connected with Italy in the same way as the other measures pursuing that goal.

The qualification of Article 46 as an overriding mandatory rule entails that, pursuant to Article 9(2) of the Rome I Regulation, Article 46 of the Decree-Law will be applied by Italian courts, no matter the law specified by the Regulation itself, to any cross-border employment relationship centred in Italy. In such a scenario, any dismissal justified by the employer’s financial difficulties or by the employee’s impossibility to perform his or her activity would be considered invalid and without effect.

What if the cross-border employment relationship brought before the Italian court is governed by a foreign law and is not connected with Italy? Should Article 46 be applied as an overriding mandatory provision of the forum?

It is argued that in such scenario an Italian court should not apply Article 46 of the Decree-Law, since relationships entirely disconnected from Italy do not fall among the cases to which this provision is meant to apply. Indeed, being Article 46 addressed to situations immediately and directly affected by the Covid-19 crisis and the measures adopted by the Italian government to face it, only cross-border relationships having a genuine connection with Italy – such as when the employee is asked to predominantly perform his or her activity in Italy, or when the employer’s establishment in charge of managing the relationship is situated in Italy – qualify to fall within its scope of application.

Another question of greater complexity is whether an Italian court ought to apply Article 46 of the Decree-Law when the employment relationship displays only a minimum connection with Italy, for instance because the employee was hired in Italy although in fact he or she never worked there.

To solve this issue, it is necessary to understand how intense the connection with the territory of Italy must be for Article 46 to be triggered. Considering the above analysis on the rationale of Article 46, it is argued that cases presenting a minimal connection with Italy fall outside the scope of application of Article 46.

Indeed, if the rationale of Article 46 is to protect the social and economic relations of Italy, there is no reason to apply such rule to employment relationships whose real seat – identified by the place of the employee’s predominant performance or the employer’s establishment – is not located in Italy, so that their termination does not jeopardise the Italian social order.

An overriding mandatory rule of the State of performance of the obligations?

A different issue is whether, and subject to which conditions, Article 46 may be given effect in a Member State other than Italy pursuant to Article 9(3) of the Rome I Regulation, that is, as an overriding mandatory rule of a country than is neither the forum nor the country whose law applies to the contract.

Article 9(3) provides that “[e]ffect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful”.

Three requirements must be met by a rule of a third State in order to fall within Article 9(3): (i) it must be an overriding mandatory rule pursuant to Article 9(1); (ii) it must be a rule of the country where the contractual obligations have to be or have been performed and (iii) it must render the contractual performance unlawful.

Having already explained why Article 46 is an overriding mandatory rule pursuant to Article 9(1), this section will focus on whether Article 46 can satisfy the remaining requirements.

With respect to the second requirement, for Article 46 to qualify as a rule of the country of the contractual performance, there are two interrelated questions that must be answered: (i) is an act of dismissal an act of performance of a contractual obligation? (ii) If so, where does it take place?

Adhering to the restrictive interpretation given to Article 9 by the ECJ in Nikiforidis, the answer to the first question should be negative: an act of dismissal cannot be strictly defined as an act of performance of whatever obligation arising out of the employment contract. Rather, the dismissal is the act by which the employer exercises the right to unilaterally terminate the contract, precluding the employee from performing his or her obligations towards the employer. As a result of this, Article 46 of the Decree-Law should be denied the effect prescribed by Article 9(3) of the Rome I Regulation.

This conclusion, although aligned with the case-law of the ECJ, does not seem fully satisfactory.

If the main goal of giving effect to the overriding mandatory rules of a third State is to render a decision which is fair because it takes into account the rules of the legal order with which the situation is most closely connected, by interpreting narrowly the notion of “performance of contractual obligations”, such goal cannot be pursued in all those cases where the dispute does not concern the performance of an obligation, but rather the exercise of a right.

It is argued that, if contractual rights and obligations are the two sides of the same coin, it would be unreasonable to consider the place of performance of the contractual obligations as the only place relevant for the purposes of Article 9(3) of the Rome I Regulation, to the detriment of the place of exercise of a contractual right. According to the circumstances of the case, both these places may share a close connection with the relationship at stake so to justify the consideration of their overriding mandatory rules pursuant to Article 9(3) of the Rome I Regulation.

However, as things currently stand, in a dispute concerning the validity of the employer’s exercise of its right to terminate the contract, the court of a Member State, seized of the matter, may give effect, pursuant to Article 9(3) of the Rome I Regulation, to the overriding mandatory rules of the State where the employee performs his or her contractual obligations – which in a cross-border employment relationship is likely not to coincide with the State where the right of dismissal was exercised – with which the issue of the dismissal is not strictly connected.

To avoid such a short circuit, a flexible interpretation of the concept “performance of contractual obligations” should be adopted for the purposes of Article 9(3) of the Rome I Regulation.

An overture to this effect can be seen in the AG Szpunar’s Opinion in the Nikiforidis case. Leveraging on the genuine meaning of the mechanism of overriding mandatory rules of third States – i.e. preserving the connection with the legal order to which the relationship is more strictly connected – AG Szpunar favoured a broad interpretation of the notion “performance of contractual obligations”, as to encompass not only the obligation consisting in characteristic performance, but any obligation arising from the contract (§ 93), irrespective of whether directly defined by the parties in the contract or imposed by law (§ 94).

The step forward to AG Szpunar’s interpretation would be to endorse a contextualized interpretation of the entire notion of “performance of contractual obligations”, so that when the dispute concerns only the credit side of the relationship – which by definition does not encompass the performance of an obligation – the exercise of a right should be understood as equivalent to the performance of an obligation for the purposes of Article 9(3). Along the lines of what AG Szpunar argued, this should hold true both for the exercise of rights conferred by the contract and the exercise of rights conferred directly by the governing law.

As to the place where the creditor’s right is exercised, it is reasonable to localize it at the same place where the creditor is established. This means that in case of an act of dismissal, said place will coincide with the place of establishment of the employer.

Building on such interpretation, Article 46 appears to fulfil the second requirement provided for under Article 9(3) of the Rome I Regulation, being a rule of the country where the statutory right of termination has been or is to be exercised by the employer based in Italy.

The compliance of Article 46 with the unlawfulness requirement set out above is more straightforward. As Article 46 renders unlawful the dismissals of employees on the grounds of the Covid-19 financial difficulties encountered by their employers, also the third requirement set out above is satisfied.

The above is without prejudice to the fact that the decision of whether to give effect to Article 46 of the Decree-Law will be taken by the court seized on the basis of its own discretionary assessment of the nature, purpose and consequences deriving from the application or non-application of such provision.

When performing such assessment, which is political in nature, the court will evaluate whether the rationale underpinning Article 46 can be welcomed as convergent with the values of the forum. In essence, the court will assess whether, on the basis of the policies of its own legal order – including solidarity with other EU Member States – the rule of conduct prescribed by Article 46 of the Italian Decree-Law can be considered justified by the protection of interests that the forum wants to safeguard with the same or a similar degree of intensity adopted by the Italian legislator in Article 46 of the Decree-Law.

This ultimately shows that the application of overriding mandatory rules of third States falling within the category of Article 9(3) of the Rome I Regulation, to put it with AG Szpunar, “creates for the [seized] court the possibility of giving a decision which is fair and at the same time has regard to the need to balance the competing interests of the States involved” (§ 74).

Seen from this perspective, the consideration of the overriding mandatory rules of a third State is an opportunity for the judge to give a decision which is considered fair because aligned with its own values not only by the State enacting the overriding mandatory provision but also by the forum itself. Hence, the broad interpretation of Article 9(3) of the Rome I Regulation above proposed should be welcomed as increasing the cases where such possibility can be granted.

UK Applies for Accession to Lugano Convention

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Matthias Lehmann
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Brexit and its legal consequences was the topic of an earlier post in this blog, suggesting the United Kingdom should join the Lugano Convention. The British government has now taken the first step in this direction.18

The UK’s Application for Accession

On 8 April 2020, the UK deposited an application to accede to the Lugano Convention with the Swiss Federal Council as the depositary of the Convention (Article 69(2) Lugano Convention). In accordance with Article 72(2) of the Lugano Convention, the information was transmitted to the Contracting Parties. Enclosed as Annex A was the information required under Article 72(1) of the Convention, amounting to 41 pages. The necessary French translation (Article 70(2) Lugano Convention) is still missing.

Switzerland requested to convene a meeting of the Standing Committee in accordance with Article 4(2) of Protocol 2 to the Convention. The Signatories of the Convention (the EU, Denmark, Iceland, Norway and Switzerland) now have to decide whether to grant the application. According to Article 72(3) Lugano Convention, they shall endeavour to give their consent at the latest within one year.

The Situation During the Transition Period

Already on 30 January 2020, the Swiss Federal Council informed the Signatories of a document it had received titled Annex to the Note Verbale on the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community. The objective of this Annex is to secure the UK’s continued treatment as a party to the Lugano Convention during the transition period, which runs from 1 February 2020 to at least 31 December 2020, subject to a further extension for up to one or two years.

The Annex to the Note Verbale first sets out some principles of the Withdrawal Agreement concluded between the EU and the UK. In particular, it recalls that the “Withdrawal Agreement encompasses international agreements concluded by the Union” (point 4 Annex). In relation to the EU and Euratom, the UK is bound by these international agreements during the transition period (Art 129(1) Withdrawal Agreement). Furthermore, the Withdrawal Agreement provides that the EU notifies parties to international agreements that the UK is treated by the Union as a Member State for the purposes of these international agreements (point 5 Annex).

After recalling these principles, the Annex to the Note Verbale adds the following sentence (point 6 Annex):

It is understood that the principles set out in this Annex also extend to international instruments and arrangements without legally binding force entered into by the Union or Euratom and to international agreements referred to in point 4 above which are provisionally applied.

The Swiss Federal Council has asked the Signatories to consent to the Note Verbale, which the EU has already done. If the other Signatories agree as well, the Lugano Convention could remain binding on all parties during the transition period. Unfortunately, the outcome of the process is unknown, which creates unnecessary uncertainty.

Back to the Past?

The UK’s application to accede to the Lugano Convention is the strongest indication yet that the UK wishes to continue participating in judicial cooperation in Europe. There are important voices against the UK’s accession to the Convention. Without it, though, those seeking legal protection will encounter obstacles in the enforcement of British judgments on the European continent, and vice versa. It therefore seems better the UK’s request would be granted.

Impact of the COVID-19 Virus on the Justice Field: Information at the e-Justice Portal

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Marta Requejo Isidro
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European e-Justice PortalConfinement has severely curtailed our freedom of movement, but it has certainly not put an end to disagrements and disputes.

Citizens and businesses needing to take procedural action in a cross-border case may be unable to do so due to emergency measures taken in an EU Member State in order to counter the spread of the COVID-19 virus.

These measures may result in the complete or partial suspension of the work of courts and authorities; the temporary inability to obtain legal aid; difficulty to access information normally provided by the competent authorities; other practical issues, for instance delays in enforcing a decision in a cross-border context or in serving a judicial document; temporary adjustments in terms of communication with the public (by email, by phone or by postal mail).

With this is mind, the e-Justice Portal has opened a page aiming to provide an overview of temporary measures taken within the European Union in relation to the COVID-19 virus. The page gives access to a table (pdf document) with information provided by the EJN contact points – and the usual disclaimer: ‘If you need additional information, please consult the webpages of the Ministry of Justice of the Member State for which you need information’

As the situation is changing rapidly and information on this topic is still evolving, the page is updated regularly to reflect new developments.

The EAPIL blog hosts an ongoing on-line symposium aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself. Contributions on this topic have been proposed so far by Giovanni Chiapponi, Matthias Lehmann and Tomaso Ferando. Those interested in proposing a guest post for publication on these issues are encouraged to contact the blog’s editorial team at blog@eapil.org. 

ELI Approves Report on the Protection of Adults in International Situations

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Apostolos Anthimos
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On 21 March 2020 the Fellows of the European Law Institute (ELI) have approved a Report on the Protection of Adults in International Situations.

The Report, prepared by Pietro Franzina and Richard Frimston based on the work of a team of academics and professionals, is the outcome of a project launched in 2017. The purpose of the Report is to illustrate the current legal framework applicable in Europe, in cross-border cases, to the protection of persons aged 18 or more who are not in a position to protect their interests due to an impairment or insufficiency of their personal faculties, and to outline the measures that EU institutions might take to enhance such protection.

The Report encourages further ratifications of the Hague Convention of 13 January 2000 on the International Protection of Adults, and suggests a number of legislative and non-legislative measures that the EU could take to complement the Convention and improve its operation in the relationship between Member States.

The Unambitious Reform of the Evidence Regulation

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Gilles Cuniberti
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In May 2018, the European Commission published a proposal for a Regulation amending the 2001 Evidence Regulation. The name of the proposal immediately clarifies the lack of ambition of the project: the intention is to amend the existing text, not to recast it.

The Commission Proposal

The Proposal aims at improving the 2001 Regulation by: using electronic transmission as the default channel for electronic communication and document exchanges; promoting modern means of taking evidence such as videoconferencing and incentives (via the financing of national projects) for Member States to equip courts with videoconferencing facilities; removing legal barriers to the acceptance of electronic (digital) evidence; tackling divergent interpretations of the term ‘court’;  communicating the importance of the uniform standards provided by the Regulation (streamlined procedures, equal standard of protection of the right of the parties involved); best practices for competent courts, to help them apply the procedures properly and without delay; and raising courts’ and legal professionals’ awareness of the availability of the direct channel of taking evidence under the Regulation.

On 13 February 2019, the European Parliament adopted its first-reading position on the proposal, with 37 amendments to the text of the Commission.

On 29 November 2019, the Council of the European Union adopted a general approach of the text.

The main purpose of the proposal is to improve transmission of requests and communication by using modern communication technology. There is no doubt that this is an important concern. Yet, the operation of the Evidence Regulation arguably raises much more important issues.

The Optional Regulation

The Evidence Regulation should further European integration by facilitating and expediting the taking of evidence in other Member States.

Instead, it is the experience of many European practitioners that the Regulation does just the opposite. It creates obstacles, and slows down the taking of evidence abroad. The reason is simple: the Regulation requires the intervention of authorities in the requested state as a preliminary step to the taking of evidence abroad. The most liberal provision in this respect is Article 17, which introduced “Direct taking of evidence by the requesting court” in other Member States. But even under Article 17, it is necessary to “submit a request to the central body or the competent authority” of the requested state.

The European Union has abolished the exequatur procedure for judgments rendered in civil and commercial matters. Under the Brussels II bis Regulation, decisions on the return of a child are immediately enforceable and may not be challenged in the requested state, even for alleged violations of human rights. But the taking of evidence abroad is still subject to a preliminary procedure. The system completely lags behind.

In Lippens and ProRail, the Court of Justice of the European Union (CJEU) addressed the issue by ruling that the application of the Evidence Regulation was not mandatory, and that Member States could simply ignore it and take evidence abroad under their own procedures, without seeking any kind of approval from the requested state. In particular, the CJEU ruled in ProRail:

43. (…) it must be recalled that, according to recitals 2, 7, 8, 10 and 11 in the preamble to Regulation No 1206/2001, the aim of the regulation is to make the taking of evidence in a cross-border context simple, effective and rapid. The taking of evidence, by a court of one Member State in another Member State must not lead to the lengthening of national proceedings. (…)

45. An interpretation of Articles 1(1)(b) and 17 of Regulation No 1206/2001 according to which the court of a Member State is obliged, for any expert investigation which must be carried out directly in another Member State, to take evidence according to the method laid down by those articles would not be consistent with those objectives. In certain circumstances, it may be simpler, more effective and quicker for the court ordering such an investigation, to take such evidence without having recourse to the regulation. 

The CJEU however reserved cases where the taking of evidence would affect the powers of the requested Member State.

The Proposal of the Commission does not address the optional character of the Regulation. This means that the future amended Regulation will remain an optional instrument that the courts of the Member States are free to (continue to) ignore.

Liberalizing the Taking of Evidence in Other Member States

The most important issue that the Proposal does not tackle, however, is that of the obstacles that the Regulation creates in the taking of evidence abroad, and that litigants avoid by resorting to national law.

During the legislative process which lead to the adoption of the initial Evidence Regulation, Germany had proposed to fully liberalize the operation of judicial experts in other Members States. Under this exception, courts could appoint a judicial expert to carry out his mission in other Member States without any need for a preliminary procedure in the requested state. The exception was eventually not adopted. However, this is exactly what the CJEU has allowed in ProRail, which was concerned with the operation of a judicial expert in another Member State.

The reform of the Evidence Regulation was thus the perfect opportunity to reconsider the issue. A much more ambitious reform would have attempted to identify cases where the taking of evidence abroad could be liberalized by abolishing any preliminary procedure, and cases where some kind of involvement of the requested state would still appear to be justified.

Instead, the European lawmaker is about to ignore the problem and, by doing so, to generate considerable uncertainty.

Disclosure: the author was a member of the expert group established by the European Commission for the purpose of drafting the Proposal of the Commission.

The Impact of Corona Virus on the Management of Judicial Proceedings in Italy

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The Editors of the EAPIL blog
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The author of this post is Giovanni Chiapponi, research fellow at the MPI Luxembourg. The post is based on a presentation given at the weekly meeting of researchers of Department 1 of the MPI Luxembourg on 11 March 2020. This is the first in a series of posts aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself (see the other contributions on the topic by Matthias Lehmann and Tomaso Ferrando).

As the Covid-19 (corona virus) spreads out, the Italian government has taken some important measures, which have a strong impact on the structure of the internal judicial system. Thus, the Decree-Law No 11/2020 of 8 March 2020 contains extraordinary and urgent measures on the management of the judicial workload and on the internal organization of the judiciary to contrast the negative effects of the virus on the functioning of judicial activities.

Indeed, even in a period of crisis, where there are many risks at stake for the health of the population, it is important to ensure a proper administration of justice. Hence, the rationale of the decree is to guarantee an effective and efficient functioning of the judicial system.

In this regard, the decree provides for the postponement of hearings and for the suspension of time limits in civil, criminal, fiscal and military proceedings.  Consequences follow in all these fields of law, however my remarks will only focus on the consequences affecting civil matters.

According to Article 1(1), most civil hearings scheduled between the day following the entry into force of the decree (9 March 2020) and 22 March 2020 will not take place due to a mandatory postponement.

In the same way, pursuant to Article 1(2), time limits for exercising judicial acts within civil proceedings are automatically suspended for the period 9 to 22 March 2020. Where a time limit would normally begin during the period of suspension, the starting point is delayed until the end of the latter period.

Despite the urgency of the situation, some exceptional rules are provided under Article 2 of the decree. Both the mandatory postponement of hearings and the suspension of time limits do not concern some categories of proceedings that deal with urgent issues. In this regard, Article 2(2)(g) lists the following exceptions: determinations as to the adoptability of children, matters relating unaccompanied minors, the removal of minors from their family and situations of serious prejudices; matters relating to maintenance obligations; provisional measures affecting fundamental rights; decisions regarding compulsory health treatments; matters in respect of the voluntary termination of pregnancy; measures of protection from domestic violence; measures of expulsion; decision on provisional enforceability of judgments before Courts of Appeal and the Court of Cassation; all matters entailing the risk of serious prejudice to the parties.

Furthermore, Article 2(1) provides that the presidents of individual courts may adopt technical and organisational measures aimed to respond to health concerns while ensuring, as far as practical, the proper administration of justice.

The following measures, among others, may be adopted for the above purposes: purely organisational measures such as limitations to the access to, or the opening hours of, courthouses; guidelines as regards the conduct of hearings; exceptions to the publicity of hearings in civil matters; the use of IT technologies in court hearings; the postponement of non urgent hearings.

Some comments

The decree impacts on some fundamental principles of civil procedure (e.g. the right of defense, the equality of arms, the reasonable length of the proceedings) enshrined in the Italian Constitution, the Charter of Fundamental rights of the European Union and the European Convention on Human rights. It aims at ensuring a balance between the right to health and health care (recognized at a constitutional and European level by the Charter of Fundamental rights and the European Convention on Human Rights) and the rights of the parties in the context of civil proceedings.

Despite the urgency and uncertainty of the situation, it is indeed important to ensure the respect of the fundamental procedural rights of the parties. In this regard, the decree suspends limitation periods to file a claim with the court and procedural time limits for the exercise of parties’ rights in order not to undermine parties’ prerogatives. The lapse of time is “locked” and in principle, this does not entail negative consequences for the parties in the proceedings.

However, some doubts on the interpretation of the text of the decree arise. In such a technical question as time limits, clear indications are needed as regards, in particular, the calculation of time limits.

Namely, the decree refers to “time limits … within the proceedings”. Which time limits are concerned, precisely? Does the suspension of time limits apply to all pending legal disputes (including the objections against injunctions and the appeal procedure) or does it apply only to those legal disputes in which hearings were fixed in the period 9 to 22 March 2020 and that have been postponed by the decree?

For instance, if no hearing is scheduled , but the deadline to submit an appeal before the Court of Appeal expires on 11 March, is the time to appeal suspended? Arguably, the first reading should be preferred, since it allows the parties to better safeguard and protect their rights.

If the first reading were adopted, another issue would arises: how should time limits be calculated retroactively if they expire within the period of suspension? For instance, if a time limit expires on 11 March, what would be the new expiry date? The expiry date, it is argued, should be 24 March (9+2/22+2), as the suspension period is to be applied.

In the meantime, the Government’s department for the relations with the Parliament in an explanatory note delivered on 11 March has indicated that the broad interpretation suspending time limits in all pending legal disputes should apply.

However, the note has no binding effect as such and does not bridge the existing legal gap. As required by the Italian Bar Council, the Italian legislator should intervene to guarantee certainty.

As the immediate conversion of the decree into law seems to be difficult, the government may provide for an authentic interpretation of the rules at stake. This would ensure that the parties’ legitimate expectations on the proper administration of justice are not undermined or frustrated.

The foreign proceedings, it is contended, should then prevail on the ground that they were brought first. The fact that the justice system in one EU Member State has come to a stand-still cannot entail that other Member States have to stop their systems, too. That would run counter the interest of the parties.

Finally, some considerations may be made on the implications of this emergency legislation for judicial cooperation at the European level. These uncertainties on time limits will inevitably entail uncertainty in cross-border cases. As Italian procedural law applies under the lex fori principle, the parties must act in accordance with Italian procedural time limits including these extraordinary rules provided by the law decree. As issues arise for parties in the context of national proceedings, in the same way they will spill over in cross-border settings.

In this respect, it is interesting to underline that some European instruments in the field of judicial cooperation in civil matters provide for strict time limits (e.g. Article 5(3) of the Small Claims Regulation or Article 18 of the Regulation on the European Account Preservation Order).

What happens to those time limits if the Italian law applies under the lex fori principle? Are they suspended in the period 9 to 22 March according to the Law decree? In order to safeguard the rights of the parties, which are even more at risk in cross-border cases, it would be reasonable to suspend also these time limits. However, the Italian legislator is not competent to suspend time limits laid down in EU Regulations. Should the European legislator intervene?

Another key issue, which may have negative consequences in cross border cases, concerns Article 32 of the Brussels I bis Regulation, which provides for an autonomous definition of the time in which a court is deemed to be seized of a dispute. May we consider that an Italian Court is seized of a dispute during the period 9 to 22 March? The same considerations pointed out above can be reiterated: the activity of Italian courts should, in principle, be suspended, but as we are dealing with a concept laid down in a European Regulation, the Italian lawmaker cannot provide for exceptional rules applying to the Brussels I bis Regulation. This is again an open question, which shines a light on the risk that the lis pendens rule may be frustrated.

To conclude, as Covid-19 spreads out throughout the EU, the exceptional situation may lead other Member States to adopt urgent measures to contain the spread of the virus. As the system of judicial cooperation in civil matters is based on mutual trust and the application of provisions under the law of the Member State of origin, the question arises how the EU procedural law system may react to the introduction of extraordinary measures.

Judicial cooperation in civil matters, indeed, is based on the assumption that there is no state of emergency. Thus, if Member States start to introduce exceptional procedural rules in their own systems, there is the high risk that the EU procedural system would not be ready to face emergency measures. The EU should arguably allow Member States a certain degree of flexibility at least to provide exceptional rules for the urgent circumstances at stake.

Mutual Trust at Issue: New Law Limiting the Independence of the Judiciary in Poland

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Agnieszka Frąckowiak-Adamska
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z25581399V,Protest-w-obronie-niezawislosci-sadow--Rynek-w-KraOn 14 of February 2020 a new law undermining the independence of judiciary in Poland (a so-called “muzzle law“) entered into force.

The Act of Law of 20 December 2019 bars judges from, among other things, contesting the status of other judges or the legality of their appointment (an English version of the draft Act, almost identical to the Act as adopted, is available here) .

The act is a reaction to (i) the CJEU judgment of 19 November 2019 in the AK case, by which the Court asked Polish judges to verify the conformity of the new Disciplinary Chamber of the Supreme Court with EU law, and (ii) the subsequent judgment of another chamber of the Polish Supreme Court of 5 December 2019 finding that the Disciplinary Chamber does not comply with EU law (an English version can be found here).

According to the new Act, judgments corresponding with the one laid down by Supreme Court on 5 December 2019 would be prohibited. Defecting judges can be removed from the profession.

The law has provoked strong reactions from the European institutions already at the stage of the legislative process.

The Vice-President of the European Commission, Věra Jourová, wrote on 19 December 2019 a letter to the Polish President, the Prime Minister and the Presidents of both chambers of the Parliament. The letter states that the rules of the new legislation “touch upon matters such as judicial independence, further raising the Commission’s existing concerns in this area”.

In the letter, Ms Jourová also encouraged “the Polish authorities to consult the Council of Europe’s Venice Commission on this draft legislation”, and invited “all State organs not to take forward the proceedings on the new draft legislation before carrying out all the necessary consultations”.

On 11 January 2020 a “March of 1000 Gowns” demanding “the right to independence, the right to Europe” took place in Warsaw. Polish judges supported by 50 judges from other European countries, together with thousands of citizens, protested against the draft law.

The Venice Commission adopted on 16 of January 2020 an urgent joint opinion on the draft law. The remark is made in the opinion that, by virtue of some of the amendments to the law, “the judges’ freedom of speech and association is seriously curtailed”: Polish courts will be effectively prevented from examining whether other courts within the country are ‘independent and impartial’ under the European rules”.

On 28 January 2020, the Parliamentary Assembly of the Council of Europe (PACE) opened a monitoring procedure for Poland over the functioning of its democratic institutions and the rule of law. In its resolution 2316(2020) it declared that recent reforms in Poland “severely damage the independence of the judiciary and the rule of law”.

The law was adopted anyway. An open question is what impact it will  have on the mutual trust and the mutual recognition of judgments in the European Union. Polish ‘reforms’ resulted already in the rebuttal of the presumption of mutual trust in the context of recognition of judgments in criminal matters (judgment of 25 July 2018 in the LM case, analysed here). But the restriction of the independence of the judiciary has a potential impact on all acts providing for the mutual recognition of judgments, in both criminal and civil matters.

It can be particularly challenging for judges applying norms of EU Private International Law. 

Recognition of civil judgments given by a court or tribunal of a Member State should take into account that the CJEU treats a “court” as an autonomous concept of EU law.

The CJEU elaborated on this notion, among other rulings, in Ibrica Zulfikarpašić (§43) and Pula Parking (§53), where it stated that due to the principle of mutual trust, EU law requires “that judgments the enforcement of which is sought in another Member State have been delivered in court proceedings offering guarantees of independence and impartiality”.

The above-mentioned doubts expressed by the European Commission and PACE appear to challenge that requirement.

Photo: Courtesy of Jakub Włodek / Agencja Gazeta

Work Resumes at the Hague Conference on a Possible Instrument on Direct Jurisdiction

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Marta Requejo Isidro
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The_Hague_Conference_on_Private_International_LawFollowing the adoption of the Judgments Convention, on 2 July 2019, the Hague Conference on Private International Law has resumed its exploratory work on the possible elaboration of an instrument dealing with jurisdiction in civil and commercial matters (the Jurisdiction Project).

From 18 to 21 February 2020, the Experts’ Group set up for this purpose met in the Hague.

The Group was pleased with the progress made and concluded that matters relating to jurisdiction, including parallel proceedings, warrant further work and study.

The Experts’ Group has recommended to the Council on General Affairs and Policy, which will meet form 3 to 6 Mars 2020, that the Group continue its work.

Towards a New Service Regulation – Some reflections

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Apostolos Anthimos
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On 29 November 2019, the Council of the European Union adopted a general approach regarding the recast of Regulation 1393/2007 on the service of judicial and extrajudicial documents abroad. On 7 February a new Council document was published, featuring the Annexes of the future Recast Regulation.

The new Regulation, which will likely be adopted in the Summer or Autumn of 2020, is not expected to bring about major changes to the current legal landscape.

A comparison is provided below between some key features of the Commission’s proposal of 31 May 2018, on the one hand, and the corresponding solutions envisaged in the compromise text elaborated by the Council, on the other.

1. The Commission proposed to clarify by an additional paragraph in Article 1 that the Regulation does not apply “to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”, thereby moving to the body of the Regulation what was already stated in Recital 8 of the 2007 Regulation. Concurrently, the Commission envisaged to introduce a new provision – Article 7a – requiring the recipient to appoint a representative for the purpose of service in the forum State for all documents following the one introducing proceedings. The Council took the view that both innovations should be dropped.

2. The Commission Proposal aimed to enhance electronic communication between Transmitting and Receiving Authorities, suggesting the establishment of national IT systems (Article 3a). This provision was partially amended, following the concerns of national delegations with respect to the sustainability of a decentralized mechanism.

3. The Proposal introduced a new provision, aiming at a more active assistance of Member States authorities towards a smoother and more efficient search of the whereabouts of the defendant (Article 3c). The provision underwent minor amendments by the Council.

4. The Proposal added two paragraphs to Article 8. One was meant to extend the delay by which the recipient may refuse service, while the other intended to specify the duty of the court of the forum to examine whether the refusal was founded. The Council’s compromise text retained the former suggestion, while rejecting the latter.

5. The Proposal introduced two additional paragraphs in Article 14 on service by post, suggesting the use of a specific acknowledgment of receipt, and deeming postal service as validly effected when served to adult persons living in the same house with the recipient. The Council rejected the proposed amendments. With reference to Article 14, two additional points should be stressed: first, the wording of the provision has changed in a way that leads to the conclusion that postal service does not have to pass through transmitting authorities / court channels; second, postal service may be resorted to not only for persons domiciled, but also for those who are merely present in the country of destination.

6. The Commission Proposal attempted to pose an obligation to all Member States to provide information on professions or competent persons permitted to effect direct service. The Council deleted this part of the proposal almost in its entirety. The efforts of the Commission towards extending direct service in all Member States met with the adamant refusal of the Council.

7. The Proposal introduced a provision on electronic service (Article 15a). The Council adopted in principle the proposal as Article 14a, slightly modifying its wording. It also stated the obligation of Member States to specify the conditions under which electronic service will be accepted.

8. The Commission proposed two innovations on Article 19, regarding the situation where the defendant fails to enter an appearance: an additional tool of communication for the purposes of Article 19(2), i.e. sending an e-mail or a message to an address or an account known to the court seised, and a streamlined approach to the delay within which an application for relief must be filed with the court (2 years following the date of the judgment). Both proposals were discarded by the Council.

As a general conclusion, it may be stated that the innovative steps proposed by the Commission were met with reservation both by the European Parliament and the Council. What hopefully will improve is the cooperation between Member States authorities in the preliminary field of transmission. This will of course depend on the willingness and preparedness of Member States.

Regarding actual service of process, the situation remains the same. A divide among Member States will continue to exist in regards to direct service; e-service will heavily depend on the conditions set out by Member States; a unified approach regarding the term within which an application for relief was rejected; finally, the obligation of the claimant to serve everything abroad will continue to exist, save for the exceptions provided for by the Regulation (legal representative and unknown residence), confirmed by the CJEU in the Alder case.

Should the EU Join the Hague Judgments Convention?

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Marta Requejo Isidro
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On 10 February 2020, the European Commission announced its intention to open a process of consultation to get feedback from citizen and stakeholders on whether the EU should join the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters (the Hague Judgments Convention). 

In the words of the Commission, the EU has put in place a highly developed internal acquis for the cross-boder recognition and enforcement of judgments, as a necessary complement to its single market. By way of contrast, at the international level the recognition and enforcement of judgments in civil and commercial matters has, until recently, not been successfully regulated, even if some bilateral agreements between States exist.

Currently, civil or commercial judgments rendered by courts in the European Union can be recognised and enforced in a third country only in a limited number of situations, namely: (i) based on the 2005 Choice of Court Convention, which has a limited scope; (ii) in Iceland, Norway and Switzerland based on the Lugano Convention; (iii) based on a limited number of bilateral treaties between individual Member States and third States; (iv) based on multilateral treaties related to particular matters; or (v) on the basis of the national law of third States, sometimes subject to reciprocity. 

The Commission believes that the adoption in July 2019 of the Hague Judgments Convention may change the situation just described. Moreover, it claims that a future proposal for EU accession to the Judgments Convention would be in line with the objectives set out in the Political Guidelines for the European Commission (2019-2024), in particular related to “An economy that works for people”.

The policy objectives of the EU accession to the Judgments Convention would be: to enhance access to justice for EU businesses and citizens through a system that facilitates the recognition and enforcement of judgments everywhere in the world where the debtor happens to have assets; to increase legal certainty for those involved in international trade and investment; to reduce costs for businesses and citizens involved in international dealings or in international dispute resolution; to allow the recognition and enforcement of third-country judgments in the EU only where fundamental principles of EU law are respected, such as for instance the right to a fair trial, and which do not affect the EU acquis related to the internal recognition and enforcement of judgments.

As for the policy options, the Commission puts forward the following:

Option 0: Baseline scenario: no policy change. The Union will thus not accede to the Judgments Convention and the current status quo will continue. However, given the EU’s active involvement in these negotiations and the fact that its results reflect EU’s policy interests, this scenario is taken into account mainly as a benchmark in order to assess the other options.

Option 1a: The Union will accede to the Judgments Convention without making any declaration.

Option 1b: The Union will accede to the Judgments Convention, excluding certain matters reflecting the EU’s policy objective of protecting weaker parties, such as consumers, employees or, in matters relating to insurance, the policyholder, the insured or the beneficiary, or/and certain matters falling under the exclusive jurisdiction of EU courts, for instance with regard to disputes relating to tenancies or commercial lease of immovable property.

Option 1c: The Union will accede to the Judgments Convention excluding State entities from the application of the Convention

Option 1d: A combination of options 1b and 1c

The Commission’s preliminary assessment of acceding to the Convention points to a positive outcome in economic terms, coupled with an improvement of growth and investment, thus of employment (the Commission acknowledges nontheless that as trade and investment of companies from outside the EU might also increase, some negative economic impacts in the short term cannot be excluded for EU competitors).

From the point of view of access to justice, signing the Convention would have postive implications as well. In terms of administrative burdens, the Commission is once again optimistic: although some Member States with a simple system for recognition and enforcement would face some negative impact if the new system based on the Judgments Convention is implemented, the Commission believes that such possible negative impacts would be offset by the important economic benefits.

The public consultation on the above-mentioned policy objectives and options, and on the likely impacts of signing the Convention, will be launched in March/April 2020 and run for a minimum period of 12 weeks. It will be available via the Commission’s central public consultations page; the questionnaires will be available in English, French and German but the replies can be made in any of the 24 official languages.

An in-depth Study on the Hague Judgements Convention Draft of November 2017, requested by the JURI Committee of the EU Parliament, to a large extent, still valid under the final version, can be downloaded here; it includes a chapter devoted to the relationship with the EU rules, and policy recommendations on the position of the EU vis-à-vis the Convention. A detailed explanation of the Convention as adopted is provided by A. Bonomi (Professor at the University of Laussane) and C. Mariottini (Senior Research Fellow, Max Planck Institute Luxembourg) at the Yearbook of Private International Law, vol. 20 (2018/2019), pp. 537-567. 

French Parliament to Pass Law Denying Right to a Child

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The Editors of the EAPIL blog
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The author of this post is François Mailhé (University of Picardy – Jules Verne).

logo_du_senat_republique_francaise

“Nul n’a de droit à l’enfant”, that is, no one has a right to a child. This is the first amendment the French Senate has recently added to the latest reform of the Bioethics Act 1994 under discussion in Parliament this month, and which is intended to introduce Title VII of the First book of the civil code “on filiation”.

The Senate is the higher chamber of Parliament, with members elected by elected officials from local governments. It participates in the discussion of all legislative projects with the National Assembly (lower chamber), but the latter would ultimately prevail in case of conflict.

I reported earlier on the three judgments of the French supreme court for civil and criminal matters (Cour de cassation) which, on 18 December 2019, extended the recognition on foreign surrogacies in France. These judgments were expressly based on an advisory opinion concerning the recognition of legal parent-child relationships between a child born through a gestational surrogacy arrangement abroad and the intended mother, given by the European Court of Human Rights (ECtHR) in April 2019.

Surprisingly, the Cour de cassation had gone much further than the ECtHR, though, allowing direct recognition of the filiation for all parents appearing on the birth certificate, while the ECtHR had only required for the recognition of the biological father one.

What happened next is even more surprising if not unique in French legislative history.

On 7 January 2020, the Senate chose to oppose the Cour de cassation case-law, on a private international law issue, to better align French law on the ECHR solution. Amendment No 333 to the Bioethics Act reform would, if passed, create a new article 47-1 of the Code civil, drafted as follows:

Any civil status record or judgment for a French citizen or a foreigner made in a foreign country and establishing the filiation of a child born as a result of a surrogacy agreement shall not be transcribed in the registers in so far as it refers as mother to a woman other than the one who gave birth or when it mentions two fathers.

The provisions of the preceding paragraph shall not prevent the partial transcription of this act or judgment or the establishment of a second parent-child relationship under the conditions of Title VIII of this Book [on adoption], where such conditions are met.

The Amendment would in fact bring the French system back to what it was after the rulings rendered by the Cour de cassation in July 2017, and in line with the ECtHR opinion of April 2019. In practice, the biological father would be the only “intended parent” to be recognised as such through direct transcription. His husband or wife would only have a right to adopt the child at a later stage (as long as the procedure of adoption is not unreasonably long, which should not be the case under French law for the adoption of the husband’s child).

As the government backed a similar amendment, though milder than the one eventually adopted, it seems probable the National Assembly will not much alter it.

The change brought about by the rulings of the Cour de cassation of 4 October and 18 December 2019 may therefore be short-lived.

Foreign surrogacy agreements may not be so much welcome in France after all.

Mediated Agreements in Cross-border Family Disputes: the AMICABLE Project

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Agnieszka Frąckowiak-Adamska
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AMICABLE, a project co-funded by the European Commission, aims to create Best Practice Tools assisting with the enforceability of mediated agreements in the EU, and a Model for incorporating mediation into child abduction proceedings.

The Best Practice Tool is a sort of legal “roadmap” for judges, legal practitioners and mediators. It will consist of an EU general Best Practice Tool and four country-specific tools for Spain, Poland, Italy and Germany, respectively.

The Model is already operative in Germany, the UK and the Netherlands. The project’s goal is to facilitate the exchange of information and mutual learning and to explore how the model could be introduced in Spain, Poland and Italy.

The Project is led by MiKK, International Mediation Centre for Family Conflict and Child Abduction (Germany) in cooperation with the Universities of Milano-Biccocca (Italy), Wrocław (Poland) and Alicante (Spain).

Registration is open for the Project Seminars, scheduled to take place on 26 and 27 March 2020 in Alicante, on 23-24 April 2020 in Wrocław and on 21-22 May 2020 in Milan.

More information is available through the Project’s website.

New Volume of The Judges’ Newsletter Focusing on Urgent Measures of Protection for Children

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Apostolos Anthimos
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The Permanent Bureau of the Hague Conference on Private International Law has published a new volume of The Judges’ Newsletter, a biannual publication aimed to guarantee circulation of information relating to judicial co-operation in the field of international protection of children.

This volume’s special focus is on urgent measures of protection as provided for under Article 11 of the 1996 Hague Child Protection Convention.

Collective Redress: Legal Affairs Committee Confirms Parliament’s Negotiating Position on New EU Legislation

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Marta Requejo Isidro
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According to a press release published on 9 January 2020, the MEPs can soon start negotiating the final shape that the legislation will take with Council. The Legal Affairs Committee confirmed the European Parliament’s negotiating position with 20 votes in favour and 2 abstentions.

The draft rules allow eligible entities, such as consumer organisations and certain independent bodies, to seek remedy, including compensation; enforce a high level of protection; and to represent the collective interest of consumers. Collective action would be authorised against trader violations, in domestic and cross-border cases, in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health.

The text approved by MEPs on 26 March 2019 also introduces the “loser pays principle”, which ensures that the losing party reimburses the winning party’s legal costs, to avoid abusive use of the new instrument. The proposed legislation reflects concerns raised by mass harm scandals with cross-border implications, e.g. Dieselgate and Ryanair.

The new rules would strengthen the right to access to justice by allowing consumers to join forces across borders and to jointly request that unlawful practices be stopped or prevented (injunction), or to obtain compensation for the harm caused (redress).

European Group of Private International Law’s 2019 Meeting: Minutes and Proposals

Gilles Cuniberti
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The European Group of Private International Law (EGPIL-GEDIP) has published the minutes (in French) of its 2019 Meeting in Katowice.

The topics discussed during the meeting included a proposal for a regulation in divorce matters, a proposal for a regulation concerning the applicable law to in rem rights and choosing a strategy for the codification of the general part of EU private international law.

Some annexes to the minutes are drafted in English, including the proposal for a regulation concerning the applicable law to in rem rights (annexe 2) and a communication on corporate social responsibility (annexe 6). The EGPIL has also published separately a proposal for a regulation on jurisdiction, applicable law and recognition of judgments and decrees with regard to divorce and legal separation, with an explanatory memorandum, and a recommendation concerning the need to maintain and develop international cooperation in matters of civil status, in particular by maintaining the conventions of the International Commission on Civil Status (ICCS).

Collective Interests of Consumers – a Directive in the Making

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Marta Requejo Isidro
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Background

On 11 April 2018, the Commission published a proposal for a new Directive on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC.

The proposal follows the REFIT Fitness Check of EU consumer and marketing law, published on 23 May 2017, which showed that due to globalisation, the rise of cross-border trading and e-commerce, the risk of infringements affecting large numbers of consumers is increasing.

The proposal aims to modernise and replace Directive 2009/22/EC (the Injunctions Directive). In order to do so, it intends to:
(a) expand the scope of the injunctions system in order to cover other horizontal and sector-specific EU instruments relevant for the protection of collective interests of consumers in different economic sectors (such as financial services, energy, telecommunications, health, environment);
(b) lay down procedures for compensatory redress (currently, Member States must have in place only procedures for obtaining an order to stop or prohibit an infringement);
(c) modify the rules on qualified entities;
(d) make the procedure more efficient – Member States will have to ensure ‘due expediency’ of procedures and to avoid procedural costs becoming a financial obstacle to bringing representative actions;
(e) promote collective out-of-court settlements.

Within the European Parliament, the proposal was referred to the Committee on Legal Affairs (JURI) with Geoffroy Didier as rapporteur. He submitted his draft report to the JURI Committee on 12 October 2018. The Committee adopted the report on 7 December. Parliament adopted its first-reading position on 25 March 2019.

The proposal was presented by the Commission to the Council on 22-24 April 2018. On 20 November 2019, the Permanent Representatives Committee (COREPER) decided to submit a compromise text proposed by the Finnish Presidency to the Competitiveness Council of 28 November 2019, with a view to reaching a general approach. The text as agreed is available here.

Main Features

In what follows I offer a summary of the main points of the proposal from a private international law perspective. Some, like the definition of a “cross-border action”, are a little bit puzzling, to say the least. I leave nevertheless open the assessment of the impact of the Directive on domestic law and the relationship with the current European private international law rules. Prof. Stefaan Voet (Leuven University) has kindly accepted to address these points in a future post.

1. The Directive should cover both domestic and cross-border infringements, in particular when consumers concerned affected by an infringement live in one or several Member States other than the Member State where the infringing trader is established (Recital 8 and Article 2(1)).

2. This Directive should not affect the application of nor establish rules on private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law. The existing Union law instruments apply to the representative actions set out by this Directive (Recital 9 and Article 2(3)).

3. A qualified entity should be able to bring a representative action in the Member State where it has been designated as well as in another Member State. Building on Directive 2009/22/EC, the new Directive should make a distinction between these two types of representative actions. When a qualified entity brings a representative action in another Member State than the one of its designation, that action should be considered a cross-border action. When a qualified entity brings a representative action in the Member State where it is designated, it should be considered a domestic representative action even if that action is brought against a trader domiciled in another Member State or even if consumers from several Member States are represented within that action. Decisive for determining the type of the representative action should be the Member State in which the action is brought. For this reason, a domestic representative action could not become a cross-border one during the course of proceedings, or vice versa (Recital 9a and Article 3(4b)).

4. The right of a qualified entity to bring a cross-border representative action should be limited to the area of activity of that entity (Recital 10c and Article 4a).

5. Qualified entities designated on an ad hoc basis should not be allowed to bring cross-border representative actions (Recital 11a).

6. It should be for the designating Member State to ensure that the qualified entity designated for the purpose of cross-border representative actions fulfills the required conditions, to assess whether it continues to comply with them and, if necessary, to revoke the designation of the qualified entity (Recital 11b and Article 4.a – whereby Member States may designate as well public bodies as qualified entities for the purpose of cross-border representative actions.)

7. Qualified entities from different Member States should be able to join forces within a single representative action in front of a single forum, subject to relevant rules on competent jurisdiction. This should be without prejudice to the right of the court or administrative authority seized to examine whether the action is suitable to be heard as a single representative action (Recital 11d and Article 4b).

8. The mutual recognition of the legal capacity of qualified entities designated for the purpose of cross-border representative actions should be ensured. The identity of these organisations and public bodies should be communicated to the Commission and the Commission should make that list publicly available. Inclusion on the list should serve as proof of the legal capacity of the organisation or public body bringing the action. This should be without prejudice to the right to examine whether the purpose of the qualified entity justifies the action in a specific case (Recital 11e and Article 4a).

9. In order to prevent conflicts of interest, Member States should be able to set out rules according to which their courts or administrative authorities could examine whether a qualified entity bringing a cross-border representative action for redress is funded by a third party having an economic interest in the outcome of a specific cross-border representative action and, if this is the case, reject the legal capacity of the qualified entity for the purpose of that action (Recital 11e a and Article 4b).

10. The courts or administrative authorities should be able to assess the admissibility of a specific cross-border representative action in accordance with national law. In accordance with the principle of non-discrimination, the admissibility requirements applied to specific cross-border representative actions should not differ from those applied to specific domestic representative actions (Recital 11h and Article 4.b).

Common Minimum Standards of Civil Procedure: European Added Value Assessment

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Apostolos Anthimos
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On 28 November 2019 the European Added Value Unit published a study accompanying the European Parliament’s legislative own-initiative report on Common minimum standards of civil procedure.

The summary reads as follows:

The European Added Value Assessment (EAVA) estimates whether and to what extent adoption of EU minimum standards of civil procedure could generate European added value. The European added value is quantified as a percentage reduction of the total cost of civil procedure. The total cost of civil procedure is estimated based on data on the number of civil and commercial proceedings in the EU-28 and the cost of litigation in the Member States. Based on this analysis, the EAVA estimates that introducing EU common minimum standards of civil procedure could reduce annual costs for citizens and businesses in the European Union by as much as € 4.7 to 7.9 billion per annum. The European added value could be potentially generated through reduction of fragmentation, simplification and filling gaps in the current EU procedural rules. Furthermore, EU common minimum standards would contribute towards building mutual trust between judicial authorities of different Member States. Increasing trust has the potential to enhance legal certainty and stability for citizens and businesses, further reduce uncertainty and delay costs.

European Parliament’s study on EU Patent and Brexit

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Pietro Franzina
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Udo Bux (Policy Department for Citizens’ Rights and Constitutional Affairs of the European Parliament) has written an In Depth Analysis for the JURI Committee of the European Parliament on EU Patent and Brexit.

The abstract reads:

This In-depth Analysis resumes the possible scenarios concerning several Intellectual Property provisions of EU and international law in the event of a withdrawal of the United Kingdom with or without a proper withdrawal agreement. It tries to clarify the question how Brexit may affect the entry into force of the new European Patent with Unitary effect (EPUE), especially, if the Unified Patent Court Agreement (UPCA) can enter into force, even in case the UK has withdrawn from the EU. What would be the necessary steps to be taken by the EU in order to ensure the functioning of the future European Unitary patent and in case the UPC Agreement would have to be revised because of Brexit. 

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