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The Swedish Supreme Court on Third-Party Transport and Article 7(1)(b) Brussels I bis

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Erik Sinander
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In matters relating to the sale of goods, the “place of delivery” constitutes the decisive connecting factor under Article 7(1)(b) of the Brussels I bis Regulation (1215/2012). Even if it is clear from case law that this place shall be where the purchaser acquires “actual power of disposal” of the goods, a recurring issue is how that shall be interpreted when the transport is performed by an independent carrier. This issue arose for the Swedish Supreme Court in a dispute between a Swedish purchaser and a Polish seller. In a decision of March 18, the Supreme Court held that the physical control of the goods was transferred in Sweden and that the Swedish court therefore had jurisdiction as the place of performance.

Background

A Swedish company purchased a scaffolding system from a Polish company. The scaffolding system was to be transported by a third-party road carrier to Örebro, Sweden. Upon arrival, the Swedish buyer alleged that the goods were defective and initiated proceedings before a Swedish court.

The Polish seller contested Swedish jurisdiction, arguing that proceedings should be brought in Poland, where the seller company was domiciled. This lead the Swedish courts to assess whether the jurisdictional rule in Article 7(1) was met in the case at hand.

Pursuant to Article 7(1), the courts for the place of performance of the obligation in question also have jurisdiction in contractual matters. When it is a sale of goods case, the “obligation in question” shall be the place where the goods were delivered or should have been delivered under the contract, as prescribed for in Article 7(1)(b).

This contractual interpretation shall be done on the basis of autonomous EU law and not on the substantive law that would have been applicable if the court has jurisdiction (see e.g. Electrosteel, C-87/10, para 26). Under this autonomous EU law, the place of delivery is “the place where the physical transfer of the goods took place, as a result of which the purchaser obtained, or should have obtained, actual power of disposal over those goods at the final destination of the sales transaction”.

The Polish seller argued that the place of delivery was in Poland, on the ground that it was there that the carrier took possession of the goods. The court of first instance, however, held that the place of delivery was in Sweden. On appeal, that conclusion was reversed. The appellate court emphasised that the transport had been carried out under a separate contract between the purchaser and the carrier. On that basis, it found that the purchaser had already acquired actual power of disposal over the goods in Poland.

With references to Car Trim, C-381/08 para 58–62, the Supreme Court held that it is the place where the purchaser takes physical control of the goods that is relevant. Holding that this place was Sweden, the Supreme Court found that the Swedish court had jurisdiction.

One of the Supreme Court justices appended a separate opinion, observing that the method for determining the place of delivery remains unclear under EU law and that further guidance from the CJEU is needed. In the present case, however, he considered that the procedural framework precluded the Supreme Court from examining that issue.

Comment

It is easy to agree with the separate opinion that the determination of the place of delivery raises complex issues where transport is carried out by a third party. While the separate opinion considered that the Court was procedurally precluded from addressing those issues, it is nevertheless open to question why the Supreme Court did not make a reference to the CJEU. Given that only a limited number of cases are granted leave to appeal and that the issue concerns the interpretation of EU law, there are strong reasons to expect that such questions should be referred to the CJEU.

New References From the UPC on Brussels I bis Soon Heading to the CJEU?

The Editors of the EAPIL blog
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The author of this post is Lydia Lundstedt, who is an Associate Professor and Senior Lecturer at Stockholm University and Linköping University.

The Unified Patent Court (UPC) has already made its first referral (see here for a review) to the Court of Justice of the European Union (CJEU) concerning the interpretation of the Brussels I bis Regulation, but new questions are continuing to arise.

On 13 March 2026, the Court of Appeal (CoA) of the UPC set aside the Paris Local Division’s (CFI) order accepting jurisdiction, on the basis of Article 7(2) Brussels I bis Regulation, over third state defendants for the alleged infringement of a European patent in states not bound by the UPC Agreement (UPCA).

However, the CoA left open the question whether jurisdiction might be possible on the “long arm”, asset-based provision in Article 71b(3) Brussels I bis.

As a court common to several Member States, the UPC is bound by EU law, including Brussels I bis and the Lugano Convention. The Brussels I bis was therefore amended to provide for UPC jurisdiction in situations where a defendant is not domiciled in an EU or Lugano state.

Article 71b(2) extends Brussels I bis rules to third state defendants “as appropriate.” Article 71b(3) introduces accessory jurisdiction, allowing the UPC to hear claims for damage outside the EU where it already has jurisdiction for EU damage, provided the defendant has property in a UPC state and the dispute is sufficiently connected to it.

Background

Keeex SAS, owner of a European patent on a method for verifying the integrity and authenticity of digital data blocks, sued several defendants before the CFI for infringements taking place both within and outside the UPC territory. The defendants were mostly companies based outside the EU, such as Adobe Inc., OpenAI LP, and Truepic Inc.

To establish international jurisdiction, Keeex’s statement of claim stated: “The acts of infringement are taking place in France (…) lt should be noted that the damage resulting from the acts of infringement is global and therefore covers all the territories protected by [the] European Patent[]”. In addition, the statement of claim included a list of the designated states, including non-UPC Member States (Spain, Poland and Ireland), Lugano Convention states (Switzerland and Norway) and a third state (United Kingdom).

Despite the defendants’ objections, the CFI accepted jurisdiction over all the claims based on Article 7(2) in conjunction with Article 71b(2) Brussels I bis Regulation, noting in particular that the CJEU’s decision in BSH Hausgeräte (C-339/22) made it possible to rule on damage occurring outside the UPC territory.

The defendants appealed arguing that the CFI lacked jurisdiction over acts allegedly committed on the territory of the non-UPC states because jurisdiction under Article 7(2) Brussels I bis is limited to the territory of the UPC. They maintained that BSH was not relevant to the case at hand.

Keeex, in turn, argued that the CFI had jurisdiction, additionally invoking Article 71b(3) Brussels I bis and Article 14 of the French Civil Code in conjunction with Article 6(1) Brussels I bis.

Court of Appeal

The CoA set aside the CFI’s decision exercising jurisdiction over the alleged infringement of the patent outside the UPC territory. The CoA held that the CFI erred when it relied on BSH to assert jurisdiction over patents with effect in the non-UPC states. Referring to the CJEU case law in Pez Hejduk (C-441/13) and Shevill (C-68/93), the CoA held that the damage head of Article 7(2) was limited to damage occurring in the forum territory. As it was uncontested that Keeex relied only on the occurrence of damage within the UPC territory to establish jurisdiction, Article 7(2) Brussels I bis did not provide a basis of jurisdiction over the alleged infringements in the non-UPC states.

The CoA also noted that neither Article 6 Brussels I bis nor Article 14 of the French Civil Code were applicable before the UPC.

Additionally, the CoA held that the statement of claim must set out sufficient facts and legal arguments to enable the defendant to assess, and, where appropriate, challenge, the CFI’s jurisdiction, and to allow the CFI to determine whether jurisdiction is established.

The CoA found that Keeex’s statement of claim was insufficient because it neither explained that it was relying on Article 71b(3) Brussels I bis nor asserted that the defendants owned property in a UPC state.

The CoA noted, however, that it remains an open question whether Article 71b(3) Brussels I bis can be interpreted, as Keeex contends, to mean that the reference to damage caused outside the EU, means the infringement of other national parts of the patent in those states.

Comment
The relevance of the BSH Hausgeräte Judgment?

The BSH Hausgeräte judgment is relevant only where a court is exercising infringement jurisdiction over a foreign patent, clarifying that even if the defendant challenges the validity of that patent, a Member State court does not lose jurisdiction over the infringement action.

By contrast, as the CoA held, the CFI had jurisdiction only over the alleged infringement of UPC-states. These patents are not “foreign” patents, as they have effect within the UPC territory.

The question remains however whether BSH Hausgeräte applies where a Member State court exercises jurisdiction under Article 7(2) Brussels I bis over a third state defendant for infringement of non-UPC patents based on a causal act within the territory of the UPC. In UPC LD Mannheim, Hurom v NUC, 2 October 2025, UPC_CFI_162/2024, the Mannheim Local Division accepted such jurisdiction over a Korean defendant for alleged infringements in Poland, Spain, and the UK, based on its involvement in acts of its German subsidiary and French distributor.

This goes beyond BSH. It is one thing to accept jurisdiction over a defendant who is “at home” in the forum for the infringement of foreign patents. However, it is not clear whether it is “appropriate” to exercise jurisdiction over a third state defendant, not only for infringements of non-UPC patents within the EU, but even for non-UPC patents with effect in third states.

Article 73b(3) Long Arm Jurisdiction

The CoA has already indicated that the meaning of Article 71b(3) remains unclear. In particular, it is uncertain how to interpret the provision on accessory jurisdiction, which allows the UPC—where it has jurisdiction under Article 71b(2) for infringement causing damage within the Union—to also exercise jurisdiction over “damage arising outside the Union from such an infringement.”

Does this text refer to damage as a result of an infringement committed within the territory of the EU or as a result of an infringement committed outside the territory of the EU? See UPC LD Mannheim, Hurom v NUC, 11 March 2025, UPC_CFI_162/2024., para 47.

The first interpretation is difficult to reconcile with the territorial nature of patents and finds no support in the legislative history of the amendment, unlike the second interpretation. However, the latter would amount to a far-reaching long-arm basis, potentially allowing jurisdiction over a third-state defendant acting outside the EU but causing damage within the UPC territory, and extending, by way of accessory jurisdiction, to infringement of other national parts of the same European patent in third states.

The amendments to the Brussels I bis Regulation, extending its rules to the jurisdiction of the UPC in cases involving defendants not domiciled in an EU or Lugano state, raise novel and complex jurisdictional questions that will undoubtedly require clarification by the CJEU.

IPRax: Issue 2 of 2026

Matthias Lehmann
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The second issue of the IPRax (Praxis des Internationalen Privat- und Verfahrensrechts) for 2026 was published on 1 March. The following abstracts have been kindly provided by the editor of the journal.

C. Budzikiewicz/H.-P. Mansel/K. Thorn/R. Wagner, Europäisches Kollisionsrecht 2025: Im Windschatten der Weltpolitik (German)

This article provides an overview of developments in Brussels in the field of judicial cooperation in civil and commercial matters from January 2025 until December 2025. It presents newly adopted legal instruments and summarizes current projects that are making their way through the EU legislative process. It also refers to the laws enacted at the national level in Germany as a result of new European instruments. The authors discuss both important decisions and pending cases before the CJEU as well as important decisions from German courts pertaining to the subject matter of the article. In addition, the article also looks at current projects and the latest developments at the Hague Conference of Private International Law.

P. Stenko, Employer’s Liability Towards Subcontractors in International Construction Disputes: Direct Claims of the Subcontractor Against the Employer in European Civil Procedure Law and the New Interpretation of the Term “Matters Relating To a Contract” (German)

This paper examines international jurisdiction for direct claims of subcontractors against employers (clients) in international construction disputes under the Brussels I Recast Regulation. In several European legal systems, subcontractors are granted a statutory direct claim for payment of remuneration against the employer, in addition to their claim against the general contractor. Central to the analysis is whether such direct claims may be qualified as “matters relating to a contract” within the meaning of Article 7(1) of the Brussels I Recast Regulation, even though there is no direct contractual relationship between the subcontractor and the employer. Traditionally, the CJEU required an “obligation freely assumed” for the application of the contractual jurisdiction under Article 7(1) Brussels I Recast Regulation. However, recent CJEU case law has relaxed this requirement: statutory claims arising in the context of a contractual relationship may also be treated as “matters relating to a contract” even if there is no direct contractual relationship between the parties. As a result of this change, the subcontractor’s claims against the employers may be qualified as “relating to a contract” and the subcontractor may sue at the contractual place of performance (Article 7(1) Brussels I Recast Regulation).

C. Wendland, The Jurisdiction of Member State Courts under the EU Maintenance Regulation in Cases Involving Third Countries (German)

While there have been repeated calls to extend the scope of the EuGVVO to third countries, the universal application of jurisdiction rules has been a reality in international maintenance law since the adoption of the EU Maintenance Regulation. The exhaustive nature of the jurisdiction rules in the Regulation was the focus of the ECJ’s ruling in the case Amozov, which is discussed here. While the court’s decision is hardly surprising, it nevertheless provides an opportunity to consider the challenges and opportunities of a conclusive jurisdiction system at the EU level.

S. Mock, Eligibility of US funds to apply for special court ordered audits under German corporate law (German)

The so-called Diesel-scandal has sparked interest, particularly among Volkswagen AG shareholders, in a comprehensive investigation into the responsibility for this scandal. Since the resolution of the annual meeting failed to achieve the required majority, several US shareholders applied for a court order for a special audit. Following several court decisions, including two successful constitutional complaints, the Court of Appeal Celle, in its decision of 27 November 2024, denied the US shareholders the capacity to participate in the proceedings, arguing that they were funds whose legal capacity was unclear. This article critically examines this decision and demonstrates that US funds are also eligible to participate proceedings in German courts.

J. Adolphsen, ECJ answers questions of jurisdiction of courts of the member states in patent infringement cases when patent infringers defend themselves with the argument the patent is not valid (German)

The judgment is the subsequent decision following a ruling from 2006. At that time, the European Court of Justice (ECJ) first addressed the question of the jurisdiction of courts of the member states in patent infringement cases when defending with the argument that the patent is not valid. It was established that any assessment of the validity of the patent is exclusively reserved for the courts of the granting state. Other questions remained unanswered. These are now answered by the present judgment. The infringement court may, but is not required to, stay its proceedings. It can also assume the validity of the patent and decide the infringement dispute accordingly. At the same time, the ECJ rejects the question of whether Article 24 Nr. 4 of the Brussels Ia Regulation also applies when a third country has granted the patent. In this case, the ECJ denies a reflexive effect of Article 24 Nr. 4 Brussels Ia Regulation and allows the infringement court to also examine the validity of the patent for the purpose of deciding the infringement dispute with inter partes effect. As a result, the judgment strengthens the possibilities for patent holders to take action against infringers at the defendant’s court, especially when multiple national patents are involved across different member states.

H. Roth, Possible Legal Remedies for Debtors in the Enforcement of Provisionally Enforceable EU Titles in Germany (Art. 39 Brussels I Regulation (recast)) (German)

In principle, the debtor is required to utilize the legal remedies against the provisional enforcement of a judgment that are available in the member state of origin, in this case before the Italian appellate court (Art. 283 of the Italian Codice di procedura civile [CPC]). Applications for enforcement protection by the debtor may only be submitted to German courts or enforcement authorities insofar as European law permits. This is the case, for example, under Article 44 (1) of the Brussels I Regulation (recast) in conjunction with Section 1115 (6) of the German Code of Civil Procedure (ZPO) and Article 44 (2) of the Brussels Regulation (recast) in conjunction with Section 1116 ZPO. If the conditions outlined in these provisions are not met, European law prohibits the debtor from seeking a suspension of enforcement based solely on German procedural law (e.g., by analogy to Sections 719 or 707 ZPO). The exhaustive regulation in Article 44 (1) and (2) of the Brussels I Regulation (recast) excludes additional legal protection under national law.

J. F. Hoffmann, Cross-border payment to the debtor after the opening of insolvency proceedings – continuation of the ECJ‘s restrictive rulings on Art. 31 EIR (German)

In its unambiguous scope of application, Art. 31 (1) of the European Insolvency Regulation protects a third-party debtor who has honoured his obligation to the benefit of the debtor in good faith after insolvency proceedings have been opened. The third-party debtor is protected from having to perform to the insolvency administrator for a second time. The ECJ had to decide whether the third-party debtor should also be protected if not only he had made his payment to the debtor after the opening of the proceedings, but also if the debtor had provided counter-performance belonging to the estate after the opening of the proceedings. A need for protection may also be apparent in this case, as the third-party debtor faces comparable economic losses. To achieve this, Art. 31 (1) EIR would need to recognise also the debtor’s counter-performance as being effective vis-à-vis the insolvency estate. However, national legal systems often do not grant any legal protection concerning asset dispositions made by the debtor after the opening of insolvency proceedings. The ECJ now continues its restrictive interpretation of Art. 31 (1) EIR, likely because the provision’s underlying regulatory purpose remains highly controversial.

K. Duden, From the principle of recognition in EU primary law to the replication of status: a doctrine decades in the making (German)

Since Grunkin-Paul, the principle of recognition based on primary EU law has – through the jurisprudence of the ECJ – gained increasing importance in international family law. The Cupriak-Trojan decision marks a milestone in this respect: the Court demands the comprehensive recognition of marriages concluded between Union citizens abroad. Not only characteristics of one’s individual status but also status relationships – at least between Union citizens – must be recognized as effective across borders. This makes the free movement of status the law in force for Union citizens. Although some open questions remain, Cupriak-Trojan, coupled with the previous Mirin decision, expands the jurisprudence on the recognition principle in a way that allows it to be consolidated into an independent doctrine of private international law. To describe this doctrine, I suggest the term “replication of status” (Statusnachvollzug), which distinguishes the replication of status from the recognition of judgments and from the referral method. Another differentiation is also necessary: between the replication of status as a doctrinal approach in conflict of laws and international civil procedural law on the one hand and the principle of recognition and the free movement of status as mandates of EU primary law on the other. While the latter currently provide their normative framework and basis, the replication of status could, in future legislation, be detached from this origin.

A. Schulz, Name and Gender: German Federal Court of Justice Ruling on a Name Change via UK Deed Poll (German)

A recent decision by the German Federal Court of Justice (BGH) addresses two key issues in Private International Law. First, the Court held that a name change effected through a British “deed poll” can be recognised as a change of birth name under German civil status law. In this respect, the Court clarified that it is irrelevant whether the change concerns a person’s “legal name” or their “conventional name”. However, the Court ultimately rejected the requested amendments in their entirety, as the requirements for recognizing the applicant’s new legal gender had not been fulfilled. In particular, the applicant had not completed the formal procedure as required by the applicable Gender Recognition Act 2004.

International and Comparative Law Quarterly: Volume 74, Issue 4

Ugljesa Grusic
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The latest issue of the International and Comparative Law Quarterly (Volume 74, Issue 4) features one article on private international law.

Adeline Chong, ‘Salami-Slicing’ and Issue Estoppel: Foreign Decisions on the Governing Law, 875-903

Whether an issue estoppel arises over foreign decisions on the governing law of the claim has not been directly considered by an English court, but decisions in other jurisdictions show that this question is increasingly being raised in litigation. Is there identity of issue if the two courts apply different choice of law rules? The answer turns on whether a broad or narrow framing of the issue is adopted. It is suggested that, absent an issue which is subject to forum international public policy, forum overriding mandatory rules or which is one that the forum court retains the prerogative to determine for itself, a broad framing ought to be adopted. Thus, in principle, an issue estoppel should arise over the identity of the governing law of the claim. However, issue estoppel should not operate where the choice of law category involved is underpinned by public policy considerations. The consideration of the specific issue of the governing law of the claim also feeds into broader questions on the applicability of issue estoppel whenever the two courts would apply different laws or frameworks to decide the issue. In general, whether a plea of issue estoppel ought to succeed depends on balancing the principles underlying res judicata against the considerations arising in each specific context.

The Italian Supreme Court on the Recognition of Foreign Judgments Awarding Punitive Damages

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The Editors of the EAPIL blog
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The author of this post is Caterina Benini, post-doctoral researcher and adjunct professor at the Catholic University of the Sacred Heart in Milan.

The recognition and enforcement of foreign punitive damages judgments in Italy is no longer considered anathema. In 2017, overturning its previous opposition, the Joint Sections of the Italian Supreme Court held that “the institute of punitive damages of US origin is not ontologically incompatible with the Italian legal order” and laid down the conditions under which foreign judgments awarding non-compensatory damages may be recognised and enforced in Italy (judgment No. 16601 of 5 July 2017).

Since that landmark ruling, Italian courts have been confronted with this issue only sporadically. One such occasion arose a few months ago, when the Supreme Court delivered its judgment No. 31244 of 30 November 2025.

Background

Insolvency proceedings were commenced before the US Bankruptcy Court for the Northern District of California against the Californian corporations Cecchi Gori Pictures and Cecchi Gori USA Inc. Following those proceedings, which resulted in the companies’ reorganisation, Cecchi Gori Pictures and Cecchi Gori USA Inc. brought an action before the same Court against two Italian citizens, G.N. and G.I. The claimants alleged that the defendants had fraudulently transferred company assets and sought an award for damages.

On 6 February 2020, the California Court upheld the claim and ordered G.N. and G.I. to pay a total amount exceeding USD 21 million. This sum comprised USD 6 million in actual damages, corresponding to the value of the assets fraudulently transferred; USD 12 million in treble damages pursuant to Section 496(c) of the California Penal Code; nearly USD 3 million in interest.

In the context of their reorganisation, Cecchi Gori Pictures and Cecchi Gori USA Inc. assigned their claims against G.N. and G.I. to the Italian company J-Invest Spa, which subsequently sought recognition and enforcement of the Californian judgment in Italy.

By judgment of 28 October 2024, the Court of Appeal of Rome held that the Californian judgment of 6 February 2020 satisfied all requirements for recognition and enforcement of foreign judgments set out in Article 64 of Law No. 218 of 1995, the Italian Private International Law Act (PILA).

G.N. and G.I. challenged the decision before the Italian Supreme Court. They argued, inter alia, that the US judgment was contrary to Italian public policy because it (i) awarded punitive damages without a normative basis ensuring the foreseeability of both the circumstances in which such damages can be awarded and their maximum amount, and (ii) awarded interest allegedly amounting to usury, which constitutes criminal office under Italian law.

The Supreme Court’s Judgment

The first Section of the Italian Supreme Court dismissed the challenge and upheld the decision of the Court of Appeal of Rome.

With regard to the compatibility of US punitive damages judgments with Italian public policy, the Court began by recalling that several Italian provisions exist that provide for private law pecuniary sanctions with punitive and deterrent functions. The latter provisions exist alongside ordinary rules on tort, which still predominantly serve a compensatory function. In light of this evolution of Italian private law, the Court held that the punitive purpose of civil law sanctions is no longer incompatible with fundamental principles of the Italian legal order. It nevertheless reiterated that any punitive or deterrent sanction under civil law must be grounded on statutory basis, in accordance with Article 23 of the Italian Constitution, which provides that no personal or financial obligation may be imposed except by law.

The Court further observed that, under Italian law, the compensatory function of civil liability encompasses not only compensation for actual loss, but also for loss of earnings resulting from a contractual breach and for non-pecuniary damage arising therefrom. On this basis, the Court noted that, had an administrator of an Italian company fraudulently transferred company assets, thereby exposing the company to insolvency proceedings – as occurred in the case decided by the Californian court – the company would have been entitled not only to compensation for the value of the unlawfully transferred assets (actual loss), but also for lost earning opportunities due to the fraudulent transfer of assets (loss of earnings) and for damage to its reputation and image (non-pecuniary loss).

Turning to the recognition of foreign punitive damages judgments, the Court recalled, in line with the 2017 ruling of the Joint Sections, that foreign punitive damages judgments can be recognised if, in the country of origin, they have been rendered on normative bases which specifically provide the cases in which punitive damages may be awarded (requirement of typicality) and which provide for some quantitative limitations of the amounts that may be ordered (requirement of foreseeability).

Applying these criteria to the case at hand, the Court concluded that the award of approximately USD 12 million in punitive damages satisfied both the typicality and foreseeability requirements. The Californian judgment had awarded treble damages pursuant to Section 496 (c) of the California Penal Code, which, in relation to the offence of receiving stolen property under Section 496 (a), provides that “[a]ny person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees”.

The Supreme Court concluded that in the circumstances the punitive damages were based on a specific legal provision, enabling individuals to foresee both the awarding of punitive damages and their precise amount. The Californian Court had classified the value of the fraudulently transferred assets as “actual damages” and had determined the amount of treble damages accordingly, resulting in an award amounting to twice the actual damages.

The Court further rejected the appellants’ contention that the punitive damages were disproportionate. In its view, proportionality had already been assessed ex ante by the Californian legislator when enacting Section 496 (c) of the Penal Code, taking into account the seriousness of the offence for which treble damages may be awarded.

As to the allegation that the interest awarded amounted to usury, the Court dismissed this argument on the ground that the interest was based on Section 3287 of the Civil Code of California.

For all these reasons, the Supreme Court concluded that “the Californian judgment complies with the conditions identified by the Joint Sections of the Supreme Court in 2017, namely … the requirements of typicality and foreseeability, and, therefore, as correctly held by the Court of Appeal, does not produce effects contrary to public policy”.

Comment

As noted, since the landmark 2017 ruling of the Joint Sections of the Supreme Court, Italian courts have seldom dealt with foreign judgments awarding punitive damages. When such a a case eventually reached the Supreme Court, the Court did not seize the opportunity to further clarify the conditions laid down in 2017.

Several aspects of the 2025 judgment appear problematic.

First, the Court devoted considerable attention to the evolution of civil liability under Italian law and its emerging deterrent and punitive functions, rather than focusing squarely on the decisive issue before it: the conditions governing the recognition and enforcement of foreign punitive damages judgments in Italy and their application to the case at hand.

This disproportionate emphasis on national private law rather than on the private international law framework for the recognition of foreign punitive damages judgments – an imbalance that mirrors the trend within Italian legal scholarship to address punitive damages primarily from a private rather than a private international law perspective – appears to explain why the Supreme Court applied only one of the two conditions laid down by the Joint Sections in 2017.

As described above, the Court applied the requirements of typicality and foreseeability, which are the two prongs of the legality condition. Under this condition, the Court must verify that “the law upon which the foreign judgment is based must specifically provide the cases for the awarding of punitive damages (typicality) and for some quantitative limitations of the amount that can be ordered (foreseeability)” (Judgment No. 16601/2017, para 7).

By contrast, the Court failed to engage with the proportionality condition, under which the requested court must verify that, in the foreign judgment, “there is proportionality between compensatory damages and punitive damages and between punitive damages and the conduct of the wrongdoer” (Judgment No. 16601/2017, para 7).

While the Court briefly referred to proportionality when rejecting the appellants’ claim that the damages awarded were disproportionate, it appears to have resolved the issue by reference to the legality condition, rather than by conducting an autonomous proportionality assessment. Even assuming that the Court intended to apply the proportionality condition, it did not do so in the manner envisaged by the Joint Sections.

According to the 2017 judgment, proportionality requires that punitive damages be proportionate both to the compensatory damages awarded and to the seriousness of the conduct sanctioned. Neither of these two aspects had been examined by the Supreme Court. This is unfortunate. A proper application of the proportionality condition could have clarified some unresolved issues on which scholars remain divided and which case law has yet to address.

One such issue is whether the proportionality of punitive damages awards is to be measured from the perspective of the legal order in which the foreign judgment originates or the legal order of the requested court (the Italian legal order). The Joint Sections did not clarify this point in 2017. In this author’s view, if the principle of proportionality forms part of Italian public policy and constitutes a prerequisite for recognition of foreign punitive damages awards, the assessment of proportionality of punitive damages must necessarily be conducted according to standards of Italian law. It is for the legal order that considers a given principle as part of its public policy to determine its content and to regulate its practical operation.

From this perspective, the Supreme Court’s statement that proportionality was assessed ex ante by the Californian legislator does not address whether the punitive damages awarded comply with the Italianstandard of proportionality. Such an assessment would have been relatively straightforward in this case. The Court should have examined whether punitive damages amounting to USD 12 million – twice the compensatory damages of USD 6 million – meet Italian proportionality standards. Italian legislation and case law offer no clear guidance on what ratio between punitive and compensatory damages may be considered proportionate. The Supreme Court missed the opportunity to elaborate on this matter with the 2025 judgment.

A second controversial issue concerns how requested courts should determine whether punitive damages are proportionate to the wrongdoer’s conduct, particularly when the foreign judgment does not clearly spell out the relevant facts of the case. In such cases, the requested courts should, in this author’s view, infer the relevant factual background from the foreign judgment itself without considering additional facts alleged by the parties during the exequatur proceedings but not resulting from the foreign judgment. Doing otherwise would risk transforming exequatur proceedings into appeal proceedings.

Another unsettled question is what the requested court should do when punitive damages are found to be disproportionate. Should the court recognise only the part of judgment awarding compensatory damages, provided that this portion of judgment is separable and autonomous from the punitive damages one? Or should it recognise the whole compensatory damages, together with punitive damages reduced to a proportionate amount?

The latter solution, often referred to as reductive partial recognition insofar as it entails a reduction of the punitive damages to be recognised and enforced, appears to have been endorsed by the CJEU in Real Madrid. In this decision (reported on this blog here), the CJEU held that recognition should be refused only for the manifestly disproportionate portion of the judgment (para 73).

It is doubtful whether such solution is consistent with the prohibition of review of the merits of foreign judgments. This prohibition constitutes a general principle governing the recognition and enforcement of foreign judgments. It applies to the recognition by Italian courts of civil and commercial judgments delivered by other EU Member States (Article 52 of the Brussels I bis Regulation), by non-EU States that are Contracting Parties to the Hague Judgments Convention (Article 4(2) of the Hague Judgments Convention), and by all other States (Articles 64 and 73 of PILA, to be read together with the now abrogated Article 798 of the Code of Civil Procedure).

Pursuant to such prohibition, the requested court cannot refuse to recognise a foreign judgment only because the conclusion it would have reached is different from the one reached by the foreign court. Yet this is precisely what would occur under reductive partial recognition. By recognising the portion of the punitive damages award it considers proportionate, the requested court refuses to recognise the whole amount of punitive damages on the ground that it exceeds the sum the requested court itself would have granted had it decided the case applying the same foreign punitive damages law but according to its own standard of proportionality. In other words, the requested court would rewrite the head of judgment devoted to punitive damages, using its own measurement of proportionality. This would amount to an impermissible review of the merits of foreign judgments.

This view appears to find indirect support in the Hague Judgments Convention. Article 10 provides that “[r]ecognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered”. This provision must be read in conjunction with Article 9, which states that “[r]ecognition or enforcement of a severable part of a judgment shall be granted where recognition or enforcement of that part is applied for, or only part of the judgment is capable of being recognised or enforced under this Convention”. A combined reading of these two provisions – which mirror Articles 11(1) and 15 of the Hague Choice of Court Convention – suggests that, where the requested court intends to deny the recognition of a foreign judgment that awards punitive damages, it should deny recognition of the operative part of the judgment awarding punitive damages while it should recognise the part of judgment awarding compensatory damages, provided that such portions are severable and autonomous one from the other. If this is not the case, the foreign judgment should be denied recognition in full.

Finally, the Supreme Court’s approach to the issue of interest is unconvincing. The appellants argued that the interest awarded amounted to usury, which constitutes a criminal offence under Italian law. Instead of addressing whether the prohibition of usury forms part of Italian public policy, the Court addressed the interest award by reference to the legality condition above described applicable to punitive damages. It remains unclear whether by doing so the Court implicitly treated the interest in question as punitive in nature, thereby considering necessary to subject the recognition of the interest award to the same conditions applicable to punitive damages award.

A more persuasive approach would have been to determine whether the prohibition of usury constitutes a principle of Italian public policy and, if so, whether the effects of recognising the interest award would conflict with that principle.

ZEuP: Issue 1 of 2025

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Pietro Franzina
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A new issue of ZEuP – Zeitschrift für Europäisches Privatrecht is now available. It comes with contributions on EU private law, comparative law and legal history, unification of law, private international law, and individual European private law regimes. The full table of content can be accessed here.

The following contributions might be of particular interest for the readers of the EAPIL blog:

Globaler Klimaschutz und Internationales Privatrecht – Meik Thöne on climate change and private international law: The consequences of climate change are perceptible worldwide and increasingly reflected in serious cases of damage. If the question is raised whether and how these cases should be compensated, the answer requires the determination of the applicable law but also to consider the relevance of permissions under public law and to determine the limits of private law solutions in order to thereby balance the affected individual rights and public welfare concerns.

On the Run from the Danish Social Authorities – An Analysis of the Danish Regulations causing a Cross-Border Flight Phenomenon to Evade Social Services’ Interference in Family Life – Anne Mørk and Hanne Hartoft on the situation in Denmark causing parents to cross borders to evade social services: Some pregnant women are fleeing Denmark to avoid their children being placed in foster care immediately after birth and possibly adopted without their consent. This raises the question of whether Danish legislation is too extreme and at odds with basic human rights principles. In this article, the Danish legislation is analysed in light of the case law from the European Court of Human Rights. The conclusion is that the errors and shortcomings in the processing of cases give reason to be concerned.

Gründungstheorie qua Niederlassungsfreiheit – eine sehr versteckte Kollisionsnorm? Urteil des EuGH vom 25. April 2024 – Maria-Teresa Kratzer comments on the decision by the ECJ in Edil Work 2, addressing the law applicable to companies.

Konkludente bzw. fiktive Rechtswahl – Zu den Anforderungen nach Art. 22 II Alt. 2 EuErbVO bzw. Art. 83 IV EuErbVO – Thomas Sagstetter discusses a decision of the Higher Regional Court of Karlsruhe on the choice of law in succession matters.

Conflict of Laws Cannot be Wished Away

Matthias Lehmann
by

A curious judgment has been rendered recently by the highest court of Germany in civil matters. The Federal Court (BGH) considers a long-term rental agreement for an apartment in Germany as a ‘purely domestic matter’ (reiner Binnensachverhalt) – even though it was concluded between a foreign state and one of its nationals, who still had a residence in the foreign country. Moreover, the rented apartment was adjacent to the foreign country’s embassy and the contract had been drafted in the language of the foreign state. In the eyes of the BGH, none of this constituted a relevant connection to another law.

In a Wonderland

Whoever has read about this judgment (reported also on conflictoflaws.net) may have been left wondering what is going on. Was the German court in Looking-glass House, seeing everything upside down, and what is outside as inside? The decision is even more astonishing when compared to the recent CJEU judgment in Inkreal, which considered a contract between two parties from the same country as falling under Article 25 Brussels I bis. Although the context is different – choice of forum there, choice of law here – and the applicable provisions as well – Brussels Ibis there, Rome I here –, the contrast with the BGH position is quite stark. While the CJEU allows parties to internationalise an obviously domestic situation through the choice of a foreign court, the BGH nationalises an obviously international situation.

Why?

The German case may be best understood by starting from its outcome. The denial of any foreign connection – except the choice of law – allowed the Federal Court to make use of Article 3(3) Rome I. As a result, it could apply the mandatory rules of German rental law, despite the fact that the parties had explicitly submitted the contract to the law of the foreign state that owned the apartment. According to the mandatory German rules, any time-limit in a rental contract for which the landlord has not provided a justifying reason in writing is deemed to be of infinite duration. The purpose of the BGH’s reductionist view is thus clear: protecting the tenant by characterising the contract as purely domestic. But was the method to get there legal?

Connections to Germany

The Federal Court argues that the contract would be purely domestic because the apartment was situated in Germany, which under Article 4(1)(c) Rome I is the decisive connecting factor for determining the governing law. Yet this argument is specious. It ignores that the applicability of Article 4(1)(c) Rome I does not exclude connections to another country. Quite to the contrary, the provision even presupposes foreign connections, because without them, there would be no need to conduct a conflict-of-laws analysis.

Equally unconvincing are the other arguments with which the Federal Court tries to prove the ‘purely domestic case’, such as that the contract has been entered into in Germany, or that the tenant and his family had lived there for 16 years. While these facts undoubtedly create strong connections to Germany, they do not make the foreign elements go away.

Foreign Connections – When Are they Relevant and When Not?

So let us turn to these connections to other countries, which according to the German Federal Court, are not sufficiently relevant to make the case ‘international’.

The first of them is that the foreign state is the owner of the apartment. The Federal Court rightly brands such ownership as irrelevant, as in contract law only the person of the landlord counts.

Yet the very same foreign state, or at least one of its Ministries, also was the landlord. The Federal Court thinks this does not matter either because the contract was handled through the foreign state’s German embassy, which would lead to the application of Article 19(2) Rome I. Again, the court falls prey to the same mistake: the fact that a provision ultimately leads to a certain law does not mean that the case would be ‘exclusively’ connected to that law. Quite to the contrary, the need to resort to a conflicts rule like Article 19(2) Rome I is created by the existence of a connection to another country, namely the principal place of business or domicile of the foreign counterparty. This foreign element cannot be ‘irrelevant’, as the Court thinks, because it triggers the application of a conflicts rule.

On the other hand, it is true that not every connection to a foreign country – apart from the choice of its law – qualifies as a foreign element under Article 3(3) Rome I. The nationality of the tenant does not seem to be among them, because it is of very little relevance in the Rome I Regulation (apart from the very specific situation of Article 7(3)(c) Rome I). Yet the present case was characterised by an abundance of relevant foreign connections – the landlord was a foreign state, the tenant had kept a residence outside of Germany, and the language of the contract was not German. To speak nevertheless of a ‘purely domestic case’ and apply Article 3(3) Rome I is simply disingenuous.

Avoiding the Rabbithole

So what should the Federal Court have done instead to protect the tenant, if we accept that there was a need to so? The court of appeals had suggested applying the German mandatory rule under Article 11(5) Rome I. However, this provision covers only rules regarding the formal validity of the contract, and the German rule is arguably more substantive than formal (it requires a good reason to limit the duration of the rental contract and not just the mentioning of any reason in writing).

The application of Article 6 Rome I would not have worked either, as the contract concerned a tenancy of immovable property. Such contracts are excluded from the scope of the consumer protection provisions by Article 6(4)(c) Rome I. The purpose of this exclusion apparently is to give priority to the law of the state where the immovable is situated. Yet the exclusion also – perhaps inadvertently – opens the way for free choice of law under Article 3(1) Rome I.

The only avenue to make the German rule prevail would therefore have been to use the rules on overriding mandatory rules of the forum in Article 9(1) and (2) Rome I (this is done for instance by the Austrian Supreme Court). The BGH may have had qualms to qualify tenant protection laws as overriding mandatory rules, given that they serve primarily private interests. In reality, however, the protection of private and public interests do not exclude each other. While tenancy law serves the interest of weaker parties, it is also underpinned by public interests, e.g. to avoid homelessness, public disorder, and the need for state-provided housing. To discuss the importance of these objectives would have been more honest and transparent than to stylise the case as ‘purely domestic’.

To avoid such inaccuracies in the future, we need a debate on the elements that qualify as ‘foreign’ under Article 3(3) Rome I. Which are they, and what way are they different from the foreign elements that lead to ‘situations involving a conflict of laws’ in the sense of Article 1(1) Rome I? Also, we need to discuss the relation between Article 6(4)(c) and Article 3 Rome I: Did the EU legislator really intend to allow parties to freely choose the law governing tenancy contracts, even where consumers are involved? And finally, we need a debate whether tenancy law qualifies as ‘overriding mandatory rules’ under Article 9 Rome I.

— Thanks to Felix Krysa, Verena Wodniansky-Wildenfeld and Paul Eichmüller for critically reviewing this post.

New Phishing attempt on Behalf of EAPIL

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Gilles Cuniberti
by

Dear readers, dear EAPIL Members,

You might have received the email below, from gilles.cuniberti@gmx.de.

This is a fraud, please do not answer.

GC

 

 

Dear xx,

How are you doing today?.

Please, I need your assistance for the EAPL.

Get back to me by email so I can explain further.

 

Best regards

Gilles Cuniberti

—Gilles CunibertiPresident of European Association of Private International Law (EAPL)Professor of Comparative and Private International LawUniversité du Luxembourg4, rue Alphonse WeickerL-2721 Luxembourg

The Effects of Foreign Cohabitation Agreements in Portugal

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The Editors of the EAPIL blog
by

The author of this post is Julian Henrique Dias Rodrigues, lawyer in Lisbon.

On 27 January 2022, the Lisbon Court of Appeal gave a decision concerning the (non) recognition in Portugal of notarial deeds attesting a de facto union.

The Case

A suit for recognition and enforcement of a foreign judgment (“ação especial de revisão de sentença estrangeira”) was filed in Lisbon in November 2021 by a Portuguese citizen and a British citizen, based on a Declaration of de facto union signed earlier that year before a notary public in London, where the couple lived.

The couple claimed that the above deed corresponds, under English law, to a judgement, and that it confers on the authors of the declaration the status of a relationship equivalent to that of spouses under English law.

The Portuguese Court analyzed the English Civil Partnership Act of 2004 (CPA).

For the Court, the civil partnership corresponding to the Portuguese de facto union is formalised by means of registration before a registry office, which results in the signature of a civil partnership document before the registry officer, with the presence of two witnesses (Article 2, Section 2, of the CPA).

The decision highlights that, under English law, a simple civil partnership agreement does not have any legal force (“does not under the law of England and Wales have effect as a contract giving rise to legal rights”, as stated in Article 75 of the CPA).

The Court acknowledged that it had previously recognized a public deed of de facto union of Brazilian origin. However, according to the reporting magistrate “[t]he legal situation brought in these proceedings is not analogous to the união estável recognized in Brazil. The English legal institute equivalent to the Brazilian stable union, foreseen and regulated in the United Kingdom, is the civil partnership”.

Relying on English legislation and case-law, the Court concluded that the document does not produce legal effects in the English legal order that go beyond the mere evidential force of the declaration. The legal significance of a partnership does not arise from it. That formal declaration is merely an additional element which the authority deciding whether or not to grant a claim based on the partnership will take into account in deciding in favour of the applicant.

In the Court’s view, the Deed in question was something different than a “civil partnership” under British law. For this reason, the Court refers to civil partnership to underline the difference between the situation created by the Deed and the situation of parties to a civil partnership agreement under UK law.

Returning to the Brazilian example, the judgment highlights that

contrary to what happens in Brazil, where the marriage and the ‘união estável’ can be dissolved by notarial deed, in the United Kingdom the divorce and the dissolution of the civil partnership need the intervention of a court according to the Matrimonial Causes Act 1973, and as for the dissolution of the civil partnership, article 37 of the Civil Partnership Act 2004.

In conclusion, the Lisbon Court of Appeal rejected the request as it considered that the “statutory declaration” is not equivalent in the United Kingdom – or in Portugal – to a judgement or judicial decision, not producing the respective effects.

Public Deed of Brazilian de facto Union: Divergence Continues

The Lisbon Court of Appeal issued between 2019 and 2021 a series of judgments admitting the recognition of a public deed of de facto unions established in Brazil, by means of the suit of recognition of foreign judgment. However, there is no consensus on the matter.

In most cases the requests for recognition are made in the context of the acquisition of Portuguese nationality by the de facto union.

At least three judgments of the Supreme Court of Justice (“Supremo Tribunal de Justiça – STJ”) contradict the trend of the Lisbon Court of Appeal (Case 106/18.0YRCBR.S on February 2019, Case 559/18.6YRLSB.S1 on March 2019 and Case 249/18.0YPRT.S2 on December 2019).

For the STJ “the applicants declaration in a Public Declaratory Deed of De Facto Union, before a foreign administrative authority (notary public) that they live in a de facto union since July 2013, should not be considered as covered by the provision of Article 978 no 1, of the Code of Civil Procedure, and cannot be revised and confirmed to produce effects in Portugal” (Case 249/18.0YPRT.S2).

However the divergence remains open in the STJ itself.

By a ruling of 8 September 2020 the Court granted recognition to a declaration of a de facto union, issued before a notary public, and stating “The contracting parties expressly recognize the fact that they have been living as if they were married since January 2005” and that “they have said so, I, the undersigned, have requested and drawn up this instrument, which, having been read aloud and found to be in conformity, they have accepted, granted and signed, together with the witnesses, present at all acts” (Case No. 1884/19.4YRLSB.S1).

To reach this understanding, the reporting magistrate observed that

the Brazilian ‘união estável’ is a fact and not a legal act. The intervention of the public official foreseen in the legal system is constitutive, in the sense of producing effects in the legal order, namely the declarative one of the verification of the situation of de facto union.

As seen above, the matter is likely to continue to be the object of controversy among Portuguese courts.

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