lecture private international law 11052014
TRANSCRIPT
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European International Private
Law
Emil Viitala
Roschier Attorneys Ltd.
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Structure
• Introduction and basic concepts of private
international law
• Jurisdiction (forum)
• Applicable law (lex causae)
• Recognition and Enforcement
•
Other issues
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Introduction
• Private international law is national law
• Harmonisation and convergence on the EU
level is scarce, no ”EU Code ”
• Conflict of laws
• Private international law aims to regulate the
relationships of private parties and to functionon the domestic level in domestic courts
- as opposed to international law
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The three processes
• Jurisdiction – Which court ( forum) has the
authority to consider and solve the case?
• Applicable law – Which domestic law (lex
causae) shall the court apply to the case?
• Recognition and enforcement of foreign
judgements – Will the judgment be effective?
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Importance of jurisdiction
• Lex fori – In certain issues the applicable law is
determined by the national law of the court
• Procedural issues – the concept of fair trial
– Evidence
– Legal aid
– Recovey of costs, etc.
• The inflence of the national legal culture and
customs on the determination of the judge
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Determination of applicable law
1. Characterization – The facts of the case need
to be indentified in legal context as a part of
certain legal categories.
2. Connecting factor – Which legal system has
the strongest or closest connection to the
legal questions. Eg. residence, nationalty.
3. Application of lex cause – The scope of
application as governed in the domestic law.
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Causal connecting factors
• Lex domicilii
• Lex fori
• Lex contractus
•Lex loci contractus, lex loci actus
• Lex delicti, lex loci delicti commissi, lex damni
• Lex situs
• Lex loci celebrationis
• Lex incorporationis
• Lex protectionis
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Characterization
• ”Mailman” –analogy: fields of law, legalconcepts and other categories
• The national laws do not follow the same
categories – In paricular cases some facts may refer to certain
choice of law where other facts of the case referto different choice of law (”Vorfrage”)
– In contract and tort – lex causae (Rome I)
• Renvoi – the ”carousel of referrals”
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Forum Shopping
• The private international law can be seen as atool to find the most favourable place to sue
– Or the most unfavorable to defend: ”a torpedo”
• Also a means to public policy andinternational competition
• Forum non conveniens – choice on the basis of
suitability for the interest of the parties andthe ends of justice
• Choice of law by the parties of agreement
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CHOICE OF JURISDICTIONUnder Brussels I Regulation
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Brussel I Regulation
• i.e. Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters
• Applicable in the courts in EU Member States• Based on mutual trust between the domestic
courts
–
Domestic rules on jurisdiction have to berespected
• Brussels I Regulation overrides national law
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Scope of Application
A two-tier determination
1. Subject matter – ’Civil and commercial´
2. Ratione Personae – Domicile
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’Subject matter’ in brief
• ”This Regulation shall apply in civil and
commercial matters whatever the nature of
the court or the tribunal.--” Art. 1.
• Distinction between civil and public law
• Exercise of public powers (LTU / Eurocontrol)
• Nature of the legal obligation that lies at the
foundation of the claim (Frahuil)
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’Ratione Personae’ in brief
• The three separate options where theRegulation is applicable:
1. The defendant is domiciled in a Member
State2. A court in Member State has exclusive
jurisdiction under Art. 22
3. One of the parties is domiciled in a MemberState and there is a valid agreement onforum
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Jurisdictional rules by exclusivity
1. Exclusive jurisdiction, Art. 22
2. Jurisdiction by appearance, Art. 24
3. Insurance, consumer and employment, 8-21
4. Agreements on Jurisdiction, Art. 235. General jurisdiction, Art. 2
6. Special jurisdiction, Art. 5-7
7. Residual jurisdiction, Art. 4
8. Loss of jurisdiction, Art. 27-30
9. Provisional or protective measures, Art. 31
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’Subject matter’ in detail
• International element:
– The Regulation takes effect only when an
international element is involved
– Factors such as domicile of the parties, place of
occurrence of the events etc. may constitute an
iternational element
–
Legal certainty – Protection of defendants domiciled in the EU
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’Subject matter’ in detail
• Civil and commercial matters:
– Where the public authority acts in the exercise of its powers (Case 29/76 Eurocontrol)
– Determination either by reason of the legalrelationships between the parties to the action orof the subject matter of the action (Case 814/79Ruffer)
– Examination of the basis and the detailed rulesgoverning the bringing of that action (Case C-271/100 Gemeente Steenberger)
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Exclusions
Art. 1(2): The Regulation shall not apply to
a) The legal status or capacity of natural persons,rights inproperty arising out of matrimonialrelationship, wills and succession;
b) Bankruptcy, proceedings relating to the winding-up of insolvent companies or other legalpersons, judicial arrangements, compositionsand analogous proceedings;
c) Social security
d) Arbitration
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’Ratione Personae’ in detail
The Regulation applies only if:
1. The defendant is domiciled in a Member
State. Nationality is irrelevant.
2. A court of a Member State has exclusive
jurisdiction pursuant to Art 22.
3. At least of the parties is dimiciled in a
Member State and a valid choice of forum
clause has been made pursuant to Art 23.
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’Domicile’ Art 59
1. In order to determine whether a party is
domiciled in the Member State whose courts are
seised of a matter, the court shall apply its
internal law.2. If a party is not domiciled in the Member State
whose courts are seised of the matter, then, in
order to determine whether the party isdomiciled in another Member State, the court
shall apply the law of that Member State.
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’Domicile’ Art. 60
1. For the purposes of the Regulation, a
company or other legal person or association
of natural or legal persons is domiciled at the
place where it has its:
(a) statutory seat, or
(b) central administration, or
(c) principal place of business.
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Unknown domicile
• Lindner (C-327/10)
• Art 16(2)
•
Domicile of a consumer was deemedunknown in the circumstances.
• ECJ: Art 16(2)Domicile is where the
consumer’s last known domicile is.
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Domicile of legal person (companies)
• The three options
• Low degree of likeliness of negative coflict of
jurisdiction
• Forum shopping, enforcement
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The international impact of the
Regulation
Article 2
1. Subject to this Regulation, persons domiciledin a Member State shall, whatever their
nationality, be sued in the courts of thatMember State.
2. Persons who are not nationals of the Member
State in which they are domiciled shall begoverned by the rules of jurisdictionapplicable to nationals of that State.
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The international impact of the
Regulation (cont’d)
Article 3
1. Persons domiciled in a Member State may be
sued in the courts of another Member State
only by virtue of the rules set out in Sections 2
to 7 of this Chapter.
2. In particular the rules of national jurisdiction
set out in Annex I shall not be applicable as
against them.
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The international impact of the
Regulation (cont’d)
Article 4
1. If the defendant is not domiciled in a MemberState, the jurisdiction of the courts of eachMember State shall, subject to Articles 22 and 23,be determined by the law of that Member State.
2. As against such a defendant, any persondomiciled in a Member State may, whatever hisnationality, avail himself in that State of the rules
of jurisdiction there in force, and in particularthose specified in Annex I, in the same way as thenationals of that State.
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Exclusive Jurisdiction
• When a court of a Member State shall have jurisdiction regardless of domicile.
• Comprises five situations as governed by Art.
22.• ’Principal subject matter’ of action a prevailing
factor.
•
If two possible outcomes, the court first seisedhas exclusive jurisdiction
• Public policy, proper administration of justice
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1/5 Real estate
• In proceedings which have as their object rights in remin immovable property or tenancies of immovableproperty, the courts of the Member State in which theproperty is situated.
•
However, in proceedings which have as their objecttenancies of immovable property concluded fortemporary private use for a maximum period of sixconsecutive months, the courts of the Member State inwhich the defendant is domiciled shall also have
jurisdiction, provided that the tenant is a naturalperson and that the landlord and the tenant aredomiciled in the same Member State;
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2/5 Incorporation of companies
• In proceedings which have as their object thevalidity of the constitution, the nullity or thedissolution of companies or other legal
persons or associations of natural or legalpersons, or of the validity of the decisions of their organs, the courts of the Member Statein which the company, legal person or
association has its seat. In order to determinethat seat, the court shall apply its rules of private international law
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3/5 Public registers
• In proceedings which have as their object the
validity of entries in public registers, the
courts of the Member State in which the
register is kept;
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4/5 Immaterial property
• In proceedings concerned with the registration or validityof patents, trade marks, designs, or other similar rightsrequired to be deposited or registered, the courts of theMember State in which the deposit or registration has beenapplied for, has taken place or is under the terms of a
Community instrument or an international conventiondeemed to have taken place.
• Without prejudice to the jurisdiction of the EuropeanPatent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the
courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedingsconcerned with the registration or validity of any Europeanpatent granted for that State;
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5/5 Enforcement
• In proceedings concerned with the
enforcement of judgments, the courts of the
Member State in which the judgment has
been or is to be enforced.
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Insurance, consumer and employment
contracts Art. 8-21
• Protection for the benefit of the assumed
”weaker” parties
• Harmonization promotes legal certainty from
the start
• Limited party autonomy, i.e. where the
plaintiff is the protected party
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Consumer contracts, applicability
Article 151. In matters relating to a contract concluded by a person, the
consumer, for a purpose which can be regarded as being outside histrade or profession, jurisdiction shall be determined by this Section,without prejudice to Article 4 and point 5 of Article 5, if:
(a) it is a contract for the sale of goods on instalment credit terms; or(b) it is a contract for a loan repayable by instalments, or for any other
form of credit, made to finance the sale of goods; or
(c) in all other cases, the contract has been concluded with a personwho pursues commercial or professional activities in the MemberState of the consumer's domicile or, by any means, directs suchactivities to that Member State or to several States including thatMember State, and the contract falls within the scope of suchactivities.
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Consumer contract, jurisdiction
Article 16
1. A consumer may bring proceedings against the otherparty to a contract either in the courts of the MemberState in which that party is domiciled or in the courts
for the place where the consumer is domiciled.
2. Proceedings may be brought against a consumer by theother party to the contract only in the courts of theMember State in which the consumer is domiciled.
3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with thisSection, the original claim is pending.
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Consumer contracts, forum clause
Article 17The provisions of this Section may be departed from only by
an agreement:
1. which is entered into after the dispute has arisen; or
2. which allows the consumer to bring proceedings in courtsother than those indicated in this Section; or
3. which is entered into by the consumer and the other partyto the contract, both of whom are at the time of conclusionof the contract domiciled or habitually resident in the same
Member State, and which confers jurisdiction on the courtsof that Member State, provided that such an agreement isnot contrary to the law of that Member State.
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Definition of consumer contract
• ’Contract’ – must give rise to reciprocal and
interdependent obligations
• ’Consumer’ – only contract concluded outside
and independently of any trade or
professional activity – solely for the purpose
of satisfactying an individual’s own private
needs in terms of private consumption.(Gruber, C-464/01)
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E-commerce
• Mere existence of website is not an indication
of direction of services to certain State
• The trader must have manifested intentions to
establish commercial relationships to certain
Member States
• ”clear expressions” (Joined cases Pammer, C-
585/08 & Alpenhof, C-144/09)
• Language, domain-names, distance?
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Employment contracts
Article 181. In matters relating to individual contracts of
employment, jurisdiction shall be determined by thisSection, without prejudice to Article 4 and point 5 of
Article 5.2. Where an employee enters into an individual contract
of employment with an employer who is not domiciledin a Member State but has a branch, agency or otherestablishment in one of the Member States, the
employer shall, in disputes arising out of theoperations of the branch, agency or establishment, bedeemed to be domiciled in that Member State.
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Employment contracts (cont’d)
Article 201. An employer may bring proceedings only in the courts of the
Member State in which the employee is domiciled.
2. The provisions of this Section shall not affect the right to bring acounter-claim in the court in which, in accordance with this Section,
the original claim is pending.
Article 21
The provisions of this Section may be departed from only by anagreement on jurisdiction:
1. which is entered into after the dispute has arisen; or2. which allows the employee to bring proceedings in courts other
than those indicated in this Section.
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Insurance contracts
An insurer domiciled in a Member State may be sued:(a) in the courts of the Member State where he is domiciled, or
(b) in another Member State, in the case of actions brought by thepolicyholder, the insured or a beneficiary, in the courts for the placewhere the plaintiff is domiciled,
(c) if he is a co-insurer, in the courts of a Member State in whichproceedings are brought against the leading insurer. Art. 9
An insurer may bring proceedings only in the courts of the MemberState in which the defendant is domiciled, irrespective of whether
he is the policyholder, the insured or a beneficiary. Art. 12
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Agreements on Jurisdiction
’Choice of forum’ or ’prorogation of jurisdiction’
Article 23
1. If the parties, one or more of whom is domiciled in a Member State, have agreedthat a court or the courts of a Member State are to have jurisdiction to settle anydisputes which have arisen or which may arise in connection with a particular legal
relationship, that court or those courts shall have jurisdiction. Such jurisdictionshall be exclusive unless the parties have agreed otherwise. Such an agreementconferring jurisdiction shall be either:
(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have established betweenthemselves; or
(c) in international trade or commerce, in a form which accords with a usage of which
the parties are or ought to have been aware and which in such trade or commerceis widely known to, and regularly observed by, parties to contracts of the typeinvolved in the particular trade or commerce concerned.
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Art. 23 (2-3, 5)
2. Any communication by electronic means which provides adurable record of the agreement shall be equivalent to"writing".
3. Where such an agreement is concluded by parties, none of whom is domiciled in a Member State, the courts of otherMember States shall have no jurisdiction over theirdisputes unless the court or courts chosen have declined
jurisdiction.
5. Agreements [or provisions of a trust instrument] conferring jurisdiction shall have no legal force if they are contrary to
Articles 13, 17 or 21, or if the courts whose jurisdiction theypurport to exclude have exclusive jurisdiction by virtue of Article 22.
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a) ’In writing or evidenced in writing’
• A guiding principal: ’a true agreement’
between the parties
• Express reference to general terms and
conditions
• Express reference to earlier offers, if it can be
checked by a party exercising reasonable care
b) h h h h
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b) …practices which the parties have
established
• Oral agreements in continuing business
relationships
• No objections against a confirmation
conferring jurisdiction (Segoura, 25/76)
• Good faith
• General conditions
( ) i i i l d
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(c) usage in international trade or
commerce
• Note: the ECJ has not considered any national
elements pertaining to the concept of
’consent’ or ’agreement’
• Prorogation seen as separate from the
underlying agreement
• Formal validity v. material validity
G l j i di i d f d ’
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General jurisdiction: defendant’s
domicile
• Art. 2: Persons domiciled in a Member State
shall, whatever their nationality, be sued in
the courts of that Member State.
• Determines the Member State only, the seat
of the court of the Member State is
determined under the national law.
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Special jurisdiction - contracts
Article 5 (1)A person domiciled in a Member State may, in another Member State,
be sued:
(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;
(b) for the purpose of this provision and unless otherwise agreed, theplace of performance of the obligation in question shall be:
• in the case of the sale of goods, the place in a Member State where,under the contract, the goods were delivered or should have beendelivered,
•
in the case of the provision of services, the place in a Member Statewhere, under the contract, the services were provided or shouldhave been provided,
• (c) if subparagraph (b) does not apply then subparagraph (a)applies;
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Special jurisdiction – contracts (con’t)
• Supplementary to general jurisdiction
(defendant’s domicile)
• Connection between the claim and the
contractual obligation is relevant
– Establishment of a legal obligation freely
consented to by one person towards another and
on which the claimant’s action is based (Engler, C-27/02)
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’Place of the obligation in question’
• ”The obligation” being the one corresponding to
the contractual right to which the plaintiff’s
action is based.
• No harmonized definition: national law applies
• The actual place of delivery takes precedence
over consented place of delivery
• If several places, apply ’principal place of delivery’, if no such ’principal place’, free choice
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T t ’ l f th h f l t
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Tort – ’place of the harmful event
occured or may occur’
• The connecting factor can be both the eventgiving rise to damage or the occurrence of thedamage (Bier), direct damage only
•Product liability, where the defective productcaused damage
• Consequential loss, where the damage firstmaterializes (Marinari)
• Shevill: limits the court’s authority to losses inonly one country (press distribution)
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Case Shevill in internet context
• A person who has suffered an infringement of
a personality in the internet may bring action
in one forum in respect to all damage caused,
at the place of the centre of main interests(eDate Advertizing)
• Where the material was placed online or
accessible, the court has only territorialauthority
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Location of damage
• DFDS Torline: the place where the harmful
event was originated
• Place of registration of the ship was to be
regarded as only one factor in identifying the
place where the harmful event took place, and
a decisive factor only if the harmful event took
place onboard
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Multi-party litigations
Art. 6: A person domiciled in a Member State may also be sued:1. where he is one of a number of defendants, in the courts for the place
where any one of them is domiciled, provided the claims are so closelyconnected that it is expedient to hear and determine them together toavoid the risk of irreconcilable judgments resulting from separateproceedings;
2. as a third party in an action on a warranty or guarantee or in any otherthird party proceedings, in the court seised of the original proceedings,unless these were instituted solely with the object of removing him fromthe jurisdiction of the court which would be competent in his case;
3. on a counter-claim arising from the same contract or facts on which theoriginal claim was based, in the court in which the original claim is
pending;4. in matters relating to a contract, if the action may be combined with an
action against the same defendant in matters relating to rights in rem inimmovable property, in the court of the Member State in which theproperty is situated.
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Multiple defendants, Art. 6(1)
• In a court of a Member state where one of the
defendant is domiciled
• Requires/promotes expediency, close connection
• Unless the sole purpose is to remove a certaindefendant from the jurisdiction of its domicile
(Kafelis)
• Avoid the risk of irreconcilable judgments,divergence on the same situation of law and fact
(Roche)
Warranty or guarantee or in any other
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Warranty or guarantee or in any other
third party proceedings, Art. 6(2)
• The action being brought for the purpose of being indemnified of the consequences of aprior action
•Unless the warrantor and warrantee have aforum clause
• Unless the sole purpose is to remove a certaindefendant from the jurisdiction of its domicile
• May be only used for the defendant to’forward’ the claim
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Residual jurisdiction
Art. 41. If the defendant is not domiciled in a Member
State, the jurisdiction of the courts of eachMember State shall, subject to Articles 22 and 23,
be determined by the law of that Member State.2. As against such a defendant, any person
domiciled in a Member State may, whatever hisnationality, avail himself in that State of the rules
of jurisdiction there in force, and in particularthose specified in Annex I, in the same way as thenationals of that State.
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Residual jurisdiction
• Prevents refusal of recognition and
enforcement of a judgment
• Serves a function in situation of lis pendens
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Lis pendens
Article 27
1. Where proceedings involving the same cause of actionand between the same parties are brought in thecourts of different Member States, any court other
than the court first seised shall of its own motion stayits proceedings until such time as the jurisdiction of thecourt first seised is established.
2. Where the jurisdiction of the court first seised is
established, any court other than the court first seisedshall decline jurisdiction in favour of that court.
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Lis pendens (cont’d)
Article 281. Where related actions are pending in the courts of different
Member States, any court other than the court first seised may stayits proceedings.
2. Where these actions are pending at first instance, any court other
than the court first seised may also, on the application of one of theparties, decline jurisdiction if the court first seised has jurisdictionover the actions in question and its law permits the consolidationthereof.
3. For the purposes of this Article, actions are deemed to be relatedwhere they are so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
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Lis pendens (cont’d)
Article 29
Where actions come within the exclusive
jurisdiction of several courts, any court other
than the court first seised shall decline jurisdiction in favour of that court.
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Lis pendens (cont’d)
Article 30
For the purposes of this Section, a court shall be deemed to be seised:
1. at the time when the document instituting the proceedings or anequivalent document is lodged with the court, provided that the
plaintiff has not subsequently failed to take the steps he wasrequired to take to have service effected on the defendant, or
2. if the document has to be served before being lodged with thecourt, at the time when it is received by the authority responsiblefor service, provided that the plaintiff has not subsequently failed totake the steps he was required to take to have the document
lodged with the court.
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Lis pendens (cont’d)
• Same action, same parties
• I.e. Identities of the parties, the subject-
matter and cause (Gubish Machinenfabrik,
The Tatry)
• Applies also to cases of exclusive jurisdiction
• Subject-matter: the end the action has in view
• Cause: The facts and the rule of law
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Lis pendens – forum non conveniens
• Another court objectively more suitable
• Core issues: predictability and legal certainty
• Not to be applied alongside with lis pendens
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RECOGNITION AND ENFORCEMENT
Under Brussels I Regulation III Title
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General
• Free movement of judgments
• Fewer grounds for preventing recognition
• Simplified procedure on recognition
• Near-automatic recognition
• Enforcement is left for national law
•
’Exequatur’
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Recognition
Art. 331. A judgment given in a Member State shall be recognised in
the other Member States without any special procedurebeing required.
2. Any interested party who raises the recognition of a judgment as the principal issue in a dispute may, inaccordance with the procedures provided for in Sections 2and 3 of this Chapter, apply for a decision that the
judgment be recognised.
3. If the outcome of proceedings in a court of a Member Statedepends on the determination of an incidental question of recognition that court shall have jurisdiction over thatquestion.
1 Adjudication from a court of a
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1. Adjudication from a court of a
Member State
• Excludes judgments from non-Member States
• ’judgment’ solely to judicial decision given by
a court, not e.g. settlement
• Not arbitral awards itself but judgments
recognising arbitral awards
• Adversarial proceedings, rights of the
defendant observed
2 Given in a Civil or Commercial
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2. Given in a Civil or Commercial
Matter
• Follows from the scope of the Brussel I
Regulation
• Second guessing
• If not considered in the first proceedings, a
consideration on th subject-matter may be
required
• The scope should be considered from start to
finish
3 Not impeachable for Jurisdictional
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3. Not impeachable for Jurisdictional
Error
Art. 351. Moreover, a judgment shall not be recognised if it conflicts
with Sections 3, 4 or 6 of Chapter II, or in a case providedfor in Article 72.
2. In its examination of the grounds of jurisdiction referred toin the foregoing paragraph, the court or authority appliedto shall be bound by the findings of fact on which the courtof the Member State of origin based its jurisdiction.
3. Subject to the paragraph 1, the jurisdiction of the court of the Member State of origin may not be reviewed. The testof public policy referred to in point 1 of Article 34 may notbe applied to the rules relating to jurisdiction.
4 Not impeachable for procedural or
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4. Not impeachable for procedural or
substantive reasons
Art. 34A judgment shall not be recognised:
1. if such recognition is manifestly contrary to public policy in the MemberState in which recognition is sought;
2. where it was given in default of appearance, if the defendant was notserved with the document which instituted the proceedings or with an
equivalent document in sufficient time and in such a way as to enable himto arrange for his defence, unless the defendant failed to commenceproceedings to challenge the judgment when it was possible for him to doso;
3. if it is irreconcilable with a judgment given in a dispute between the sameparties in the Member State in which recognition is sought;
4. if it is irreconcilable with an earlier judgment given in another MemberState or in a third State involving the same cause of action and betweenthe same parties, provided that the earlier judgment fulfils the conditionsnecessary for its recognition in the Member State addressed.
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Enforcement
• A simplified procedure ’exequatur’
• Two phases: production of documents and
declaration of enforcement (possible appeal)
• Authority to review whether the right of
defence was observed (Trade Agency)
• Authority not to grant enforcement of a one-
sided judgment, after review of the merits
(Trade Agency)
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CHOICE OF APPLICABLE LAW - Contracts
Under Rome I Regulation
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Principles
• Predictability (internal market)
• Room for manoeuvre for the forum
• Applies to contractual obligations in civil and
commercial matters, no to e.g. tort
• Freedom of contract – no connections between
the parties and lex causae required
• Prodived protection for ’weaker’ parties• Absence of choice, ’characteristic performance’
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Scope of application, Art 1.
1. This Regulation shall apply, in situations
involving a conflict of laws, to contractual
obligations in civil and commercial matters.
It shall not apply, in particular, to revenue,
customs or administrative matters.
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Exclusions
2. The following shall be excluded from the scope of this Regulation:(a) questions involving the status or legal capacity of natural persons,
without prejudice to Article 13;
(b) obligations arising out of family relationships and relationshipsdeemed by the law applicable to such relationships to have
comparable effects, including maintenance obligations;(c) obligations arising out of matrimonial property regimes, propertyregimes of relationships deemed by the law applicable to suchrelationships to have comparable effects to marriage, and wills andsuccession;
(d) obligations arising under bills of exchange, cheques and promissory
notes and other negotiable instruments to the extent that theobligations under such other negotiable instruments arise out of their negotiable character;
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Exclusions
(e) arbitration agreements and agreements on the choice of court;
(f) questions governed by the law of companies and otherbodies, corporate or unincorporated, such as the creation,by registration or otherwise, legal capacity, internal
organisation or winding-up of companies and other bodies,corporate or unincorporated, and the personal liability of officers and members as such for the obligations of thecompany or body;
(g) the question whether an agent is able to bind a principal,
or an organ to bind a company or other body corporate orunincorporated, in relation to a third party;
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Exclusions
(g) the question whether an agent is able to bind a principal, or an organ tobind a company or other body corporate or unincorporated, in relation toa third party;
(h) the constitution of trusts and the relationship between settlors, trusteesand beneficiaries;
(i) obligations arising out of dealings prior to the conclusion of a contract;
(j) insurance contracts arising out of operations carried out by organisationsother than undertakings referred to in Article 2 of Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002concerning life assurance (1) the object of which is to provide benefits foremployed or self-employed persons belonging to an undertaking or groupof undertakings, or to a trade or group of trades, in the event of death orsurvival or of discontinuance or curtailment of activity, or of sicknessrelated to work or accidents at work.
i l li i
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Universal application
Article 2: Universal applicationAny law specified by this Regulation shall be applied whether or
not it is the law of a Member State.
Article 22: States with more than one legal system
1. Where a State comprises several territorial units, each of which has its own rules of
law in respect of contractual obligations, each territorial unit shall be consideredas a country for the purposes of identifying the law applicable under thisRegulation.
2. A Member State where different territorial units have their own rules of law inrespect of contractual obligations shall not be required to apply this Regulation toconflicts solely between the laws of such units.
3. Where all other elements relevant to the situation at the time of the choice are
located in a country other than the country whose law has been chosen, thechoice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement.
F d f h i A 3
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Freedom of choice, Art. 3
1. A contract shall be governed by the law chosen by the parties. The choiceshall be made expressly or clearly demonstrated by the terms of thecontract or the circumstances of the case. By their choice the parties canselect the law applicable to the whole or to part only of the contract.
2. The parties may at any time agree to subject the contract to a law otherthan that which previously governed it, whether as a result of an earlier
choice made under this Article or of other provisions of this Regulation.Any change in the law to be applied that is made after the conclusion of the contract shall not prejudice its formal validity under Article 11 oradversely affect the rights of third parties.
3. Where all other elements relevant to the situation at the time of the choiceare located in a country other than the country whose law has beenchosen, the choice of the parties shall not prejudice the application of
provisions of the law of that other country which cannot be derogatedfrom by agreement.
F d f h i A 3
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Freedom of choice, Art. 3
4. Where all other elements relevant to the situation atthe time of the choice are located in one or moreMember States, the parties' choice of applicable lawother than that of a Member State shall not prejudicethe application of provisions of Community law, where
appropriate as implemented in the Member State of the forum, which cannot be derogated from byagreement.
5. The existence and validity of the consent of the parties
as to the choice of the applicable law shall bedetermined in accordance with the provisions of Articles 10, 11 and 13.
F d f h i
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Freedom of choice
• ’Clearly demonstrated’ compared to ”implicit”
• Court clauses
• Reference to laws of a non-State or a model
law?
• Possibility of severance
• Limited freedom as regards ’weaker’ parties,
consumers, empolyees, passangers etc. (Art.
5-8)
Ab f h i A t 4 (1)
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Absence of choice, Art. 4 (1)
(a) a contract for the sale of goods shall be governed by the law of thecountry where the seller has his habitual residence;
(b) a contract for the provision of services shall be governed by the lawof the country where the service provider has his habitualresidence;
(c) a contract relating to a right in rem in immovable property or to atenancy of immovable property shall be governed by the law of thecountry where the property is situated;
(d) notwithstanding point (c), a tenancy of immovable propertyconcluded for temporary private use for a period of no more thansix consecutive months shall be governed by the law of the country
where the landlord has his habitual residence, provided that thetenant is a natural person and has his habitual residence in thesame country;
Ab f h i A t 4 (1)
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Absence of choice, Art. 4 (1)
(e) a franchise contract shall be governed by the law of the countrywhere the franchisee has his habitual residence;
(f) a distribution contract shall be governed by the law of the countrywhere the distributor has his habitual residence;
(g) a contract for the sale of goods by auction shall be governed by thelaw of the country where the auction takes place, if such a placecan be determined;
(h) a contract concluded within a multilateral system which bringstogether or facilitates the bringing together of multiple third-partybuying and selling interests in financial instruments, as defined byArticle 4(1), point (17) of Directive 2004/39/EC, in accordance with
non-discretionary rules and governed by a single law, shall begoverned by that law.
Ab f h i A t 4 (2 4)
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Absence of choice, Art. 4 (2-4)
2. Where the contract is not covered by paragraph 1 or wherethe elements of the contract would be covered by morethan one of points (a) to (h) of paragraph 1, the contractshall be governed by the law of the country where theparty required to effect the characteristic performance of
the contract has his habitual residence.3. Where it is clear from all the circumstances of the case that
the contract is manifestly more closely connected with acountry other than that indicated in paragraphs 1 or 2, thelaw of that other country shall apply.
4. Where the law applicable cannot be determined pursuantto paragraphs 1 or 2, the contract shall be governed by thelaw of the country with which it is most closely connected.
Ab f h i
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Absence of choice
• Characterisation of contract – where is thedesired effect of the contract?
• Habitual residence, at the time of the conclusionof the contract
– Central administration (companies) – Principal place of business (natural person)
– Location (branch office, agency etc.)
• The context of adjudication
• Manifestly closer connections, to be appliedrestrictively
C t
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Consent
Article 10: Consent and material validity1. The existence and validity of a contract, or of any term
of a contract, shall be determined by the law whichwould govern it under this Regulation if the contract or
term were valid.2. Nevertheless, a party, in order to establish that he did
not consent, may rely upon the law of the country inwhich he has his habitual residence if it appears from
the circumstances that it would not be reasonable todetermine the effect of his conduct in accordance withthe law specified in paragraph 1.
F l lidit
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Formal validity
Article 11: Formal validity1. A contract concluded between persons who, or whose agents, are in
the same country at the time of its conclusion is formally valid if itsatisfies the formal requirements of the law which governs it insubstance under this Regulation or of the law of the country whereit is concluded.
2. A contract concluded between persons who, or whose agents, are indifferent countries at the time of its conclusion is formally valid if itsatisfies the formal requirements of the law which governs it insubstance under this Regulation, or of the law of either of thecountries where either of the parties or their agent is present at thetime of conclusion, or of the law of the country where either of theparties had his habitual residence at that time.
C it
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Capacity
Article 13: Incapacity
In a contract concluded between persons who
are in the same country, a natural person whowould have capacity under the law of thatcountry may invoke his incapacity resulting fromthe law of another country, only if the other party
to the contract was aware of that incapacity atthe time of the conclusion of the contract or wasnot aware thereof as a result of negligence.
Mandator La
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Mandatory Law
Art. 33. Where all other elements relevant to the situation at the
time of the choice are located in a country other than thecountry whose law has been chosen, the choice of theparties shall not prejudice the application of provisions of
the law of that other country which cannot be derogatedfrom by agreement.
4. Where all other elements relevant to the situation at thetime of the choice are located in one or more MemberStates, the parties' choice of applicable law other than that
of a Member State shall not prejudice the application of provisions of Community law, where appropriate asimplemented in the Member State of the forum, whichcannot be derogated from by agreement.
Mandatory Law
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Mandatory Law
• Elements located – the issue needs to beexclusively linked to that country, partial linkwill not suffice
•
Freedom of choice?• ’All elements’ to be interpreted by courts
• iIncreasing mandatory EU law, e.g. inconsumer protection, suggests that the choiceof law may lose its meaning in consumercontracts
Overriding Mandatory Law
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Overriding Mandatory Law
Article 9: Overriding mandatory provisions1. Overriding mandatory provisions are provisions the
respect for which is regarded as crucial by a countryfor safeguarding its public interests, such as its
political, social or economic organisation, to such anextent that they are applicable to any situation fallingwithin their scope, irrespective of the law otherwiseapplicable to the contract under this Regulation.
2. Nothing in this Regulation shall restrict theapplication of the overriding mandatory provisions of the law of the forum.
Overriding Mandatory Law
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Overriding Mandatory Law
Art. 9(3)Effect may be given to the overriding mandatoryprovisions of the law of the country where theobligations arising out of the contract have to be
or have been performed, in so far as thoseoverriding mandatory provisions render theperformance of the contract unlawful. Inconsidering whether to give effect to those
provisions, regard shall be had to their nature andpurpose and to the consequences of theirapplication or non-application.
Overriding Mandatory Law
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Overriding Mandatory Law
• A ground to reject enforcement (Foster vDriscoll, English law)
• The difference between Art. 9 and Art 3(4):
provisions considered overriding v EU law thatcannot be derogated by an agreement
• A gold plating?
Ordre public
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Ordre public
Article 21: Public policy of the forum
• The application of a provision of the law of any
country specified by this Regulation may be
refused only if such application is manifestlyincompatible with the public policy (ordre public)
of the forum.
• Impact in the application only: the ’manifestly
incompatible’ provision will just vanish
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CHOICE OF APPLICABLE LAW - Tort
Under Rome II Regulation
Principles
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Principles
• Predictability of the outcome of the litigation
• Certainty on the applicable law
• Free movement of judgments
• Proper functioning of the internal market
• Defines material and temporal scope
•
Freedom of choice of the parties• Universal application
Scope of application
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Scope of application
• Events after 11 January 2009 giving rise todamage
• Art 1 (1): Scope
This Regulation shall apply, in situations involvinga conflict of laws, to non-contractual obligationsin civil and commercial matters. It shall not apply,in particular, to revenue, customs or
administrative matters or to the liability of theState for acts and omissions in the exercise of State authority (acta iure imperii).
Scope of application
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Scope of application
• Application in arbitral proceedings notexpressly excluded
• ’Non-contractual obligations’ should be
understood as autonomous concept• Residual in relation to contract, e.g. agent
without capacity, unjust enrichment, culpa incontrahendo
• Situations with both contractual and non-contractual features?
Exclusions
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Exclusions
(a) non-contractual obligations arising out of family relationships and relationships deemed by the lawapplicable to such relationships to have comparable effects including maintenance obligations;
(b) non-contractual obligations arising out of matrimonial property regimes, property regimes of relationships deemed by the law applicable to such relationships to have comparable effects tomarriage, and wills and succession;
(c) non-contractual obligations arising under bills of exchange, cheques and promissory notes and othernegotiable instruments to the extent that the obligations under such other negotiable instrumentsarise out of their negotiable character;
(d) non-contractual obligations arising out of the law of companies and other bodies corporate orunincorporated regarding matters such as the creation, by registration or otherwise, legal capacity,internal organisation or winding-up of companies and other bodies corporate or unincorporated,the personal liability of officers and members as such for the obligations of the company or bodyand the personal liability of auditors to a company or to its members in the statutory audits of accounting documents;
(e) non-contractual obligations arising out of the relations between the settlors, trustees andbeneficiaries of a trust created voluntarily;
(f) non-contractual obligations arising out of nuclear damage;
(g) non-contractual obligations arising out of violations of privacy and rights relating to personality,including defamation.
General rule – lex loci damni
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General rule – lex loci damni
• ”Where the damage occurs” Art. 4(1)
• Irrespective of the country in which the event
giving rise to the damage occurred
• Irrespective of the country or countries in
which the indirect consequences of that event
occur
A general exception
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A general exception
Art 4(2): However, where the person claimed tobe liable and the person sustaining damage
both have their habitual residence in the same
country at the time when the damage occurs,the law of that country shall apply.
Habitual residence Art 23
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Habitual residence, Art. 23
1. For the purposes of this Regulation, the habitual residence of companies and other bodies, corporate or unincorporated, shall bethe place of central administration.
Where the event giving rise to the damage occurs, or the damagearises, in the course of operation of a branch, agency or any otherestablishment, the place where the branch, agency or any otherestablishment is located shall be treated as the place of habitualresidence.
2. For the purposes of this Regulation, the habitual residence of a
natural person acting in the course of his or her business activityshall be his or her principal place of business.
Escape clause Art 4(3)
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Escape clause, Art. 4(3)
Where it is clear from all the circumstances of thecase that the tort/delict is manifestly moreclosely connected with a country other than thatindicated in paragraphs 1 or 2, the law of that
other country shall apply. A manifestly closerconnection with another country might be basedin particular on a preexisting relationshipbetween the parties, such as a contract, that is
closely connected with the tort/delict inquestion.
Specific choice of law rules
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Specific choice of law rules
• Product liability
• Competition
• Environment
• Intellectual property rights
• Industrial actions
• Note: specific torts, not ’victims’
Product liability Art 5
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Product liability, Art. 5
1. Without prejudice to Article 4(2), the law applicable toa non-contractual obligation arising out of damagecaused by a product shall be:
(a) the law of the country in which the person sustainingthe damage had his or her habitual residence when thedamage occurred, if the product was marketed in thatcountry; or, failing that,
(b) the law of the country in which the product wasacquired, if the product was marketed in that country;
or, failing that,(c) the law of the country in which the damage occurred,if the product was marketed in that country.
Product liability Art 5
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Product liability, Art. 5
However, the law applicable shall be the law of the country inwhich the person claimed to be liable is habitually residentif he or she could not reasonably foresee the marketing of the product, or a product of the same type, in the countrythe law of which is applicable under (a), (b) or (c).
2. Where it is clear from all the circumstances of the case thatthe tort/delict is manifestly more closely connected with acountry other than that indicated in paragraph 1, the law of that other country shall apply. A manifestly closerconnection with another country might be based in
particular on a pre-existing relationship between theparties, such as a contract, that is closely connected withthe tort/delict in question.
Competition Art 6
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Competition, Art. 6
1. The law applicable to a non-contractualobligation arising out of an act of unfaircompetition shall be the law of the countrywhere competitive relations or the collectiveinterests of consumers are, or are likely to be,affected.
2. Where an act of unfair competition affects
exclusively the interests of a specificcompetitor, Article 4 [general rule] shall apply.
Competition Art 6
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Competition, Art. 6
3.(a) The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be,affected.
(b) When the market is, or is likely to be, affected in more than one country, theperson seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court
seised, provided that the market in that Member State is amongst those directlyand substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises; where the claimant sues,in accordance with the applicable rules on jurisdiction, more than one defendantin that court, he or she can only choose to base his or her claim on the law of thatcourt if the restriction of competition on which the claim against each of thesedefendants relies directly and substantially affects also the market in the MemberState of that court.
4. The law applicable under this Article may not be derogated from by an agreementpursuant to Article 14.
Environmental damage Art 7
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Environmental damage, Art. 7
• The law applicable to a non-contractualobligation arising out of environmental
damage or damage sustained by persons or
property as a result of such damage shall bethe law determined pursuant to Article 4(1),
unless the person seeking compensation for
damage chooses to base his or her claim on
the law of the country in which the event
giving rise to the damage occurred.
Environmental damage Art 7
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Environmental damage, Art. 7
•
Recital (24): ‘Environmental damage’ should be understood asmeaning adverse change in a natural resource, such as water, landor air, impairment of a function performed by that resource for thebenefit of another natural resource or the public, or impairment of the variability among living organisms.
• Recital (25): Regarding environmental damage, Article 174 of the
Treaty, which provides that there should be a high level of protection based on the precautionary principle and the principlethat preventive action should be taken, the principle of priority forcorrective action at source and the principle that the polluter pays,fully justifies the use of the principle of discriminating in favour of the person sustaining the damage. The question of when the
person seeking compensation can make the choice of the lawapplicable should be determined in accordance with the law of theMember State in which the court is seised.
Rules of safety and conduct Art 17
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Rules of safety and conduct, Art. 17
• In assessing the conduct of the person claimed tobe liable, account shall be taken, as a matter of
fact and in so far as is appropriate, of the rules of
safety and conduct which were in force at theplace and time of the event giving rise to the
liability.
• Permits under lex loci delicti commissii not
relevant if applicable law is lex loci damni
• Corporate headquarters
Infringements of IPR Art 8
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Infringements of IPR, Art. 8
1. The law applicable to a non-contractual obligation arisingfrom an infringement of an intellectual property right shallbe the law of the country for which protection is claimed.
2. In the case of a non-contractual obligation arising from aninfringement of a unitary Community intellectual property
right, the law applicable shall, for any question that is notgoverned by the relevant Community instrument, be thelaw of the country in which the act of infringement wascommitted.
3. The law applicable under this Article may not be derogated
from by an agreement pursuant to Article 14.
Industrial action, Art 9.
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Industrial action, Art 9.
• Without prejudice to Article 4(2), the lawapplicable to a non-contractual obligation in
respect of the liability of a person in the
capacity of a worker or an employer or theorganisations representing their professional
interests for damages caused by an industrial
action, pending or carried out, shall be the law
of the country where the action is to be, or
has been, taken.
Freedom to choose applicable law
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Freedom to choose applicable law
Art 14 (1)1. The parties may agree to submit non-contractual
obligations to the law of their choice:
(a) by an agreement entered into after the event giving
rise to the damage occurred; or(b) where all the parties are pursuing a commercial
activity, also by an agreement freely negotiated beforethe event giving rise to the damage occurred.
The choice shall be expressed or demonstrated withreasonable certainty by the circumstances of the caseand shall not prejudice the rights of third parties.
Freedom to choose applicable law
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Freedom to choose applicable law
Art. 14 (2-3)2. Where all the elements relevant to the situation at the time when
the event giving rise to the damage occurs are located in a countryother than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of thelaw of that other country which cannot be derogated from by
agreement.3. Where all the elements relevant to the situation at the time when
the event giving rise to the damage occurs are located in one ormore of the Member States, the parties’ choice of the lawapplicable other than that of a Member State shall not prejudicethe application of provisions of Community law, where appropriate
as implemented in the Member State of the forum, which cannotbe derogated from by agreement.
Scope of the law applicable, Art. 15
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Scope of the law applicable, Art. 15
The law applicable to non-contractual obligations under this Regulation shallgovern in particular:
(a) the basis and extent of liability, including the determination of persons who maybe held liable for acts performed by them;
(b) the grounds for exemption from liability, any limitation of liability and any divisionof liability;
(c) the existence, the nature and the assessment of damage or the remedy claimed;
(d) within the limits of powers conferred on the court by its procedural law, themeasures which a court may take to prevent or terminate injury or damage or toensure the provision of compensation;
(e) the question whether a right to claim damages or a remedy may be transferred,including by inheritance;
(f) persons entitled to compensation for damage sustained personally;
(g) liability for the acts of another person;(h) the manner in which an obligation may be extinguished and rules of prescription
and limitation, including rules relating to the commencement, interruption andsuspension of a period of prescription or limitation.
Mandatory law
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Mandatory law
Art. 16: Overriding mandatory provisions
Nothing in this Regulation shall restrict the
application of the provisions of the law of the
forum in a situation where they are mandatoryirrespective of the law otherwise applicable to
the non-contractual obligation.
Ordre public
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Ordre public
Art. 26: Public policy of the forum
The application of a provision of the law of any
country specified by this Regulation may be
refused only if such application is manifestlyincompatible with the public policy (ordre public)
of the forum.