Yearbook of Private International Law: Volume VIII, 2006

YEARBOOK OF PRIVATE INTERNATIONAL LAW

YEARBOOK OF PRIVATE INTERNATIONAL LAW VOLUME VIII – 2006

EDITORS PETAR ŠARČEVIĆ † Professor at the University of Rijeka

PAUL VOLKEN

ANDREA BONOMI

Professor at the University of Fribourg

Professor at the University of Lausanne

PUBLISHED IN ASSOCIATION WITH SWISS INSTITUTE OF COMPARATIVE LAW LAUSANNE, SWITZERLAND

Sellier. European Law Publishers

Stæmpfli Publishers Ltd. Berne

Sellier. European Law Publishers ISBN 978-3-86653-018-8

Stæmpfli Publishers Ltd. Berne ISBN 978-3-7272-2736-3

Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über http://dnb.d-nb.de abrufbar.

© 2007 by Sellier. European Law Publishers GmbH, München, Stæmpfli Publishers Ltd., Berne, and Swiss Institute of Comparative Law. Dieses Werk einschließlich aller seiner Teile ist urheberrechtlich geschützt. Jede Verwertung außerhalb der engen Grenzen des Urheberrechtsgesetzes ist ohne Zustimmung des Verlages unzulässig und strafbar. Das gilt insbesondere für Vervielfältigungen, Übersetzungen, Mikroverfilmungen und die Einspeicherung und Verarbeitung in elektronischen Systemen. Herstellung: Karina Hack, München. Druck und Bindung: Pustet, Regensburg. Gedruckt auf säurefreiem, alterungsbeständigem Papier. Printed in Germany.

ADVISORY BOARD TITO BALLARINO Milan

FERENC MÁDL Budapest

JÜRGEN BASEDOW Hamburg

RUI MANUEL GENS DE MOURA RAMOS Lisbon/Coimbra

GENEVIÈVE BASTID-BURDEAU Paris

YASUHIRO OKUDA Tokyo

ELEANOR CASHIN RITAINE Lausanne

GONZALO E. PARRA-ARANGUREN The Hague/Caracas

SIR LAWRENCE COLLINS London HUANG JIN Wuhan

SYMEON C. SYMEONIDES Salem (Oregon)

HANS VAN LOON The Hague

PIERRE WIDMER Lausanne

ASSISTANT EDITOR GIAN PAOLO ROMANO Legal adviser, Swiss Institute of Comparative Law

ADDRESS FOR MANUSCRIPTS AND CORRESPONDENCE Swiss Institute of Comparative Law Dorigny, CH – 1015 Lausanne

ENGLISH REVISION SUSAN ŠARČEVIĆ Professor, University of Rijeka

GENEVIÈVE SAUMIER Professor, McGill University

CHARLES TABOR lur. doct. Candidate, Lousiana State University

NATASHA PITTET Independent Legal Translator MARC R. MERRILL Attorney at Law, Baton Rouge

TABLE OF CONTENTS ________________

Foreword ........................................................................................................ xi Abbreviations............................................................................................... xiii Doctrine Alfred E. von OVERBECK Three Steps With Petar Šarčević................................................................ 1 Tito BALLARINO Is a Conflict Rule for Living Wills and Euthanasia Needed? .................... 5 Katharina BOELE-WOELKI, Ian CURRY-SUMNER, Miranda JANSEN, Wendy SCHRAMA The Evaluation of Same-Sex Marriages and Registered Partnerships in the Netherlands .................................................................................... 27 Alegría BORRÁS Competence of the Community to Conclude the Revised Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters – Opinion C-1/03 of 7 February 2006: Comments and Immediate Consequences ................. 37 Lawrence COLLINS The United States Supreme Court and the Principles of Comity: Evidence in Transnational Litigation ......................................................... 53 William DUNCAN Nationality and the Protection of Children across Frontiers, and the Example of Intercountry Adoption................................................ 75 Jasnica GARAŠIĆ What is Right and What is Wrong in the ECJ’s Judgment on Eurofood IFSC Ltd..................................................................................... 87 Huang JIN Interaction and Integration between the Legal Systems of Hong Kong, Macao and Mainland China 50 Years after Their Return to China.......... 105 Ulrich MAGNUS Set-off and the Rome I Proposal .............................................................. 113 Yuko NISHITANI International Child Abduction in Japan ................................................... 125 Yasuhiro OKUDA Reform of Japan’s Private International Law: Act on the General Rules of the Application of Laws ............................. 145

Robert G. SPECTOR Same-Sex Marriages, Domestic Partnerships and Private International Law: At the Dawn of a New Jurisprudence in the United States ............. 169 National Reports Richard Frimpong OPPONG The Hague Conference and the Development of Private International Law in Africa: A Plea for Cooperation............................... 189 Serge BILLARANT The French Diptych on Foreign Law: An Analysis through Its Most Recent Retouching................................... 213 Nidhi GUPTA and Rajnish KUMAR SINGH Law Relating to International Arbitration in India................................... 231 Marie-Claude NAJM Codification of Private International Law in the Civil Code of Qatar ..... 249 Court Decisions Fang XIAO and Yujun GUO China – Enforcement of Arbitration Clauses. Remarks on Two 10 May 2005 Decisions of the Supreme People’s Court.......................... 267 Haris P. MEIDANIS Greece – Three Recent Greek Cases on the Brussels Convention ........... 281 Edgars STRAUTINS Latvia – Two 2005 Latvian Supreme Court Decisions on International Jurisdiction and Procedure ....................................................................... 289 Patricia OREJUDO PRIETO DE LOS MOZOS Spain – Private International Law Problems Relating to the Celebration of Same-Sex Marriages: DGRN of 29 July 2005 ..................................... 299 Bart VOLDERS / Valentin RÉTORNAZ Switzerland – Challenging an Arbitral Award for Infringement of Competition Law? The Terra Armata Decision of the Swiss Federal Tribunal of 8 March 2006 ................................................. 307 Ian CURRY-SUMNER United Kingdom – An Age-Old Dilemma: Is It Time for a ‘Revolutionary Approach’? A Commentary on Harding v. Wealands .... 321 Forum Stéphanie FRANCQ The Scope of Secondary Community Law in the Light of the Methods of Private International Law – Or the Other Way Around? ..................... 333

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Paolo BERTOLI The Court of Justice, European Integration and Private International Law .................................................................. 375 Texts, Materials and Recent Developments Elisabeth MEURLING New Choice of Law Rules For Capacity to Marry and the Recognition of Marriage in Sweden – A New Principle? .................. 413 Anis BEN KHAMMASSI Art. 54(1) of the Tunisian Code of Private International Law – The Mysterious Article 54(1)………………………………………..….. 421 Kent ANDERSON and Yasushiro OKUDA (translators) Japanese Act on the General Rules of the Application of Laws .............. 427 Books Received ........................................................................................... 443 Index ............................................................................................................ 455

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FOREWORD ________________

The present volume of the Yearbook is a special one for at least two reasons. First, it includes a section devoted to the memory of the Yearbook’s spiritual father, the late Petar Šarčević. The purpose of this special section is obviously not to compete with the outstanding collection of Essays published in 2005 in Petar’s honour.1 Rather we seek simply to pay tribute once again to Petar’s passionate commitment to conflicts science within the very book which he cherished most and hoped would represent his long-lasting legacy to academic research and professional practice of private international law. At the same time, this section is intended to offer to those among Petar’s friends and colleagues who weren’t able to contribute to the previous Essays a new opportunity to express the high esteem in which they held the Yearbook’s creator and the affection they felt for him. We have good reason to be satisfied with the success of this initiative. This special section features twelve most interesting contributions by colleagues from no less than eleven countries and three continents, thus confirming once again the worldwide reputation of Petar Šarčević and his Yearbook. The papers deal with a wide array of subjects ranging from classical themes such as the protection of children in inter-country adoptions and abduction cases, the principle of comity in United States case law and new national conflict codifications, to very fashionable topics like non-marital unions and same-sex marriages, up to the new challenging questions of the conflict régime of euthanasia and living wills. The second unique aspect of the present volume is that, for the first time in its still short history, the Yearbook approaches 500 pages. It is worth stressing that the whole volume is made up of articles or shorter contributions, the only legislative text included being the English translation of the recent reform of the Japanese conflict of law rules, which is hereby published for the first time in Europe. In our opinion, this significant growth is a tangible sign of the everincreasing dissemination and popularity of the Yearbook within the academic community, which is also confirmed by a constant rise in the number of copies sold – volumes 1999 to 2002 are in the process of being reprinted and the 2006 issue will enjoy a noticeable increase in print run from the outset. These developments show once again how forward-looking Petar’s idea of creating in 1999 the first English language periodical completely dedicated to PIL questions proved to be, and they encourage us to carry on with his efforts in order to maintain its high quality and to increase the world-wide reach he had imagined for this tool of information and discussion. The recent appearance of a second promising English language private international law periodical, the Journal of Private International Liber Memorialis Petar Šarčević: universalism, tradition and the individual, ed. by J. ERAUW, V. TOMLJENOVIC and P. VOLKEN, Munich (Sellier) 2006. 1

Law, is further testimony to the fertility of Petar’s intuition that new scientific fora in English can only foster the debate in a branch of law which is universal by its very nature and whose importance is continuously growing in a globalized world. With the intention of bringing the celebratory aim of the present volume in harmony with the general goals of the Yearbook, we have maintained in the current issue most of our traditional sections. We thus have the pleasure of presenting the reader with several most interesting national reports, as well as commentaries on court decisions and recent developments from various African, Asian and European countries. We will not mention all of them here, but we are pleased to stress that, in line with the purpose of extending with each passing year the Yearbook’s information network, the present volume hosts for the first time contributions from Greece, India, Latvia, Qatar and Tunisia. In order to make the Yearbook more attractive for practitioners, we have also enlarged the section on national court decisions and included contributions on international arbitration. And last but not least, this year’s ‘Forum’ section summarizes the contents of two excellent doctoral theses on the pending European conflict system. One article analyzes the new system taking into account the scope of application of secondary Community legislation, while the other focuses on the conflict of laws aspects of the ever growing case law of the European Court of Justice. We would like to express our gratitude to all of the authors who have contributed to this issue, and to all the members of the editorial staff, in particular to the Assistant Editor Gian Paolo Romano, who has accomplished a huge work not only at the editing stage, but also in the search and selection of the contributions. Also, many thanks go to our dedicated team of English revisers – Prof. Susan Šarčević, Mr. Charles Tabor, Prof. Geneviève Saumier, Mrs. Natasha Pittet and Mr. Marc Merrill – as well as to Mrs. Monique Bassin, who was for the first time responsible for the formatting of the book. Our grateful acknowledgment is additionally owed to Sellier. European Law Publishers and to their Swiss partner, Staempfli, for the active and successful role they played in disseminating the Yearbook, and, finally, to the Swiss Institute of Comparative Law, in particular its Director Eleanor Cashin Ritaine, for her unwavering support, which is now also confirmed by her serving, together with other distinguished colleagues and dedicated supporters of the Yearbook, on the extended Advisory Board of our publication.

Andrea Bonomi

Paul Volken

ABBREVIATIONS ________________

Am. J. Comp. L. Am. J. Int. L. Clunet ECR I.C.L.Q. I.L.M. id. IPRax OJ PIL RabelsZ Recueil des Cours

Rev. crit. dr. int. pr. REDI Riv. dir. int. priv. proc. Riv. dir. int. RIW RSDIE

American Journal of Comparative Law American Journal of International Law Journal de droit international European Court Reports International and Comparative Law Quarterly International Legal Materials idem Praxis des internationalen Privat- und Verfahrensrechts Official Journal Private International Law Rabels Zeitschrift für ausländisches und internationales Privatrecht Recueil des Cours de l'Académie de la Haye de droit international = Collected Courses of The Hague Academy of International Law Revue critique de droit international privé Revista española de derecho internacional Rivista di diritto internazionale privato e processuale Rivista di diritto internazionale Recht internationaler Wirtschaft Revue suisse de droit international et européen = Schweizerische Zeitschrift für internationales und europäisches Recht

DOCTRINE ________________

THREE STEPS WITH PETAR ŠARČEVIĆ Alfred E. von OVERBECK*

This brief note is about three institutions in which Petar Šarčević and I were active either at the same or different times. There were many other happy encounters with Petar and his wife Susan, for example, at their Embassy in Berne or at the Dubrovnik Inter-University Centre of Postgraduate Studies where they invited me to lecture. The Swiss Institute of Comparative Law1 has to be mentioned first because this is where I met Petar Šarčević and we worked together and became good friends. From 1980 to 1990 I served as Director of the Institute, an autonomous institution of the Swiss Confederation which was opened to the public in 1982. At that time, Petar Šarčević was Professor at the Law Faculty of the University of Rijeka. As one of the first members of the scientific staff, he worked at the Institute part time in 1983, full time from October 1984 to October 1985, and again part time until September 1986. Thereafter he returned to Rijeka as Professor and Dean, became President of the University, then served as the first Ambassador of the Republic of Croatia in Washington, later as Ambassador in Berne and finally returned to academia as Professor again. Petar Šarčević was held in high esteem at the Institute for his personality, his outstanding legal qualifications and his knowledge of several languages. He enjoyed discussing his ideas and projects with the staff and visitors of the Institute. His wife Susan, Professor of legal German and legal English at the University of Rijeka, was exceptionally helpful throughout his entire career. She was also very useful to the Institute by revising English texts for publication. Both were very active in the social life of the Institute and made many friends. After their departure they kept close links with the Institute and returned regularly to work at the library or participate in colloquiums. Petar Šarčević played a major role in creating and publishing the present Yearbook of Private International Law,2 while the English texts were revised by Mrs. Šarčević. * Professor Emeritus of the University of Fribourg; former Director of the Swiss Institute of Comparative Law. 1 See Loi fédérale sur l’Institut suisse de droit comparé, of October 6, 1978. RS 425.1 . 2 Vol. I-V, 1999-2003 edited by P. ŠARČEVIĆ and P. VOLKEN, published by Kluwer Law International in association with the Swiss Institute of Comparative Law; Vol VI-VII,

Yearbook of Private International Law, Volume 8 (2006), pp. 1-3 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Alfred E. von Overbeck Founded in 1893, The Hague Conference on Private International Law enjoyed some success before World War I, engaged in limited activities between the two wars, and then experienced a renaissance after 1951. A small Permanent Bureau was established and has overseen the drafting of thirty-seven conventions up to 2005.3 Petar Šarčević was very interested in the work of the Hague Conference and we discussed it many times. He became Delegate of Croatia in 1996 when the Conference drafted a Convention on the protection of children.4 As President of The International Society of Family Law, he was very qualified to deal with these matters. This very successful Convention replaced a former Convention of 1960,5 which I knew very well because I had participated in its drafting as a Secretary of the Permanent Bureau. In the nineties the Conference was very different from the one I knew when I began to work there in 1956. At that time, only continental European States, the United Kingdom and Japan were Members of the Conference. Most of the Delegates were outstanding specialists in the field and were quite free to propose solutions based on their expertise. Since then, the Membership has increased to 65 States (March 2006), making it more difficult to reach agreement. In addition, many Delegates are now bound by strict instructions from their Government. This, however, did not apply to Petar Šarčević. If he had not passed away, he would have played a major role in establishing a convention on unmarried couples, which the Conference plans to draft. He had studied this subject very thoroughly and was scheduled to lecture on Private International Law Aspects of Non-Marital Cohabitation at the Hague Academy of International Law in July 2005. The Institute of International Law, an Academy with a limited membership, deals with both public and private international law, the accent being on the former.6 It is very renowned and for a long time was one of the few bodies interested in this field. Since 1945 it faces more competition as a result of the numerous governmental and non-governmental organisations which deal with different aspects of International Law and often have significantly greater human and financial resources. Nevertheless, cooptation to the Institute is still the ambition of many international lawyers. Candidates are first elected as an Associate and then promoted to a Member after a few years. 2004-2005, edited by P. ŠARČEVIĆ, P. VOLKEN and A. BONOMI, published by Sellier European Law Publishers and Staempfli in association with the Swiss Institute of Comparative Law. 3 See the Proceedings – Actes et Documents – of each Session, . 4 Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation in Respect of Parental Responsibility and Measures for the Protection of Children of October 19, 1996, which is in force in twelve States and has been signed by many more. 5 Convention Concerning the Powers of Authorities and the Law Applicable in Respect of the Protection of Infants of October 5, 1961. 6 See the Proceedings – Annuaire de l’Institut de Droit international: .

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Three Steps With Petar Šarčević After being elected as an Associate at the 1997 Session in Strasbourg, Petar Šarčević became a Member in 2001. The Strasbourg Session was the last one I attended and it was a great satisfaction for me to see Petar elected. Having participated in the work of the Institute since 1957, first as a Secrétaire rédacteur, then as Associate and Member, I had witnessed a slow change in the atmosphere of the meetings. Whereas most Associates and Members used to stay for the entire two weeks, many accompanied by their wife and children, today people have less time, tend to come alone and attend only part of the Session despite modern means of travel and communication. Petar Šarčević participated in the work of the Institute of International Law with his usual enthusiasm and energy and soon became Rapporteur of the Commission on Registered Partnerships in Private International Law. The choice of such subject by the venerable Institute shows how greatly ideas have evolved since the fifties! Petar Šarčević put considerable effort and care into the drafting of his report. We discussed the substance several times and the best way of presenting it in order to achieve a majority for a Resolution. We had our last discussion in Lausanne in March 2005. Although already greatly affected by his illness, Petar was still optimistic and hoped to present his report in Cracow in August. Unfortunately this was not to be… The foreword of the first volume of the Yearbook of Private International Law (1999) reminds us that a large number of national codifications and international conventions were adopted in the twentieth century. The principles and solutions in the field of Private International Law have been thoroughly revised. New problems will arise in this century, the age of globalisation. New solutions will have to be found, especially because of the increasingly intense contacts between very different civilisations and legal systems. Petar Šarčević, with his open, creative and inquisitive mind, would certainly have greatly contributed to resolving these problems had he not died prematurely. The internationalists will miss him, but even more so will the many friends of this likeable, cultivated man.

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IS A CONFLICT RULE FOR LIVING WILLS AND EUTHANASIA NEEDED? Tito BALLARINO∗

I. II. III. IV. V. VI. VII.

Introduction An Ethical Foundation for the Living Will Euthanasia in the Conflict of Laws The Living Will in the Conflict of Laws: Domestic and International The Hague Convention of 2000 on the Protection of Adults Does Not Regulate Living Wills A Proposal for the Living Will in Conflict of Laws Conclusion

I.

Introduction

A ‘living will’ is a document by which a person makes provisions for health care decisions in the event that in the future he/she becomes unable to make those decisions. It is the popular name for one of the two main types of the so called ‘advance directives.’1 The other type of advance directive is the ‘durable power of attorney for health care,’2 a document in which an agent is designated to make health care decisions if the patient becomes temporarily or permanently unable to do so (‘proxy directive’ in the American literature). The decision spelled out in the document must be very specific in character, such as the following examples: implying drug or tube feeding; surgery; resuscitation; cardiopulmonary resuscitation (CPR); ventilators when the patient becomes terminally ill, or unconscious and not likely to wake up, or has suffered a severe stroke in such a way that he/she is dependant on others for all daily functions. The real scope of an advance directive is to extend a person’s absolute right to refuse medical treatment into circumstances where the ability to communicate is lost, or to agree in advance to such treatments disclosing clearly that person’s feelings. An advance directive is a legal document insofar as it produces effects on the person’s right to make decisions about his/her body and health, a right which is ∗ Professor of law, University of Padua and the Catholic University of Milan. This paper is dedicated to the memory of my dear friend and colleague Petar ŠARČEVIĆ (19412005). 1 In this paper ‘advance directive’ and ‘living will’ will be used synonymously. 2 See . There is a third form too, which is sometimes separately available as well on the web: the do-not-resuscitate-order-form.

Yearbook of Private International Law, Volume 8 (2006), pp. 5-26 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Tito Ballarino often recognized even at a constitutional level. Being a document it must express something3 having legal effects: in our case, it is the person’s wish to be medically treated in a certain way under circumstances of extreme gravity. In a fortunate way the English language has picked up the term ‘will’, which joined with ‘living’ is more assertive than its continental European counterpart ‘testament’.4 The English formula has become the more widespread form for the document we deal with. Once the meaning of the act expressed in either form of an advance directive has been ascertained, the next inquiry concerns both the capacity of the person to accomplish the act and his/her real intention to produce the effects laid down in the document. As for capacity, there is no doubt that an act having such far reaching consequences must be given by a person with full capacity, having a certain age, who is not inabilitated, and must emanate from effective will power. In order to assess the real intention of a subject who makes a legal act, it is sometimes required that the document be in a certain form (written form, notarized act). Generally speaking, form requirements have two aims.5 The first is a guarantee of the seriousness of the author’s intention to create a valid act. The second pertains to the procedure: if certain forms are not observed, though the act is valid, no action can be brought upon it. In matters like ours, which can scarcely give rise to regular judicial proceedings, these dual aims are likely to overlap. In the first phase of the ill-fated Terri Schiavo case, before the issue began to receive national attention and was just a mere family conflict, Judge George Greer had to determine, given the lack of a living will, what Terri’s wishes would have been regarding life-prolonging procedures.6 Eighteen witnesses were heard in connection with this determination. Whereas Terri’s husband, Michael, claimed that she would not want to be kept on a machine with no hope for recovery, her parents claimed that she was a devout Roman Catholic and she would not wish to Document stems from Latin verb docere = to give knowledge. ‘Testamento biologico’ or ‘di vita’ is the current Italian denomination. 5 See BALLARINO T., Forma degli atti e diritto internazionale privato, Padova (Cedam), 1970, p. 110 s. A third aim, which consists in promoting confidence in validly concluded transactions is unlikely to become effective in our field: see TOTTERMANN, ‘Functional Bases of the Rule locus regit actum in England Conflict Rules’, in: 2 Int. and Comp. Law Quart. 1953, p. 27-46 at p. 33. 6 The same inquiry was made by the Corte d’appello di Milano (Dec. 16, 2006, in: Guida al diritto, 2007, n° 1, p. 39) but the court turned down the testimonies of close friends of a girl (Eluana) in a persistent vegetation coma since 1992. Eluana was kept alive through tube feeding and her father asked for the interruption of the treatment. The initial petition gave rise to six decisions worthy of note, amongst which was the ruling of Italy’s Supreme Court (Corte di Cassazione) which dismissed the petition on a procedural ground (the lack of a special guardian acting for Eluana). The core of the legal debate was the question of the superiority, amongst Italy’s constitutional provision involved (art. 2, 3, 13, 32), either of right to life or of right of respect for autonomy of an incapacitated patient. In the final judgment, the Court of appeals acknowledged the primacy of the right to life (art. 2) owing to its outstanding rank inside Italy’s constitution. 3 4

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Is a Conflict Rule for Living Wills and Euthanasia Needed? violate the Church’s teaching on euthanasia.7 Later on, Terri’s parents insisted on claiming that a new medical treatment could restore sufficient cognition so that Terri herself would be able to decide to continue life-prolonging measures. Eventually, Terri died when Judge Greer granted Michael’s petition to discontinue artificial life support. Although Michael Schiavo was Terri’s husband, his authority to make this decision was established because he had been recognized as Terri’s court appointed guardian.8 Obviously, it is hard to challenge the validity of an advance directive since it is statutory recognized in several States9 and expressly mentioned in such important international instruments like the so called Oviedo Convention of the Council of Europe.10 After stating, in Art. 5, that ‘An intervention in the health field may be only carried out after the person concerned has given free and informed consent to it,’ the Convention goes on ruling as follows: Art. 9 – Previously expressed wishes. ‘The previously expressed wishes relating to a medical intervention by a patient who is not, at the time of the intervention, in a state to express his or her wishes shall be taken into account.’

II.

An Ethical Foundation for the Living Will

Let us now take a step aside into the ethical field. From the beginning, the main argument in favor of the advance directives was found in patient’s autonomy.11 Just as a competent patient has the right to give or withhold his consent to a treatment, he must also have the power to anticipate that treatment and provide for his wishes in the event he is incompetent at the critical time. Advance directives, as was stressed,12 are an extension of the principle of respect of patients’ autonomy, permitting people to prospectively express their autonomous choice about medical treatment. 7 Schiavo I, Febr. 11, 2000. For a review of the entire case, see . 8 According to Florida law, the husband (or the wife) comes after the guardian in the priority list. If one of Terri’s parents had opposed Michael appointment it is possible that one of them, rather than Michael, could have become Terri’s decision-maker. 9 See below, para. VI. 10 Oviedo, Spain, April 4, 1997. The correct title is ‘Convention on human rights and biomedicine’. For the text and the Explanatory report, see: International Legal Materials, XXXVI, 1997, p. 817 (n° 4). 11 VEZZONI C., The legal status and social practice of treatment directives in the Netherlands, doct. thesis at the Rijksuniversiteit Groningen, 2005, p. 16. 12 See the influential book of CANTOR N.L., Advance Directives and the Pursuit of Death with Dignity, Bloomington (Medical ethics series) 1993.

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Tito Ballarino Autonomy, in this context, means a power given by the substantive rules of a given legal system. This faculty must not be generalized, as it happens in conflicts rules on contracts,13 into a power to choose among several municipal laws, in such a way as to designate the law which favours the ‘validity’ of the living will. As we will see, the subjective choice of the applicable law, which is gaining an increasing importance in succession as well as in contractual conflict law, is superseded by other arguments in the field of advance directives. The most fundamental criticism, from an ethical perspective, involves questions of the ‘testator’s’ personal identity and continuity.14 It is alleged that an incompetent patient, particularly a demented one, is so different from the individual who created the advance directive that it is impossible to talk of an unique subject. This fact would make it ethically preferable to give the power to decide, in the critical moment, to care-givers and families on the basis of the present best interests of the incompetent patient. This argument is uncertain from an ethical perspective and absolutely inconsistent from a legal point of view. This is so because what is at the stake is the effect of an intention expressed in advance and in view of the fact that the subject may become incapacitated. What is important is the psychological and juridical capacity at the moment of the act. In quite the same way, a testament validly performed by a person who is not declared incapacitated by law remains valid if that person becomes incapacitated at the moment of his/her death.15 In order to reinforce the person’s absolute competence at the moment in which the will is made, regard is also paid to the personal conditions of the testator. So, according to the Italian law, the will is not valid if the testator is shown to have been for any reason, even transitory, incapable of understanding or intending at the moment when he made it.16 Just in the same way as it is ruled by substantive law, the capacity to dispose is governed by the national law in force for the testator at the moment he made the will.17 13 The principle of the autonomy in the choice of applicable law has been extended, in very recent time, to other fields like succession law and tort law. For the first item (where it was not completely unknown, as has shown the research of DE CESARI P., Autonomia della volontà e legge regolatrice delle successioni, Padova 2001) see DAVÌ A., ‘Riflessioni sul futuro diritto internazionale privato europeo delle successioni’, in: Riv. dir. int. 2005, p. 297-341, at 320 and the study made on behalf of the EC Commission by DÖRNER H. and LAGARDE P., in: Les successions Internationales dans l’UE – Perspective pour une Harmonisation, Würzburg 2004, p. 1 s. 14 See DWORKIN R., Life’s Dominion: an Argument about Abortion, Euthanasia and Individual Person, New York 1993, p. 224. 15 See for Italian law TAMBURRINO G., Enciclopedia del diritto, XLIV, Milan 1992, p. 475. 16 Italian Civil Code, art. 591. 17 See, Italian law No 218 of 31 May 1995, Reform of the Italian system of private international law, art. 47. For the case of a change in the personal law before death, see BALLARINO T., Diritto internazionale privato, 3rd ed., Padova 1999, p. 533. As for the substantive law, Italian private international law prescribes the competence of the law at the

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Is a Conflict Rule for Living Wills and Euthanasia Needed? To support the living will against the criticism of the lack of continuity in the subject, an argument could be used which was developed by the most radical scholars of legal theory. These scholars are used to reducing the legal subject to a sheer point of imputation of manifold legal relations. Adopting this view, there is no need to prove the existence of a real continuity, since the subject/person in law is quite different from the biological concept of a human being. What matters for the law is the ‘unity effect’ created by the legal system.

III. Euthanasia in the Conflict of Laws A subject which is similar to the living will from an ethical perspective is euthanasia. From the legal point of view, instead, the difference between the two institutions is absolutely clear since they are founded on different laws18, or legal principles, and their enactment is submitted to different rules. Euthanasia is a positive action taken to end the patient’s life. In looking at the last act that intentionally causes death, we have active euthanasia when a physician ends the life of persons suffering from incurable conditions or diseases, and passive euthanasia when the patient is allowed to die through the physicians failure to provide necessary medication.19 Where this institution is regulated, the law prefers to distinguish between euthanasia and assisted suicide. The latter term is used when the last act is performed by the person who dies.20 A further significant tie between euthanasia and the living will consists in the fact that a written advance request for euthanasia is sometimes provided for by private health associations: it consists of a request for the responsible doctor to perform euthanasia if the author of the document becomes incompetent.21

moment of death. This is not inconsistent with the rule we have exposed; the regime stems from the fact that the will becomes effective only at the moment of death. 18 Reporting the legal regulation existing in the Netherlands: VEZZONI C. (note 11), at 106, refers, however, that in this country the documents drafted by notaries include both an advance refusal of treatment and a request of euthanasia, unaware of their different status. In the Netherlands, he says (at p. 75), performing euthanasia for an incompetent patient on the basis of a previously written request is doubtful (ibidem, at 106). 19 See . See below, notes 20 and 39. 20 MARKER R.L. and HAMISON K., Euthanasia and Assisted Suicide: Frequently Asked Questions (2004), . 21 See VEZZONI C. (note 11), p. 15. The author signals that the Dutch association for voluntary euthanasia provides a standard document which contains three parts: one for a refusal of treatment, another for the appointment of a representative, and a third part containing an advance request for euthanasia.

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Tito Ballarino At present, the only countries which specifically permit either euthanasia or assisted suicide are the Netherlands22 and Belgium.23 Oregon, a state within the United States, also permits assisted suicide.24 All other countries strongly oppose25 both measures, sticking to the traditional view that death given by a third person is homicide and cooperation in bringing the patient’s life to end is likewise a crime.26 22 The Netherlands, where euthanasia and assisted suicide were already widely practiced, approved a law on April 12, 2001 on Termination of life on request and assisted suicide. VEZZONI C.’s thesis (note 11) states that according to research conducted for the whole of the Netherlands there are approximately 2200 cases of euthanasia per year. 23 Belgium passed a law on May 28, 2002 (Loi relative à l’‘euthanasie’). 24 Oregon’s Death with Dignity Act was established in 1994 (and upheld by U.S. Supreme Court in Gonzales v. Oregon, January 17, 2006). Previously, the Supreme Court had upheld (Vacco v. Quill, 1997 and Washington v. Glucksberg, 1997) State prohibitions against assisted suicide, ruling that it is not a fundamental liberty interest protected by the Constitution. In the famous Cruzan Case (497 US 261, June 25, 1990), the U.S. Supreme Court ruled 5-4 in favor of the State of Missouri which required ‘clear and convincing evidence’ in order to authorize Nancy Cruzan’s parents to remove the tubes which kept their daughter alive. Previously, the trial court had allowed the parents to discontinue tube feeding, but the judgment was reversed by the Missouri State Supreme Court because the lower Court did not meet clear and convincing evidence standards. The U.S. Supreme Court’s ruling assumed that the ‘U.S. Constitution would grant a competent person a constitutionally protected right to refuse lifesaving hydration and nutrition’ (at p. 262) and held that the Due Process Clause does not require a State to accept the ‘substituted judgment’ of family members in the absence of evidence that their views reflected those of the patient. After this decision Nancy’s family went back to the lower Court and presented the testimony of three of Nancy’s young friends who stated that Nancy would have preferred to die rather than to be artificially kept alive. So the family eventually obtained a Court order to have life support removed. 25 In countries where euthanasia is illegal attempts are sometimes made to overcome the prohibition through an affirmative interpretation of constitutional provisions. So in Italy: see the case exposed at note 6 and most recently the well-known Welby case. Piergiorgio Welby suffered from muscolar dystrophy and was confined to bed, fed through a tube, and ventilated mechanically. But he was fully conscious and spoke through a computer that red his eyes’ movements. He filed a petition with the Tribunale di Roma against his physician and the healthcare organization which had him in charge asking to have his artificial respirator turned off and to receive sedatives to ease his pain until he died. The public prosecutor (Pubblico ministero) told the Court that Mr. Welby had the right to interrupt the unwanted treatment but he did not have the right to prohibit treatment from being resumed since the medical code of conduct prescribes to protect the quality of life. The Court (Tribunale di Roma Dec. 16th 2006, Judge Salvio) denied the petition because of the imprecision inherent in the right at issue. Lacking any legal definition of what is considered ‘therapeutic furor’ (accanimento terapeutico), the Judge explained that a provisional measure like the one asked for was inconceivable, since there was no possibility of a ruling on the merit of the case. 26 An exception is Switzerland, where art. 115 of the Penal Code exempts people who assists in a suicide for honorable motives. An increasing number of States have enacted specific provisions on the subject, mostly in the form of a code of conduct but sometimes also through binding rules. France

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Is a Conflict Rule for Living Wills and Euthanasia Needed? Could this state of affairs give rise to a conflict of laws in the meaning of private international law? From one side, one could remark that the conflict of laws has its starting point in the assumption of a community of nations having intercourse with one another (‘eine völkerrechtliche Gemeinschaft der miteinander verkehrenden Nationen’),27 whereas there is no community at all when countries differ so widely in their approach to a social problem. From the other side, it is undisputable that modern legal thinking has increased the category of personal rights, often incorporating them into constitutional charter’s positions28 formerly considered outside ‘positive’ law, as something appertaining to ethics. Accepting the second point of view, criteria must be found to allocate these rights in a suitable way. Books on conflict of laws generally discuss only the right to the personal name and emphasize the need of a conflict rule to deal with its violations.29 But, it must be stressed that rights of personality (Persönlichkeitsrechte, diritti personalissimi) are a much broader concept and that their reduction to the law of tort is misleading. The first issue which arises is determining the existence and content of these rights. As I have pointed out, this question is not limited to the right to the name and could not be considered, as happens in this case, as an exception to the general conflict rule on personal status,30 since the existence of a personality right is decisive also in cases where a violation is not likely to arise. Let us take for instance the right of an adopted child to have access to the identity of his/her blood parents,31 or the right to one’s sexual identity. A tort inflicted through the violation of has enacted a statute (loi n° 2005-370 du 22 avril 2005 relative aux droits des malades et à la fin de la vie, generally quoted as Loi Leonetti) which has modified the Code de la santé publique. The law prohibits therapeutic overtreatment (= medical acts carried out with obstination déraisonnable) but does not give the doctor an unconditional power to provide a treatment which could shorten the patient’s life (Code de la santé, art. L. 1110-5). The nature of criminal offence has been denied in the famous case Adelaide National Health Service Trust v. Bland (1993, 1 All ER 821 House of Lords) to the cessation of nourishment and hydration since the cessation was an omission and not an act. 27 According to the famous Savigny’s words (SAVIGNY F.C., System des heutigen römischen Rechts, VIII, Berlin 1849, p. 27). 28 According to this view, not only the right on one’s personal body but the right to wealth are likely to be framed in legal terms. See PERLINGIERI P., ‘Il diritto alla salute quale diritto della personalità’, in: Rassegna di diritto civile 1982, p. 1020 et seq. 29 See recently KROPHOLLER J./VON HEIN J., ‘Der postmortale Persönlichkeitsschutz im geltenden und künftigen Internationalen Privatrecht’, in: Festschrift A. Heldrich, München 2005, 793-813, at 798. 30 Some scholars suggest to unite both the existence and the violation of personality rights inside the competence of the law of tort. For this opinion see JUNKER A., Münch. Komm. zum BGB, Bd 10 EGBGB, 4th ed., München 2006, Art. 40, Rdn. 165: ‘Nicht nur die Frage nach dem Schutz des Persönlichkeitsrechts unterliegt damit dem Deliktsstatut, sondern auch die Frage nach dem Bestehen und Inhalt dieses Rechts’. 31 See the recent decision of Italy’s Constitutional Court 25 November 2005, No 425 which rules out any conflict between the Italian prohibition to look into the identity of an

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Tito Ballarino these rights is hard to imagine, but the search for a law which confers those rights in a transnational situation sometimes appears absolutely necessary. A mere reference, conceived in general terms, to the personal law of the subject does not always seem suitable, even in countries which adhere to the competence of a person’s national law.32 Regard must be given to other laws when the surroundings of the subject are located in such a way that it is not possible to rely exclusively on his personal statute, both in the sense of the national or domiciliary principle.33 This argument seems less persuasive for euthanasia, when this ‘right’ is explicitly stated in the domestic law of one State. The European Court of Human Rights (4th Section) ruled in Pretty v. United Kingdom (April 29, 2002, Application no 2346/02) that no right to die, either at the hands of a third person or with the assistance of a public authority, can be derived from Art. 2 of the Convention for the Protection of Human Rights (‘Everyone’s right to life shall be protected by law’).34 A ruling of the Court, which becomes more and more influential in personal status matters,35 could have also been decisive in conflict situations, since the European Convention on Human Rights is applicable to all subjects who are under the jurisdiction of the Contracting States. Given its sphere of application, the Convention could have an impact beyond member States’ municipal law, taking on a role similar to that of a uniform law for adopted child’s mother and the general provisions contained in Art. 2, 3, and 32 of the Constitution. 32 See for Italy BALLARINO T. (note 17), Padua 1999, p. 344. The Italian law on PIL (Art. 24) states that ‘personal rights shall be governed as their existence and substance by the person’s national law’ and goes forth submitting the infringement of these rights to the law applicable to tortious liability. In Switzerland the conflict rule on personal rights is formulated in the same way, except that domicile is competent instead of nationality. The competence of the domiciliary law has been applied to a case of change of sex: see DUTOIT B., Droit international privé suisse, 4th ed., Basel [etc.] 2005, p. 121. 33 See for the adoption the Preliminary Draft of the Hague Convention (Art. 25): ‘The Contracting States shall ensure that information concerning the child’s origin is preserved and that he or she has access, under appropriate guidance, to such information in so far as is permitted by the law of the State of origin and the law of the State where such information is held’. The final text seems less accurate. 34 The applicant, a 43-year-old woman suffering from a neuro-degeneration incurable disease that made her paralyzed from the neck down, alleged that the Public Prosecutor’s refusal to grant her husband immunity from prosecution if he assisted her in committing suicide violated art. 2 of the Convention, insofar as it protects not only the right to life but also the right to choose whether or not to go on living. Likewise, the Court found that there was neither a violation of Art. 3 (‘No one shall be subjected to torture or the inhuman or degrading treatment or punishment’) nor of art. 8 (‘Everyone has the right to respect for his private and family life’), art. 9 (freedom of thought), or art. 14 (prohibition of discrimination). 35 HUNTER-HENIN M., ‘Droit des personnes et droits de l’homme: combinaison ou confrontation?’, in: Rev. crit. dr. int. pr. 2006, pp. 743-775, at p. 743: ‘La Convention européenne de sauvegarde des droits de l’homme et des libertés fondamentales, devenue omniprésente en la matière …’ (italics added).

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Is a Conflict Rule for Living Wills and Euthanasia Needed? international cases, by becoming the source of a ‘right to die’ recognized throughout the territory of the Contracting States. Instead, according to the quoted judgment, neither the right to life nor the principle of autodetermination could be invoked at present to perform euthanasia (autodetermination, a very important principle in European Court of Human Rights’ rulings36, maintains, however, its meaning for advance directives). If a municipal law legalizes euthanasia, it is undisputable that this right should be governed by the law applicable to the person, i.e. what is called statut personnel. It is well known that in establishing the law competent for personal status the world is divided between national law countries and domicile countries, and that this division has been a marking point for the whole theory of private international law.37 This division has also given rise to a quantity of problems and has hindered the pursuit of harmonious international solutions in international private law relations. Given, however, the scarcity of positive rules on euthanasia and its radical refusal by the overwhelming majority of municipal laws, the question as to whether the general ‘allocation-to-one-law’ method38 is really fitting in our case seems unavoidable. An alternative approach could be to consider euthanasia, as we have hinted, as an institution entirely outside the realm of conflicts of law. Sometimes the said method works, as happens, for example, in a relationship involving Belgium and The Netherlands. Both countries provide the right to receive euthanasia under rigorous conditions and since both follow the principle of the national law, the request of a Dutch citizen to receive euthanasia in Belgium is subject to Dutch law. Nevertheless, the competence of Dutch law does not govern either the medical or administrative treatment under which euthanasia is dispensed (the ‘bureaucracy of death’) or the widely spread ‘terminally ill’ requirement.39 All HUNTER-HENIN M. (note 35), p. 745-746: ‘Une libéralisation progressive des carcans légaux est cependant en marche: peu à peu, le nom, le sexe et, de manière globale le corps… deviennent un lieu d’autodétermination de soi qui supporte peu d’entraves…’. 37 For an accurate review of the discipline of personal status as well as of the problems originated by the worldwide conflict between the two principles see UBERTAZZI B., La capacità delle persone fisiche nel diritto internazionale privato, Padova (Cedam) 2006, at 66-88. In this book it is also raised (at 204) the question that I am trying to answer in the present paper. 38 See, on this method WENGLER W., ‘The General Principles of Private International Law’, in: Recueil des Cours, 1961, p. 315 et seq. 39 For example, Jack Kevorkian, who gained for himself the nickname of Dr. Death by participating in the death of more than 130 people before he was convicted of murder, said that a terminal illness was ‘any disease that curtails life even for a day’: see MARKER L. and HAMLON K. (note 20), p. 3. Oregon’s assisted suicide law defines ‘terminal’ as a condition which will ‘within reasonable medical judgment produce death within six months.’ According to a certain interpretation, a law that permits assisted suicide or euthanasia for persons who are terminally ill could apply to virtually anyone if that person is no longer receiving food or fluids: see MARKER R.L., Euthanasia, Assisted Suicide & Health 36

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Tito Ballarino these requirements must comply with the law of the country where euthanasia occurs since the application of the lex fori profesional, as Spanish scholars have called it,40 is mandatory. The countries where euthanasia is legalized carefully control its implementation requiring the fulfilment of numerous conditions in addition to the prerequisite of the patient’s unbearable suffering. Dutch law permits euthanasia and physician-assisted dying when the following conditions are fulfilled: the patient’s request must be voluntary and persistent; he/she must be fully aware of his/her condition; an independent doctor must be consulted to confirm the above mentioned conditions; the death must be carried out in a medically appropriate way in the presence of the doctor. A register, held by a special commission, is created to document each case.41 Dutch law does not require that the patient has a terminal condition, an unbearable suffering of either a physical or mental nature.42 Instead, according to Belgian law, euthanasia can be performed by a doctor only if the patient suffers from serious and incurable pain and the situation is irreversible. In addition, the request must come from a competent patient and be in written form (art. 3, para. 1).43 Let us now set aside the specific relations between Belgium and The Netherlands. Care Decisions (2006), at p. 10, . Marker refers that the provision of food and fluids by means of a tube is actually considered in the USA as ‘medical treatment’ from a legal standpoint. For this reason patients or their decision-makers are often required to authorize withdrawal or withholding of treatment with food and fluids. This circumstance has been considered by the Court of Appeals of Milan in the reported Eluana Case (note 6). The Court argues that, failing any legislative provision and Eluana’s desires being uncertain, withholding food would have led to her death, a form of passive euthanasia which is not admitted by Italian law. 40 FERNÁNDEZ ROZAS J.C. / SÁNCHEZ LORENZO S., Derecho internacional privado, rd 3 ed., Madrid 2004, p. 293. See also UBERTAZZI B. (note 37), who gives an accurate review of the cases where the provisions of the lex fori must be respected in the exercise of a profession: ascertainment of birth (p. 151), interruption of pregnancy (p. 155), transport of dead (p. 163), and organ transplant (p. 167 et seq.). 41 The Belgian regulation has the same characters. Art. 3, 1 of the law on euthanasia states: ‘Le médecin qui pratique une euthanasie ne commet pas d’infraction s’il s’est assuré que: – le patient est majeur ou mineur émancipé, capable et conscient au moment de sa demande; – la demande est formulée de manière volontaire, réfléchie et répétée, et qu’elle ne résulte pas d’une pression extérieure; – le patient se trouve dans une situation médicale sans issue et fait état d’une souffrance physique ou psychique constante et insupportable qui ne peut être apaisée et qui résulte d’une affection accidentelle ou pathologique grave et incurable; et qu’il respecte les conditions et procédures prescrites par la présente loi’. 42 In the Netherlands the question has been discussed whether euthanasia is available to elderly people who are in good health but tired of life. 43 If the patient is not capable to personally write and sign his/her request (but supposedly he/she is still competent) the request must be written in the presence of the doctor by someone who has no interest in the patient’s death (art. 3, para. 4). If the patient becomes incapacitated, his/her wish can be drafted in a déclaration anticipée (art. 4, para. 1).

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Is a Conflict Rule for Living Wills and Euthanasia Needed? In general terms, we can assume that the personal law of the man or woman who is a candidate for euthanasia must govern his/her right to receive it according to that law: the minimal age required, the ways to express the will to receive euthanasia,44 the conditions required (like unbearable suffering of either a physical or mental nature), and the possibility that a surrogate may make a request for death on behalf of a child or adult who is incapacitated. But, the problem of which law regulates euthanasia is likely to arise only in countries which contain express rules on this institution. This is because in negationist countries public policy would certainly bar any question of the law applicable to euthanasia. If it is true that the existence abroad of an unknown institution (for example a polygamous family) does not hinder the working of conflict rules, it is equally certain that the process of the latter’s application must comply with the principles which integrate the system, among which there is ordre public. The only point where the application of a pro-euthanasia law should not give rise to any problem is the equation: euthanasia = death for natural causes.45 Each law governing the decedent’s contracts (especially insurance contracts) must accept this equation, even if it does not admit euthanasia. It is, rather, the choice of the governing law in a country which legalizes euthanasia, or at least tolerates it, which raises problems. Generally, these problems are created when a foreigner or non-resident addresses himself to the proper local authority asking for access to a self-inflicted death and local law does not preclude foreigners or non-residents from receiving such a treatment.46 44 From this point of view there is an undeniable intertwining, or an uncertain border, between euthanasia and negative treatment directives. On this matter see VEZZONI C. (note 11), p. 74-75, who makes reference to the Netherlands, where written refusals of treatment and advance requests for euthanasia ‘are regulated by different laws and have a completely different legal status’ (ibidem, p. 106). 45 See art. 15 of the Belgian Law: ‘La personne décédée à la suite d’une euthanasie dans le respect des conditions imposées par la présente loi est réputée décédée de mort naturelle pour ce qui concerne l’exécution des contrats auxquels elle était partie, en particulier les contrats d’assurance’. 46 Oregon’s Death with Dignity Act provides that only requests made by Oregon residents shall be granted. Oregon residency can be proven through possession of an Oregon driver license, registration to vote in Oregon, ownership of property in Oregon, etc. This provision was inserted into the law to prevent terminally ill people throughout the United States from flock to Oregon to take advantage of the law. This argument was used in the controversial ballot which followed the enactment of the law: the fear proved, however, to be ungrounded. Provisions like that of Oregon belong to the category which Arthur Nussbaum called ‘spatially conditioned internal rules’ (see DE NOVA R., ‘Historical and Comparative Introduction to Conflict of Laws’, in: Recueil des Cours, 1966-II, p. 532 s.). But, the question arises whether such rules want to be applied in any case, bypassing the result occasioned by the conflict rules, or they are simply, as in our case, a part of the ‘ordinary’ local law. This question is not always clearly perceived by skilled lawyers, but it becomes crucial when these rules are enacted, as lois de police, by a State whose law, according to the general rules on private international law, is not competent for the question. See on the whole question BONOMI A., Le norme imperative nel diritto internazionale privato, Zürich 1998.

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Tito Ballarino One could assume that euthanasia, like other institutions connected with personal status (adoption, divorce etc.), can be made accessible to foreigners irrespectively of the law regulating their personal status, provided that they have a sufficient link with the forum.47 This approach could overcome the possible objection that euthanasia falls outside of the laws reach, since it is not performed through a judicial act having constitutive effects, as generally happens for the said institutions. The authority which performs the act modifying status, as the referred opinion concedes, could, in effect, be an administrative body (especially a healthcare institution).48 More so than this difference, what makes the analogy to other domestic institutions useless is, rather, the lack of the second segment of the proposed method: the recognition of status created abroad. It is obvious that the criteria used to affirm the lex fori’s competence do not have an outward-looking correspondent, since death, once given, generates a fact. Putting aside this suggestive theory, the problem of how to handle a case presenting foreign elements still remains. Taking for granted that there is compliance with all local rules for implementing euthanasia (lex fori profesional), the right to receive the death treatment must be determined by applying the personal law of the subject, a mere connection with the forum being inadequate for this purpose. But, the hypothesis of a general multilateral rule remains inappropriate. Rather, the competent law must be ensued from the existing personal connections of the claimant with the forum. If he/she is a citizen of a country A, which is against euthanasia, but he/she is domiciled in country B, which supports euthanasia, the latter’s law must be applied. In this process of shifting the applicable law, renvoi has no role to play: even if it is admitted by the law of country A because its conflicts rules follow the domiciliary principle, it may happen that country B does not accept country A’s reference to its law. Moreover, since country A does not recognize euthanasia, its public policy would bar any reference to the matter, thus raising doubts about country A’s law’s ability to initiate the process of renvoi and refer to another law. A further reason for choosing a ‘flexible’ critère de rattachement is given by the fact that euthanasia is performed in a health care institution, with the oversight of doctors and under ex post control by a special board. These requirements can be complied with only by the health service of the State where the patient has been living. When the patient, due to his/her professional life, resides abroad, it is this centre-de-vie State which will provide both the legal grounds for euthanasia and the needed health documents. In this way, the home State principle which is so A young Italian scholar has reviewed these cases emphasizing their impact on the development of a new method in private international law which overcomes the traditional multilateral rule. The recognition of the forum law’s authority to create a certain relationship as soon as a sufficient link with the forum is present goes with the recognition of foreign relationships generated in foreign countries, when in turn they present a sufficient connection with those countries. See ROMANO G.P., ‘La bilatéralité éclipsée par l’autorité. Développements récents en matière d’état des personnes’, in: Rev. crit. dr. int. pr. 2006, p. 457-519. 48 ROMANO G.P. (note 47), p. 462. 47

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Is a Conflict Rule for Living Wills and Euthanasia Needed? cherished by the supporters of the ‘recognition method’ reappears in an uncontested form. Nevertheless, the respect of the lex fori profesional has a strong impact on carrying out euthanasia. Vezzoni’s accurate research tells us that only 3% of the interviewed doctors have ever performed euthanasia on a demented patient based upon a written request.49 Therefore, considerable doubts still persist about the possibility of effectively performing euthanasia for an incompetent patient in a pro euthanasia country, even if there is a previously written request. Apparently, but only apparently, these circumstances support the above quoted theory (competence of the lex auctoritatis).50 The lesson we learn from the above analysis is, in fact, quite different because of the overall restrictions set on euthanasia. This fact renders it unlikely that the States which, in the failure of a ‘communauté juridique universelle,’ have endowed themselves with this new institution are prompt to ‘offrir le bénéfice [of it] de façon bien plus généreuse que si son champ d’application était délimité par une règle de conflit classique’.51 Euthanasia can be performed, according to the ‘host’ State’s rules, only if it is permitted by the dying subject’s personal law, which must be ascertained in the ‘flexible’ way we have indicated. It is likewise out of question to allocate the problem of euthanasia to the realm of public law: problems of civil liability could arise between either the patient’s designated agent or parents and the healthcare organization concerning payment for the medical treatment or hospice care.

IV. The Living Will in the Conflict of Laws: Domestic and International The purpose of a living will ‘by proxy’ is to allow a person to make decisions about life support as well as to direct others to implement the designating person’s desires. It is an act which falls outside succession law, being more similar to a power of attorney. At the same time, it shares some elements of protection of adult, which is regulated through international conventions. From the point of view of characterization, the living will swings between these two poles. VEZZONI C. (note 11), p. 76. Vezzoni goes on reporting on specific questions addressed to nursing home doctors who have had a patient with a euthanasieverklaring (the Dutch name for a written request for termination of life issued by a patient who is no longer capable of expressing his will). ‘Although in 67% of these cases’ ― writes VEZZONI (loc. cit.) ― ‘the patient had arrived at the situation he had specified in the document, euthanasia was actually performed in only 7% of the cases’. 50 It is the opinion mentioned above of ROMANO G.P (note 47). For the meaning of lex auctoritatis, see ibidem, p. 463. 51 See ROMANO G.P. (note 47), p. 467. 49

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Tito Ballarino In internal conflicts of law, satisfactory solution have been achieved through basic harmonization of legal thinking and common values. In the United States, where most States have laws specifying who make decisions for a patient,52 people are frequently advised to create a living will. Health care providers, such as hospitals, doctors, nursing facilities, and hospices, are required by federal law to inquire whether a patient has an advance directive and, if so, to obtain a copy of the document and place it in their medical record.53 Physicians or health care providers will follow the instructions given by the living will. To be valid, the document must be used in the patient’s State and it must comply with the law of that State. The formal requirements may vary from State to State. Some States require two witnesses or that the form be signed in the presence of a Notary Public or both. The home State, in internal U.S. conflicts of law, is for this purpose the State where one is registered to vote or where one’s driving license is issued.54 All Member States are linked to web sites that provide free advance directive forms.55 In 1996, Dr. Barmakian created the U.S. Living Will Registry, to solve many problems for filing, storing, updating, and ascertaining the validity of advance directives. The Registry is available to health care providers 24 hours a day through its automated service.56 In countries where they are implemented, living wills are supported, lacking any specific legislation, by the doctrine of informed consent.57 This doctrine made its appearance in many U.S. courts’ decisions in middle of the 20th century, as both a leading principle in the relation between doctor and patient and as a defence against any possible state power interference trying to change this relation. Now informed consent is accepted in almost all western countries: informed consent is a prerequisite to any medical treatment and is a leading force in recognizing advance directives. Consent is autonomous if the patient acts voluntary after being informed about his/her situation, treatment alternatives, and possible outcomes. If these conditions are fulfilled but the patient withholds or refuses authorization, there is informed refusal.58

Generally a spouse and afterwards adult children, parents, and siblings. See . 54 Through these plain rules U.S. practice avoids the difficulties which arise in English law in ascertaining domicile and the pathos which characterizes the theoretical discussion on the existing domicile for the purpose of conflict of laws. 55 See the list on . Most States have laws specifying who can make decision for a patient who does not have an advance directive. 56 See the website (note 55), fn. 40. 57 VEZZONI C. (note 11), p. 22 et s. with doctrinal references. See at p. 23 the different meaning of the concept. 58 VEZZONI C. (note 11), p. 23. 52 53

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Is a Conflict Rule for Living Wills and Euthanasia Needed? Either by means of a law or through acceptance of the informed consent principle,59 the living will is widely recognized in the present world. The existing differences in its legal regulation make conflict of laws likely. The questions which arise are manifold. First: the availability of the ‘local’ living will for persons who are in a transnational situation. Second: the formal validity of advance directives made according to the laws of other States. Third: the most fitting connecting point to determine the law applicable to the advance directives. Fourth: the conflict between a law which recognizes the advance directive and a law which strongly asserts the priority of certain persons (the parents, the husbands) to make medical decisions for the incapacitated patient. Fifth: the effective implementation of what is stated in a directive. We shall start with the new Hague Convention on the Protection of Adults,60 which has comprehensively regulated mandates with a view toward incapacity (or enduring powers of attorney). 59 This is the situation of Italy (among other countries). VEZZONI C. (note 11), p. 24 et s. lists Italy in the group of countries which accept the requirement of informed consent only in principle, and points out that in these countries implementation of the principle in specific cases is problematic. In effect, Italian judges, up to the Italian Supreme Court, recognize the principle of informed consent, drawing it from many rules contained in both the Italian Constitution and in ordinary health legislation. This recognition, however, has been used only for the purpose of ascertaining the responsibility of doctors and healthcare institutions (even if the medical or surgical treatment has been performed in a correct way). See Corte di cassazione, March 14, 2006, n. 5444. The long disputed question about the obligatory force of the refusal of blood transfusion by Jehovah’s Witnesses has found its solution in a recent ruling of Italian Supreme Court (Corte di cassazione Febr. 23, 2007, n. 4211). According to the Court, the refusal expressed in the moment of hospitalization is no more binding when the patient is in danger of death during the surgical treatment. In a very appropriate way VEZZONI C. (note 11), p. 25 remarks that despite the general recognition of the idea of informed consent, its implementation in legal rules is problematic and one can speak of a ‘rhetoric of informed consent’. At present many bills have been introduced in Italian Parliament: six at the Senate and five at the lower Chamber, very different from each other. The National Commission for Bioethics has given an opinion (18 Dec. 2003) holding that ‘anticipated declarations of treatment’ puts medical cares in harmony with the general principle of the patient’s autonomy. The tendency to pass a specific law is gaining ground in Italy through the continuous support of the Fondazione Umberto Veronesi (Veronesi is a famous Italian oncologist who has been for a time Minister for health). A book has been published under the sponsorship of the said Foundation, with Doctor Veronesi’s preface, collecting the opinions, all in favour of anticipated directives, of many leading jurists: M. DE TILLA, S. PATTI, P. RESCIGNO, G. ALPA, L. D’AVACK, L. BALESTRA, R. CECCHI, G. FERRANDO, M. SESTA, D. VINCENTI AMATO, G. BONILINI. 60 See CLIVE E., ‘The New Hague Convention on the Protection of Adults’, in: this Yearbook 2000, p. 1-23 (professor Clive was the Chairman of the Special Commission which prepared the Convention and the author of the Report of Council of Europe’s convention on incapable and other vulnerable adults which is published in Actes et

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Tito Ballarino

V.

The Hague Convention of 2000 on the Protection of Adults Does Not Regulate Living Wills

The power to make decisions relating to the medical treatment for incapacitated adults could be brought inside the scope of the Convention,61 the purpose of which is to organize ‘the protection in international situations of adults who, by reason of an impairment or insufficiency of their personal faculties are not in a position to protect their interests’ (art. 1, 1). But, its choice of law regime is acceptable only for its basic rule, which gives competence to the law of the adult’s habitual residence (art. 15, 1), and not, as we will see, for the adult ability to designate ‘expressly in writing’ another law. Moreover, it is difficult to qualify the medical treatment usually prescribed by an advance directive as belonging to the ‘measures of a temporary character for the protection of the person of the adult’ which can be taken by the authorities of the adult’s host State (art. 11), as these measures must have ‘a territorial effect limited to the State in question’ and must emanate from a jurisdictional authority.62 It is certainly possible under the Convention to petition a Court to enforce the advance directive, but it is unclear whether an administrative institution, like a health care organisation or a private physician, will perform de plano the advance directive. A jurisdictional authority, in its turn, will abide by the territorial effect of the measures, which it is required to adopt and look into the protection of the adult’s person. Any medical treatment which interrupts the patient’s life does not meet the concept of a ‘measure of a temporary character,’ nor does it, at the moment of treatment, meet the definition of aiming at the protection of the person. During the travaux préparatoires, the question of medical treatment was discussed and some delegates pointed out that allowing excessive freedom of choice to grant the power of representation may lead to a shameful ‘euthanasia shopping.’63 But, this risk hardly seems actual in light of the real meaning of euthanasia in the conflict of laws and the need to regulate it through the subject’s decisive law. Documents de la Conférence de La Haye de droit international privé. 1999. Protection des adultes, p. 10-28). See furthermore LAGARDE P., ‘La convention de La Haye du 13 janvier 2000 sur la protection internationale des adultes’, in: Rev. crit. dr. int. pr. 2000, p. 159-179 (Professor Lagarde was the Rapporteur of the said Special commission); BUCHER A., ‘La Convention de La Haye sur la protection internationale des adultes’, in: SZIER 2000, p. 3759; SIEHR K., ‘Das Haager Übereinkommen über den internationalen Schutz Erwachsener’, in: RabelsZ 2000, p. 715-751; REVILLARD M., ‘La convention de La Haye sur la protection internationale des adultes et la pratique du mandat d’inaptitude’, in: Mélanges en l’honneur de Paul Lagarde, Paris 2005, p. 724-735. 61 See CLIVE E. (note 60), p. 19 et seq. 62 See CLIVE E. (note 60), p. 18: ‘A purely factual measure of protection is not within the Convention’. 63 See the concern expressed by the Swiss delegate BUCHER A., Actes et documents (note 60), p. 260 and 269.

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Is a Conflict Rule for Living Wills and Euthanasia Needed? The core of the Convention is the control of the power of representation, in view of an adult’s protection. The advance directive meets these requirements insofar as the incapacitated patient, who has laid down the directive in an appropriate and careful manner, becomes certain that the person who is going to make decisions for him will have the power to protect him.64 But, an advance directive does not necessarily imply a power of representation given to a decision-maker. Nonetheless, it should be stressed that when completed through the appointment of a third person, an advance directive is completely different from an ordinary mandate, whereby a fully capable person confers on a person the power to accomplish an act or, generally speaking, to take care of his/her interests. Such a mandate takes effect immediately and ends with either the repeal of the power given to the proxy or the onset of the adult’s incapacity. According to the Hague Convention of 14 March 1978 of the Law Applicable to Agency, this mandate is governed, in the absence of a choice, by either the law of the business establishment or by the law of the agent’s habitual residence (art. 6). This law also applies to the termination of the agency (art. 8, lit a). The choice of law solution adopted in the Adults’ Convention is obviously different, since in case of incapacity the mandate (mandat d’inaptitude)65 aims to protect the incapacitated person and not to guarantee the certainty of the legal state of affairs for third subjects having patrimonial intercourse with the incapacitated person. During the travaux préparatoires, medical treatment was the object of a sometimes heated debate,66 but no reference at all was ever made to the advance directives. Therefore, we can conclude that the Convention is useless for our purposes,67 except for choosing the habitual residence as the most fitting connecting factor.68 Moreover, at present the Convention has been ratified by only a few Member States of the Conference.

MARKER R.L. (note 39), p. 2. See on this subject LAGARDE P. (note 60), p. 175; UBERTAZZI B. (note 37), p. 198. 66 The proposition (N° 85) that the Convention should not apply to medical acts was not accepted, but the Special Commission eventually agreed on the possible jurisdiction based on presence without any need to declare this in the text of the Convention (Actes et Documents, p. 308). On the final day, the Commission found a solution acceptable to all delegations according to which medical acts fall outside the scope of the Convention, since the medical practitioners are not authorities within its meaning. The legal questions concerning the representation of an adult when he must undergo a medical treatment are, on the contrary, subjected to the General rules of the Convention. This is why the final text of the Convention expressly excludes only ‘public measures of a general nature in matters of health’ (art. 4, 1, f). See the Explanatory Report by LAGARDE P., Actes et Documents (note 60), p. 409. 67 It may happen, however, that statutory provisions or notaries’ practice provide a mandat d’inaptitude ruling out excessive health care. See REVILLARD M. (note 60), p. 733. 68 ‘Most relevant contact’, according to the American language. 64 65

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Tito Ballarino Many States, including Italy, have enacted specific conflict rules for the protection of adults.69 The ‘ordinary’ mandat d’inaptitude falls within their scope, but an advance directive through a durable power of attorney for health care presents, as we have already stressed en passant, different characteristics. In addition, the durable power of attorney for health care is not the only form of living will. In a conflict perspective, we must strive for a solution which will match both forms of advance care directives.

VI. A Proposal for the Living Will in Conflict of Laws With regard to the advance directives, the conflict of laws may have different appearances. A law which elaborately regulates the living wills can collide with another law which refuses the principle of informed consent, sticking to the paternalistic approach of giving doctors and family members the power to decide.70 Two countries both of which confer a strong legal status on treatment directives can disagree on the faculty to appoint a representative for decision making: one being in favor, the other against.71 Even when enacted in the law, the power to form an advance directive may sometimes be unconditional, sometimes subject to certain restrictions which are different from one State to another, such as pregnancy (according to some regulations a previously written request of an incompetent pregnant woman should not be fulfilled); the same occurs with the patient’s wish to exclude certain treatments, like artificial nutrition and hydration, which, according to the other State’s law, could not be refused.72 Dissimilarities also exist with re-

Law May 31, 1995, reforming the Italian system of private international law, art. 43 (Protection of persons of full age): ‘The prerequisites for and the effects of the measures protecting disabled individuals and the person(s) in charge of their care, shall be governed by the national law in force for the disabled individual. Nonetheless in order to protect, on an interim or urgent basis, either the disabled individual or his property, Italian courts may adopt the measures provided for by Italian law.’ The rule is criticized by UBERTAZZI B. (note 37), p. 201 because of its failure to comply with the Hague Convention and its lack of respect for the person’s autonomy. 70 So, for instance in Japan. See VEZZONI C. (note 11), p. 25. 71 For example Denmark: see VEZZONI C. (note 11), p. 31. 72 For the United States, see VEZZONI C. (note 11), p. 31, who stresses that the validity conditions specified in a statute enacted by a Member State can be overruled by the constitutional ‘right of privacy’ and by the common law doctrine of informed consent. 69

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Is a Conflict Rule for Living Wills and Euthanasia Needed? spect to the minimal age required,73 the legal force accorded to treatment directives, their duration,74 and the power of the subject to repeal them. Advance directives, as we have seen, are of two different kinds. When the directive is provided through a durable power of attorney for health care, a warning is often given to patients advising them that the document they are forming must comply with the law of their State.75 I cannot agree with this warning. A power of attorney which has absolutely no effect in the patrimonial sphere and which only sets out rules about the person’s physical wealth does not necessarily belong to a definite legal order in such a way that it must comply with its rules. It is surely an act having legal consequences, but its content, being an exercise of the author’s autonomy, which is universally recognized, can be implemented pursuant to any legal system; and, afterwards it can be recognized abroad. The same could be said in regard to form, even when a public notary certification is required.76 When a ‘simple’ written form is prescribed, that form is ‘spatially indifferent’.77 On the other hand, the need to have a living will notarized only 73 Some States follow the rule of the ‘competent minor,’ according to which patients 12 years or older are presumed competent to make medical decisions (but the age of majority is required to appoint a representative, like in the Netherlands: see VEZZONI C., op. cit., p. 31). 74 See the French Code de la santé publique which prescribes: ‘Le médecin tient compte [des directives anticipées] pour toute décision d’investigation, d’intervention ou de traitement concernant [la personne] … à condition qu’elles aient été établies moins de trois ans avant l’état d’inconscience’ (art. L. 1111-11 added along with other rules concerning the Expression de la volonté des malades en fin de vie by the already quoted Loi Leonetti, above footnote 26). 75 MARKER R.L. (note 39), p. 4: ‘since’ — the author remarks — ‘requirements for a valid power of attorney for health care differ from State to State’. 76 This rule is valid a fortiori if a witness is required which is not subject to any territorial condition, as happens in France (Code de la santé publique, art. R. 1111-17, added with décret n° 2006-119 du 6 février 2006): ‘Lorsque l’auteur de ces directives, bien qu’en état d’exprimer sa volonté, est dans l’impossibilité d’écrire et de signer lui-même le document, il peut demander à deux témoins, dont la personne de confiance lorsqu’elle est désignée en application de l’article L. 1111-6, d’attester que le document qu’il n’a pu rédiger lui-même est l’expression de sa volonté libre et éclairée. Ces témoins indiquent leur nom et qualité et leur attestation est jointe aux directives anticipées’. 77 As I called it in my book Forma degli atti (note 5), p. 81 s. and 337, pointing at acts like the holograph will which, not being bound to a certain territory nor to certain authorities, can be made anywhere (an example could be the recognition of an illegitimate child according to the formal provisions of lex substantiae which are satisfied through a holograph will, whereas a more stringent form is required in the place where the will is written). But, even when the observance of mandatory rules on formalities (like a notarized act) is prescribed, the required form can be implemented through an act accomplished in a different legal order which for many reasons, mostly because the act to be performed is locally unknown, could not be held competent under the rule locus regit actum. Accordingly, I have proposed to distinguish between ‘indirect rules’ of form (for example the requirement of a written or a notarized act) and ‘direct rules’ of form (the way in which a

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Tito Ballarino hints to a special way for certifying a will, which is likewise the same throughout the several legal orders that may be called to evaluate it. Being a document which does not have any relation with an authority acting pursuant to mandatory local rules, a living will can be made anywhere. The rule locus regit actum has no role to play. The only aspect of the advance directives which is regulated by the common rules on the conflict of laws is the capacity to make them. Following the approach of the Hague Convention on the Protection of Adults, habitual residence seems preferable to nationality, even from the point of view of the States which stick to national law.78 Moreover, it is the State of the person’s habitual residence which provides the patient with the services of a national health care or medical insurance, whose meaning for the case cannot be disregarded. An equivalence among the different ways to write an advance directive is the leading criterion in conflict of laws. What matters, in effect, is only the wish expressed in the document, something which is unrelated either to the exclusive competence of a legal order or to the consent of a certain authority. So, a living will must be recognized, provided it is formed by a competent subject (not only from a psychological stand-point, but legally as well), if it is created according to a legal order to which the person has sufficient connections, even if the the patient later becomes incompetent. The ruling principle, in this matter like in others, is more recognition than choice of law. From a substantive point of view, the legal foundation for a living will can be given either by specific rules enacted by that country or by principles therein recognized. This often means that the patient’s autonomy and informed consent are sufficient, provided that the statutory limits (such as the period of validity) are complied with. But if recognition, conceived in these terms, means a nearly absolute freedom to make advance directives, the real problem is implementing them in the country where the patient becomes incapacitated and is residing at the moment when he/she needs medical treatment. Both straight directives and directives establishing a power of representation come under review by physicians and healthcare institutions which are bound to apply their lex fori profesional. In ascertaining document must be drafted): BALLARINO T. (ibidem), p. 72. The rules of the first type can also be satisfied through the formalities of a third law. 78 The capacity to make an advance directive could appear as a special one which must be submitted to specific conflict rules when they exist (like in Italy, L. 218/1995, Art. 23, 1: ‘Legal capacity of natural persons shall be governed by their national laws. Nonetheless, where an act is governed by a law providing for special conditions with respect to legal capacity, those conditions shall be governed by that law’: Italics added). But, what is the law ‘providing for special conditions’ in the case of an advance directive? In my opinion, there is no such law, since forming a living will is, above all, a question of discernment. This gives support to Dr. Ubertazzi’s opinion which limits the special rules, like the Italian one, and vindicates the competence of the general conflict rule laid down in the first part of Art. 23 for any case where human discernment is a matter for conflict of laws. See UBERTAZZI B. (note 37), p. 100 s., 113 and 276.

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Is a Conflict Rule for Living Wills and Euthanasia Needed? the validity of an advance directive, these ‘authorities’ will check whether it is effective under an adequate relationship with the legal order to which the incapacitated patient seems to be subjected. Since advance directive forms can be downloaded on the web, no problem of form will arise; the only problem will be to ascertain the effectiveness of the patient’s intent. This inquiry will be governed by the local rules. So, the faculty to appoint a representative must be scrutinized under two different laws. When the patient’s law (generally his/her country of habitual residence) does not provide binding rules on advance directives or gives them a weak legal status, whereas the country where medical treatment is provided contains extensive ‘favourable’ regulations, a question is likely to arise which has a pivotal role in the most recent evolution of the conflict of laws. Both statutory rules and judicial practice show an increasing tendency to refuse the operation of bilateral rules on conflict of laws in favor of a method which emphasizes the role of the lex fori in providing a legal discipline for personal relationships which are sufficiently connected with the country. Such relationships created abroad are given an effective status inside the lex fori legal order not by virtue of conflict rules but on the basis of a straight recognition method. This method does not work, it seems, with regard to legal relations whose content lies in a prevailing way under the mastery of private parties’ autonomy.79 Its raison d’être lies, in effect, in the relationship between the person and the authority to which he/she turns in order to acquire a certain personal status. Accordingly, relations which are created between two parties in the exercise of their absolute autonomy, as in contractual relations, and do not give rise to any status do not seem suitable for this method. Autonomy can, however, have a different meaning unrelated to both business transactions and the faculty of choosing a competent law. Where autonomy has such a character, nothing prevents the said method from working with regards to relations created by a person. Adopting this point of view, the recognition method is not restricted to relations involving the participation of a legal authority, but may be extended to cases like ours in which private autonomy is only a requisite for treatments having direct consequences on the incapacitated patient’s status. A counterpart of this situation can be seen in the recognition of illegitimate offspring contained in a will. When sons born out of wedlock can be recognized in a will, as in Italy (Codice civile, Art. 254), we have an act which can be made either in the mere private form of the holograph will or in a notarized form, which gives rise to a status affecting the parent as well. Moreover, in order to become effective this status is subject, under certain circumstances, to the approval of either the son (Art. 250, para. 2) or the parent who has already recognized him (Art. 250, para. 3). As in the case of advance directives, the exercise of a private perSee ROMANO G.P. who says of this method (note 47), at 461: ‘Les domaines qui nous intéressent sont ceux où l’intervention d’une autorité du for est une condition nécessaire pour créer une situation juridique par la modification du statut des intéressés…’. 79

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Tito Ballarino son’s autonomy is competent to create a status only if it passes under further scrutiny unrelated to the author’s will and without the authority’ participation.80

VII. Conclusion Euthanasia and living will are two institutions which are progressively entering into the domain of conflict of laws. Their purpose, however, is different because the advance directives only aim at setting limits to medical cares in a future critical situation, whereas euthanasia deals with the primary foundation of a person. A correct approach suggests the enactment of different laws for each of the two phenomena, as some States have already done. So the tendency to treat them together appears to be a pretext to sanction them on ethical grounds (which anyway are worthy of respect). The enactment of specific laws, as it happens with the living will and sometimes with euthanasia as well, does not mean however that the problem is ripe for a ‘traditional’ conflict of laws solution since: - medical cares are always subject to the lex fori profesional; - the law applicable to general issues like capacity cannot be identified through bilateral conflict rules. Both euthanasia and living will must reckon with the most relevant relationship criteria which are supported by health care provisions; - the form requirements, although compulsory, do not have an independent conflicts treatment. What remains for the conflict method? What I would like to suggest is that the allocation to one law method is not the best way to master the problems I reviewed. A different solution is possible provided there are enough clues, in legislation and not in scholars’ wishful thinking, which support it.

80

26

See ROMANO G.P. (note 47), at 461.

Yearbook of Private International Law, Volume 8 (2006)

THE EVALUATION OF SAME-SEX MARRIAGES AND REGISTERED PARTNERSHIPS IN THE NETHERLANDS Katharina BOELE-WOELKI Ian CURRY-SUMNER Miranda JANSEN Wendy SCHRAMA* I. II. III. IV. V.

VI.

Introduction Aims of the Research Structure and Methodology Aims of the Legislation Research Results A. Act Opening Marriage to Same-Sex Couples 1. Recognition of Dutch Same-Sex Marriages Abroad 2. Same-Sex Marriages and Children B. Act Introducing Registered Partnership 1. Recognition of a Dutch Registered Partnership Abroad 2. Registered Partnerships and Children Conclusion

I.

Introduction

This contribution summarizes research that on the 1st of November 2006 was submitted by the authors to the Dutch Ministry of Justice.1 On the 14th of December 2006, the report was sent to the second Chamber of the Dutch Parliament. It addresses both same-sex marriages and registered partnerships, a topic which, in the first volume of this Yearbook, was tackled by the late Petar Šarčević in his contribution about the private international law aspects of these non-traditional relationships.2

University of Utrecht. BOELE-WOELKI K., CURRY-SUMNER I., JANSEN M.D., SCHRAMA W.M., Huwelijk of geregistreerd partnerschap? Een evaluatie van de Wet openstelling huwelijk en de Wet geregistreerd partnerschap, Ars Notariatus, No. 134, Kluwer Deventer 2007. 2 ŠARČEVIĆ P., ‘Private international law aspects of legally recognised regulated forms of non-marital cohabitation and registered partnerships’, in: this Yearbook 1999, pp. 37-48. * 1

Yearbook of Private International Law, Volume 8 (2006), pp. 27-35 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Katharina Boele-Woelki, Ian Curry-Sumner, Miranda Jansen, Wendy Schrama

II.

Aims of the Research

The research was aimed at evaluating two central pieces of Dutch family law legislation, namely the Act which opened civil marriage to same-sex couples in 2001 (Wet openstelling huwelijk) and the Act introducing registered partnership in 1998 (Wet geregistreerd partnerschap). Although initially the Act introducing registered partnership was to be evaluated five years subsequent to its implementation, the Dutch Minister of Justice announced in 2001 the intention to evaluate both of these pieces of legislation simultaneously in 2006. How do these legislations function in practice? Have they attained the objectives that lay at the foundation of their implementation? Have there been technical or practical problems associated with their introduction, and exactly what role does registered partnership now fulfil alongside a marital institution open to couples regardless of sex? These and many other questions have formed the basis for the evaluation of these two pieces of Dutch legislation.

III. Structure and Methodology This research embodies three perspectives: a national legal perspective, an international legal perspective, and a sociological perspective. The socio-legal conclusions at the end of this research are, accordingly, a mélange of these three interrelated, yet distinct angles. The national legal perspective consists of an analysis of the statutory rules relating to registered partnership and marriage, concentrating on the similarities and differences between these two regimes. This research is based on an analysis of the relevant legal provisions, case law, and legal literature. This black-letter and case law analysis has been complemented by a questionnaire-study, distributed amongst Dutch notaries and Dutch Registrars of Births, Deaths, Marriages and Registered Partnerships, as well as by interviews with Dutch lawyers practicing in this field of law. The international legal perspective is divided into two sections. In the first section, the registration schemes for non-married couples in fourteen European jurisdictions are described and compared. The systematic description of the establishment, rights, duties, and termination of the registered relationship in each of these systems forms the basis for a comprehensive overview of the internal substantive regime. Furthermore, this description contains the necessary information for a fertile external comparison. The second section focuses on the private international law rules of thirteen European and non-European jurisdictions, in relation to the recognition of Dutch registered partnerships and same-sex marriages. This research is based on an analysis of the relevant legal provisions, case law, and legal literature.

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Evaluation of Same-Sex Marriages and Registered Partnerships in the Netherlands The sociological perspective is aimed at ascertaining insight into the reasons underpinning a couple’s choice to formalise their relationship, as well as the reasons associated with their choice of formal relationship, i.e. registered partnership or marriage. This perspective is comprised of three sections. In the first section, demographic information relating to the number of marriages and registered partnerships is analysed. In the second section, the results of a large-scale, representative sociological survey are expounded. A detailed questionnaire was sent to approximately 2,500 partners, of whom approximately 1,200 responded. The survey was limited to those partners who had either celebrated a marriage or registered a partnership since 2001. The third and final section provides the results of a number of follow-up interviews conducted with respondents of the questionnaire. The results of these three perspectives have subsequently been combined to form the basis for the conclusions. In answering the main research questions posed at the commencement of this research, a distinction has been made between the problems experienced as a result of the legislation, the differences between the two formal relationship forms in Dutch law, and the possible recommendations for removing these problems and differences. It is important to note that not all differences lead to problems, and not all problems are a result of differences. In the conclusions, attention is first devoted to summarizing the problems experienced in relation to these two pieces of legislation. Thereafter, focus shifts to the proposed recommendations put forward by the research team, aimed at tackling the problems and/or removing the differences. In the conclusions, the arguments for and against the abolition or retention of registered partnership (assuming that the amendments and recommendations listed in earlier are carried out) are laid out.

IV. Aims of the Legislation Two distinct objectives underpin the implementation of the Act introducing registered partnership. The institution of registered partnership was primarily created to ensure equal treatment for same-sex couples wishing to formalise their relationship. It was argued that same-sex couples should also be provided with an opportunity to have their relationship publicly recognised. In doing so, this Act aimed to provide those couples opting to register their relationship with the same rights and duties as attached to marriage. To have done otherwise would once again have created an unjustified distinction. The second objective was to provide an alternative to different-sex couples who may have preferred to register a partnership rather than get married. Although registered partnership was similar to marriage, it was clearly distinguishable from it. Equal treatment of same-sex couples also formed the foundation-stone of the Act opening marriage to same-sex couples. The creation of registered partnership was, in the eyes of the legislature, not sufficient to satisfy the requirements imposed by the principle of equality, as laid down in the Dutch Constitution. This

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Katharina Boele-Woelki, Ian Curry-Sumner, Miranda Jansen, Wendy Schrama principle requires that exactly the same institution be open to both same-sex and different-sex couples.

V.

Research Results

A.

Act Opening Marriage to Same-Sex Couples

On the whole, the Act opening marriage to same-sex couples has satisfied the principle of equal treatment, the core objective at the heart of its enactment. As a result of this Act, the same legislation applies to spouses regardless of their sex; thus, one marital institution is open to couples regardless of sex. Nevertheless, this research has substantiated two previously indicated problems in relation to same-sex marriages. Firstly, the legal recognition of same-sex marriages abroad, and secondly, the legal position of social parents and children born in or being raised in same-sex marriages.

1.

Recognition of Dutch Same-Sex Marriages Abroad

Substantial problems arise in relation to the recognition of same-sex marriages once one or both of the partners leave the Netherlands. The fear that same-sex marriages may not be recognized, appreciated by both Dutch practitioners active in this field as well as the couples themselves, is confirmed by the information collated in the international legal perspective. The non-recognition of a couple’s marriage can have important and far-reaching consequences for those concerned. From the international legal research, it would appear that in many instances no clear answer can be provided as to whether, and if so how, these marriages will be recognized abroad. The answer to the question is heavily dependent upon the substantive law rules in force in that country. In those countries that have opened civil marriage to same-sex couples, the recognition of Dutch same-sex marriages is generally not problematic (Belgium and Spain). In those countries where a domestic form of registered partnership has been created, same-sex marriages celebrated abroad are often afforded recognition as this domestic form of registered partnership. A Dutch same-sex marriage will be recognised in Germany as an eingetragene Lebenspartnerschaft;3 whereas in the United Kingdom, it will be recognised as a civil partnership.4 However, in France, where to date same-sex couples can only conclude a pacte civil de solidarité, a Dutch same-sex marriage will,

3 Art. 17b EGBGB. See RÖTHEL A., ‘Anerkennung gleichgeschlechtlicher Ehen nach deutschem und europäischem Recht’, in: IPRax 2006, pp. 250-253. 4 Schedule 20 Civil Partnerships Act 2004.

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Evaluation of Same-Sex Marriages and Registered Partnerships in the Netherlands according to high-ranking French ministerial officials, also be recognised as a marriage.5

Recognition of Dutch Same-Sex Marriages in 11 Members States of the EU with a Statutory Legislation Scheme for Same-Sex Couples Country Belgium Czech Republic Denmark Finland France Germany Luxembourg Slovenia Spain Sweden United Kingdom

Marriage (same sex) recognised as Marriage Registrované partne rství Registreret partnerskab Rekisteröidystä parischteesta Marriage Lebenspartnerschaft Partenariat Partnerski skupnosti Marriage Registrerat partnerskap Civil partnership

In those jurisdictions were no substantive law regime is available for same-sex couples to formalise their relationship, the chances are great that a Dutch same-sex marriage will not be recognized. The following public policy arguments are used. First, and most importantly, reference is made to the traditional concept of marriage. Marriage is considered to be a union between persons of the opposite sex. Second, it is argued that this concept is protected by the national constitution (this is, for instance, the case in Latvia). Finally, it is submitted that the non-recognition does not violate the European Human Rights Convention (Articles 8, 12 and 14 ECHR). It belongs to each national state’s margin of appreciation whether or not to regulate the formalization of same-sex relationships according to its constitution, culture, religion, and family system. All these arguments were put forward in the recent decision of the Irish High Court, in its decision of the 14th of December 2006.6 It was held that a marriage concluded in Canada between two Irish women could not be recognized in Ireland. 5 ‘Effets en France du mariage homosexuel valablement célébré dans un pays de l’Union européenne’, in: Rep. Min no. 41533, justice: JOAN 26 July 2005, p. 7437. See also La semaine juridique, édition notariale et immobilière, no. 35 of 2nd September 2005. The French recognition rules regarding marriage also contain a choice of law test, which ensures that a Dutch same-sex marriage will only be recognized in France, should it satisfy the French choice of law rules. As a result, both parties to a same-sex marriage celebrated in The Netherlands will need to possess the nationality of a State which permits the celebration of marriages between persons of the same-sex if this marriage is to be recognized in France. 6 Irish High Court in Zappone/Gilligan v. Revenue Commissioners Ireland, 14th December 2006.

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Katharina Boele-Woelki, Ian Curry-Sumner, Miranda Jansen, Wendy Schrama 2.

Same-Sex Marriages and Children

The second problem, substantiated by the research, in relation to same-sex marriages arises in relation to children. Unlike children born in different-sex marriages, legal parentage is only created by operation of law as regards the birth mother in same-sex marriages. The fact that a third party is required for the conception and/or the birth of the child, implies that same-sex married couples are not comparable to different-sex married couples for purposes of the principle of equality. Nonetheless, the question remains how children born and raised in such relationships can be protected. According to current Dutch law, only the legal parentage of the birth mother is determined by operation of law upon the child’s birth. The female spouse of the birth mother is not permitted to recognize the child. Adoption is therefore the only alternative, along with the associated costs, conditions, judicial intervention, and waiting periods. In relation to the adoption of a foreign child, a prohibition still operates preventing same-sex married couples from jointly adopting abroad. Thus, same-sex married couples wishing to adopt a foreign child are obliged to first follow the single-person adoption procedure, and then at a later stage make use of step-parent adoption. The question can be raised as to whether or not this prohibition against joint same-sex adoption of a foreign child is contrary to the principle of equality. At present, a legislative proposal before the Dutch Second Chamber aims to repeal this prohibition, thus, permitting same-sex couples to jointly adopt a foreign child. Other problems associated with the opening of civil marriage to same-sex couples have not been uncovered in the research. The opening of same-sex marriage is, therefore, to be regarded as a success, since hereby justice has been done to the principle of equality.

B.

Act Introducing Registered Partnership

In evaluating the Act introducing registered partnership it is important to draw a distinction between the two distinct objectives underpinning this legislation, namely, the primary aim of equal treatment of same-sex couples and the secondary aim of providing an alternative for different-sex couples who do not wish to marry. It is plausible that the discussion enveloping the introduction of registered partnership paved the way or, at the very least, contributed to the opening of civil marriage to same-sex couples. In this respect the legislation was indispensable. In attempting to fulfil the obligations imposed by the principle of equality, the Dutch legislature sought to sculpt the institution of registered partnership, as far as possible, according to the marital model. As is clear from the national legal perspective, legislation with respect to registered partnership and marriage are indeed very similar, in terms of the establishment of the relationship, the conversion of one relationship into another, the rights and duties attributed to the relationship, and the procedures available for terminating the relationship. Nevertheless, a number of exceptions to this overall resemblance deserve mentioning, two of which deserve particular attention. The first difference relates to the marital pre32

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Evaluation of Same-Sex Marriages and Registered Partnerships in the Netherlands sumption of parentage that is not mutatis mutandis applicable to registered partnerships. In this respect it is important to draw a distinction between different-sex and same-sex couples. The second objective upon which the Act introducing registered partnership is based was the creation of an alternative for different-sex couples who did not wish to marry. From the sociological research, it would appear that registered partnership is regarded by both same-sex and different-sex couples as an alternative to marriage. Registered partnerships are regarded more as a business arrangement, whereas the reasons for choosing to marry lie more embedded in the symbolic and emotional sphere. Even though the absolute number of partnerships registered each year is relatively small compared to the absolute number of marriages, it can still be concluded that, of the couples who since 2001 have decided to formalize their relationship, a small, but not insignificant group of people have chosen to register their partnership instead of getting married. In this sense, registered partnership would seem to fulfil an apparent demand from a small group of couples.

1.

Recognition of a Dutch Registered Partnership Abroad

Regardless of the societal demand for a marital alternative, a number of problems have been revealed by the research. Firstly, as stated above in relation to same-sex marriages, the possibility that the registered partnership will not be recognized abroad is great. Two separate problems in this respect need to be distinguished: First, the high chances of non-recognition, especially in relation to different-sex registered partnerships, and second, legal uncertainty. Those jurisdictions which provide the possibility for same-sex couples to formalize their relationship will most likely recognize the Dutch same-sex registered partnership as their ‘local’ institution. In nearly all of the jurisdictions studied (apart from Belgium), it was unclear how different-sex registered partnerships will be dealt with. It may be that they will be recognized, and it may be that they will not be recognized. Both of these problems could lead to ‘limping relationships’ (relationships recognized in one country, yet not recognized in another). It is noteworthy to mention that although a distinction is made in The Netherlands between registered partnership and marriage, in the majority of countries researched this distinction is not respected. In Germany, for example, both same-sex marriages and Dutch registered partnerships will more-than-likely be recognized as eingetragene Lebenspartnerschaft, whilst at the other end of the spectrum, in Belgium, both relationship forms are recognized as marriages. It would also appear from both the national legal perspective and the sociological research that those professionals involved with the registration of partnerships, as well as the couples themselves, regard the potential non-recognition of the relationship as a problem.

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Katharina Boele-Woelki, Ian Curry-Sumner, Miranda Jansen, Wendy Schrama Recognition of a Dutch registered partnership in 11 Members States of the EU with statutory legislation schemes other than marriage Country Belgium Czech Republic Denmark France Germany Luxembourg Finland United Kingdom Slovenia Spain Sweden

2.

Registered partnership (same sex) recognized as Marriage Registrované partne rství registreret partnerskab Not known Lebenspartnerschaft Partenariat Rekisteröidystä parischteesta Civil partnership Partnerski skupnosti Not known Registrerat partnerskap

Registered partnership (different sex) recognized as Marriage Not known Not known Not known Not known Not known Not known Not known Not known Not known Non-marital cohabitation

Registered Partnerships and Children

Unlike in different-sex married couples where the legal parentage of both the birth mother and her husband are legally established at the moment of birth, the birth mother’s male registered partner is not regarded as the legal father of the child by operation of law. Consequently, he must formally recognize the child. Should he fail to recognize the child for whatever reason, the consequences can be far-reaching (especially in the field of name law, contract, inheritance law, nationality law, and public law). The initial objectives of the Dutch Government were, however, to introduce a formalized relationship scheme which was only to have consequences for the partners themselves. Between 1998 and 2001, this was indeed the case, but over time this legislation has been amended. Since 2001, legislative change granting joint parental authority by operation of law to registered partners over a child born during a registered partnership has come into force. This change, coupled with the results from the sociological perspective which indicate that a majority of those different-sex registered partners questioned were raising children, indicates that it can no longer be said that registered partnership has no effect on the parent-child relationship, or that no children are being born or growing up in registered partnerships. It is, therefore, vital that the problems signalled by both legal professionals and the couples themselves with the absence of a legal presumption of paternity be rectified immediately. A subsidiary argument is that this difference in treatment is contrary to the principle of equality. When turning one’s attention to same-sex couples, the questions raised are to some extent more complicated, due to the presence of a third party. No legal distinction is drawn between children born during or growing up in either a marriage or registered partnership between couples of the same-sex when it comes to 34

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Evaluation of Same-Sex Marriages and Registered Partnerships in the Netherlands legal parentage or parental responsibility over the children. No presumption of parentage results for same-sex couples, obliging those wishing to establish legal parentage to adopt. Furthermore, as demonstrated in the sociological perspective, a significant minority of same-sex couples are indeed raising children. Therefore, it is important that these children are afforded adequate legal protection in the field of legal parentage.

VI. Conclusion This research was aimed at evaluating two fundamental pieces of Dutch family law legislation. The Act opening civil marriage to same-sex couples and the Act introducing registered partnership clearly illustrate the complex process which has formed the basis for the current legislative situation of two almost identical legal institutions functioning side-by-side, both open to couples regardless of sex. At the start of the 1990s, it was almost impossible to foresee that within ten years it would have been possible to open civil marriage to same-sex couples. Changes in the political composition of the government and unremitting social change both contributed to the rapid legal developments in this field. The Act introducing registered partnership smoothed the path for civil marriage to be opened to same-sex couples. It is plausible that this piece of legislation provided the catalyst for the debate surrounding the opening of civil marriage. In this respect, any evaluation of this Act should view this point positively. However, in evaluating the Act and the resulting institution of registered partnership through the eyes of the current legislature, one must balance the need for clear legislation and the prevention of limping relationships against the need for access to a wellregulated formalized institution without the symbolism and tradition of marriage. The Act opening civil marriage to same-sex couples has satisfied the obligation embodied in the principle of equality in the context of formalized relationships. In spite of the problems of international recognition and the vital question of how best to protect children born in or growing up in same-sex relationships, there are no problems with the implementation or functioning of this Act. Therefore, the opening of civil marriage to same-sex couples is to be regarded as a success.

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COMPETENCE OF THE COMMUNITY TO CONCLUDE THE REVISED LUGANO CONVENTION ON JURISDICTION AND THE RECOGNITION AND ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS OPINION C-1/03 OF 7 FEBRUARY 2006: COMMENTS AND IMMEDIATE CONSEQUENCES Alegría BORRÁS*

I. II. III. IV. V.

Introduction The Procedure in Court Contents of the Opinion Consequence of the Opinion Continuation of the Revision of the Lugano Convention

I.

Introduction

Following a lengthy three-year wait, the Court of Justice finally gave its Opinion on 7 February 2006, which, although expected, does not fail to surprise, both with regard to the scope of the Opinion and the reasoning leading to the resolution.1 In Professor of Private International Law at the University of Barcelona since 1985. Professor at the Academy of International Law at The Hague in 1994 and in 2005. Spain’s representative at the Hague Conference on Private International Law since 1987. Spain’s representative for cooperation on justice (civil matters) in the European Union since 1993. Spain’s representative at the Standing Committee of the Lugano Convention since 1996 and at the Diplomatic Session for the revision of the Lugano Convention (10-12 October 2006). 1 This paper has its origin in ‘Les compétences externes de l’Union Européenne dans le domaine du Droit international privé’, a paper presented by the author at the 2005 Annual Conference of the Société suisse de Droit international held 18 November 2005 in Lausanne, hence, before the Opinion was rendered. A shorter comment (in Spanish) by the author is published in the Revista Jurídica de Catalunya 2006, n° 3, pp. 879 et seq. and in the Revista General de Derecho Europeo, No 10, May 2006, online at . See also the comments by BAUMÉ T., in: German Law Journal 2006, nº 8, pp. 681-692; BRAND R.A., ‘The Lugano Case in the European Court of Justice: Evolving European Union Competence in Private International Law’, in: ILSA Journal International and Comparative Law, p. 297. *

Yearbook of Private International Law, Volume 8 (2006), pp. 37-52 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Alegría Borrás order to understand the consequences of this Opinion, which constitutes a truly leading case, one must refer to the antecedents of the case, to the procedure followed and incidents that occurred, to the result achieved and, finally, to the consequences that this will have for legal professionals as well as for the conclusion of other Conventions. With this plan, we follow what the Court does in broad terms, given that the Opinion stricto sensu is only the object of paragraphs 110 to 173 and, furthermore, is expressed in terms which will be outlined further on. It is a great opportunity to publish these comments in the Yearbook of Private International Law, of which Prof. Petar Šarčević is considered as the ‘father’.2 In light of his enthusiasm and enormous spiritus movens, he would have shown great interest in the Opinion commented on here. It is really a pity that we did not have the opportunity to discuss it personally, as our courses at The Hague Academy of International Law were scheduled for the same week in July 2005 and I already made some predictions about the contents of the expected Opinion there. As is well known, the 1968 Brussels Convention on jurisdiction, the recognition and the enforcement of judgments in civil and commercial matters is a complementary Convention between the Member States of the European Community (based on Article 220 of the Treaty, now Article 293) and, as such, is not open to third States. This is the reason why the Lugano Convention on the same subject was concluded in 1988, and why it was referred to as a ‘parallel’ Convention. Some European third States are also party to the Lugano Convention,3 as are the old Member States of the Community and Poland. The success of both instruments is well known, but after twenty years they were in need of further modernisation and approximation. In its Session held on 4-5 December 1997, the Council put together an ad hoc group consisting of all States parties to both Conventions, in addition to observers from the Permanent Bureau of the Hague Conference on Private International Law, EFTA and the European Parliament, for the purpose of modernising both Conventions and accentuating their parallelism, thereby ironing out the differences.4 It is not obvious to emphasise the fact that the joint technical revision was finalised on 30 April 1999, just a day before the entry into force of the Amsterdam Treaty, which made such a joint exercise no longer possible. Shortly thereafter, the Council adopted Regulation No 44/2001 of 22 December 2000, which substituted the 1968 Convention among the Member States, with the exception of Denmark, to which the Regulation has been extended later by a subsequent agreement.5 2 In the introduction by ERAUW J./TOMLJENOVIĆ V./VOLKEN P. to the Liber Memorialis Petar Šarčević. Universalism, Tradition and the Individual, Munich 2006, pp. XX-XXI. 3 Currently Switzerland, Norway and Iceland. 4 On this joint exercise, see the note by BORRÁS A. in: R.E.D.I. 1998 (n° 2), pp. 300 et seq. 5 Decision of the Council of 20 September 2005, Agreement between the European Community and Denmark of 19 October, OJ L 299 of 16 November 2005. Another decision was taken the same day to extend Regulation No 1348/2000 on the service in the Member States of judicial and extrajudicial documents in civil and commercial matters to Denmark.

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Competence of the Community to Conclude the Revised Lugano Convention Thus the difficult journey on the road to the revising the Lugano Convention commenced. On 22 March 2002, the Commission presented a proposal to the Council to initiate negotiations with the aim of carrying out this revision. However doubt emerged among the Member States as to whether the Community had exclusive competence to conclude the new Lugano Convention in light of the so-called ‘ERTA effect’,6 or whether it shared competence with the Member States.7 Despite the discrepancy, a decision of the Council of 14-15 October 2002 authorised the Commission to start negotiations for the revision of the Convention, irrespective of whether the Community had exclusive competence or shared competence with the Member States for the conclusion of the new Convention.8 In its meeting on 27-28 February 2003, the Council decided to request an opinion (Opinion C-1/03) of the Court of Justice in the following terms: ‘Does the conclusion of the new Lugano Convention on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters, [...] fall entirely within the sphere of exclusive competence of the Community, or within the sphere of shared competence of the Community and the Member States?’.

II.

The Procedure in Court

The procedure in Court has been particularly lengthy and complex, thus illustrating the interest in this matter. Firstly, this is due to the fact that it is unusual for so many Member States to present written observations, as did the following countries in this case: Germany, Greece, Spain, France, Ireland, Italy, the Netherlands, Portugal, Finland, Sweden and the United Kingdom. The Commission and the ParliaJudgment of 31 March 1971 in Case 22/70 states in paragraph 17: ‘In particular, each time the Community, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules, whatever form these may take, the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those rules.’ 7 On this subject, BORRÁS A., ‘The frontiers and the institutional constitutional question’, in: NUYTS A. & WATTÉ N. (eds.), International civil litigation in Europe and relations with third States, Brussels 2005, pp. 27-54 and BORRÁS A., ‘Diritto internazionale privato comunitario e rapporti con Stati terzi’, in: Diritto internazionale privato e Diritto comunitario (PICONE P. ed.), Padova 2004, pp. 449-483. Already including reference to the Opinion dealt with here, see BORRAS A., ‘Le droit international privé communautaire: réalités, problèmes et perspectives d’avenir’, in: Recueil des Cours 2005, vol. 317, in particular, pp. 467-522. 8 On the consequences of this situation in the meetings of the Standing Committee of the Lugano Convention, see the notes by BORRÁS A. in: R.E.D.I. 2003 (no° 2), pp. 1117-1119, and 2004 (no° 2), pp. 1061-1064. 6

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Alegría Borrás ment also submitted written observations. An important part of the Opinion9 is dedicated to summarising these written observations. With more or less accurate arguments and various clarifications, a majority of the States declared themselves in favour of shared competence, whereas the Commission, the Parliament, France and, to a certain extent, Italy defended exclusive competence of the Community. Although a hearing is not necessary when an opinion is requested, the Court held a hearing on 19 October 2004, alleging that this opportunity would also enable the new Member States that had acceded to the Community after the opinion had been requested to present their observations. At the hearing, the Czech Republic and Poland intervened, as did Denmark, Germany, Greece, Spain, France, Ireland, the Netherlands, Portugal, Finland and the United Kingdom, as well as the Commission, the Council and the European Parliament. The judge rapporteur, A. Rosas, prepared the report for the hearing. As a peculiarity of this hearing, the Member States and the institutions had been asked in advance to declare on four questions only: ‘1) the relevance of the wording of Articles 61 EC and 65 EC, in particular the words ‘necessary for the proper functioning of the internal market’ in Article 65 EC; 2)

the relevance of the question of the extent to which a Member State can negotiate, for example, a bilateral agreement with a non-member country governing the problems covered by Regulation No 44/2001, but without necessarily adopting the same criteria as those envisaged in that regulation;

3)

whether a distinction can be drawn between the provisions on jurisdiction and those on the recognition and enforcement of judgments, and

4)

whether there is any need for the existing case-law to be elaborated upon or clarified.’

These questions were by no means simple and, in particular, the second question was especially worrisome. The Member States and institutions insisted and reinforced the arguments presented in their written observations. Given that this deals with an opinion, there are no conclusions on the part of an Advocate General, but the eight Advocates General were heard by the Court in a hearing on 15 April 2005.10 The Opinion of 7 February 2006 was adopted by the Full Court of the Court of Justice. It is useful here to call attention to the added difficulty represented by the fact that this was the first time that the Court had to decide with all 25 members, thus making it necessary to have the text of the Opinion written in the 21 languages of the Community. Since even minor revisions in the text required a great deal of work, it is not difficult to understand how this Paragraphs 29 to 95. L.A. Geelhoed, F.G. Jacobs, P. Léger, D. Ruiz-Jarabo, A. Tizzano, C. Stix-Hackl, J. Kokott and M. Poiares Maduro. 9

10

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Competence of the Community to Conclude the Revised Lugano Convention requirement, in terms of substance and formal aspects, delayed the publication of this Opinion so much.

III. Contents of the Opinion The structure of the part constituting the Opinion stricto sensu is very simple, and I might add, so is the reasoning given by the Court. It deals first with the competence of the Community to conclude international agreements (paragraphs 114 to 133) subsequently passing on to the competence of the Community to conclude the new Lugano Convention (paragraphs 134 et seq.), where it differentiates between the rules on jurisdiction (paragraphs 139 to 161) and the rules on recognition and enforcement of decisions (paragraphs 162 to 172). The conclusion of the Opinion is simple and to the point: the conclusion of the new Lugano Convention ‘falls entirely within the sphere of the exclusive competence of the European Community’. The outcome could not have been stated more clearly, however, it is not equally clear as regards the arguments presented, as we shall now see. The first question examined concerns the competence of the Community to conclude international agreements. A distinction is first made between cases where the competence to conclude international agreements arises from an express rule of the Treaty and cases where it arises implicitly from other provisions of the Treaty and acts adopted by the institutions within the framework of such provisions. Secondly, it differentiates situations where that competence of the Community is exclusive and where it is shared with the Member States, referring to its former jurisprudence, in particular, the Open Skies judgments,11 paragraph 83 of which states that ‘Thus it is that, whenever the Community has included in its internal legislative acts provisions relating to the treatment of nationals of non-member countries or expressly conferred on its institutions powers to negotiate with non-member countries, it acquires an exclusive external competence in the spheres covered by those acts.’ This statement has been criticised by various Member States, and namely, in the observations submitted by the United Kingdom in the Lugano case. As was to be expected, the Court recalled in the Opinion that the Community possesses only conferred powers, thus implying that in order to establish whether an implicit exclusive competence exists, it is necessary to carry out ‘a specific analysis of the relationship between the agreement envisaged and the Community law in force and from which it is clear that the conclusion of such

11 Judgment of 5 November 2002, comment by TORRENT R., in: Revista Jurídica de Catalunya 2003 (no° 3), pp. 946 et seq.

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Alegría Borrás an agreement is capable of affecting the Community rules’.12 To that end, as the Court points out, ‘account must be taken not only of the area covered by the Community rules and by the provisions of the agreement envisaged, insofar as the latter are known, but also of the nature and content of those rules and those provisions, to ensure that the agreement is not capable of undermining the uniform and consistent application of the Community rules and the proper functioning of the system which they establish’.13 As regards whether the Convention envisaged is capable of affecting the Community regulation, the interpretation given by the Court is extensive, given that it is not restricted to the known formula of considering that it happens when it is dealing with ‘an area which is covered to a large extent by Community rules’,14 but the Court adds in this Opinion,15 that ‘it is also necessary to take into account not only the current state of Community law in the area in question but also its future development, insofar as that is foreseeable at the time of that analysis’. This might lead one to think that an initiative of the Commission16 or the presentation of a green paper17 or even simply a planned green paper18 or the inclusion in a long-term action plan19 could unleash Community competence. Moreover, the question of the exclusive competence of the Community for the purpose of concluding the Convention is not resolved by the inclusion of a so-

Paragraph 124. Paragraph 133. 14 In the terms of Opinion 2/91. 15 Paragraph 126. 16 See, currently, the various texts in preparation on contractual obligations (‘Rome I’) and non-contractual obligations (‘Rome II’), on the European monitoring process, on small claims, or, in the field of Family Law, the Community initiative on competence, applicable law, the recognition and enforcement of resolutions and the cooperation of authorities in the matter of maintenance obligations, document COM (2005) 649 final, 15 December 2005, which affects the Convention in preparation in the Hague on the same subject, and can be consulted at . The same applies to the proposal for a Regulation to modify Regulation No 2201/2003 with regard to competence and introducing rules concerning applicable law in matrimonial matters, see document COM (2006) 399 final, 17 July 2006 (‘Rome III’). 17 Currently, on successions, see document COM (2005) 65 final, 1 March 2005 and on conflict of laws, competence and mutual recognition of matrimonial regimes, see document COM (2006) 400 final, 17th July 2006. 18 For example, on mutual recognition in matters relating to civil status. 19 Action Plan of the Council and the Commission to put into practice the Hague Programme, O J C 198, 12 August 2005. 12 13

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Competence of the Community to Conclude the Revised Lugano Convention called ‘disconnection’ clause.20 The Court21 understood that the inclusion of such clauses did not constitute a guarantee that Community norms would not be affected, but, on the contrary, might be an indication that such regulations would be affected and therefore the question of determining the existence of exclusive Community competence has to be decided prior to the conclusion of the Convention. In this context22 reference is made to the interpretation of the Commission, which stresses in its observations23 ‘the particular nature of a disconnection clause in an international agreement of private international law, since this is completely different from a classic disconnection clause’. For the Commission, the objective of such disconnection clauses in the new Lugano Convention is not to ensure the application of Regulation No 44/2001, but to regulate in a ‘coherent manner the distributive application of that regulation and of the agreement envisaged’. In other words, it would be dealing with what is now known more specifically as ‘a compatibility clause’ or ‘grounds for applicability’. In fact, the States opposing the exclusive competence of the Community do not negate the existence of a shared competence as a consequence of the existence of Regulation No 44/2001. For that reason, it is worth highlighting the reference made by the Court to Article 65 which requires a link to the proper functioning of the internal market as a means of justifying the adoption of measures in the field of legal cooperation in civil matters. In the Court’s view,24 this limitation lacks pertinence for the conclusion of the international Convention. According to the Court, this limitation plays a role only in regard to the adoption of the Community instrument, but not in regard to the conclusion of an international Convention, in which case the only question of interest is whether or not it affects a Community instrument. This is in keeping with the opinion expressed by the Commission, the Parliament and France but opposed to that of the United Kingdom, Spain, Greece, Finland and the Czech Republic, which regard Article 65 as defining ‘the scope and intensity of the internal Community system’,25 thus leading them to interpret Regulation No 44/2001 as not entailing a complete harmonisation of the rules of the Member States in the matter of international jurisdiction, as a result of which the external Community competence is limited by the specific objective of the proper functioning of the internal market.26 Therefore, the Court presented an extensive interpretation of Community competence. See BORRÁS A., ‘Les clauses de déconnexion et le droit international privé communautaire’, in: MANSEL H.P. – PFEIFFER TH. – KRONKE H. – KOHLER CH. – HAUSMANN R. (Hrsg.), Festschrift für Erik Jayme, Munich 2004, Vol I, pp. 57-72. 21 Paragraph 130, repeated in paragraph 154. 22 Paragraph 155. 23 Paragraph 85. 24 Paragraph 131. 25 Paragraph 98. 26 Paragraph 99. 20

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Alegría Borrás As one might expect, the Court draws on the judgment in the Owusu case,27 where the Court holds that Article 2 of the Brussels Convention (and this interpretation also applies to the Regulation, as it contains the same rule) is applicable in a case where the plaintiff and the respondent are resident in the same Member State. This interpretation is the result of considering that Article 2 is a rule of general jurisdiction based upon the respondent’s domicile without involving another Member State, given that the other respondents were domiciled in a third State, thus lending the case an international nature with regard to the application of the Convention. As a result of this interpretation, the Regulation also applies to relations between a Member State and a third State. From the current perspective, it is significant that this judgment goes so far as to state:28 ‘However, the uniform rules of jurisdiction contained in the Brussels Convention are not intended to apply only to situations in which there is a real and sufficient link with the working of the internal market, by definition involving a number of Member States. Suffice it to observe in that regard that the consolidation as such of the rules on conflict of jurisdiction and on the recognition and enforcement of judgments, effected by the Brussels Convention in respect of cases with an international element, is without doubt intended to eliminate obstacles to the functioning of the internal market29 which may derive from disparities between national legislations on the subject (see, by analogy, as regards harmonisation directives based on Article 95 EC intended to improve the conditions for the establishment and working of the internal market, Joined Cases C-465/00, C-138/01 and C-139/01 Österreichischer Rundfunk and Others [2003] ECR I-4989, paragraphs 41 and 42).’ As in both the judgment and the above-mentioned opinion, the reference to the functioning of the internal market is excessively vague and flexible. Although the text of the new Lugano Convention was not fully established at the time of rendering the Opinion 1/03, the text resulting from the revision of the Brussels and Lugano Conventions made in 1999 sufficed to underline the ‘parallel’ nature of the envisaged agreement. As a consequence, the text of the current Regulation No 44/2001 and the said text were used to examine both the nature of the Community regulation and the extent to which it would be affected by the new Lugano Convention. To this end, the Court differentiated between the rules on international jurisdiction and those on the recognition and enforcement of judgments. With regard to the rules on international jurisdiction, the Court stressed ad nauseam (although without solid arguments) the ‘global and coherent’ nature of the

Judgment of 1 March 2005 in Case C-281/02 is seriously criticised by BEAUMONT P. in: Revista Jurídica de Catalunya 2005 (no° 4), pp. 1246-1255. 28 Paragraph 34. 29 Emphasis added by author. 27

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Competence of the Community to Conclude the Revised Lugano Convention rules on international jurisdiction contained in Regulation No 44/2001, thus deducing30 that ‘any international agreement also establishing a unified system of rules on conflict of jurisdiction such as that established by that regulation is capable of affecting those rules of jurisdiction’. Many Member States interpreted Article 4(1) of the Regulation as allowing them to remain competent to determine the jurisdiction of their jurisdictional bodies when the defendant is not a Community resident.31 This argument, however, is rejected by the Court which shares the views of the Commission and France. In effect, the Court finds that the inclusion of this provision32 ‘must be interpreted as meaning that it forms part of the system implemented by that regulation, since it resolves the situation envisaged by reference to the legislation of the Member State before whose court the matter is brought’. That means that the inclusion of this rule had ‘communitarised’ the exorbitant existing grounds of jurisdiction of the Member States, which is hardly compatible with the exclusion made in Article 3 (assuming that the Regulation is applicable), precisely due to the somewhat ‘noncommunitary’ nature of such grounds. The obsession of the Court with the ‘uniform and coherent’ nature of the Community system undoubtedly prompted it to omit all reference to Article 1, as there are matters which, despite being civil or commercial, are not included within the scope of application of the Regulation. On the other hand, if the Community system of international competence were really so ‘uniform’, then one could go as far as to question whether the Member States could continue to legislate on the matter of international jurisdiction, which would be somewhat absurd given the current state of development of Community Law. Moving from the nature of the rules of jurisdiction laid down in Regulation No 44/2001 to an examination of the rules in the revised Lugano Convention, the Court establishes that the rules of jurisdiction contained in both instruments are identical. Nonetheless, there are two consequences to be taken into account: first the territorial scope of the Lugano Convention is much broader, and secondly, the rules of jurisdiction of the Lugano Convention are applied not only by third State courts but also by the Member State courts, thus affecting the Community Regulation. In this sense, the Court concludes:33 ‘[W]hilst the fact that the purpose and wording of the Community rules and the provisions of the agreement envisaged are the same is a factor to be taken into account in determining whether that agreement affects those rules, that factor alone cannot demonstrate the absence of such an effect.’ Going a step further, the Court finds:

Paragraph 151. Paragraph 64. 32 Paragraph 148. 33 Paragraphs 153 and 158. 30 31

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Alegría Borrás ‘As for the consistency arising from the application of the same rules of jurisdiction, this is not the same as the absence of such an effect since the application of a rule of jurisdiction laid down by the agreement envisaged may result in the choice of a court with jurisdiction other than that chosen pursuant to Regulation No 44/2001.’ Good examples are Articles 22 (exclusive grounds of jurisdiction) and 23 (choice of court),34 included in the new Lugano Convention, what would result in the jurisdiction of the courts of a third State, even where the defendant is domiciled in a Member State. It is, therefore, not surprising that the Court repeats its arguments on the disconnection clause,35 here with specific reference to Article 54ter of the Lugano Convention of 1988. Following this line of reasoning, the Court concludes36 that ‘the main provisions of the agreement envisaged are capable of affecting the unified and coherent nature of the rules of jurisdiction laid down by Regulation No 44/2001’, as a result of which they, ‘affect the uniform and consistent application of the Community rules on jurisdiction and the proper functioning of the system established by those rules’. In the final part of the Opinion, the question is raised whether the rules on the recognition and enforcement of judgments would also be affected by the conclusion of the new Convention. The majority of Governments stated in their observations that this constitutes a field separate from the rules on jurisdiction. On the contrary, the Spanish Government maintained37 that both categories of provisions constitute a whole, since the objective of the Convention is the suppression of exequatur. Such opinion is shared by the Commission and the Parliament, as well as by other Governments, and is also supported by the Jenard Report to the Convention in 1968, which points out: ‘The very strict rules of jurisdiction laid down in Title II, and the safeguards granted in Article 20 to defendants who do not enter an appearance make it possible to dispense with any review, by the court in which recognition or enforcement is sought, of the jurisdiction of the court in which the original judgment was given.’ However, if this is the case, the Court has not performed its task of placing limits on this external competence arising of the existence of Regulation No 44/2001. The Court finds that the analysis of Regulation No 44/2001 in itself suffices to conclude38 that ‘because of the unified and coherent system which it establishes for the recognition and enforcement of judgments, an agreement such as that envisaged,

See Articles 16 and 17 of the Lugano Convention of 1988. Paragraphs 154 to 159. 36 Paragraphs 160 and 161. 37 Paragraph 105. 38 Paragraph 168. 34 35

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Competence of the Community to Conclude the Revised Lugano Convention whether it contains provisions on the jurisdiction of courts or on the recognition and enforcement of judgments, is capable of affecting those rules’.

IV. Consequences of the Opinion One of the consequences of the Opinion that ought to be examined is related to the conclusion of other multilateral Conventions which could affect Regulation No 44/2001. Although the Opinion states in the conclusion that it deals solely with the entire exclusive competence of the Community in regard to ‘the conclusion of the new Lugano Convention’, the views expressed by the Court and its lack of precision could lead to an extensive interpretation of the external competence of the Community in the field under scrutiny. A Convention that seems will suffer immediately the consequences of the Opinion is the Hague Convention adopted on 30 June 2005 on choice of court agreements, which includes a compatibility clause (Article 26(6)), incorporated specifically to clarify its relationship with Regulation No 44/2001. Following this Opinion, it seems difficult to reach any conclusion other than the exclusive competence of the Community. But the Opinion of the Court will affect a very large number of cases, just as it already has already happened in practice39 where only one provision of a Convention refers to matters included in a Community instrument, in particular, a provision on the jurisdiction and on the recognition and enforcement of decisions.40 In such cases, in line with the Opinion commented upon thus far, the Community would have ‘exclusive’ competence as regards the said provisions, however, this would not be ‘entirely’ a Community competence because the Member States would remain competent for the rest of the Convention. An even more troublesome situation could arise in regard to the competence of the Member States to conclude bilateral agreements such as ones on the recognition and enforcement of judgments in civil matters, which are very frequent but are not mentioned in the Opinion itself, thus meaning that they are neither included nor excluded. However, one of the questions formulated by the Court for the hearing refers to such bilateral agreements.41 It is certainly not one of the easiest quesThis was advanced by GONZÁLEZ CAMPOS J.D., in his note on the Judgment of 28 October 2004, Case C-148/03, in: Revista Jurídica de Catalunya 2005 (no° 2), pp. 624-629. 40 In matters so diverse as the UNIDROIT Convention and the OACI (Organisation d’Aviation Civile Internationale) on international guarantees on mobile equipment materials and the Protocol on specific questions relating to aeronautic equipment materials, adopted in Cape Town on 16 November 2001, the Hague Convention of 1996 on the protection of children, the Protocol of the Athens Convention of 13 December 1974 relating to the sea transport of passengers and their luggage or the Paris Convention of 29 July 1960 on civil responsibility in the field of nuclear energy, modified by the additional Protocol of 28 January 1964 and by the Protocol of 16 November 1982. 41 Paragraphs 100 to 103. 39

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Alegría Borrás tions to answer as one must determine whether the obligations arising from the particular bilateral convention fall within the scope of application of the Regulation. Several Member States stress the prudence with which such agreements must be eventually drawn up by using a disconnection clause to guarantee that their provisions do not make reference to matters regulated by Regulation No 44/2001. However, in the view of Parliament and the Commission, such agreements affect the Regulation even though they include a disconnection clause, thus raising the argument again that the existence of such a clause is obvious proof that Community rules are affected. The Spanish position took into account the diversity of interests of the Member States when concluding bilateral agreements, suggesting that a distinction be made between matters included in Regulation No 44/2001 and those not included. With regard to the latter, there is no doubt that the Member States remain competent. As regards the former, the Court of Justice was requested to qualify its case law, in particular the Open Skies cases, taking into account precisely that a Member State may have a particular interest in negotiating a bilateral Convention with a third State, whether this be due to geographical proximity or the existence of historic links between the States in question. This raises the question, for example, whether it would now be possible for Spain to conclude Conventions on an individual basis, such as the Convention on legal assistance in civil and commercial matters with the Dominican Republic of 15 September 2003,42 or even more recently, the Convention on legal assistance in civil and commercial matters with Algeria on 24 February 200543 or the Convention on legal assistance in civil and commercial matters with Mauritania of 12 September 2006,44 all of which were concluded after Regulation No 44/2001. As for the future, the question arises whether Spain will be in a position to sign new Conventions on the recognition and enforcement of judgments in civil and commercial matters with any of the Latin American Republics as the conclusion of such Conventions will probably hold little interest for the other Member States. Although, for the time being, the Commission has said nothing in regard to this question, the problem exists and one could even envisage a system of ‘controlled freedom’ insofar as a bilateral Convention could be concluded by one State but subject to the Commission’s control. The resulting panorama is nothing short of alarming. The eagerly awaited Opinion on the competence of the Community to conclude the Lugano Convention does not measure up to the high expectations, given that it is imprecise, vague and poorly argued. The Court repeatedly refers to the ‘uniform and coherent’ character of the system laid down by Regulation No 44/2001 as a ground to justify the exclusive competence of the Community. However, the existence of such character is not proved or supported by the arguments in the Opinion. Furthermore, the distribution of competences is imprecise, leaving plenty of room for discretion. Meanwhile, the Commission is constantly taking action in various fields of civil and BOE 23 of October 2003. BOE 1 May 2006. 44 BOE 8 November 2006. 42 43

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Competence of the Community to Conclude the Revised Lugano Convention commercial matters, thus increasing the external competence in the broad terms allowed by the Opinion and in this sense encouraging further action by the Commission. Conversely, the importance of the strategic document of the Council on external aspects of justice and home affairs merits to be underlined45 as it illustrates that the Member States are disposed to give the Community all freedom to act on the international level. This means that one cannot exclude the possibility that the Court could be requested to give another opinion concerning the conclusion of international Conventions in other fora or that, in light of the current direction, the Commission could initiate a procedure for breach against one or several Member States in matters relating to the conclusion of a Convention with third States.46 In sum, therefore, we would find ourselves staring at the omnipresent objective of developing Community competences under the protection of the imprecision of the Court, which, in this case, appears to be a response to a clear political objective of ‘Eurocentrism’. In addition, we can imagine the extent of the effect of this exclusive competence on our legal professionals, in particular our judges and lawyers. They have already become used to the fact that under Community law regulations such as Regulation No 44/2001 on jurisdiction and the recognition and the enforcement of judgments in civil and commercial matters and Regulation No 2201/2003 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and parental responsibility are directly applicable in the Member States by virtue of their publication in the Official Journal of the European Union, without being published in the relevant national official journal. On the other hand, what should a lawyer from a Member State think, for example, in cases where the new Lugano Convention is to be applied to the enforcement of a judgment given in the non-EU State of Switzerland? Although the State of enforcement is not a party to the new Lugano Convention, it will be bound by the Convention regardless of the fact that the new Convention will not have been published in its national official journal instead of the Lugano Convention of 1988 to which this Member State is a party and which is published in its relevant official journal. The communitarisation of Private International Law under the Amsterdam Treaty is giving rise to unthinkable consequences and the external projection of such communitarisation is an aspect of great complexity in both theory and practice. Nevertheless, this is the way the

45 Aspects of judicial cooperation in civil matters in the framework of the Strategy for the external dimension of JHA: global freedom, security and justice, document 8140/07, 11 April 2006. 46 In this regard, the comments of the Advocate General Poiares Maduro are significant in Case C-459/03, Comission v. Ireland, the first case in which Article 292 of the Treaty was applied. Mr. Poiares Maduro concluded that Ireland had breached its obligations under Community law by initiating proceedings against the United Kingdom concerning a MOX fuel plant in Sellafield before the Court of Arbitration in accordance with the Convention of the United Nations on the law of the sea of 1982. His conclusions were confirmed by the ECJ in its Judgment of 30 May 2006 (comment by GONZÁLEZ CAMPOS J.D., in: Revista Jurídica de Catalunya 2006, 4, pp. 1192-1199).

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Alegría Borrás Community is making headway, by taking small steps, although the current step may not seem to be so small.

V.

Continuation of the Revision of the Lugano Convention

In this point it is important to make reference to the ‘day after’ and to stress that, despite the interventions made throughout the procedure leading to the Opinion of 7 February 2006, the States which opposed to the exclusive competence of the Community to conclude the revised Lugano Convention have accepted its content without a word of complaint. A good example of this is the Diplomatic Session for the finalisation of the Lugano Convention from 10-12 October 2006. The Opinion of the Court of Justice had the immediate effect of breaking the deadlock in the negotiations on the revision of the Lugano Convention, which was immediately reopened by the Commission as promised. The Commission presented a proposal on 3 April 2006 and on 26 June the Civil Law Committee met in Brussels to coordinate the Diplomatic Session. The status of the participants at the Diplomatic Session was somewhat unusual, given that the representatives of the Commission attended the meeting in the capacity of representatives of the European Community, capacity of representantives that also have the delegates Denmark, Iceland, Norway and Switzerland, whereas the Member States of the European Community attended as observers, with France and the Netherlands playing a special role as representatives of the French Overseas Territories and Aruba and the Dutch Antilles, respectively. Thus it follows that the exclusive competence of the Community means that, in accordance with the mandate adopted in its day, only the Commission has the right to intervene, while the Member States have no such authority despite their presence. Pursuant to Article 300, their powers are limited to advising the Commission, however, their advice is not binding for the Commission. In light of the failure to overcome the obstacles and adopt the text,47 this is not the time or place to make comments on the revised Convention, but it is the time and place to draw attention to some of the points of contention which arose as a result of the Opinion of 7 February 2006.

While many ‘crispy points’ were resolved, the failure was due to complete disagreement on Protocol 4 which confers exclusive jurisdiction on the Court of Justice of the European Communities in matters relating to Community industrial property rights. The question arises in regard to the Commission’s proposal of 23 December 2003 for a Council decision conferring jurisdiction on the Court of Justice in disputes relating to the Community patent and a related proposal for a Council decision establishing the Community Patent Court and concerning appeals before the Court of First Instance. Discussions in the Council are pending but have not been active since 2004. 47

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Competence of the Community to Conclude the Revised Lugano Convention In the first place, as regards the scope of the Convention, paragraph 3 of Article 1 differentiates between ‘contracting party’ and ‘State bound by this Convention’ so that the latter term encompasses the States party to the Convention as well as the Member States of the European Union. Moreover, the term ‘State bound by this Convention’ may also mean the European Community, taking into account the functions already carried out by the Office of Alicante, as well as those which the Court of Justice of the European Communities, will carry out in the future in matters relating to patents. Whereas the key point of disagreement from the standpoint of the negotiators concerned Protocol 4, the greatest obstacle for the EU Member States arose in connection with Protocol 2 (Protocol on the uniform interpretation of the Convention and on the Standing Committee) as a result of the completely closed attitude of the Commission regarding the possibility of Member State participation. However, this was not the subject of the great debate in the plenary because the Member States could not intervene. The disagreement hinges on the following two points: a) The first point concerns the composition of the Standing Committee (Article 4), which consists exclusively of the contracting parties, without the presence of the Member States. All Member States attending the meeting expressed their unanimous discontent. Furthermore, France and the Netherlands may attend meetings of the Standing Committee in the capacity of representatives of the overseas territories. In light of the broad powers entrusted to the Standing Committee in paragraph 2, the exclusion of the Member States became a particularly sensitive issue. The only concession granted by the Commission was the modification of the fourth indent as a result of which the Committee is not authorised to ‘revise the Convention’ but rather to offer ‘a consultation on a revision of the Convention’. This means that the revision should take place at a Diplomatic Conference, even though the exclusive competence of the Community leads to situations such as those which have arisen in this opportunity. b) The second point concerns the fact that the disagreement went so far as the composition of the meeting of experts (Article 5) which constitutes something similar to the current Standing Committee and which has the function of examining the case law in the application of the Convention. The meeting of experts includes the contracting parties, the States bound by the Convention, the Court of Justice of the European Communities and EFTA. The disagreement here concerns the two options for convening the meeting of experts, i.e., whether the decision to convene a meeting should be made by the Depositary whenever necessary or at the request of a contracting party or a State bound by the Convention. Without having said a single word in the coordination meetings, the Commission chose the first option, considering it to be the most flexible. Switzerland preferred the second formula due to the imprecision of the term whenever necessary, but was also ready to accept the first. It was precisely the second option that seemed more appropriate in light of the new situation of the European Community and its Member States, which expressed their discrepancy with the Commission’s position in a new coordination meeting. The resulting situation is one of uncertainty as we do not know when an opportunity will arise to reinstate negotiations which could lead to the adoption of Yearbook of Private International Law, Volume 8 (2006)

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Alegría Borrás the revised Lugano Convention. The adoption of the revised Convention should have high priority for all concerned as it will facilitate the alignment of the Lugano Convention with Regulation No 44/2001. In the meantime, the 15 old Member States and Poland will continue to apply the Lugano Convention of 1988, however the rest of the new Member States cannot apply this instrument and therefore they need still more the revised Lugano Convention. Despite the imprecision of the Opinion of 7 February 2006, its importance cannot be disputed and it will undoubtedly have consequences for the conclusion of other Conventions, as has been indicated above. What remains to be seen is just how far the Commission will go in taking action to apply the Opinion, and how much space will be left for the Member States to rule on matters on which the Community is progressing day by day.

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THE UNITED STATES SUPREME COURT AND THE PRINCIPLES OF COMITY: EVIDENCE IN TRANSNATIONAL LITIGATION Lawrence COLLINS∗ I. II. III. IV.

V.

Introduction Orders by Forum State for Production of Documents Abroad Letters Rogatory and Comity U.S.C. Section 1782 and Comity A. The Position of the European Commission B. Supreme Court Decision C. Subsequent Developments Conclusion

I.

Introduction

The purpose of this contribution is to explore some of the issues relating to comity (often, but by no means always, a synonym for principles of public international law) which can arise in the private law context of discovery and evidence in transnational private litigation, with particular reference to the decisions of the United States Supreme Court in the area of transnational evidence-gathering. Comity, of course, became a familiar phrase in the context of the enforcement of foreign judgments as a result of the famous 1895 decision of the United States Supreme Court in Hilton v. Guyot,1 in which Justice Gray said:2 ‘No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. The extent which the law of one nation, as put in force within its territory, whether by executive order, by legislative act, or by judicial decree, shall be allowed to operate within the dominion of another nation, depends on what our greatest jurists have been content to call “the comity of na-

∗

LL.D., F.B.A.; Lord Justice of Appeal, London; Fellow, Wolfson College, Cambridge; Visiting Professor, Queen Mary College, London. The author was a colleague of Petar Šarčević in the Institut de droit international, and this piece is dedicated to his memory. 1 159 U.S. 113 (1895). 2 At pp. 163-164. See Judge CALABRESI in Pravin Banker Assocs., Ltd. v. Banco Popular del Peru, 109 F. 3d 850, 854 (2d Cir. 1997). Yearbook of Private International Law, Volume 8 (2006), pp. 53-73 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Lawrence Collins tions”. Although the phrase has been often criticised, no satisfactory substitute has been suggested. “Comity”, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and goodwill, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.’ But Professor Dicey regarded comity as ‘a singular specimen of confusion of thought produced by laxity of language.’3 Shortly after publication of the first edition of Dicey’s Conflict of Laws in 1896, Sir Frederick Pollock wrote to Dicey to say: ‘[…] I rejoice in your summary abolition of that confusing term comity.’4 But today in the common law countries, and especially in the United States and in England, it has become commonplace to rely on comity as a basis for decision in international cases.5 In particular it plays a role not only in evidence-gathering in transnational litigation in the context of obtaining orders in one country for the use of litigation in another country, but also when the court in the State in which the substantive proceedings are pending makes orders for the production of evidence abroad.

II.

Orders by Forum State for Production of Documents Abroad

In Mackinnon v. Donaldson, Lufkin & Jenrette Securities Corp6 litigation was pending in England. One of the parties sought an order requiring the London branch of Citibank to produce documents held by its New York head office. The bank was amenable to the jurisdiction of the English court because it had a branch in London, but the documents were entirely unrelated to the business of the London branch. Hoffmann J. decided that the court should not, save in exceptional circumstances, impose a requirement upon a non-party foreigner (especially a foreign DICEY A.V., Conflict of Laws, 1st ed., London 1896, p. 10. 4 Quoted in COSGROVE R., The Rule of Law: Albert Venn Dicey, Victorian Jurist, London 1980, p.168. 5 See generally COLLINS L., ‘Comity in Modern Private International Law’, in: Reform and Development of Private International Law: Essays in Honour of Sir Peter North (FAWCETT J.J. ed.), Oxford 2002, p. 89; SCOLES E./HAY P./BORCHERS P./SYMEONIDES S., Conflict of Laws, 4th ed., St. Paul (Minnesota) 2004, pp. 18 et seq. 6 [1986] Ch. 482. 3

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Principles of Comity and Evidence in Transnational Litigation bank) to produce documents outside the jurisdiction. The principle was that a State should refrain from demanding obedience to its sovereign authority by foreigners in respect of their conduct outside the jurisdiction. If every country where a bank happened to carry on business asserted a right to require the bank to produce documents relating to accounts kept in any other such country, banks would be in the unhappy position of being forced to submit to whichever sovereign was able to apply the greatest pressure. It would be wrong to undertake a process of weighing the interests of England in the administration of justice and the interests of litigants before its courts against those of the United States. That was an exercise which had frequently been undertaken by the courts of the United States. It was extremely difficult to perform in a way which carried conviction outside the forum. Distinguished American commentators as well as foreign observers had not failed to notice that the balance invariably comes down in favour of the interests of the United States. It was equally hard for a court in England to put objectively into the scales the interests of a foreign country in the integrity of its sovereignty over persons or transactions within its jurisdiction. So also a case of conflict with principles of comity may arise when the forum state orders the production of documents in another state, where in the latter state, by reason of a ‘blocking statute,’ production of the documents and compliance with the foreign order is illegal. In Société Internationale pour Participations Industrielles et Commerciales, S.A. v. Rogers7, the Swiss plaintiff was unable to produce certain records requested by the defendant (the United States Attorney General as successor to the Alien Property Custodian) because the Swiss government had directly forbidden their disclosure. The United States Supreme Court held that all considerations must be weighed in determining whether the non-production would be excused. To avoid sanctions the party which is unable to comply with a valid discovery request must have acted in good faith. Any evidence of collusion with a foreign government in ‘courting legal impediments [...] would have vital bearing on justification for dismissal of the action.’8 The Supreme Court stated:9 ‘Fear of criminal prosecution constitutes a weighty excuse for nonproduction, and this excuse is not weakened because the laws preventing compliance are those of a foreign sovereign.’ The non-producing party must have made a good faith effort to obtain sovereign consent to produce the requested records. A fair balance should be struck when the non-producing party could reasonably incur foreign criminal liability by complying with the discovery order. Failure of production because of potential criminal liability was a weighty excuse. The absence of records might impact upon the burdens 7 357 U.S. 197 (1958). See Reinsurance Company of America, Inc. v. Administratia Asigurarilor de Stat, 902 F. 2d 1275 (7th Cir. 1990) and Cochran Consulting, Inc v. Uwatech USA, Inc, 102 F. 3d 1224 (Fed Cir. 1996) for discussion of the principle. 8 357 U.S. at 209. 9 At 211.

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Lawrence Collins and defences at trial, and left it to the trial court to devise fair procedures and remedies, on the facts and evidence, when compliance is burdened with foreign criminal liability. When compliance with a discovery request was illegal in the foreign country, before non-production is punished in the United States, due consideration must be given to alternative sources of the information or other modes of establishing the necessary facts. As the Federal Circuit Court of Appeals put it,10 the Société Internationale decision requires that when there are foreign legal barriers to the production of documents, the courts in the United States must balance the interests and needs of the parties in the light of the nature of the foreign law and the party’s efforts to comply in good faith with the demanded production.11 But as Hoffmann J. observed the balance generally comes down in favour of production. Thus in Arthur Andersen & Co. v. Finesilver12 and Ohio v. Arthur Andersen & Co.13, the then well known firm of international accountants (now, of course, destroyed by the Enron affair) was compelled by the United States court to produce material from its Geneva office which was held in this capacity as accountants for IOS Ltd, a Canadian corporation with its principal place of business in Geneva. Arthur Andersen & Co had its principal offices in Chicago, but was an international organisation of accountants with offices throughout the world14 and ordered production despite resistance on the grounds of Swiss secrecy law. The Court of Appeals noted that the firm had failed to bring forward adequate evidence of the applicability of Swiss law, and that its reliance on Swiss law was not in good faith.15 The Restatement (Third), Foreign Relations Law of the United States (1987), section 442, provides that a court in the United States may order a person subject to its jurisdiction to produce documents or other information relevant to an action, even if the information or the person in possession of the information is outside the United States. In deciding whether to issue an order directing production of information located abroad, the court in the United States should take into account the importance to the litigation of the documents or other information requested, the degree of specificity of the request, whether the information originated in the United States, the availability of alternative means of securing the information, and the extent to which non-compliance with the request would undermine ‘important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located’.

See Cochran Consulting, Inc. v. Uwatech USA, Inc, 102 F. 3d 1224, at 1227. See Restatement (Second), Foreign Relations Law of the United States (1965), section 40. See e.g. In re Grand Jury Proceedings (United States v. Field), 532 F.2d 404 (5th Cir.), cert. denied, 429 U.S. 940 (1976). 12 546 F. 2d 338 (10th Cir. 1976), cert. den., 429 U.S. 1096 (1977). 13 570 F. 2d 1370 (10th Cir.), cert. den., 439 U.S. 833 (1978). 14 546 F. 2d at 340. 15 570 F. 2d at 1376. See also United States v. Bank of Nova Scotia, 691 F. 2d 1384 (11th Cir. 1982), cert. den., 462 U.S. 1119 (1983). 10 11

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Principles of Comity and Evidence in Transnational Litigation In particular, if disclosure is prohibited by the law of the State in which the information or witnesses are located, or of the state of which a prospective witness is a national, the court in the United States may require the person to whom the order is directed to make a good faith effort to secure permission from the foreign authorities to make the information available, and the United States court should not ordinarily impose sanctions for failure to comply with an order for production, except in cases of deliberate concealment or removal of information or of failure to make a good faith effort to secure permission.16

III. Letters Rogatory and Comity In cases of international judicial assistance, the English Court of Appeal has emphasised the considerations of comity inherent in the need for international judicial co-operation in obtaining evidence. Thus in State of Minnesota v. Philip Morris Inc17 Lord Woolf MR said: ‘The approach of this court and other courts in this jurisdiction will be to seek to assist a foreign court wherever it is appropriate. For that reason the courts will seek to give effect to a Letter of Request wherever this is practical. Comity between jurisdictions demands no different an approach.’ But there may be exceptional cases in which the request itself may be contrary to principles of comity or international law. Thus in the Westinghouse Uranium Contract case18 execution of letters rogatory issued in civil anti-trust proceedings in the United States was refused because there was a collateral attempt to use the material for criminal proceedings in circumstances in which the British Government had objected to the exercise of extraterritorial jurisdiction in breach of international law. A judge in the U.S. district court in Virginia, on the application of Westinghouse, issued letters rogatory addressed to the High Court in London to compel seven individuals connected with the Rio Tinto Zinc Corporation, an English company (‘RTZ’), to testify before a U.S. Consul in London and to produce documents. The litigation involved a private anti-trust proceeding between Westinghouse and RTZ, but the U.S. Department of Justice advised the judge that the evidence of the witnesses named in the letters rogatory was required for the purpose of the grand jury investigation in Washington. Applied in, e.g.,. Reinsurance Company of America, Inc. v. Administratia Asigurarilor de Stat, 902 F. 2d 1275 (7th Cir. 1990); Richmark Corp. v. Timber Falling Consultants, 959 F. 2d 1468 (9th Cir. 1992); Re Parmalat Securities Litigation, S.D.N.Y., November 2, 2006. 17 [1998] I.L.Pr. 170 at 176. See also Re International Power Industries NV [1985] B.C.L.C. 128 at 130. For insolvency see England v. Smith [2001] Ch. 419, at 435 (CA). 18 [1978] A.C. 547. 16

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Lawrence Collins After the Court of Appeal in England had ordered the witnesses to testify, subject to any claim for privilege against self incrimination, the Attorney General intervened in the appeal by RTZ to the House of Lords, submitting that the intervention of the United States Government showed that the execution of the letters rogatory was being sought for the purposes of the exercise by the United States courts of extraterritorial jurisdiction in penal matters which was prejudicial to the sovereignty to the United Kingdom. It was held in the House of Lords that an English court was entitled to have regard to any possible prejudice to the sovereignty to the United Kingdom, and that the court should take account of the declared policy of the British Government. The policy of the government had been against recognition of the United States investigatory jurisdiction extra-territorially against United Kingdom companies. Lord Wilberforce said:19 ‘[…] in deciding whether to give effect to letters rogatory, the courts are entitled to have regard to any possible prejudice to the sovereignty of the United Kingdom – that is expressly provided for in article 12(b) of the Hague Convention […] [T]hat in a matter affecting the sovereignty of the United Kingdom, the courts are entitled to take account of the declared policy of Her Majesty's Government is in my opinion beyond doubt […] [A]s the views of the executive in the United States of America impel the making of the order, so must the views of the executive in the United Kingdom be considered when it is a question of implementing the order here. It is axiomatic that in anti-trust matters the policy of one state may be to defend what it is the policy of another state to attack […] The courts should in such matters speak with the same voice as the executive [...].’ In England it is well-established that the Hague Convention cannot be used for discovery, i.e. the production of documents or oral testimony which would not necessarily be restricted to matters which were relevant in the suit, nor to admissible evidence, but might be such as would lead to a train of inquiry which might itself lead to relevant material. The Evidence (Proceedings in Other Jurisdictions) Act 1975, which gives effect to the Hague Convention, provides what orders the court may make to steps that can be required to be taken by way of obtaining evidence for the purposes of civil proceedings in the English Court, and so ‘prohibits the making of an order for the examination of a witness not party to the action for the purpose of seeking information which, though inadmissible at trial, appears to be reasonably calculated to lead to the discovery of admissible evidence.’20 [1978] A.C. at 616-617. Re Westinghouse Uranium Contract [1978] A.C 547, at p. 634 per Lord Diplock. See also Re Asbestos Insurance Coverage Cases [1985] 1 W.L.R. 331; First American Corporation v. Sheikh Zayed Al Nahyan [1998] 4 All E.R. 439. For the position prior to the Hague Convention, see Radio Corporation of America v. Rauland Corporation [1956] 1 Q.B. 618. 19 20

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Principles of Comity and Evidence in Transnational Litigation In Soc. Nat. Industrielle Aérospatiale v. US district court21 the United States Supreme Court, in considering whether a party seeking discovery/evidence from another party to the litigation must resort first to the Hague Evidence Convention if the other party was abroad, revealed a sharp divergence in the use of comity in that context. The question for the Supreme Court was whether French aircraft manufacturers who were being sued in the United States were obliged to give documentary discovery in the normal course of judicial proceedings in the United States. They argued that the effect of the Hague Evidence Convention was that the plaintiffs had to resort to the Convention and seek the documents through letters rogatory issued by the United States courts to the French court. Two corporations owned by the Republic of France designed, manufactured and marketed aircraft. After an aircraft sold by the two corporations crashed in Iowa, three individuals brought actions against the two corporations in the United States district court for the Southern district of Iowa, and alleged that the French corporations had manufactured and sold a defective plane, and were guilty of negligence and breach of warranty. The two corporations were served with (inter alia) a request for the production of documents, and a set of interrogatories, pursuant the Federal Rules of Civil Procedure. The corporations argued that because they were French corporations and the materials sought through discovery could be found only in France, the exclusive procedures for such discovery were dictated by the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, to which the United States and France were parties; and that under a French penal law (the ‘blocking statute’), the corporations could not respond to discovery requests that did not comply with the Hague Convention. The United States Court of Appeals for the Eighth Circuit decided that when a district court has jurisdiction over a foreign litigant, the Hague Convention does not apply to the production of the evidence in that litigant’s possession, even though the documents and information sought may be physically located within the territory of a foreign signatory to the Convention; and that the principle of international comity did not require that the individuals first attempt discovery through the Hague Convention procedures, and rely on the Federal Rules only if their Convention discovery attempts proved futile. The conclusion was that the court had, after balancing competing national interests, properly ordered the French corporations to comply with the discovery requests, despite the French blocking statute. This writer has argued that some serious misconceptions about the purpose and nature of the Hague Evidence Convention have been adopted by United States courts, and in particular the idea that it was intended to apply to common law forms of discovery, or to provide a uniform or orderly system of foreign discovery, or that the Convention was designed to deal with the problems caused by the fact that discovery was a judicial function in civil law countries to be accomplished by courts, or that the Convention was intended to reconcile the different discovery procedures which existed in common law countries and civil law countries.22 In482 U.S. 522 (1987). See COLLINS L., Essays in International Litigation and the Conflict of Laws, Oxford 1994, 289, at 293. 21 22

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Lawrence Collins deed the decision of the Court of Appeals that the Hague Evidence Convention had no application to discovery inter partes was plainly right and the elaborate arguments on the applicability of the Hague Evidence Convention should not have troubled the Supreme Court. There is no doubt that the issue of whether a person in one jurisdiction can be ordered to produce documents situated in another jurisdiction where compliance with the order may have penal consequences in the latter State does raise issues of international law and comity. It was that issue which a number of governments raised with the Supreme Court in amicus briefs. The French Government’s view was that the theory that the jurisdiction of a court over a witness places all of the witness’ property and information, wherever located, under the control of that court, without regard to the interest of the discovered party’s sovereign, transgressed the most elementary notions of international comity. The British Government took the view that a United States court should not require a party to use information located abroad, in violation of a foreign ‘blocking law’ without taking reasonable steps, consistent with the principle of comity, to avoid or limit the undermining of either nation’s important interests or imposing of conflicting legal requirements on individuals. In sovereign jurisdictional conflicts over the furnishing of information, courts should fully address considerations of comity before allowing discovery to proceed by means not recognised by the foreign sovereign. Comity was a basic practice recognised by the United States and exercised by the United Kingdom. Mutual self-restraint was embodied in the judicial practice of the United States and the United Kingdom. The Federal Republic of Germany argued that the Hague Evidence Convention had taken the place of the previous practice which was previously carried out only on the basis of comity. The Convention replaced the need of the United States courts to rely on comity when seeking evidence abroad under the Federal Rules with an assurance that judicial assistance, including the extra territorial conduct of U.S. style pre-trial discovery, was a matter of treaty right. The German Government also took the position that if the exercise of in personam jurisdiction would violate the sovereignty of Germany, the court should be required, in accordance with the principles of international comity, to first apply the methods for taking evidence abroad to which United States and the Federal Republic of Germany had agreed under the convention. In a note from the embassy of the Federal Republic of Germany to the Department of State following the decision of the Court of Appeals, the embassy took note, with surprise, of the United States Government’s recommendation to the Supreme Court not to grant certiorari in a matter on which the Federal Republic of Germany had, throughout the years, continuously expressed its grave concern. Respect for another country’s judicial sovereignty was the very principle of international law upon which all international treaties on judicial assistance were based. The Supreme Court, by a 5-4 majority, rejected this argument that the effect of the Hague Evidence Convention was that the plaintiffs had to resort to the Convention and seek the documents through letters rogatory issued by the United States court to the French court. It was held that, in a civil action in a federal district court, the Hague Evidence Convention does not provide the exclusive dis60

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Principles of Comity and Evidence in Transnational Litigation covery procedures the district court must use when litigants seek evidence abroad, and such litigants are not required in all cases to resort first to the procedures of the Convention before using the normal discovery methods of the Federal Rules of Civil Procedure; but the Convention applies when discovery is sought from a litigant who is subject to the jurisdiction of the district court, even though the discovery methods of the Federal Rules are also available; under the principle of international comity, the Convention is an undertaking among sovereigns to provide optional procedures to facilitate discovery to which the district court should resort when it deems that course of action appropriate; in such a case, the district court ought to scrutinize the particular facts, sovereign interests, and likelihood that resort to the Convention procedures will prove effective; and with respect to the French blocking statute, although such a statute did not deprive the district court of the power to order a party subject to its jurisdiction to produce evidence, even though the act of production might violate the statute, such a statute was relevant to the district court’s particularized comity analysis to the extent that its terms and its enforcement identified the nature of the sovereign interests in non-disclosure of specific kinds of material. The minority (Blackmun, J., joined by Brennan, Marshall, and O’Connor, JJ.) expressed the view that the Supreme Court had correctly rejected the extreme positions that the Hague Evidence Convention was not applicable at all to the case at hand, or the Convention provided the exclusive means for discovery involving signatory countries; but experience indicated that the case-by-case comity analysis permitted under the Supreme Court’s opinion meant that courts would unnecessarily resort to issuing discovery powers under the Federal Rules of Civil Procedure in a raw exercise of their jurisdictional power to the detriment of the United States’ national and international interests; and there should be a general presumption that, in most cases, courts ought to resort first to the Convention procedures. The majority opinion emphasised that the object of an international agreement is to define the common ground between sovereign nations. The absence in the Hague Evidence Convention of an exclusivity provision had an obvious explanation: the contracting states did not agree that its procedures were to be exclusive. Both comity and concern for the separation of powers counselled the utmost restraint in attributing motives to sovereign states which have bargained as equals. In rejecting the argument that a rule of first resort was necessary to accord respect to the sovereignty of states in which evidence is located, the majority (speaking through Stevens J.) said23 that ‘the concept of international comity requires in this context a more particularised analysis of the respective interests of the foreign nation and the requesting nation than the [defendants’] proposed general rule would generate.’ Stevens J. noted that in this context:

23

At 543.

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Lawrence Collins ‘Comity refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states.’24 The majority approved the formulation in the draft Restatement Third of Foreign Relations Law of the United States25 as to the concerns which should guide a comity analysis, namely: (1) the importance to the litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; and (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located. The French blocking statute did not affect the conclusion. It was well settled that such statutes did not deprive an American court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production might violate that statute.26 Nor could the enactment of such a statute by a foreign nation require United States courts to engraft a rule of first resort onto the Hague Evidence Convention, or otherwise to provide the nationals of such a country with a preferred status. It is clear that United States courts were not required to adhere blindly to the directives of such a statute. Indeed, the language of the statute, if taken literally, would appear to represent an extraordinary exercise of legislative jurisdiction by the Republic of France over a United States district judge, forbidding him or her to order any discovery from a party of French nationality, even simple requests for admissions or interrogatories that the party could respond to on the basis of personal knowledge. It would be particularly incongruous to recognize such a preference for corporations that were wholly owned by the enacting nation. Extraterritorial assertions of jurisdiction were not one-sided. While the district court’s discovery orders arguably had some impact in France, the French blocking statute asserted similar authority over acts to take place in the United States. According to the majority:27 ‘The lesson of comity is that neither the discovery order nor the blocking statute can have the same omnipresent effect that it would have in a world of only one sovereign. The blocking statute thus is relevant to the court’s particularized comity analysis only to the extent that its terms and its enforcement identify the nature of the sovereign interests in nondisclosure of specific kinds of material.’

Ibid. Now section 442 (see text following note 15, Section II above). 26 Citing Société Internationale pour Participations Industrielles et Commerciales, S. A. v. Rogers, 357 U.S. 197, 204-206 (1958). 27 At 544. 24 25

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Principles of Comity and Evidence in Transnational Litigation The dissenting opinion took the position that principle of comity led to more definite rules than the ad hoc approach endorsed by the majority. There was nothing inherent in the comity principle which required case-by-case analysis: ‘Comity is not just a vague political concern favoring international cooperation when it is in our interest to do so. Rather it is a principle under which judicial decisions reflect the systemic value of reciprocal tolerance and goodwill … . As in the choice-of-law analysis, which from the very beginning has been linked to international comity, the threshold question in a comity analysis is whether there is in fact a true conflict between domestic and foreign law. When there is a conflict, a court should seek a reasonable accommodation that reconciles the central concerns of both sets of laws. In doing so, it should perform a tripartite analysis that considers the foreign interests, the interests of the United States, and the mutual interests of all nations in a smoothly functioning international legal regime.’28 Accordingly neither the majority nor the minority addressed the question whether the convention applied to discovery inter partes, and both assumed evidence and discovery were co-terminous. They were influenced by the brief submitted by the foreign governments, which to a greater or lesser extent supported the view that comity required consideration to be given to the Hague Evidence Convention procedures even as regards discovery between the parties.

IV. U.S.C. Section 1782 and Comity It is likely that a confusion between evidence and discovery lies behind the extensive development of the jurisprudence in relation to section 1782 of the United States Code (‘U.S.C.’), culminating in the recent decision of the United States Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc.29 Section 1782(a) provides: ‘The district court of the district in which a person resides or is found may order him to give his testimony or statement, or to produce a document of other thing for use in a proceeding in a foreign or international tribunal. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal, or upon the application of any interested person [...].’ This provision has its origin in 1855, shortly before the English equivalent, the Foreign Tribunals Evidence Act 1856. But in the last 20 years it has been used in the United States to allow US-style discovery to be sought by litigants in foreign 28 29

At 555. 542 U.S. 241 (2004).

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Lawrence Collins proceedings against their opponents, irrespective of whether the material would be discoverable or admissible in the foreign country. This is the export of US-style discovery to foreign litigation. In Malev Hungarian Airlines v. United Technologies International Inc.30 Pratt & Whitney, the well-known engine manufacturer, filed an action in the Municipal Court of Budapest, Hungary, against Malev, the Hungarian national airline. In its action Pratt & Whitney sought specific performance of an alleged multimillion dollar contract for Malev to purchase a number of jet engines from Pratt & Whitney in connection with the modernisation of its fleet of aircrafts. Malev initiated an action in the United States district court for the district of Connecticut, in which it requested the district court enter an order pursuant to section 1782, permitting discovery of Pratt & Whitney by Malev in the United States. It sought to depose a number of individuals located in Connecticut who held various positions with Pratt & Whitney and to obtain documents purportedly relevant to the litigation in Hungary. Malev requested discovery of, among other things, every document in Pratt & Whitney’s files concerning (a) any engine contract it had with the national airlines of Yugoslavia and Romania; (b) Pratt & Whitney’s efforts to sell engines to the airlines of Poland, Czechoslovakia and the Soviet Union; and (c) Pratt & Whitney’s development of its jet engine for all of Eastern Europe. The Court of Appeals for the Second Circuit (by a majority, against a vigorous and persuasive dissent from Judge Feinberg) held that there was nothing in section 1782 which required the party seeking discovery to resort first to the foreign tribunal for discovery: to require an interested person first to seek discovery from the foreign court was at odds with the purposes of the section as articulated in the legislative history. It would undermine the policy of improving procedures for assistance to foreign and international tribunals by imposing an additional burden on persons seeking assistance from the federal courts for matters relating to international litigation; and it would undermine the policy of prompting foreign courts to act similarly based on the generous example of the United States. This view was not followed in all Circuits. As well as the Second Circuit, the Third and Ninth Circuits had rejected a foreign discoverability requirement.31 The First and Eleventh Circuits had construed section 1782 to contain a foreign discoverability requirement.32 The Fourth and Fifth Circuits had held that no such requirement exists if the applicant was a foreign sovereign.33 964 F. 2d 97 (2d Cir. 1992). In re Application of Gianoli Aldunate, 3 F. 3d 54 (2d Cir. 1993); Euromepa, SA v. R. Esmerian, Inc, 154 F. 3d 24 (2d Cir. 1998); In re Bayer A.G., 146 F. 3d 188 (3d Cir. 1998); Advanced Micro Devices, Inc. v. Intel, 292 F 3d 664 (9th Cir. 2002). 32 In re Application of Asta Medica, S.A., 981 F. 2d 1 (1st Cir. 1992); In re Request for Assistance from Ministry of Legal Affairs of Trinidad and Tobago, 848 F. 2d 1151 (1st Cir. 1998). 33 In re Letter of Request from Amtsgericht Ingolstadt, FRG, 82 F. 3d 590 (4th Cir. 1996); In re Letter Rogatory from First Court of First Instance in Civil Matters, Caracas, Venezuela, 42 F. 3d 308 (5th Cir. 1995). 30 31

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Principles of Comity and Evidence in Transnational Litigation After several years of conflicting decisions, the United States Supreme Court decided in Intel Corp. v. Advanced Micro Devices, Inc.34 that it was not necessary that the evidence sought in the United States should be discoverable in the foreign country where the litigation was pending. It also adopted a very broad notion of ‘tribunal’ to allow the use of section 1782 in a competition complaint before the European Commission. AMD had filed an anti-trust complaint against Intel with the DirectorateGeneral for Competition of the Commission of the European Communities alleging that Intel had violated European competition rules. AMD’s complaint alleged that Intel, in violation of European competition law, had abused its dominant position in the European market through loyalty rebates, exclusive purchasing agreements with manufacturers and retailers, price discrimination and standard setting cartels. AMD recommended that DG Competition should seek discovery of documents which Intel had produced in a private anti-trust suit brought in a federal district court in Alabama. After DG Competition declined AMD’s request to seek documents which Intel had produced in a private anti-trust suit in the Alabama federal court, AMD petitioned the district court for the Northern district of California under section 1782 for an order directing Intel to produce the documents. California was chosen because both Intel and AMD had their headquarters in the northern district of California. AMD asserted that it sought the materials in connection with the complaint which it had filed with the European Commission. The Circuit Court of Appeals for the Ninth Circuit decided that section 1782 included matters before bodies of a quasi-judicial or administrative nature.35 The Court of Appeals also rejected Intel’s argument that section 1782 called for a showing that the documents that AMD sought, if located in the European Union, would have been discoverable in the Commission investigation.

A.

The Position of the European Commission

In its brief to the Supreme Court, the European Commission said that it perceived a serious threat to European Union competition law and policy and to the European Commission’s ability to carry out its governmental responsibilities if section 1782 was read to treat the Commission as a ‘tribunal’ in connection with competition law and other enforcement actions. An accurate understanding of the European Commission’s nature and functions should rule out any application of the term ‘tribunal’ to it. A contrary reading would have serious adverse consequences for the Commission, and should be rejected in the interests of comity. Permitting discovery requests would undermine the European Community's carefully balanced policies regarding the disclosure of 34 35

542 U.S. 241 (2004). Advanced Micro Devices, Inc. v. Intel, 292 F. 3d 664 (9th Cir. 2002).

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Lawrence Collins confidential information, by allowing complainants to obtain via section 1782 documents that they are not permitted to review under European law. The discovery sought by AMD was information that the Commission had thus far declined to seek on its own behalf. Such a rule could encourage companies to file complaints with the Commission solely in order to use section 1782, wasting the Commission’s scarce resources. Characterising the Commission as a ‘tribunal’ posed serious threats to its anti-cartel Leniency Programme by jeopardizing the Commission’s ability to maintain the confidentiality of documents submitted to it. The Commission’s investigation of competition law complaints was not an adjudicative process. The European Commission’s overriding responsibility in this area is to conduct investigations into alleged violations of the European Union’s competition laws. The Commission’s staff might do so in response to a complaint like that filed by AMD, or it may do so on its own initiative. DG Competition may take into account information provided by a complainant, and it may seek information directly from the target of the complaint. Ultimately, DG Competition’s preliminary investigation results in a formal written decision whether to pursue the complaint. If it declines to proceed, that decision is subject to judicial review. Should it pursue the matter further, DG Competition moves into a more formal investigative mode. DG Competition initiates proceedings by serving the target with a formal statement of objections which outlines DG Competition’s preliminary views that infringement of the competition laws has occurred, and advises the target of DG Competition’s intention – subject to hearing out the target – to recommend a decision adverse to it. If the target so requests, an independent hearing officer will hold a non-adversarial hearing to engage in further information-gathering from the target of the complaint, and will report his or her conclusions. DG Competition then decides whether to recommend a finding of infringement against the target. No matter what action the Commission then takes on that recommendation – whether it dismisses the complaint, or issues a decision finding infringement and imposing penalties as appropriate – that action is again subject to judicial review. Neither DG Competition nor the Commission as a whole is ever engaged in adjudicating rights as between private parties. It never performs the functions of a tribunal, because it never decides the merits of any dispute between the complainant and the target. The Commission’s actions are directed against the target of its investigations, i.e. the addressee of the statement of objections and of any Commission decision. The complainant is not a party to the Commission’s investigations. A complainant does have certain procedural rights that give it an onlooker’s role in the proceedings. But the complainant does not have any right to confront the target, and the Commission does not act on its behalf. The limited observer’s role conferred on the complainant in no way marks the Commission’s proceedings as adjudicative. A Commission investigation ‘does not constitute an adversary procedure as between the [companies] concerned but a procedure commenced by the Commission [...] in fulfilment of its duty to ensure that the rules on competition are ob-

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Principles of Comity and Evidence in Transnational Litigation served.’36 The Commission acts solely to protect the public interest and solely to investigate and, as necessary, to enforce the competition laws. It is by assessing where the public interest lies that the DG Competition and the Commission decide at each step whether or not to proceed further with investigations and decisions. The Commission functions as an executive agency investigating and determining whether to initiate proceedings concerning a violation of European competition law. Only at the very end of the process, when the Commission acts on DG Competition’s final recommendation to abandon the investigation or to make a finding of infringement, does the investigative function blur into decision-making. But while the line between prosecutorial and adjudicative functions in the last stage of the proceeding may be less sharp than that which exists in United States practice, that modest convergence in no way converted the Commission into a ‘tribunal’ of the sort contemplated in section 1782. Nor was the prospect of judicial review of the Commission’s prosecutorial decisions sufficient to warrant section 1782 discovery in connection with competition law investigations. If that feature were sufficient for a section 1782 petitioner to claim that discovery is ‘for use in a foreign [...] tribunal,’ it would open the statute to discovery requests in connection with virtually every administrative agency action, regulation, investigation, license or permit anywhere in the world, so long as the action is ultimately subject to judicial review. Congress cannot have intended such an extreme result. International law had long provided for the device of letters rogatory, or letters of request, from the courts of one country to the courts of another seeking their assistance in obtaining evidence for use in proceedings in the requesting courts. This practice, which originally depended solely on each country’s courts’ attitude of comity toward the courts of the other, had been codified in international agreements such as the Hague Evidence Convention. Section 1782’s deep roots in court-to-court practice should not be disregarded. The statute should be construed to be faithful to that purpose, by applying the term ‘tribunal’ solely to adjudicative bodies and not to bodies, like the Commission, which were entrusted principally with investigative rather than adjudicative functions. It was the Commission’s clear preference to rely on the formal mechanisms that it had carefully negotiated with the United States specifically for the purpose of co-operation in competition law enforcement. The Community entered into a cooperation agreement in 1995 with the United States Department of Justice and the United States Federal Trade Commission to share information, including information about current enforcement activities, and to conduct parallel investigations, as well as a subsequent 1998 agreement deepening that co-operative relationship. That co-operation was extremely effective in practice, as demonstrated by investigations co-ordinated among the Commission, the United States antitrust agencies, and even competition authorities in other countries.

36 Citing Case T-65/96 Kish Glass & Co. v. Commission of the European Communities [2000] ECR, II-1885.

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Lawrence Collins Far more important was the very real risk that unless its preferred, narrow reading of ‘tribunal’ prevails, the Commission’s competition law enforcement programs would be placed in jeopardy. First, the Commission objected to the potential subversion of limits that the European Union had imposed, in the exercise of its sovereign regulatory powers, on access by an antitrust complainant to the information that the Commission gathers in its investigation, including confidential business information of the target company. The Commission was bound by an obligation of confidentiality, as a result of which there are many elements of the Commission’s files (including commercial information and business secrets) to which the complainant is denied access. The European Court had mandated that ‘a third party who has submitted a complaint may not in any circumstances be given access to documents containing business secrets.’37 A broad reading of ‘tribunal’ in section 1782 would directly undermine the European Court’s effort to protect the investigation process from abuse. A complainant in Europe might use the Commission investigation triggered by his complaint to obtain access in the United States to confidential documents describing his competitor’s business practices. This situation provides a powerful incentive to file complaints at the Commission, in order to be eligible to employ section 1782. Deeming the Commission to be a ‘tribunal’ for section 1782 purposes would not only facilitate circumvention of the European Union’s considered policies on access to information, but also might cause a co-equal competition authority to waste precious time and resources on unfounded antitrust complaints. The Commission was profoundly concerned that characterizing it as a ‘tribunal’ within the meaning of section 1782 would have adverse collateral consequences for its ability to protect its prosecutorial and law enforcement prerogatives in other proceedings. The European Commission had needed to invoke the law enforcement investigative privilege in civil actions in the United States to protect from disclosure documents that it gathered in its antitrust law enforcement capacity. Of paramount importance were documents submitted to the Commission under its Leniency Programme by cartel participants who confessed their own wrongdoing. If the Commission were deemed a ‘tribunal’ in the competition context, it could find itself no longer able to guarantee the confidentiality of those Leniency Programme confessions by, inter alia, resort to the law enforcement privilege wherever necessary. Companies made delicate balancing judgments in deciding to come forward under the Leniency Programme, and any enhanced risk of public disclosure of their confessions would deter their participation. Section 1782 as read by the Ninth Circuit thereby threatened to undercut the effectiveness of the Commission’s Leniency Programme. There was no reason to believe that these adverse consequences of an overbroad interpretation of ‘tribunal’ would be limited to the antitrust context. ‘Interested parties’ who might benefit from fishing expeditions under United States discovery rules abounded in Commission proceedings. For example, private in37 Case 53/85 AKZO Chemie BV v. Commission of the European Communities, in: [1986] ECR 1965.

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Principles of Comity and Evidence in Transnational Litigation dustry complaints could also trigger Commission investigations in the international trade arena, such as in anti-dumping and anti-subsidy enforcement. Where two interpretations of a statute were available to it, the Court should favour the interpretation that did not offend the sovereign interests of the United States’ foreign policy partners.

B.

Supreme Court Decision

These arguments were very powerful, but the Supreme Court rejected the European Commission’s argument that DG Competition was not a ‘tribunal’ for the purposes of section 1782. In an opinion delivered by Justice Ginsburg, the Supreme Court decided that (a) a complainant before the Commission, such as AMD, qualifies as an ‘interested person’, for the purposes of section 1782, and the expression is not limited to litigants, foreign sovereigns, or its designated agents; (b) the Commission qualifies as a ‘tribunal’ when it acts as a first instance decision-maker: both the Court of First Instance and the European Court of Justice were tribunals, not proof-takers and their review is limited to the record before the Commission: in adopting the Rules Commission’s recommended replacement of the term ‘any judicial proceeding’ with the words ‘a proceeding in a foreign or international tribunal’, Congress opened the way for judicial assistance in foreign administrative and quasi-judicial proceedings; (c) the ‘proceeding’ for which discovery was sought must be within reasonable contemplation, but need not be ‘pending’ or ‘imminent’, and the legislative history corroborated Congress’ recognition that judicial assistance would be available for both foreign proceedings and investigations; (d) section 1782 does not impose a foreign-discoverability requirement although it expressly shields from discovery matters protected by legally applicable privileges: although avoiding offence to foreign governments and maintaining parity between litigants may be legitimate touchstones for the exercise of discretion in particular cases they do not justify construction of the text to include a generally applicable foreign-discoverability rule. As regards the exercise of discretion, the Supreme Court noted factors to guide the district court. First, when the person from whom discovery is sought is a participant in the foreign proceedings, as Intel was, the need for section 1782 aid generally was not as apparent as when evidence was sought from a non-participant in the matter arising abroad: a foreign tribunal had jurisdiction over those appearing before it and could itself order them to produce evidence. In contrast, non-participants in foreign proceedings might be outside of the foreign tribunal’s jurisdictional reach and their evidence available in the United States might be unobtainable without the aid of section 1782. Second, a court presented with a request might consider the nature of the foreign tribunal, the character of proceedings under way abroad, and the receptivity of the foreign government, court or agency to federal court judicial assistance: in particular a district court could consider whether the request concealed an attempt to circumvent foreign proof gathering limits or other policies of a foreign country or the United States, and unduly intrusive all burdens and requests might be rejected or trimmed. Yearbook of Private International Law, Volume 8 (2006)

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Lawrence Collins The application of section 1782 to an anti-trust complaint was justified on the ground that, following the creation by Congress in 1958 of a Commission on International Rules of Judicial Procedure to investigate and study existing practices of judicial assistance and cooperation between the United States and foreign countries with a view to achieving improvements, in 1964 Congress unanimously adopted legislation recommended by the Rules Commission, and deleted the words ‘in any judicial proceeding pending in any court in a foreign country’ and replaced them with the phrase ‘in a proceeding in a foreign or international tribunal’. The accompanying Senate report did not account separately for the deletion of the word ‘pending’ but explained that Congress introduced the word ‘tribunal’ to insure that ‘assistance is not confined to proceedings before conventional courts’ but extended also ‘administrative and quasi-judicial proceedings’. Congress understood that change to provide the possibility of US judicial assistance in connection with administrative and quasi judicial proceedings abroad. Justice Ginsburg concluded: ‘We have no warrant to exclude the European Commission, to the extent that it acts as a first instance decision-maker, from section 1782(a)’s ambit’.38 As regards the foreign discoverability rule on which lower courts had divided, Justice Ginsburg regarded it as significant, that section 1782 expressly shielded privileged material. Beyond that, nothing in the text limited the authority to materials which could be discovered in the foreign jurisdiction if the materials were located there. If Congress had intended to impose such a sweeping restriction on the discretion, at a time when it was enacting liberalising amendments to the statute, it would have included statutory language to that effect. Nor did the legislative history suggest that Congress had intended to impose a blanket foreign discoverability rule on the provision of assistance under section 1782. She said:39 ‘[...] While comity and parity concerns may be important as touchstones for a district court’s exercise of discretion in particular cases, they do not permit our insertion of a generally applicable foreigndiscoverability rule into the text of §1782(a). We question whether foreign governments would in fact be offended by a domestic prescription, permitting but not requiring, judicial assistance. A foreign nation may limit discovery within its domain for reasons peculiar to its own legal practices, culture, or traditions – reasons that do not necessarily signal objection to aid from United States federal courts... A foreign tribunal’s reluctance to order production of materials present in the United States similarly may signal no resistance to the receipt of evidence gathered pursuant to §1782(a)... When the foreign tribunal would readily accept relevant information discovered in the United States, application of a foreign38 39

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At 258. At 261-262.

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Principles of Comity and Evidence in Transnational Litigation discoverability rule would be senseless. The rule in that situation would serve only to thwart §1782(a)’s objective to assist foreign tribunals in obtaining relevant information that the tribunals may find useful but, for reasons having no bearing on international comity, they cannot obtain under their own laws.’ The Supreme Court also rejected Intel’s suggestion that the applicant must show that United States law would allow discovery in domestic litigation analogous to the foreign proceeding. It was provision for assistance to tribunals abroad, and did not direct United States courts to engage in comparative analysis to determine whether analogous proceedings existed in the United States. Justice Breyer dissented. When a foreign entity possessed few tribunal-like characteristics, so that the applicability of the word ‘tribunal’ was in serious doubt, then a court should pay close attention to the foreign entity’s own view of its ‘tribunal’-like or non ‘tribunal’-like status. The United States court should not permit discovery where (1) a private person seeking discovery would not be entitled to that discovery under foreign law and (2) the discovery would not be available under domestic law in analogous circumstances. The status of the Commission as a ‘tribunal’ was questionable. It more closely resembled a prosecuting authority (such as the Department of Justice Antitrust Division) than an administrative agency which adjudicated cases, such as the Federal Trade Commission. Those who decide whether to bring an antitrust prosecution on the European Commission’s behalf were not judges. They did not adjudicate adversary proceedings on the basis of proofs and argument, nor did the later availability of a review in court matter where review was limited to the record before the Commission and AMD could use evidence in the reviews in courts only by submitting it to the Commission in the current investigative stage. As a minimum the question whether the Commission was a ‘tribunal’ was unclear. The Commission had told the court in its amicus brief that it was not a ‘tribunal’ under the act and added that should it be considered a ‘tribunal’ its ability to carry out its governmental responsibilities would be seriously threatened: brief for the Commission of the European Communities. The Commission’s characterisation of its own function was entitled to deference. It is very curious that the Commission’s own characterisation of itself was given so little weight, but equally curious that the Supreme Court took with one hand what it gave with the other by giving the clearest opportunity to the lower court (to whom the matter was remitted for further consideration) to reject the application. The Supreme Court decided that a district court faced with a section 1782 request might take into account (a) the nature of the foreign tribunal; (b) the character of the proceedings underway abroad; (c) the receptivity of the foreign government or the court or agency abroad to United States federal court judicial assistance. The district court could also consider whether the request concealed an attempt to circumvent foreign proof gathering restrictions or other policies of a foreign country or the United States.

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Lawrence Collins C.

Subsequent Developments

When the matter came back before the district court for the Northern district of California, AMD’s application was denied Advanced Micro Devices, Inc v. Intel Corp.40 The reasons were as follows. First, the United States Supreme Court had already determined that Intel was a participant in the European Commission proceedings, and that participant status was significant because the European Commission had jurisdiction over Intel and could simply ask Intel to produce any or all of the discovery which AMD sought, but the Commission had not sought the documents. Secondly, the European Commission was not receptive to judicial assistance in the case. The district court referred to the citation by the United States Supreme Court of the European Commission’s amicus curiae briefs to support finding that the European Commission did not need or want the court’s assistance in obtaining the documents. Third, AMD’s application appeared to be an attempt to circumvent the decision of the European Commission not to pursue the discovery. But the decision of the Supreme Court led directly to several attempts, ultimately unsuccessful, by Microsoft to use section 1782 to obtain documents in the United States for use in the defence of DG Competition complaints against Microsoft. In re Application of Microsoft Corp.41 involved service by Microsoft on International Business Machines Corporation, Cleary Gottlieb Steen & Hamilton LLP (counsel to several of Microsoft’s competitors in European antitrust matters), and a partner in Cleary Gottlieb’s Brussels office with subpoenas to produce documents in connection with the proceedings before the European Commission for alleged anti-competitive and abusive behavior by Microsoft in the PC operating systems market. The Commission imposed a fine on Microsoft and ordered it to remedy the violation by supplying interoperability information to interested undertakings on reasonable and non-discriminatory terms and by offering a fully-functioning version of its Windows PC operating system which did not incorporate Windows Media Player. Microsoft appealed against the decision to the Court of First Instance. The Commission also determined that Microsoft was not in compliance with its decision and took separate proceedings to enforce compliance, including the issue of a statement of objections in 2005 alleging that Microsoft still had not complied with its obligations to supply complete and accurate interoperability information. The subpoenas directed IBM and Cleary Gottlieb to produce, inter alia, documents and testimony concerning communications with third parties, and documents relating to any potential violation by Microsoft of European competition laws, on the basis that the requested documents might be helpful in defending against the statement of objections. The Commission opposed the discovery sought by Microsoft and asserted that Microsoft's request was ‘unduly intrusive and totally at odds with the European rules on access to file,’ that disclosure of the requested 2004 U.S. Dist. Lexis 21437 (N.D. Cal. 2004). 428 F. Supp. 2d 188 (S.D.N.Y. 2006). See also In re Application of Microsoft Corp. (N.D.Cal.2006); In re Application of Microsoft Corp. (D. Mass. 2006). 40 41

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Principles of Comity and Evidence in Transnational Litigation documents was ‘apt to seriously harm the Commission's investigation process and circumvent the European rules on access to file,’ and that Microsoft’s application was ‘not objectively necessary’ since Microsoft’s ‘rights to defence’ were properly protected by European access to file rules. The subpoenas were quashed on the ground (among others) that Microsoft was attempting to divest the European Commission of jurisdiction over the matter and replace a European decision with one by the New York court. A decision by the New York court would either pre-empt or contradict a decision by the Commission, and would render the Commission’s proceedings meaningless and undermine the Commission’s rules on confidentiality, which carefully balance the need for third party co-operation against the need to preserve a defendant’s rights to defence. A decision upholding Microsoft’s discovery request would contravene the purpose of section 1782 by pitting the court against the Commission, rather than fostering co-operation between them, and would violate established principles of comity, under which ‘United States courts ordinarily refuse to review acts of foreign governments and defer to proceedings taking place in foreign countries.’42 Section 1782 was not intended as a vehicle to avoid or appeal an unfavourable discovery decision by the Commission.

V.

Conclusion

Only a few words in conclusion are necessary. In a period of 10 years the United States Supreme Court has only twice turned to the issues arising out of transnational evidence-gathering. Both decisions are a victory for US-style discovery. The result in Aérospatiale is plainly correct, although there is a real question over the reasoning used to achieve the result. That may have been due, at least in part, to the failure of the foreign governments to put forward the true basis of the Hague Evidence Convention and its inapplicability to discovery between the parties. That failure, in turn, may have been due to the fact that they relied overmuch on the advice of their American lawyers, who because of their familiarity with, and enthusiasm for, the American discovery process, may not have been alive to the point that it might have had no application to the case at all. The decision in Intel on the application of section 1782 to bodies such as the European Commission is extremely surprising, but its effect has been mitigated by the Supreme Court’s message that the district court could take into account, among other things, the receptivity of the foreign tribunal to judicial assistance from the United States court.

42 Citing Pravin Banker Assocs., Ltd. v. Banco Popular del Peru, 109 F.3d 850, 854 (2d Cir. 1997).

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NATIONALITY AND THE PROTECTION OF CHILDREN ACROSS FRONTIERS, AND THE EXAMPLE OF INTERCOUNTRY ADOPTION William DUNCAN∗

I. II. III. IV.

Preface Introduction Intercountry Adoption Effects of Intercountry Adoption on the Nationality of the Child

I.

Preface

My memories of Petar Šarčević, as a friend and as a colleague, go back more than thirty years. We worked on projects together in the context of the International Law Association, the International Society of Family Law and the Hague Conference on Private International Law. His never failing warmth and kindness, combined with his commitment to scholarship and reform, left an indelible mark. It is a great privilege and a joy to be part of a tribute to a remarkable man.

II.

Introduction

Within private international law, and particularly the Hague Conventions, the last century has witnessed a gradual reduction in the role of nationality as the predominant connecting factor in matters of child protection. From the dominant position occupied by nationality at the beginning of the 20th century we have now reached the stage where, with the three modern Hague Children’s Conventions,1 nationality occupies at best a subsidiary position.

∗

Professor of Law, Deputy Secretary General of the Hague Conference on Private International Law. 1 The Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction, the Hague Convention of 29 May 1993 on Protection of Children and Cooperation in Respect of Intercountry Adoption and the Hague Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children. Yearbook of Private International Law, Volume 8 (2006), pp. 75-86 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

William Duncan The story begins with the 1902 Hague Convention on the Guardianship of Minors.2 As with the other family law Conventions of that time3 the theories of Mancini prevailed and the lex patriae occupied the centre of the stage both with regard to jurisdiction and applicable law. The lex patriae determined the authorities having jurisdiction to appoint a child’s guardian,4 as well as the law regulating the guardianship regime.5 The authorities and the law of the country where the child was resident played a subsidiary role. For example, if the lex patriae made no provision for the appointment of a guardian of a child abroad the authorities of the child’s place of residence could make an appointment,6 and they could also take any necessary interim measures.7 But any measures taken by the child’s national authorities in the end took precedence. However, there have always been problems inherent in the lex patriae approach to child protection. One is that the child and her / his immediate family may have lost, or may never have had, real connections with the country of the nationality. At the same time, the claim by the country which constitutes the child’s current social environment to exercise jurisdiction to protect the child is a strong one, based as it is on practicality and convenience for family members as well on a sense of responsibility which States have developed in relation to children living within their territories. This tension between nationality and the child’s actual social environment was at the root of the Boll case8 decided by the International Court of Justice in 1958. The case was brought by the Netherlands against Sweden – both Parties to the Hague Convention of 1902. It concerned protective arrangements made for Elizabeth Boll, a child of Dutch nationality who had been living in Sweden with her mother before the mother’s death. The Dutch authorities assigned a guardian, but the Swedish authorities placed the girl under a public care order maintaining her residence in Sweden with her maternal grandparents. The I.C.J. supported the Swedish authorities by interpreting narrowly the concept of guardianship under the 1902 Convention and deciding that the Convention did not preclude the operation of a public care order. The response by the Hague Conference was to draw up the Convention of 1961 concerning the power of authorities and the law applied in respect of the protection of minors.9 This Convention, whose scope extended to both private and

2

Convention pour régler la tutelle des mineurs. See LIPSTEIN K., ‘One Hundred Years of Hague Conferences on Private International Law’, I.C.L.Q. 1993, pp. 553-653. 4 Article 2. 5 Article 5. 6 Article 3. 7 Article 6. 8 I.C.J. Rep. 1959, p. 55. 9 Hague Convention of 5 October 1961 concerning the powers of authorities and the law applicable in respect of the protection of minors. The States Parties to the Convention 3

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Nationality and the Protection of Children public measures of protection of children, represented a compromise between the advocates of nationality and those who, through the concept of ‘habitual residence’, preferred to emphasise the child’s actual social environment. In fact the basic connecting factor under the 1961 Convention is habitual residence. The authorities in the State in which the child has his / her habitual residence have jurisdiction to take measures of protection,10 and in doing so they apply their internal law.11 However, the right of national authorities to take overriding measures to protect the child, under their own laws, if they consider that the child’s interests so require, is retained.12 The national law also controls any relationship of authority over the child which arises by operation of law.13 Some of the problems created by this uneasy compromise between nationality and habitual residence, combined with problems arising from dual nationality, are summarised by Professor Paul Lagarde in the Explanatory Report on the Hague Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children.14 ‘On one hand, the national authorities sometimes have taken decisions which were difficult to accept on the part of the authorities of the child's habitual residence, who are by hypothesis closer to the child and frequently better able to assess his or her situation and needs; on the other hand, in the hypothesis that the minor has dual nationalities, which is very frequent, the conflict between the authorities of the two States of which the child has the nationality brought on the paralysis of the Convention.15

are: Austria, People's Republic of China, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Spain, Switzerland and Turkey. 10 Article 1. 11 Article 2. 12 Article 4. 13 Article 6. 14 Proceedings of the Eighteenth Session (1996) Tome II – Protection of Children, para. 5. 15 See in France, Court of Cassation, 1st Civil Chamber, 16 Dec. 1986, in: Rev. crit. dr. int. pr. 1987, p. 401, note by LAGARDE P.; cf. LAGARDE P., ‘La protection du mineur double national, talon d’Achille de la Convention de La Haye du 5 octobre 1961’, in: L’unificazione del diritto internazionale privato e processuale, Studi in memoria di Mario Giuliano, Padova 1989, p. 529.

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William Duncan Another difficulty came from the uncertain meaning of Article 3 on the relationship subjecting the child to authority by operation of law (conflicts rule or rule of recognition?) and of the problematical articulation between the national law applicable to this relationship and the law of the habitual residence applicable in principle to measures of protection.’ Another reason for the decline of nationality as a connecting factor in child protection is the problem of discrimination. Where children are living in equivalent circumstances in the same country the idea that the level of protection given them should be conditional on nationality is difficult to justify. Indeed Article 2 of the Convention on the Rights of the Child16 now requires States Parties to respect and ensure the Convention rights to each child irrespective of the child’s national, social or ethnic origin. It was partly for this reason also that nationality has not featured as a primary connecting factor in the various treaties dealing with the recovery of child support across frontiers. For example, under the Hague Conventions, which deal with the law applicable to maintenance obligations and the recognition and enforcement of foreign maintenance decisions,17 it is the habitual residence of the creditor which is the primary connecting factor. Under the UN Convention of 1956 on the Recovery Abroad of Maintenance, nationality plays no role. The Convention facilitates the recovery of maintenance whenever a person ‘who is in the territory of one of the Contracting Parties’ claims to be entitled from another person ‘who is subject to the jurisdiction of another Contracting Party’.18 The problems surrounding international child abduction emerged during the 1970’s and led to the conclusion of the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction,19 as well as the Council of Europe ‘Luxembourg’ Convention of 1980.20 Because of an unwillingness among the proponents of nationality to accept that the removal of a child from the country of habitual residence to that of the nationality could constitute a wrongful act, it had proved impossible at The Hague to address this issue in the Hague Convention of 5 October 1961 concerning the Powers of Authorities and the Law Applicable in Respect of the Protection of Minors. By 1980, opinion had shifted to such an extent that nationality Adopted by the General Assembly of the United Nations on 20 November 1989. Convention de La Haye du 24 octobre 1956 sur la loi applicable aux obligations alimentaires envers les enfants; Convention de La Haye du 15 avril 1958 concernant la reconnaissance et l’exécution des décisions en matière d’obligations alimentaires envers les enfants; Hague Convention of 2 October 1973 on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations; Hague Convention of 2 October 1973 on the Law Applicable to Maintenance Obligations. 18 Article 1. 19 Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction. 20 European Convention of May 1980 on Recognition and Enforcement of Decisions Concerning Custody of Children and on the Restoration of Custody of Children. 16 17

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Nationality and the Protection of Children was not even referred to in the Hague Convention of that year. A wrongful removal or retention of a child under that Convention occurs where there is a breach of custody rights established under the law of the State where the child was habitually resident immediately before the removal or retention,21 and the Preamble refers to the prompt return of the child, not to the State of nationality, but rather to the State of habitual residence. It is rather ironic that the more usual abduction currently being dealt with under the Convention is one where the abducting parent (in sixty-eight percent of cases, the mother) has removed the child to the country of which that parent is a national.22 The dominance of habitual residence over nationality is now fully realised, as is evident in the Hague Convention of 1996 on the Protection of Children,23 which is also the model for the European Union Regulation on parental responsibility.24 The authorities having pre-eminent jurisdiction to take measures of protection in respect of a child are those of the child’s habitual residence.25 Even in the case of refugee or internationally displaced children, primary jurisdiction is not with the child’s national authorities, but rather with those of the country where the child is present.26 The law to be applied in exercising jurisdiction to take protective measures is normally that of the forum (i.e. in most cases the law of the child’s habitual residence)27 and the law governing the attribution of parental responsibility by operation of the law is that of the child’s habitual residence.28 Thus the hold which nationality had over the question of guardianship, which lay at the heart of the 1902 Hague Convention, has now yielded to a policy which vests responsibility for child protection primarily in the country which is de facto the centre of the child’s life. The role of nationality has been reduced to exceptional circumstances, Article 3. See LOWE N., ATKINSON E., HOROSOVA K. AND PATTERSON S. , ‘A statistical analysis of applications made in 2003 under the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction’, Preliminary Document No 3 of October 2006 for the attention of the Special Commission of October / November 2006. In this study 55% of the abductors had the nationality of the requested State. 23 Hague Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children. The States Parties to the Convention are: Albania, Australia, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Ecuador, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Monaco, Morocco, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom of Great Britain and Northern Ireland. 24 Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial maters and matters of parental responsibility. The Regulation came into effect on 1 March 2005. 25 Hague Convention, Article 5. EC Regulation, Article 8. 26 Hague Convention, Article 6.1. EC Regulation, Article 13.2. 27 Hague Convention, Article 15.1. 28 Hague Convention, Article 16. 21 22

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William Duncan determined by the authorities of the habitual residence, in which a transfer of jurisdiction to the national authorities may occur where this is in the child’s best interests.29 It is also possible in exceptional cases for an authority exercising general jurisdiction under the Convention to apply or take into consideration the law of the child’s nationality. In this rare event, national law would be applied or considered, not as such but by virtue of being ‘the law of another State with which the situation has a substantial connection.’30 The reasons behind the move from nationality to habitual residence may thus be summarised as follows: (a) (b) (c)

(d)

the child may have never had, or may have lost, any real connection with the country of nationality; complications arise where the child has more than one nationality; the authorities of the country where the child has his / her habitual residence are usually better placed to make decisions concerning the welfare of the child. This has to do with the likely availability of relevant evidence, as well as convenience for the child and his family. Relevant here is the child’s right to be provided with an opportunity to be heard in judicial or administrative proceedings affecting the child.31 The application of the nationality principle in matters of child protection may lead to differences in the levels of protection afforded to children who are living in similar circumstances in the same country and who may be equally vulnerable.

Of course the use of the child’s habitual residence as the usual connecting factor is not without its own problems. The international case law on the meaning of habitual residence is becoming extensive and there are points of divergence between the developing jurisprudence in different countries.32 Particular difficulties arise where frequent changes occur in a child’s residence. There are different views as to the extent to which the intentions of the parents, or any agreements reached between them with regard to the child’s residence, should be taken into account. Nevertheless, the shared idea behind habitual residence is that it is a factual concept designed to identify as best as possible that country which at any given time constitutes the main focus of the child’s life. What is also interesting is that the shift from nationality to habitual residence as a connecting factor within private international law implies certain changes in ideas about state responsibilities towards children. Where the protection of children and their basic rights is concerned, it has now become difficult for states to justify discrimination in favour of their own nationals. It may be argued – Hague Convention, Articles 8 and 9. EC Regulation, Article 15. Hague Convention, Article 15. National law is not mentioned in Article 15. 31 See UN Convention on the Rights of the Child, Article 12.2. 32 See in particular the cases decided under the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction at: < www.incadat.com >. 29 30

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Nationality and the Protection of Children and the Convention on the Rights of the Child provides support – that a state’s responsibilities towards children, at least with respect to their fundamental rights, now encompass all children living within its territories. This concept has also had important consequences in the context of intercountry adoption, which is the subject matter of Part III of this paper.

III. Intercountry Adoption The first effort at The Hague to deal with international adoptions resulted in a traditional private international law Convention33 establishing common provisions on jurisdiction, applicable law and recognition of decrees relating to adoption. Jurisdiction to grant an adoption under the 1965 Hague Convention is vested equally in the authorities of the adopters’ habitual residence and those of their nationality,34 and an authority having jurisdiction, with one exception, is to apply its internal law to the conditions governing an adoption.35 The exception concerns certain consent and consultation requirements (e.g. those applying to biological parents or to the child), which are governed by the national law of the child.36 In passing, it may be said that one of the reasons why this Convention has not attracted many ratifications is the complications which arise from the attempt to find a compromise between nationality and habitual residence, not so much in the basic rules of jurisdiction, but in defining the scope of the Convention37 and the circumstances in which the Convention is not to apply.38 When next the Hague Conference visited international adoptions, the product was very different – a Convention39 on co-operation between countries of origin and receiving countries whose objects are to ensure that intercountry adoptions take place in the best interests of the child, to establish safeguards and thus prevent the abduction, the sale of, or traffic in children and finally – the one traditional private international law objective – to secure the recognition of adoptions made in accordance with the Convention.40

33

Hague Convention of 15 November 1965 on Jurisdiction, Applicable Law and Recognition of Decrees Relating to Adoptions. The States Parties to the Convention are: Austria, Switzerland and the United Kingdom of Great Britain and Northern Ireland. 34 Article 3. 35 Article 4. 36 Article 5. 37 Article 1. 38 Article 2. 39 Hague Convention of 29 May 1993 on Protection of Children and Co-operation in Respect of Intercountry Adoption. 40 Article 1.

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William Duncan The 1993 Convention, which now has 71 States Parties and a further 3 signatory States applies where a child habitually resident in one Contracting State (‘the State of origin’) has been, is being, or is to be moved to another Contracting State (‘the receiving State’) either after his or her adoption in the State of origin by spouses or a person habitually resident in the receiving State, or for the purposes of such an adoption in the receiving State or in the State of origin.41 Nationality, either of the child or the adopters, plays no part in defining the scope of the Convention. Thus, even if a child is moved or is to be moved for the purpose of adoption to a country of which the child is a national (probably a rare event), the Convention procedures and safeguards must still be applied. Interestingly also the so-called ‘subsidiarity’ principle, as defined both in the Hague Convention42 and the UN Convention on the Rights of the Child,43 gives priority, when considering an appropriate placement for a child, to options available in the child’s country of origin, rather than the country of nationality. It is true that the country of origin is usually also the country of which the child is a national. There is also a general principle that, when considering forms of alternative care for a child, due regard should be paid to the child’s ethnic, religious, cultural and linguistic background.44 Nevertheless, it remains significant that it is the child’s actual country of origin, and not that of the nationality, which remains the key concept used in both Conventions. The approach of the Hague Convention to the question of jurisdiction to make an adoption also illustrates the point. In fact the Convention contains no common uniform rules on the exercise of such jurisdiction. Certain States of origin took the view in negotiations on the Convention, that, in order to secure the child’s new adopted status, it is right that the adoption be made in the country of origin before the child is removed to the receiving country. Certain receiving States, on the other hand, felt that adoption in the receiving State, following a ‘probationary’ period there, was the preferable alternative. In the end, the matter is left open by the Convention, which is drafted to accommodate the two alternatives. It is therefore a matter for the two States concerned to decide whether co-operation is possible in the light of their respective views on jurisdiction. However, the right of the State of origin to insist that the adoption takes place on its territory before the transfer of the child to the receiving State is expressly confirmed.45 Note that it is again the State of origin, and not that of the child’s nationality, for whom this guarantee is provided. There are other matters in respect of which the Hague Convention acknowledges a special protective role for the authorities of the child’s country of origin. For example, it is the authorities of the child’s country of origin that must ensure

Article 2.1. Article 4 b). 43 CRC Article 21 (b). See also the Hague Convention of 1993, Article 16(1)(b). 44 CRC Article 20.3. 45 Hague Convention of 1993, Article 28. 41 42

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Nationality and the Protection of Children that free and informed consents are given by those whose consents are necessary.46 There is no requirement, like that in the 1965 Convention, to apply national law to any such matters.47 To take another example, where an adoption is to take place in the receiving country, but the placement breaks down before the adoption occurs, it is the Central Authority of the State of origin that must be consulted in relation to a new placement for the child.48

IV. Effects of Intercountry Adoption on the Nationality of the Child In what circumstances does the intercountry adoption of a child lead to the acquisition of a new nationality for the child or the loss of an existing nationality? As a matter of principle, the answer to these questions should above all avoid a situation in which the child becomes stateless. Article 7 of the United Nations Convention on the Rights of the Child provides: ‘1. The child shall be registered immediately after birth and shall have the right from birth to a name, the right to acquire a nationality and, as far as possible, the right to know and be cared for by his or her parents. 2. States Parties shall ensure the implementation of these rights in accordance with their national law and their obligations under the relevant international instruments in this field, in particular where the child would otherwise be stateless.’ More particularly, the Convention on Certain Questions Relating to the Conflict of Nationality Laws,49 in Article 17, provides that loss of nationality through adoption shall be conditional upon the acquisition by the adopted person of the nationality of the adopter. The same principle is to be found in Article 11(2) of the European Convention on the Adoption of Children.50 A second important consideration is the integration of the child into the adoptive family. This is assisted by allowing the child to acquire the nationality of the adopter. Article 11(1) of the European Convention embodies this idea: ‘Where the adopted child does not have, in the case of an adoption by one person, the same nationality as the adopter, or in the case of 46 47

Article 4 c). However, there is nothing in the Convention to prevent the application of national

law. Article 21. Signed at The Hague 12 April 1930. 50 Opened for signature in Strasbourg 24 April 1967. 48 49

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William Duncan an adoption by a married couple, their common nationality, the Contracting Party of which the adopter or adopters are nationals shall facilitate acquisition of its nationality by the child.’ A third principle is that of non-discrimination. The United Nations Convention on the Rights of the Child, in Article 21(c), requires States Parties to ensure that the child concerned by intercountry adoption enjoys safeguards and standards equivalent to those existing in the case of national adoptions. In other words, if the effect of a national adoption is to confer on the child the nationality of the adoptive parent, the same principle should apply within the receiving State to an intercountry adoption. The Hague Convention embodies this principle, in the case of a full adoption, by providing, inter alia, that the child should enjoy in the receiving State rights equivalent to those which result from similar adoptions within that State.51 Bearing in mind these general principles, what is the current practice? With regard first to loss of nationality, the current position is still broadly that described by Hans van Loon in his Hague lectures on intercountry adoption: ‘Few countries have expressly regulated the question of loss of nationality as a result of adoption by a foreigner. In the absence of an express rule, the conclusion must be that no loss of nationality occurs. Some countries have a procedure for dismissal of nationality (e.g. Greece). A number of States provide that adoption abroad automatically leads to loss of nationality (e.g. Korea).’52 In fact some countries provide expressly for the retention by the child of that country’s nationality. An example is Bolivia where Article 105 of the Minor’s Code provides that a minor adopted by foreigners maintains his / her nationality, without prejudice to acquiring that of the adopters. Colombia, whose Constitution allows for dual nationality, permits a child born in Colombia to maintain Colombian nationality, unless it is expressly waived.53 The same is true in Costa Rica and Ecuador. In India, the same approach is adopted, but voluntary renunciation of Indian citizenship is possible under Section 8 of the Indian Citizenships Act 1955. Under the Romanian Law of 1991 concerning Romanian Citizenship,54 a child who has Romanian citizenship and is adopted by foreigners loses Romanian citizenship only if the adopters expressly so request. In the event of an adoption being nullified, the child is considered as never having lost Romanian citizenship. With regard to the acquisition of citizenship through intercountry adoption, the clear trend among States which are Parties to the Hague Convention of 1993 is in favour of according automatically to the adopted child the nationality of the receiving State, provided that the adopter or one of them has the nationality of that State. The Article 26(2). International Co-operation and Protection of Children with regard to Intercountry Adoption, Hague Academy of International Law, in: Recueil des Cours 1993, t. 244, 195, at 298. 53 See National Constitution, Article 96. 54 Law No 21 of 1 March 1991. 51 52

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Nationality and the Protection of Children following is a summary of the discussion on this matter which took place at the Special Commission on the practical operation of the 1993 Convention which took place in The Hague in 2000: ‘(80) Discussion in the Special Commission revealed a clear trend in favour of according automatically to the adopted child the nationality of the receiving State. Several experts described the systems operating in their countries. In many countries the acquisition of the nationality of the receiving State depended on one of the adoptive parents also having that nationality. In one case (Norway) the consent of a child above the age of twelve was needed. The type of adoption involved may also be relevant. (81) It was also pointed out that the acquisition of the nationality of the receiving State was regarded by certain States of origin (for example, Paraguay and China) as a precondition to intercountry adoption. Indeed, this could cause a problem where the adoptive parents are habitually resident in, but do not have the nationality of, the receiving State. In a case of this kind the country of origin might allow the adoption to proceed if the child obtains the nationality of the prospective adopters. It was pointed out that some systems do allow, in the case of certain categories of parents living abroad, the assumption by the adopted child of the parent’s nationality (82) Discussion revealed differences as to the actual moment of the acquisition of the new nationality by the child. Either the child was deemed to have acquired the new nationality once the adoption was pronounced in the State of origin, or upon the child arriving in the receiving State.’55 A fairly typical example is the British Adoption (Intercountry Aspects) Act 1999 which provides for a child adopted under the Hague Convention to have British citizenship conferred on him / her, provided that all the requirements of the Convention have been met and at least one adoptive parent is a British citizen at the time the adoption order is made and both (in the case of a joint application) are habitually resident in the United Kingdom. Continuing concern about the effects of adoption on the nationality of the child were reflected in the discussions during the second meeting of the Special Commission on the practical operation of the Hague Convention of 29 May 1993

Report and Conclusions of the Special Commission on the practical operation of the Hague Convention of 29 May 1993 on Protection of Children and Co-operation in respect of Intercountry Adoption, 28 November-1 December 2000, paragraphs 80-82. 55

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William Duncan on Protection of Children and Co-operation in respect of Intercountry Adoption.56 The following recommendation was adopted: ‘The Special Commission recommends that the child be accorded automatically the nationality of one of the adoptive parents or of the receiving State, without the need to rely on any action of the adoptive parents. Where this is not possible, the receiving States are encouraged to provide the necessary assistance to ensure the child obtains such citizenship. The policy of Contracting States regarding the nationality of the child should be guided by the overriding importance of avoiding a situation in which an adopted child is stateless.’ It may appear strange that, in the context of a Convention (the Hague Convention of 1993) which has reduced the role of nationality so dramatically, there should still be such concern about the effects of adoption on nationality. The reason of course is that nationality has consequences, and may give rise to privileges and duties, which go beyond and may have little to do with child protection. As far as child protection is concerned, the issue of nationality is, as we have seen, of diminishing importance. This is further illustrated by the general recognition that the receiving State should make available the full range of its child protection services without discrimination to the adopted child regardless of the child’s nationality.

56 Which met at The Hague from 17-23 September 2005. See the Report and Conclusions of that meeting drawn up by the Permanent Bureau, August 2006, available on the Hague Conference website at: <www.hcch.net> under Convention #33, under ‘Practical Operation Documents’.

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WHAT IS RIGHT AND WHAT IS WRONG IN THE ECJ’S JUDGMENT ON EUROFOOD IFSC LTD Jasnica GARAŠIĆ∗

I. II. III. IV. V. VI. VII.

Introduction The Centre of a Debtor’s Main Interest and International Jurisdiction Review of Jurisdiction Decision Opening Insolvency Proceedings The National Relation Back Principle Public Policy Conclusion

I.

Introduction

The Court of Justice of the European Communities (ECJ), in its judgment of 2 May 2006 in case C-341/04 (Eurofood IFSC Ltd),1 finally answered some controversial questions concerning the application of the European Regulation on Insolvency Proceedings (EuInsR)2 with regard to international jurisdiction for the opening of insolvency proceedings. The issues connected with such international jurisdiction have been among the most disputed in European courts’ case law ever since the entry into force of the EuInsR. Therefore, this judgment by the highest court of the European Union, pursuant to a reference for a preliminary ruling under Articles 68 EC and 234 EC from the Irish Supreme Court, which was contained in its decision of 27 July 2004 and submitted in the context of insolvency proceedings against the Irish company Eurofood IFSC Ltd, had been awaited by scholars and practitioners with great impatience and interest.3 ∗ Dr. Sc., Assistant Professor in the Department of Civil Procedural Law of the Faculty of Law of the University of Zagreb. The author dedicates this paper to the memory of the very distinguished Professor Dr. Sc. Petar Šarčević, with a deep gratefulness for the given scientific support. 1 Available on the website: . 2 Council Regulation (EC) No. 1346/2000 of 29 May 2000 on Insolvency Proceedings, in: Official Journal of the European Communities, 2000, L 160, p. 1; 2003, L 236, p. 1; 2005, L 100, p. 1; 2006, L 121, p. 1. 3 This judgment is the second decision of the ECJ regarding the EuInsR. The first decision was the Judgment of 17 January 2006, in case C-1/04, Susanne Staubitz-Schreiber. It is available on the website: .

Yearbook of Private International Law, Volume 8 (2006), pp. 87-104 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Jasnica Garašić In this eagerly awaited case, the debtor, Eurofood IFSC Ltd (Eurofood) with its registered office in Irland, is a wholly owned subsidiary of Parmalat SpA, a company incorporated in Italy. Eurofood’s main purpose was the provision of financing facilities for companies in the Parmalat group. On 27 January 2004, a creditor, the Bank of America NA, applied to the Irish High Court for both compulsory winding up proceedings to be commenced against Eurofood and for the court's nomination of a provisional liquidator, all based on the contention that that company was insolvent. On the same day, the High Court appointed Mr Farrel as the provisional liquidator, granting him the power to take possession of all the company's assets, manage its affairs, open a bank account in its name, and instruct lawyers on its behalf. On 9 February 2004, the Italian Minister for Production Activities admitted Eurofood into extraordinary administration procedure and appointed Mr. Bondi as the extraordinay administrator. On 10 February 2004, an application was lodged before the Italian Tribunale civile e Penale di Parma (District Court) for declaration of Eurofood’s insolvency. A hearing on this issue was scheduled for 17 February 2004, and Mr Farrel was informed of the hearing date on 13 February. On 20 February 2004, the District Court in Parma, taking the view that Eurofood’s centre of main interests was in Italy, held that it had international jurisdiction to determine whether Eurofood was insolvent. By 23 March 2004 the High Court decided that, according to Irish law, the insolvency proceedings against Eurofood had been opened in Ireland on the date on which the application was submitted by the Bank of America NA, namely 27 January 2004. It made an order for winding up and appointed Mr. Farrell as the liquidator. The High Court took view that they were main proceedings. It held that the circumstances in which the proceedings were conducted before the District Court in Parma were such as to justify, pursuant to Art. 26 of EIR, the Irish court's refusal to recognise that court’s decision. Because Mr. Bondi appealed the judgment, the Irish Supreme Court considered it necessary to stay the proceedings and referred questions the ECJ for a preliminary ruling before ruling on the dispute before it.4 The Irish Supreme Court requested that the ECJ interpret EuInsR provisions concerning the following issues: a) What is the determining factor for identifying the centre of main interests of a subsidiary company, i.e. how to determine international jurisdiction, especially where a subsidiary company and its parent have their respective registered offices in two different Member States? b) May the jurisdiction assumed by a court of a Member State to open main insolvency proceedings be reviewed by a court of another Member State in which recognition has been applied for? c) Does a Member State court's appointment of a provisional liquidator, which is made in response to a petition for an insolvent company's liquidation, done before the liquidation is ordered, and which effectively deprives the com-

4 For a detailed review of the Parmalat case see CARRARA C., ‘The Parmalat case’, in: RabelsZ 2006, pp. 538-562.

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Comment on ECJ’s Judgment on Eurofood pany’s directors of the power to act, constitute a decision opening insolvency proceedings for the purposes of the first subparagraph of Art. 16 (1) EuInsR? d) Does the presentation of a petition to the Irish High Court seeking compulsory winding up of a company by the court constitute an opening of insolvency proceedings for the purposes of the EuInsR by virtue of the Irish legal provision (section 220(2) of the Companies Act, 1963), deeming the winding up of the company to commence at the date of the presentation of the petition? Basically, does the national relation back-principle apply according to the EuInsR? e) Is a Member State required, under Art. 17 EuInsR, to recognise insolvency proceedings opened in another Member State, where the decision opening those proceedings was handed down in disregard of procedural rules guaranteed in the first Member State by the requirements of its public policy? The ECJ’s answers to these questions – which essentially adopted the reasoning and Opinion of Advocate General Jacobs – are presented below, followed by a short commentary on each.5

II.

The Centre of a Debtor’s Main Interests and International Jurisdiction

In its answer to the question regarding determination of international jurisdiction, the ECJ ruled as follows: ‘Where a debtor is a subsidiary company whose registered office and that of its parent company are situated in two different Member States, the presumption laid down in the second sentence of Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, whereby the centre of main interests of that subsidiary is situated in the Member State where its registered office is situated, can be rebutted only if factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which location at that registered office is deemed to reflect. That could be so in particular in the case of a company not carrying out any business in the territory of the Member State in which its registered office is situated. By contrast, where a company carries on its business in the territory of the Member State where its registered office is situated, the mere fact that its economic choices are or can be controlled by a parent company in another Member State is not enough to rebut the presumption laid down by that Regulation.’

5 The Opinion of the Advocate General Jacobs is available on the website: .

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Jasnica Garašić The significance of this ruling lies primarily in its emphasising that, when determining international jurisdiction for the opening of insolvency proceedings, the centre of main interests (COMI) is subject to uniform interpretation independent of national legislation,6 and must be defined according to factors that are objective and ascertainable by third parties.7 In rulings concerning corporate groups, some national courts have taken the position that in order to open insolvency proceedings against a subsidiary, the internationally competent court is one in the Member State where the COMI of the parent company is located, for this is also where the subsidiary’s COMI lies. Such a position is supported by the view that a parent company is actually the subsidiary’s mind of management; basically, the parent holds the head office functions because it controls and directs the subsidiary’s business decisions.8 Through this interpretation of the COMI concept, an attempt has been made to indirectly introduce international jurisdiction over corporate groups into the EuInsR, although it does not provide for such jurisdiction.9 Therefore, the ECJ found it necessary to emphasise that each debtor constituting a distinct legal entity is subject to its own court’s jurisdiction.10 Such an incorrect interpretation of the COMI concept by some national courts, whereby, in order to rebut the presumption set forth in Art. 3(1) sent. 2 EuInsR, it is sufficient that the debtor, a subsidiary, be controlled by its parent company (with the possible added stipulation that this must be known to its creditors) is, to some extent, the result of the inadequate definition of COMI contained in the 13th Recital of the EuInsR. It states that the centre of main interests should correspond to the place where the debtor conducts the administration of his interests on regular basis and is therefore ascertainable by third parties. This definition allows for the impression that the crucial factor in determining the COMI is the 6 This was expressly stated by the ECJ in its Judgment of 2 May 2006, case C341/04, no. 31. 7 ECJ Judgment of 2 May 2006, case C-341/04, no. 33-34. 8 For example: High Court of Justice Leeds Decision of 16 May 2003 – No 861876/03, in: Zeitschrift für Wirtschaftsrecht 2003, pp. 1362 et seq.; High Court of Justice Birmingham Decision of 18 April 2005 – Case Nos 2375-2382, in: Neue Zeitschrift für das Recht der Insolvenz und Sanierung 2005, pp. 467 et seq.; AG München Decision of 4 May 2004 – 1501 IE 1276/04, in: Zeitschrift für Wirtschaftsrecht 2004, pp. 962 et seq.; AG Weilheim Decision of 22 June 2005 – in 260/05, in: EWiR (Entscheidungen zum Wirtschaftsrecht), Art. 3 EuInsVO 6/05, pp. 791 et seq; Tribunale di Parma Decision of 15 June 2004 – 93/04, EWiR (Entscheidungen zum Wirtschaftsrecht), Art. 3 EuInsVO 11/04, pp. 1181 et seq. – For other cases see WESSELS B., ‘The Place of the Registered Office of a Company: a Cornerstone in the Application of the EC Insolvency Regulation’, in: European Company Law 2006, Issue 4, pp. 184-188. 9 See Explanatory Report to the Insolvency Convention, EC Council, 6500/1/96 REV 1, published in MOSS G./FLETCHER J.F./ISAACS S., The EC Regulation on Insolvency Proceedings (eds.), Oxford 2002, pp. 261-327, so called ‘Virgόs/Schmit Report’, Art. 3, no. 76. 10 ECJ Judgment of 2 May 2006, case C-341/04, no. 30.

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Comment on ECJ’s Judgment on Eurofood location, i.e. the state where the insolvency debtor’s management activity is carried out. Such an understanding of COMI could lead to a situation where insolvency proceedings are conducted in a state which is neither the location of the assets of the debtor (or at least not his major assets), or of his creditors, nor where the debtor’s economic activity is carried out.11 Proceedings so conducted would undoubtedly be contrary to the 8th Recital of the EuInsR, which sets forth the principle of efficiency and effectiveness of insolvency proceedings. Unjustified costs would, thus, be incurred by creditors who would be obliged to travel abroad. Many of them, in particular creditors with smaller claims and those with lower levels of education, would most likely refrain from seeking their claims due to insufficient financial means, as well as inadequate knowledge of foreign languages, and legal codes. Such an interpretation of the COMI concept is, therefore, obviously contrary to the very purpose of conducting insolvency proceedings. Moreover, such an interpretation of COMI by some national courts runs counter to the requirement of legal certainty, which is one of the most important legal values. Namely, it is often not clear from the outside whether and where control over a debtor (a subsidiary) is exercised. The notion of a corporate group is not strictly specified, and exists in various forms.12 It is crucial that a creditor knows what court he may submit an application to open insolvency proceedings, in order to realise (if only partially) his unsettled claims. However, even before establishing insolvency, it is important for a creditor, when entering into a legal relation with a debtor who could become insolvent later, to know which court will have jurisdiction over the insolvency proceedings. This is because the lex fori concursus is the dominant conflict of law norm in determining which law is applicable to the legal consequences of opening insolvency proceedings, (Art. 4 (1) EuInsR). The ECJ must, therefore, be given credit for having emphasised the importance of legal certainty and foreseeability,13 as well as the fact that the mere existence of control by a parent company over a subsidiary, which is an insolvency debtor, is not sufficient to rebut the presumption contained in Art. 3(1) sent. 2 EuInsR. A shift away from the place of the registered office as the basis for determining international jurisdiction to open insolvency proceedings against a company or other legal entity must be allowed to prevent possible debtors’ misuse through forum shopping: changing their registered office’s location to another country. A shift away from the place of the registered office must also be allowed in order to take into consideration possible changes in the debtor’s economic activity because of their freedom to perform this activity in different Member States, i.e. because of their right to change the place of such activity from on Member State to

Compare WIMMER K., ‘Anmerkungen zum Vorlagebeschluss des irischen Supreme Court in Sachen Parmalat, Bemerkungen anlässlich der deutschen Stellungnahme gegenüber dem EuGH zu dem Vorabentscheidungsersuchen des Supreme Court (Irland) RS C-341/04’, in: Zeitschrift für das gesamte Insolvenzrecht 2005, p. 122. 12 See WIMMER K. (note 11), p. 122. 13 ECJ Judgment of 2 May 2006, case C-341/04, no. 33. 11

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Jasnica Garašić another.14 However, the loose and insufficiently objective factors for challenging the presumption contained in Art. 3(1) sent. 2 EuInsR can only encourage, not prevent, possible forum shopping. It should be emphasised that in the 4th Recital of the EuInsR, the European legislature expressly specified prevention of the forum shopping as one of the EuInsR’s objectives. As in all private international law, we must begin with the ‘closest connection’ determination. As a general rule, the state that has the closest connection with the insolvency proceedings will be that in which the majority of the debtor’s assets and creditors are located and where the debtor’s economic activity, i.e. activity for which the debtor is registered, is carried out.15 However, it must be emphasised that neither the location of the majority of the debtor’s assets by itself nor the location of a majority of creditors by itself is decisive when determining COMI. When assessing risks before entering into a legal relationship with a debtor, creditors do not necessarily know where all the debtor’s assets are located or where his creditors can be found. Various categories of creditors will possess different pieces and amounts of information regarding the debtor.16 Therefore, when determining COMI, information concerning the debtor’s assets and creditors is mainly considered indicative. It is, however, very important to know where the debtor’s economic activity is carried out. The ECJ has expressly stated that the COMI cannot be located in the Member State where a company has its registered office, if the company does not carry out any business in that particular state. However, we need not conclude that the presumption set forth in Art. 3(1), sent. 2 EuInsR is irrefutable if the debtor actually carries out some activity in the Member State where his registered office is located.17 Unfortunately, the ECJ did not expressly indicate 14 See KLÖHN L., ‘Verlegung des Mittelpunkts der hauptsächlichen Interessen iSd Art. 3 Abs. 1 S. 1 EuInsVO vor Stellung des Insolvenzantrags – Plädoyer für ein bewegliches System zur Bestimmung der internationalen Eröffnungszuständigkeit im Europäischen Insolvenzrecht’, in: Zeitschrift für Konkurs-, Treuhand- und Schiedsgerichtswesen 2006, p. 278. 15 Compare HANISCH H., ‘Internationale Zuständigkeit und Rechtsanwendung in neueren europäischen Insolvenzabkommens-Entwürfen’, in: Recht und Rechtsdurchsetzung, Festschrift für Hans Ulrich Walder, ed. MEIER I., RIEMER H.M., WEIMAR P., Zürich 1994, p. 488.; METZGER I., Die Umsetzung des Istanbuler Konkursübereinkommens in das neue deutsche Internationale Insolvenzrecht, Reihe Rechtswissenschaft, vol. 172, Pfaffenweiler 1994, p. 28; VOGLER D., ‘Die internationale Zuständigkeit für Insolvenzverfahren’, Zeitschrift für Insolvenzrecht und Kreditschutz 2001, p. 191; DUURSMA-KEPPLINGER H.-Ch., in: Europäische Insolvenzverordnung, Kommentar, DUURSMA-KEPPLINGER H.-Ch./DUURSMA D./CHALUPSKY E. (Hrsg.), Wien – New York 2002, Art. 3, no. 12; WIMMER K. (note 11), p. 121. – See also Virgόs/Schmit Report, Art. 3, no. 75. 16 For more, see KONECNY A., ‘Thesen zum Mittelpunkt der hauptsächlichen Schuldnerinteressen gem. Art 3 Abs 1 EuInsVO’, in: Zeitschrift für Insolvenzrecht und Kreditschutz 2005, p. 4. 17 So also FREITAG R./LEIBLE S., ‘Justizkonflikte im Europäischen Internationalen Insolvenzrecht und (k)ein Ende?’, in: Recht der internationale Wirtschaft 2006, p. 647; KONECNY A., ‘EuGH zu internationaler Zuständigkeit, Eröffnung und Anerkennung von Hauptinsolvenzverfahren’, in: Zeitschrift für Insolvenzrecht und Kreditschutz 2006, pp. 150-

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Comment on ECJ’s Judgment on Eurofood what kind of activity must be involved for determining the COMI. It seems that emphasis should not be placed on management activity, as this would make forum shopping much easier. Namely, management activity can be transferred to another Member State more easily than economic activity, particularly in the case of small debtors. Using the place of the management activity as the criteria for determining jurisdiction to open insolvency proceedings would provide no advantage whatsoever over using the place of the registered office. In any event, economic activity, i.e. the activity for which the debtor is registered, must also be taken into consideration.18 Some authors have criticised the ECJ for not providing any examples for how to determine the COMI in its ruling.19 There is no doubt that in each specific case courts will have to consider a number of criteria which may not exist in all cases. However, when deciding on their international jurisdiction, courts should, on a case by case basis, take into account legal foreseeability for creditors and legal certainty as fundamental values of legal order. They should also bear in mind that the main objective of insolvency proceedings - a general settlement of creditors’ claims - ought to be accomplished in the most efficient and low cost way possible. Nevertheless, there is still some vagueness in the COMI concept.20 We should take comfort in the fact that determination of international jurisdiction based on the place of the registered office, as per Art. 3(1) sent. 2 EuInsR, represents the rule, 151; PAULUS C. G., ‘Der EuGH und das moderne Insolvenzrecht’, in: Neue Zeitschrift für das Gesellschaftsrecht 2006, pp. 612-613. – Opposite opinion POERTZGEN C./ADAM D., ‘Die Bestimmung des ‘centre of main interests’ gem. Art. 3 Abs. 1 EuInsVO, Anmerkung zum Urt. des EuGH (‘Parmalat’) v. 2. 5. 2006 – C-341/04 – ZInsO 2006’, Zeitschrift für das gesamte Insolvenzrecht 2006, p. 507. Compare KAMMEL V., ‘Die Bestimmung der zuständigen Gerichte bei grenzüberschreitenden Konzern-Insolvenzen’, in: Neue Zeitschrift für das Recht der Insolvenz und Sanierung 2006, p. 336. 18 In this way AG Mönchengladbach Decision of 27 April 2004 – 19 IN 54/04, Zeitschrift fur das gesamte Insolvenzrecht 2004, pp. 563 et seq. and AG Hamburg Decision of 16. August 2006 – 67 a IE 1/06, in: Neue Zeitschrift für das Recht der Insolvenz und Sanierung 2006, pp. 652 et seq. – In contrast AG München Decision of 4 May 2004 – 1501 IE 1276/04, in: Zeitschrift für Wirtschaftsrecht 2004, pp. 962 et seq. 19 KNOF B./MOCK S., ‘Anmerkung zum EuGH, Urt. v. 2. 5. 2006 – Rs C-341/04 (Supreme Court Dublin ZIP 2004, 1969; Schlussanträge des GA: ZIP 2005, 1878)’, in: Zeitschrift für Wirtschaftsrecht 2006, p. 914-915; KONECNY A. (note 17), p. 150; MANKOWSKI P., ‘Klärung von Grundfragen des europäischen Internationalen Insolvenzrechts durch die Eurofood-Entscheidung?’, in: Betriebs-Berater (BB) 2006, p. 1754; POERTZGEN C./ADAM D. (note 17), p. 507; SAENGER I./KLOCKENBRINK U., ‘Anerkennungsfragen im internationalen Insolvenzrecht gelöst?, Zugleich Anmerkung zum Urteil des EuGH vom 2.5.2006 – Rs. C-341/04 (Eurofood/Parmalat)’, in: Europäische Zeitschrift für Wirtschaftsrecht 2006, p. 364. – On proposals for identfying the COMI, see also: KLOHN L. (note 14), pp. 283-285 and WIMMER K. (note 11), pp. 122-123. 20 Therefore EIDENMÜLLER H., ‘Wettbewerb der Insolvenzrechte?’, in: Zeitschrift für Unternehmens- und Gesellschaftsrecht 2006, pp. 469-470, 480-482, 487-488, proposes to drop the idea of the COMI and to determine the international jurisdiction to open insolvency proceedings only on the basis of the place of the registered office (seat). He also proposes to give up the idea of secondary insolvency proceedings.

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Jasnica Garašić whereas a determination based on COMI represents an exception; because in general, a debtor’s place of registered office and his COMI will be located in one and the same state. Furthermore, mutual trust should exist among EU courts regarding professional performance of their duties.21 However, since the challenges of opening insolvency proceedings which would normally be carried out in another Member State within one’s own jurisdiction are significant,22 a court should support its decision on international jurisdiction with very strong arguments, particularly when rebutting the presumption stated in Art. 3(1) sent. 2 EuInsR, so as to demonstrate that objective criteria have been applied.23 This is also very important for harmonising case law regarding application of the EuInsR, and, thus, also for the principles of legal foreseeability and certainty. Some authors have also criticised the fact that the ECJ, having emphasised that the COMI should be determined according to objective criteria ascertainable by third parties, does not define who is considered a third party.24 In this context, third party should be understood as encompassing all creditors.25 British courts’ ruling, which limit third parties to being only creditors with large claims,26 are incorrect, because such reasoning contradicts the principle of par conditio creditorum on which the EuInsR is based.27 However, it should be emphasised that a correct interpretation of the COMI concept is important not only for the European Union, but also for all states whose autonomous international insolvency law is based on the UNCITRAL Model Law

See the 22th Recital of the EuInsR. In particular, insolvency proceedings concerning multinational companies in particular involve business affairs of great significance to various types of participants (managers, lawyers, auditors, and business advisers), as well as to the state itself, due to the development of the service industry. As far as judges are concerned, it is often a matter of reputation to conduct insolvency proceedings involving multinational companies. See EIDENMÜLLER H. (note 20), p. 471. 23 Compare WIMMER K. (note 11), p. 123, who thinks that the opening court should name the reasons for its international jurisdiction in the decision opening insolvency proceedings. 24 KNOF B./MOCK S. (note 19), p. 915; PAULUS C. G. (note 17), p. 612; SCHILLING S./SCHMIDT J., ‘COMI und vorläufiger Insolvenzverwalter – Problem gelöst?, Die Schlussäntrage in der Rechtssache ‘Eurofood/Parmalat’ als wesentlicher Schritt zur Lösung der Kontroverse um die Auslegung der EuInsVO’, in: Zeitschrift für das gesamte Insolvenrecht 2006, p. 117. 25 In the same way already Virgόs/Schmit Report, Art. 3 no. 75. 26 See High Court of Justice Leeds Decision of 16. May 2003, Re Daisytek-ISA Ltd (2004), no. 16, in: Neue Zeitschrift für das Recht der Insolvenz und Sanierung 2004, p. 219; High Court Dublin Decision of 23 March 2004, Re The Insolvency of Eurofood IFSC Limited, in: Zeitschrift für Wirtschaftsrecht 2004, p. 1225. 27 In the same way KNOF. B./MOCK S. (note 19), p. 915; SCHILLING S./SCHMIDT J. (note 25), p. 117. 21 22

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Comment on ECJ’s Judgment on Eurofood on Cross-Border Insolvency.28 This is so because this Model Law likewise introduces COMI as the basis for determining international jurisdiction when opening main insolvency proceedings (Art. 17(2)(a) in connection with Art. 2 (a)(b)). Due to the ever-increasing emphasis on a global economy, there are more and more important cases of international insolvency involving companies which are part of an international corporate group. With respect to the economic interdependency of these companies, as well as to international company law and international insolvency law, the need to foresee certain specific new rules, hitherto lacking, will undoubtedly arise. In the case of the insolvency of such merged companies, such rules would offer instruments for their successful recovery.29 However, so long as such specific rules are lacking, and international company law and international insolvency law are not harmonised, interpretation of the provision concerning the COMI should not be distorted; because this would indirectly jeopardise certain basic principles on which existing international insolvency law is founded, as may be seen in the example of the EuInsR. If this continues to be the case, the results for all participants in specific insolvency proceedings will in no way be satisfactory.

III. Review of Jurisdiction In answering whether or not the assumption of jurisdiction by a Member State court to open main insolvency proceedings may be reviewed by a court of another Member State where recognition has been applied for, the ECJ ruled as follows: ‘On a proper interpretation of the first subparagraph of Article 16(1) of Regulation No 1346/2000, the main insolvency proceedings opened by a court of a Member State must be recognised by the courts of the other Member States, without the latter being able to review the jurisdiction of the court of the opening State.’ The ECJ supported its ruling by referring to the principle of priority and the system of automatic recognition of decisions opening insolvency proceedings, The UNCITRAL Model Law is available on the website: <www.uncitral.org.> Legislation based on it has been adopted in: Eritrea, Japan, Mexico, South Africa, Montenegro, Poland, Romania, Serbia, British Virgin Islands, the overseas territory of the United Kingdom of Great Britain and Northern Ireland, the United States of America, and Great Britain. 29 UNCITRAL’s Working Group V (Insolvency Law) has recently started to work on the treatment of corporate groups in insolvency. See the available documents on the website: www.uncitral.org. See in german literature, for example: PAULUS C.G., ‘Überlegungen zu einem modernen Konzerninsolvenzrecht’, in: Zeitschrift für Wirtschaftsrecht 2005, pp. 1948-1955; SESTER P., ‘Plädoyer gegen ein materielles Konzerninsolvenzrecht’, in: Zeitschrift für Wirtschaftsrecht 2005, pp. 2099-2101; SCHILLING S./SCHMIDT J. (note 24), 117-118. 28

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Jasnica Garašić based on the principle of mutual trust set forth in Art. 16 EuInsR.30 The principle of mutual trust requires that a Member State court, in which an application has been filed to open insolvency proceedings, evaluate its jurisdiction according to Art. 3(1) EuInsR, likewise respecting the basic procedural guarantees of fair proceedings. Therefore, a court in another Member State is not authorised to review a decision regarding the jurisdiction of the court that opened insolvency proceedings.31 However, the ECJ has emphasised that if a party believes such a decision to be incorrect, it may challenge it, but only in the Member State where insolvency proceedings have been opened, and using the legal remedies prescribed by the national law of that state.32 The ECJ has not offered anything new with this answer, since the prevailing scholarly view already states that it is impossible to review a decision to open insolvency proceedings by a court of another Member State.33

IV. Decision Opening Insolvency Proceedings In deciding whether a Member State court’s appointment of a provisional liquidator, which is made in response to a petition for an insolvent company’s liquidation, done before the liquidation is ordered, and which effectively deprives the company’s directors of the power to act, constitutes a decision opening insolvency proceedings for the purposes of the first subparagraph of Art. 16(1) EuInsR, the ECJ concluded as follows: ‘On a proper interpretation of the first subparagraph of Article 16(1) of the Regulation, a decision to open insolvency proceedings for the purposes of that provision is a decision handed down by a court of a Member State to which application for such a decision has been made, based on the debtor's insolvency and seeking the opening of proceedings referred to in Annex A to the Regulation, were that decision involves the divestment of the debtor and the appointment of a liquidator referred to in Annex C to the Regulation. Such divestment implies that the debtor loses the powers of management that he has over his assets.’ The ECJ justifies its interpretation by referring to the principle of priority stated in Art. 16(1) EuInsR, as well as the need to ensure that the system of recognition set ECJ Judgment of 2 May 2006, case C-341/04, no. 39-40. ECJ Judgment of 2 May 2006, case C-341/04, no. 41-42. 32 ECJ Judgment of 2 May 2006, case C-341/04, no. 43. 33 So FREITAG R./LEIBLE S. (note 17), pp. 644-645; KONECNY A. (note 17), p. 151; PAULUS C.G. (note 17), p. 613; POERTZGEN C./ADAM D. (note 17), pp. 508-509; SAENGER I./KLOCKENBRINK U. (note 19), p. 364; WIMMER K. (note 11), p. 123. – Opposite opinion, for example MANKOWSKI P. (note 19), p. 1755. 30 31

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Comment on ECJ’s Judgment on Eurofood forth therein is effective. According to the ECJ's words, the mechanism providing that only one main set of proceedings may be opened, producing its effects in all the Member States in which the Regulation applies, could be seriously disrupted if the courts of those States, hearing at the same time applications based on a debtor's insolvency, could claim concurrent jurisdiction over an extended period.34 Further, the ECJ emphasised that the EuInsR does not provide an adequate definition of precisely what is meant by a decision to open insolvency proceedings.35 The ECJ’s answer to the aforementioned question is problematic and dubious for a number of reasons. First, it calls into question the reason for the existence of Art. 25(1) subpara. 3 EuInsR,36 according to which the means foreseen for recognition and enforcement of judgments - which are handed down by a court whose judgment concerning the opening of proceedings is recognised in accordance with the provisions of Art. 16 and which judgements concern the course and closure of insolvency proceedings, as well as compositions approved by that court - also apply to judgments relating to preservation measures taken after the request for the opening insolvency proceedings. In the EuInsR, preservation measures are clearly regarded as decisions differing from a decision to open insolvency proceedings and, as such, represent an independent subject of recognition.37 In its reasoning, the ECJ did not refer even once to the content of Art. 25(1) subpara. 3 EuInsR. There is no doubt that insolvency proceedings should have the most immediate legal effect once an application to open them has been submitted. However, so long as the court (or other competent body) does not issue a decision establishing the existence of insolvency ground(s), the objects (things, rights) of a potential future insolvency mass are protected by the necessary preservation measures – which is precisely their purpose in insolvency proceedings. Thus, the decisions by the Irish High Court on the appointment of a provisional liquidator and the divestment of Eurofood IFSC Ltd should have been recognised in Italy as preservation measures pursuant to Art. 25(1) subpara. 3 EuInsR. Furthermore, the ECJ interprets the content of Art. 38 EuInsR too narrowly in its reasoning: opining that it concerns only the situation in which the competent court of a Member State had the main insolvency proceedings brought before it and has appointed a person or body to watch over the debtor’s assets on a provisional basis, but has not yet ordered that that debtor be divested or appointed the liquidator referred to in Annex C to the EuInsR.38 However, no such limitation ECJ Judgment of 2 May 2006, case C-341/04, no. 49, 52-53. ECJ Judgment of 2 May 2006, case C-341/04, no. 50. 36 In this way already PAULUS C.G. (note 17), p. 613. 37 Expressly Virgόs/Schmit Report, Art. 25, no. 199. For more details, see DUURSMA-KEPPLINGER H.-C. (note 15), Art. 25, no. 57-60; GARAŠIĆ J., Anerkennung ausländischer Insolvenzverfahren: Ein Vergleich des kroatischen, des deutschen und des schweizerischen Rechts sowei der Europäischen Verordnung über Insolvenzverfahren, des Istanbuler Übereinkommens und des UNCITRAL-Modellgesetzes, Teil 1 und Teil 2, Frankfurt am Main (etc.) 2005, vol. 1, pp. 103-107; PAULUS C.G., Europäische Insolvenzverordnung, Kommentar, Frankfurt am Main 2006, Art. 25, no. 1-12. 38 ECJ Judgment of 2 May 2006, case C-341/04, no. 57. 34 35

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Jasnica Garašić proceeds from the text of Art. 38 EuInsR; rather, it should be assumed that a temporary liquidator (administrator) specified in Annex C would be empowered, even in a situation where the debtor has been divested, to request any measures necessary to secure and preserve any of the debtor’s assets situated in another Member State, provided for under the law of that Member State for the period between the request for the opening of insolvency proceedings and the judgment opening the proceedings. Therefore, Art. 38 EuInsR does not favour an interpretation according to which a decision on divestment of a debtor and appointment of a temporary liquidator is to be regarded as a decision opening insolvency proceedings. Were this the case, such a liquidator would have neither the right nor reason to request preservation measures in another Member State, because the decision on his appointment and on the divestment of the debtor would already have the legal effect of a decision opening insolvency proceedings pursuant to Art. 16(1) EuInsR.39 Also problematic is the interpretation whereby previous proceedings on the opening of proceedings referred to in Annex A of the EuInsR, in which the liquidator referred to in Annex C is appointed and the debtor’s divestment is ordered, are subsumed under the notion of insolvency proceedings as per Art. 1(1) EuInsR.40 Namely, the definition of insolvency proceedings given in this provision also presupposes the debtor’s insolvency, among other things. In proceedings occurring prior to the actual opening of insolvency proceedings, insolvency is only being examined and has not yet been established by a court decision (or by a decision made by some other competent body).41 The ECJ took no notice of the necessity of establishing the existence of insolvency ground(s) as a constituent element in defining insolvency proceedings. As an argument in favour of the ECJ’s ruling, some authors have pointed out that in the UNCITRAL Model Law on Cross-Border Insolvency, interim proceedings in Art. 2(a) are regarded as insolvency proceedings.42 However, it should be emphasised here that the Model Law does not distinguish between different subjects of recognition, as does the EuInsR in Arts. 16(1) and 25(1).43 In addition, the ECJ asserts that the EuInsR does not sufficiently define what is meant by a decision to open insolvency proceedings.44 However, we have to take in consideration Art. 2(f), where the EuInsR states that ‘the time of the In different way SCHILLING S./SCHMIDT J. (note 24), p. 114 and SAENGER I. / KLOCKENBRINK U. (note 19), p. 365. They opine that Art. 38 EuInsR cannot be used as an argument against the ECJ’s decision. Compare MANKOWSKI P. (note 19), p. 1757 and WIMMER K. (note 11), p. 126, whose view is that Art. 38 EuInsR serves only those Member States whose law does not provide the legal institution of a provisional liquidator/trustee. 40 ECJ Judgment of 2 May 2006, case C-341/04, no. 54. KAMMEL V. (note 17), p. 912 and WIMMER K. (note 11), p. 126 support this interpretation by the ECJ. 41 This flaw in the ECJ’s interpretation was already pointed out by PAULUS C.G. (note 17), p. 613. 42 So WIMMER K. (note 11), pp. 126-127; MANKOWSKI P. (note 19), p. 1757. 43 For more details, see GARAŠIĆ J. (note 37), vol. 1, pp. 103-109. 44 ECJ Judgment of 2 May 2006, case C-341/04, no. 50. 39

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Comment on ECJ’s Judgment on Eurofood opening of proceedings’ shall mean the time at which the judgment opening proceedings becomes effective, whether it is a final judgment or not. In other words, the EuInsR autonomously and uniformly establishes when insolvency proceedings should be considered as having been opened: namely, when the decision opening proceedings (a real decision opening insolvency proceedings based on a determination that insolvency ground(s) do exist)45 becomes effective. However, when such a decision is effective, or becomes effective, is not established by the EuInsR, but rather by national law, the lex fori concursus, in accordance with Art. 4(2) EuInsR.46 Pursuant to Art. 16(1) EuInsR, only a decision whereby insolvency proceedings are really opened may be considered as an opening decision, because the EuInsR provides a separate provision for preservation measures, namely Art. 25(1) subpara. 3. One further question that needs to be raised here is whether national law, which governs when an opening decision becomes effective, is also applicable to the possible reverse effects of opening insolvency proceedings with regard to the time at which an application to open insolvency proceedings was submitted. The ECJ did not think it necessary to answer this question, since it had extended the concept of a decision opening insolvency proceedings.47 Unfortunately, the ECJ did not even mention the provision of Art. 2(f) in its reasoning, although it should have connected this provision with Art. 16(1) and Art. 25(1) subpara. 3 EuInsR. According to Art. 3(1) EuInsR, the COMI can only be located in one state, and, as a result, main insolvency proceedings may only be opened once. Therefore, the ECJ’s desire to reduce the number of parallel prior proceedings for establishing (through examination) insolvency grounds and international jurisdiction48 seems contrary to the principle of trusting courts’ to perform their duties, which is particularly emphasised in the 22nd Recital of the EuInsR.49 This almost suggests that a court’s capacity to correctly decide the existence or non-existence of its international jurisdiction is suspect. Contrary to the opinions of certain authors,50 no equality of arms (Waffengleichheit) among the Member States has been achieved by this ECJ ruling. On the contrary, it gives priority to Member States which have a better-developed

45 In different way, WIMMER K. (note 11), p. 126, who opines that Art. 2 (f) EuInsR can relate not only to the decision opening insolvency proceedings, but also to the preservation measure before opening of insolvency proceedings, which orders deprivation of a debtor's right to manage and dispose of his assets. 46 For the opinion that national law is applicable to the effectiveness of a decision opening insolvency proceedings, see in particular Virgόs/Schmit Report, Art. 2, no. 68; DUURSMA-KEPPLINGER H.-C. (note 15), Art. 2, no. 13; PAULUS C.G. (note 37), Art. 2, no. 15. 47 ECJ Judgment of 2 May 2006, case C-341/04, no. 59. 48 See ECJ Judgment of 2 May 2006, case C-341/04, no. 52. 49 In the same way already KONECNY A. (note 17), p. 151. 50 Such as MANKOWSKI P. (note 19), p. 1757. Compare WIMMER K. (note 11), p. 126 who speaks of ‘Chancengleichheit’. See also KNOF B./MOCK S., (note 19), p. 913.

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Jasnica Garašić system of preservation measures.51 The forum shopping race between creditors and debtors will not significantly slow down as a result of this ruling.52 Instead focusing on the actual moment insolvency proceedings are opened, the race will now focus on obtaining a court decision on preservation measures, which, according to the ECJ’s criteria, can be regarded as a decision opening insolvency proceedings.53 Due to the various types of preliminary measures that exist in different Member States, the ECJ’s ruling also raises the question of which national law preliminary measures, in combination with the appointment of the temporary liquidator/administrator specified in Annex C, must be imposed in order to achieve the effect of ‘opening insolvency proceedings.’54 Correctly, it has been warned that it will be particularly difficult for a foreign judge (or foreign body) to determine, when deciding on its own jurisdiction, whether insolvency proceedings are already ‘open’ in some other Member State.55 The ECJ interpretation of what constitutes a decision opening insolvency proceedings will, in fact, postpone the real opening of insolvency proceedings in the Member State in which the COMI actually is situated in cases where the following elements are met: (1) an application to open insolvency proceedings has been submitted to the court; (2) this court has appointed a temporary liquidator; (3) the same court has ordered the divestment of the debtor; and (4) it has subsequently been determined (either by the court itself or by means of some legal remedy) that jurisdiction for opening insolvency proceedings of that court does not exist.56 One additional, very serious problem arising from the ECJ ruling is what triggers the legal effects of opening insolvency proceedings, as set forth in Art. 4(1) EuInsR? There are two possibilities: (1) the actual, real opening of the insolvency proceedings after insolvency has been established; or (2) the appointment of a temporary liquidator and divestment of the debtor. Should a distinction be made in this regard among different legal effects of opening proceedings?57 Can a decision opening secondary insolvency proceedings be made before insolvency has been established within proceedings which precede the opening of main proceedings (Art. 27 EuInsR)? The ECJ ruling has, thus, created a lot of legal uncertainty, rather than contributing to its diminishment. Based on the foregoing, it may be concluded that the ECJ’s answer should have been that a decision involving the appointment of a temporary liquidator In the same way KONECNY A. (note 17), p. 151. Opposite opinion SCHILLING S./SCHMIDT J. (note 24), pp. 114-115. 53 See POERTZGEN C./ADAM D. (note 17), p. 508. 54 See discussion on this topic for example: FREITAG R./LEIBLE S. (note 17), p. 646; KNOF B./MOCK S., (note 19), p. 912; KONECNY A. (note 17), p. 152; MANKOWSKI P. (note 19), p. 1757; SAENGER I./KLOCKENBRINK U. (note 19), p. 366; SCHILLING S./SCHMIDT J. (note 24), pp. 114-115. 55 PAULUS C. G. (note 17), p. 613. 56 In this way KONECNY A. (note 17), p. 151. 57 See on this problem: KAMMEL V. (note 17), p. 337; KONECNY A. (note 17), p. 152; MANKOWSKI P. (note 19), p. 1758. 51 52

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Comment on ECJ’s Judgment on Eurofood referred to in Annex C to the EuInsR and the divestment of the debtor cannot be regarded as a decision opening insolvency proceedings as per Art. 16(1) EuInsR. Thus, the ECJ should alter its position regarding this issue as soon as possible.58

V.

The National Relation Back Principle

Due to the manner in which the ECJ defined what it considers to be a decision opening insolvency proceedings, it did not consider it necessary to answer the question regarding the validity of the national relation back principle.59 In its ruling, the ECJ should have actually distinguished between and given clear answers to the following independent questions: (1) what is the very concept of a decision opening insolvency proceedings (is it necessary to establish insolvency grounds?); (2) what time insolvency proceedings are considered to opened; (3) when a decision opening insolvency proceedings becomes effective (does a legal remedy against the decision opening insolvency proceedings have a suspend effect or not?); and (4) whether, with regard to legal consequences, a valid and effective decision opening insolvency proceedings relates back to the time when an application to open such proceedings was submitted? As has already been stated in connection with questions (1) and (2), the EuInsR contains autonomous, uniform solutions and, therefore, national law is not applicable in these areas (Art. 16(1) in connection with Art. 2(f) and Art. 25(1) subpara. 3 EuInsR). On the contrary, national law is applicable to question (3), in accordance with Art. 4(1, 2) EuInsR. As for question (4), i.e. whether the national relation back principle is valid, most German commentators argue that it is not, i.e. that there is no possibility of a reverse effect of the legal consequences of opening insolvency proceedings on the time when an application to open them was submitted.60 The most frequently-cited reason for this position is based on Arts. 2(f), 16(1) and 3(1), and states that the EuInsR autonomously and uniformly specifies the time of the opening of insol-

For views opposed to the ECJ’s position, PAULUS C. G. (note 17), p. 613 and POERTZGEN C./ADAM D. (note 17), pp. 508-509. For views in favour of ECJ’s position, see FREITAG R./LEIBLE S. (note 17), p. 646; KAMMEL V. (note 17), p. 337; KNOF B./MOCK S. (note 19), p. 912; MANKOWSKI P. (note 19), p. 1759; SCHILLING S./SCHMIDT J. (note 24), p. 115. 59 ECJ Judgment of 2 May 2006, case C-341/04, no. 59. 60 For example HERCHEN P., ‘Das Prioritätsprinzip im internationalen Insolvenzrecht, Zugleich Besprechung Stadtgericht Prag, Beschl. v. 26. 4. 2005 – 78 K 6/05-127’, in: Zeitschrift für Wirtschaftsrecht 2005, p. 1403; FREITAG R./LEIBLE S. (note 17), p. 650; KNOF B./MOCK S. (note 19), p. 912; MANKOWSKI P. (note 19), p. 1757; POERTZGEN C./ADAM D. (note 17), p. 509; SCHILLING S./SCHMIDT J. (note 24), p. 115; WIMMER K. (note 11), p. 127. 58

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Jasnica Garašić vency proceedings.61 It is also contended that application of this principle would result in significant legal insecurity.62 It seems that these authors have erred because they do not distinguish between the question of the time of the opening of insolvency proceedings and the question of whether, with regard to legal consequences, a valid and effective decision opening insolvency proceedings has a reverse effect on the time when an application to open such proceedings was submitted. Namely, if we respect Art. 4(1,2) EuInsR, (where the applicability of the lex fori concursus is foreseen with regard to the legal effects of opening insolvency proceedings, provided the EuInsR does not state otherwise - as it does not where validity of the national relation back principle is concerned -), then it must be concluded that it is national law which determines whether or not the legal effects of a decision opening insolvency proceedings will relate back to the time when an application was submitted.63 This does not mean, however, that a decision opening insolvency proceedings by a court in Member State A, whose law prescribes the relation back principle, can annul an earlier decision opening insolvency proceedings in Member State B, whose law does not prescribe this principle, even though the application to open insolvency proceedings was submitted earlier in Member State A.64 Namely, a decision opening insolvency proceedings in Member State A would, in accordance with the principle of priority stated in Art. 16(1) EuInsR, relate back to the time an application was submitted to open insolvency proceedings in the EU only if no other EU court had previously issued a decision opening insolvency proceedings against the same debtor. If an earlier decision opening insolvency proceedings by court of another Member State does exist, then this earlier decision will necessarily also have legal effect in Member State A, and, therefore, any later decision opening insolvency proceedings made in Member State A will be without any effect both in Member State A and in the entire EU.

VI. Public Policy In answering the question of whether a Member State is required, under Art. 17 EuInsR, to recognise insolvency proceedings opened in another Member State where the decision opening those proceedings was handed down in disregard of the For example HERCHEN P. (note 61), p. 1403; KNOF B./MOCK S. (note 19), p. 912; POERTZGEN C./ADAM D. (note 17), p. 509. 62 FREITAG R./LEIBLE S. (note 17), p. 650; MANKOWSKI P. (note 19), p. 1757; SCHILLING S./SCHMIDT J. (note 24), p.115; WIMMER K. (note 11), p. 127. 63 Such an interpretation is expressly stated in the Virgόs/Schmit Report, Art. 13, no. 135 and also in SAENGER I./KLOCKENBRINK U. (note 19), p. 366. 64 Opposite opinion HERCHEN P. (note 61), pp. 1403-1404 and FREITAG R./LEIBLE S. (note 17), p. 650; WIMMER K. (note 11), p. 127. 61

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Comment on ECJ’s Judgment on Eurofood procedural rules guaranteed by public policy in the first Member State, the ECJ ruled as follows: ‘On a proper interpretation of Article 26 of the Regulation, a Member State may refuse to recognise insolvency proceedings opened in another Member State where the decision to open the proceedings was taken in flagrant breach of the fundamental right to be heard, which a person concerned by such proceedings enjoys.’ The ECJ emphasizes that the public policy clause can be envisaged only where recognition or enforcement would vary to an unacceptable degree with the legal order of the State in which enforcement is sought, insomuch as it infringes a fundamental principle.65 The need for restraint in applying this clause has, thus, been indicated.66 Keeping in mind both the constitutional traditions common to the Member States and the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, the ECJ also stresses that the right to be notified of procedural documents and, more generally the right to be heard, occupy an eminent position in the organisation and conduct of a fair legal process. This applies to insolvency proceedings as well.67 If the right to be heard during the imposition of a measure is restricted due to the urgency of the insolvency proceedings, the person against whom such a measure has been imposed must have the opportunity to challenge it.68 The ECJ also states that, when establishing the existence of a public policy violation, the court must proceed based not only on the understanding of public policy in national law, but also take into consideration the whole of the circumstances.69 Therefore, the ECJ’s conclusions regarding the interpretation of Art. 26 EuInsR are acceptable.70 With respect to case law and interpretations in literature, they essentially offer nothing new.71

ECJ Judgment of 2 May 2006, case C-341/04, no. 63. See POERTZGEN C./ADAM D. (note 17), p. 509. 67 ECJ Judgment of 2 May 2006, case C-341/04, no. 65-66. 68 ECJ Judgment of 2 May 2006, case C-341/04, no. 66. 69 ECJ Judgment of 2 May 2006, case C-341/04, no. 68. See also POERTZGEN C./ ADAM D. (note 17), p. 509. 70 So also FREITAG R./LEIBLE S. (note 17), p. 645; KONECNY A. (note 17), p. 151; MANKOWSKI P. (note 19), pp. 1758-1759; PAULUS C.G. (note 17), p. 613. 71 For more details, see DUURSMA-KEPPLINGER H.-C. (note 37), Art. 26, no. 1-15; GARAŠIĆ J. (note 37), vol. 1, pp. 233-235; PAULUS C.G. (note 37), Art. 26, no.1-19. 65 66

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VII. Conclusion As to the question of international jurisdiction, we must welcome the ECJ ruling; because, the Court has emphasised the importance of objective factors ascertainable by third parties when determining where a debtor’s COMI is located, with the purpose of preventing forum shopping and providing both legal certainty and foreseeability. As to whether a decision opening insolvency proceedings may be reviewed by a court in another Member State, the ECJ has concluded that such a review is not permitted, a view which prevails in the legal literature as well. However, the ECJ’s position that a decision involving the appointment of the temporary liquidator referred to in Annex C to the EuInsR and the divestment of a debtor is regarded as decision opening insolvency proceedings pursuant to Art. 16(1) EuInsR runs counter to the provisions and conception of the EuInsR. The ECJ should, therefore, alter its position as soon as possible. The ECJ should also have answered the question regarding the validity of the relation back principle, adopting the position that national law is applicable to this question in accordance with Art. 4(1,2) EuInsR. With regard to public policy clause, the ECJ emphasises its exceptional application, while at the same time confirming the importance of the right to be heard in insolvency proceedings. What is also very important is the Court’s emphasis of the fact that public policy must not be assessed in only a national context. With regard to the case of Eurofood IFSC Ltd, there can be no doubt that the decision by the Irish High Court on appointment of a temporary liquidator and divestment of the debtor should have had automatic legal effect in Italy, pursuant to Art. 25(1) subpara. 3 EuInsR. From this perspective, the effect of the decision by the Italian Minister for Production Activities to appoint an extraordinary administrator for the same debtor is legally disputable. However, the Tribunale civile e penale in Parma was the first to have issued a decision opening insolvency proceedings, and, thus, based on the priority principle set forth in Art. 16(1) EuInsR, this decision should have been observed in all Member States, including Ireland; this is so even though this decision opening insolvency proceedings may have been incorrect, since the debtor’s COMI is not situated in Italy. However, it could only be challenged using the legal remedies provided by Italian law. The Irish court’s later decision regarding the opening of insolvency proceedings should not have had any legal effect, even though Irish law does prescribe the relation back principle. Recognition of the Italian judgment opening insolvency proceedings might be refused only if the existence of a public policy violation can be established in the Italian opening procedure. The conclusions of the ECJ are, unfortunately, different.

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INTERACTION AND INTEGRATION BETWEEN THE LEGAL SYSTEMS OF HONG KONG, MACAO AND MAINLAND CHINA 50 YEARS AFTER THEIR RETURN TO CHINA Huang JIN∗

I. II. III. IV. V.

Introduction Meaning of the ‘Remaining Unchanged for 50 Years’ Rule Hong Kong SAR and Macao SAR Will Remain Separate Law Districts Establishment of an Interregional Mechanism of Legal Consultation, Coordination and Cooperation Conclusion

I.

Introduction

In light of the express provision of Article 5 of the Basic Law of the Hong Kong Special Administrative Region (‘SAR’) of the People’s Republic of China (referred to hereinafter as the ‘Basic Law of Hong Kong’) and Article 5 of the Basic Law of the Macao Special Administrative Region of the People’s Republic of China (referred to hereinafter as the ‘Basic Law of Macao’), the socialist system and policies shall not be practiced in the Hong Kong or Macao SARs, and the former capitalist system and way of life shall ‘remain unchanged for 50 years’. This principle is equivalent to the legal system remaining unchanged for 50 years. Thus Article 8 of the Basic Law of Hong Kong ensures that ‘the law previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate legislation and customary law shall be maintained, except for any that contravenes this Law, and subject to any amendment by the legislature of the Hong Kong Special Administrative Region’. It is the same with Article 8 of the Basic Law of Macao, which provides that ‘the laws, decrees, administrative regulations and other normative acts previously in force in Macao shall be maintained, except for any that contravenes this Law, or subject to any amendment by the legislature or other relevant organs of the Macao Special Administrative Region in accordance with legal procedures.’ Under these provisions, it is reasonable to say that the meaning of ‘the legal system remaining unchanged for 50 years’ is that the laws previously in force ∗ Professor of Law and Director of the Wuhan University Institute of International Law; President of the China Society of Private International Law; Vice President of the Chinese Society of International Law; Vice President of the Wuhan University. Email: [email protected].

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Printed in Germany

Huang Jin in these two regions shall remain basically unchanged.1 Now that this is clear, issues of common concern are the changes and trends of the laws of Hong Kong and Macao 50 years after their return to China, and the link with the law of Mainland China at that time. On the occasion of the 10th anniversary of Hong Kong’s, and the 8th anniversary of Macao’s return to China, it may appear too early to discuss the situation to come in 40 years.2 However, I see some value in examining this issue in the academic perspective and in making appropriate arrangements in advance, as reflection and academic research should precede the occurrence of real life issues.

II.

Meaning of the ‘Remaining Unchanged for 50 Years’ Rule

The ‘remaining unchanged for 50 years’ rule in the Basic Laws of Hong Kong and Macao may be understood in two ways. On the one hand, it is an express provision of the Basic Law, a legal document of a constitutional law character.3 ‘Remaining unchanged for 50 years’ is thus a rigid requirement, leaving no room for change within 50 years of the return of the two regions, any change being unconstitutional.4 On the other hand, ‘50 years’, rather than calling for a strict construction, is, in Chinese language, to be intended as an approximation, the emphasis of the ‘unchanged for 50 years’ formula having rather to be placed on the word ‘unchanged’. It means remaining unchanged even after 50 years, as Mr. Deng Xiaoping has explained on many occasions in an articulate way. To give one example, during a meeting in Beijing with members of a Hong Kong delegation from the industrial 1 After the return of Hong Kong and Macao, the laws there will remain basically unchanged, but not absolutely so. Actually since the day of return, the laws of the two regions have undergone some amendments. Taking Hong Kong as an example, three important changes have occurred: the Basic Law of Hong Kong has come into effect in the Hong Kong SAR; laws previously in force in contravention with the Basic Law have become void automatically; new legislation has been passed by the legislature of the Hong Kong SAR. See the Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong and Annex I thereto, in Important Documents on the Basic Law of the Hong Kong SAR of the PRC, People’s Publishing House 1990, pp. 41, 45-46. 2 The Government of the People’s Republic of China has resumed the exercise of sovereignty over Hong Kong with effect from 1 July 1997 and Macao with effect from 20 December 1999. 3 See Ieong WAN CHONG, ‘One Country, Two Systems and The Modern Constitutional Science’, Macao University Press 1996, pp. 113-114. 4 The Hong Kong SAR and Macao SAR have been established in accordance with the provisions of Article 31 of the Constitution of the People’s Republic China.

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Interaction and Integration between Hong Kong, Macao and Mainland China and commercial community and with some prominent Hong Kong figures, Mr. Deng Xiaoping made the following statement: ‘We have discussed the policy of ‘one country, two systems’ more than once […]. Some people are worried that it might change. I say it will not. The crux of the matter, the decisive factor, is whether the policy is correct. If it is not, it will change; otherwise it won’t […]. If we are on the right track and enjoy the people's support, the policy will not change.’5 While meeting a Hong Kong and Macao delegation attending the National Day ceremony, Mr. Deng Xiaoping gave the following speech: ‘Now some people worry that the policy will change after the older generation of leaders leaves office. I am grateful for your confidence in the older generation. Today I am telling you that our policy will not change and no one will be able to change it. Because these measures are right and effective and thus enjoying the people’s support which will revolt against any change by anyone. The central government and CPC central committee have always been true to their promises even in the riot era and on the international arena. Keeping the promise has been the tradition of the Chinese people for long rather than the proper character of our generation. This is also consistent with the grace of a major power with a long history. A major power attaches great importance to its dignity and firmly believed guidelines. As we have established our position that things will remain unchanged for 50 years, it will not be changed either by this generation of leaders or by the later generation. And in 50 years Mainland China will have developed enormously, will Mainland China deal with these issues in an intolerant manner? Thus there is no need to worry about any change, which will never happen. If anything will change, it will change for the better of Hong Kong, more conducive to the prosperity and development of Hong Kong, rather than detrimental to the interests of Hong Kong people.6 Given the remarks of Mr. Deng Xiaoping, the fundamental reason for the principle of ‘remaining unchanged [not only] for 50 years’, but also after 50 years, lies in the fact that the basis of the ‘one country, two systems’ policy is practical reality, with sufficient consideration of the historical and current circumstances of Hong Kong and Macao. It has been hailed and supported by the people. As the fundamental Chinese guideline for the peaceful reunification of the motherland and a basic policy of the vital State, its legal status has been entrenched in the Constitution of 5 DENG XIAOPING, ‘One Country, Two Systems’, in: Important Documents on the Basic Law of the Hong Kong SAR of the PRC, People’s Publishing House, Beijing 1990, p. 2. 6 DENG XIAOPING, ‘Maintaining the Prosperity and Stability of Hong Kong’, in: Important Documents (note 5), pp. 7-8.

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Huang Jin the People’s Republic of China7 and the Basic Laws of the two SARs. It is the ultimate guarantee for maintaining the prosperity and stability of the SARs in the long term. And the ‘one country, two systems’ formula, being an integral one, tolerates no separation of the two elements. One country absent two systems, and vice versa, would be fatal to the formula.

III. Hong Kong SAR and Macao SAR Will Remain Separate Law Districts A brief introduction to the notion of law districts is necessary before discussing the issue of the Hong Kong SAR and the Macao SAR remaining relatively separate law districts in 50 years. A diversity of the legal systems in force within a country is organized within the framework of law districts. A law district, also known as a legal region, territory, or unit, is a region with its own legal system in force. Thus a law district has a legal system of its own, covering either all aspects and branches of law or certain such. Additionally, a law district is a specific region. Here a ‘region’ refers either to a country or to a region within a country.8 Usually a country with a unified legal system is a separate law district. However, many countries around the world do not have a unified legal system, but are composed of regional law districts. These countries are known as countries with a non-unified, plural, or composite legal system.9 Thus the term ‘composite legal system countries’ refers to countries with two or more law districts within its territory. With the return of Hong Kong and Macao to China, China has changed from a single legal system country to a non-unified, plural, or composite legal system country. In light of the ‘one country, two systems’ idea, after China’s resumption of sovereignty over Hong Kong and Macao, the former capitalist system and way of life continue to be practiced there, and their laws, belonging respectively to the Common law and Continental law traditions, remain basically unchanged. Thus, Hong Kong and Macao are law districts with their own legal systems, separate from Mainland China despite their return to the PRC. And there is no denying that Mainland China is a separate law district within China, with its 7

See Article 31 of the Constitution of the People’s Republic China. See MORRIS J. H. C., The Conflict of Laws, 4th ed., London 1993, p. 2; SZáSZY I., Conflict of Laws in the Western, Socialist and Developing Countries, Leiden 1974, p. 233; ZHAI CHU, Outline of Private International Law (in Chinese), 7th ed., National Institute for Compilation and Translation, Taibei 1982, pp. 5-6. 9 See VITTA E., ‘Interlocal Conflict of Laws’, in: 3 International Encyclopedia of Comparative Law (LIPSTEIN K. et al eds), 1985, p. 3; GRAVESON R.H., Comparative Conflict of Laws, Amsterdam-Oxford 1977, Vol. 1, p. 310; CAVERS D. F., ‘Contemporary Conflicts Law in American Perspective’, in: Recueil des Cours, 1970-III, t. 131, p. 77; HUANG JIN, A Study of Interregional Conflict of Laws (in Chinese), Shanghai Xuelin Publishing House, Shanghai, 1991, pp. 14-46. 8

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Interaction and Integration between Hong Kong, Macao and Mainland China own legal system, which has evolved over 50 years. In China, two social systems, three legal traditions and four law districts (if Taiwan is taken into account) coexist and prosper, making China a typical plural legal system country. After their return to China, the social system and way of life in Hong Kong and Macao shall remain unchanged for 50 years and the laws shall remain basically unchanged, even after 50 years. What does this then imply? In my opinion, ‘unchanged’ after 50 years means that the ‘one country, two systems’ mechanism and legal framework will be unchanged, as well as the legal status and the basic legal systems of Hong Kong and Macao. In this way, Hong Kong and Macao will continue to be separate law districts within China, and China will remain a country with a plural or a composite legal system in 50 years. Of course, ‘remaining unchanged’ does not exclude the natural evolution of the laws of the SARs, such as the revision of laws by the SAR legislatures. This rule will not exclude the adaptation of the SAR laws to those rules of international and interregional law agreed between the SARs and their partners. So the overall situation will not change and the evolution of the legal systems of the SARs will be natural.

IV. Establishment of an Interregional Mechanism of Legal Consultation, Coordination and Cooperation Mainland China, the Hong Kong SAR, and the Macao SAR have distinct legal systems, are relatively separate law districts within China, and each have their respective legislative, administrative and judicial jurisdictions. Interregional conflicts or collisions of laws of various kinds will inevitably occur between them. Though unilateral legislation on each part may resolve some of these, this may be inoperative and even complicate matters in the certain situations, in particular those involving others and requiring assistance and cooperation from them. Thus, on legal issues, cooperation between Mainland China, the Hong Kong SAR and the Macao SAR is desirable, as is the joint effort necessary to establish an interregional mechanism of consultation, coordination and cooperation. This is needful for the 50 years to come, as well as thereafter. Consultation, coordination and cooperation mechanisms of various kinds have so far been set up between Mainland China and the Hong Kong SAR and the Macao SAR. For example, the Supreme People’s Court of the PRC and the High Court or the Department of Justice of the Hong Kong SAR have established consultation mechanisms on interregional judicial assistance and have reached agreements on, and made arrangements for, the service of civil and commercial judicial documents, and the enforcement of arbitral awards and judicial decisions in civil matters.10 Furthermore, during the investigation of certain criminal cases, 10 For example, Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong SAR Courts signed on

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Huang Jin the so-called ‘procuratoriats’ of Guangdong Province, the Independent Commission Against Corruption of Hong Kong as well as the Commission Against Corruption of Macao have lent their assistance and cooperation. However, the consultation, coordination and cooperation are temporary, of limited scope, and have yet to be institutionalized. Interregional legal issues will endure in China in the long term, that is even after the 50-year period. Consultation, coordination and cooperation on interregional legal issues must be phased in through a long process, rather than imposed in a single, sudden action. In this context, it is absolutely necessary to establish an institutional and comprehensive mechanism for these matters between Mainland China, the Hong Kong SAR and the Macao SAR. The legal consultation and cooperation mechanism to be created by these parties may take the shape of an institution, to be called the ‘National Commission of Legal Consultation and Coordination’. Within the framework of the Constitution of the PRC and, in particular, of the Basic Law of SARs, the Commission would be a working committee with the official support of all parties. Before the reunification of Mainland China and Taiwan, members of the Commission would be legislature members, judges, lawyers, law professors and other law experts appointed by Mainland China, the Hong Kong SAR and the Macao SAR. Of course, Taiwan law experts could be invited to participate. A secretariat would be established to take charge of the routine work and communications, in order to facilitate the work of the Commission. The responsibilities of the National Commission of Legal Consultation and Coordination would be the following: the initiation of research, consultation and coordination in interregional legal affairs and issues and the making of proposals likely to be accepted by all parties, in order to promote mutual assistance and cooperation in legal matters between all parties. If a consensus were to be reached under the aegis of the Commission, legislative proposals could be made on issues usually falling within the jurisdiction of the central legislature of the PRC, thus allowing legislation, passed by the central legislature, to be applicable across the country; local legislatures would also draft and promulgate local legislation in the regions under their respective jurisdictions, on the basis of proposals concerning areas usually falling within the jurisdiction of SARs. In this way, the Commission would play an important role in harmonizing and resolving interregional legal conflicts or collisions. The National Commission of Legal Consultation and Coordination should preferably be an institution acting in practical cases and respecting the principle of consultation, rather than a public entity established under the Constitution of the PRC or the Basic Law of the SARs. Its legislative proposals would thus serve as recommendations, model laws, or instructions, without having mandatory force. The final decision-making power would rest with the respective legislatures in accordance with the Basic Law of the SARs.11 14 January 1999; Arrangement for Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong SAR signed on 21 June 1999. 11 According to Article 18 of the Basic Law of Hong Kong and Basic Law of Macao, national laws shall not be applied in the SARs except for those listed in Annex III to the Basic Laws, and laws listed in Annex III to the Basic Laws shall be confined to those

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Interaction and Integration between Hong Kong, Macao and Mainland China It is advisable that the National Commission strike a balance between legal consultation and coordination and the unification of law. The ‘one country, two systems’ policy adopted by China to deal with the issues of Hong Kong, Macao and Taiwan is intended to maintain the socioeconomic and legal systems of the three regions distinct from Mainland China over a relatively long period, at least 50 years. Hasty unification of law, forgetful of the historic and current situations of Mainland China, Hong Kong, Macao and Taiwan, would be contrary to the ‘one country, two systems’ policy and doomed to failure. As a result, the primary task of the Commission would be consultation and coordination and making legislative proposals on interregional affairs and issues, while the unification of law would not be a major concern. However, legal consultation and coordination are closely intertwined with unification, as they may lead to a consensus, which may in turn lead to the unification of law. The integration and unity of the laws of different regions within a single country are more natural, in view of the worldwide convergence and unification of national laws in many areas. However, against the background of the current situation in China, legal consultation and coordination should be the immediate and practical objective, while the unity of law will be a long-term objective, to be attained by a lengthy and unhurried process.

V.

Conclusion

The ‘one country, two systems’ formula has been in place for 10 years in Hong Kong and 8 years in Macao. During this period, it has been successful, enjoying worldwide recognition. Yet we have a long way to go. There are still 40 of the 50 years to run. And having shown that this policy should remain unchanged even after 50 years, we have a much longer path ahead. Concurrent with our firm intention of adhering to the ‘one country, two systems’ policy in the long run, we must also remain realistic, that is use the realities on the ground as a starting point and search for actual concrete subjects to be examined; understand the interregional legal affairs and issues between Mainland China, Hong Kong and Macao, which will remain topical in the long run; examine the interregional conflict of laws in an insightful manner; and seek resolution through interaction, consultation, coordination and cooperation. The author argues for the establishment of a standing, stable and institutionalized mechanism of interregional legal consultation, coordination and cooperation, as the primary objective both within and after the 50year period.

relating to defense and foreign affairs as well as other matters outside the limits of the autonomy of the SARs as specified by the Basic Laws.

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SET-OFF AND THE ROME I PROPOSAL Ulrich MAGNUS*

I. II. III. IV. V.

VI. VII.

Introduction The Rome I Proposal on Set-off The Present Views on the Law Governing Set-off The ECJ’s Decision of 2003 The Scope of the Proposal on Set-off A. Characterisation B. General Rule or Limited to Contracts? C. Set-off Governed by the Law of the Main Obligation D. The Meaning of Legal Set-off E. Distinction between Set-off and Mere Deduction? F. The Requirements and Consequences of Set-off Some Problems Conclusions

I.

Introduction

The Convention on the law applicable to contractual obligations of 19 June 1980 – the so-called Rome Convention – does not explicitly regulate the law governing international set-off. In contrast to this attitude, the Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual regulations (Rome I),1 which will transform the Rome Convention into a directly applicable EU-Regulation, contains a separate provision which explicitly addresses international set-off. The following paper examines the scope and problems of the proposed new provision. This paper is devoted to the memory of my good friend Petar Šarčević. He was a great scholar, a fantastic diplomat for his country in very difficult times, but what is much more important was that he was a wonderful, warm-hearted personality. We met for the first time at a conference in Graz in the nineteen seventies and then subsequently on many later occasions. We became friends and organized a number of activities and planned some others for the years after our retirement. * Professor for Civil Law, Private International Law, and Comparative Law at the University of Hamburg; Judge (part-time) at the Hanseatic Court of Appeal, Hamburg. 1 Of 15 December 2005, COM (2005) 650 final, with an Explanatory Memorandum of the Commission.

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Printed in Germany

Ulrich Magnus Among these projects was a book on international contract law. Therefore, it is appropriate to honour the memory of Petar by some words concerning a topic from that field.

II.

The Rome I Proposal on Set-off

The Rome I Proposal introduces a short and clear-cut rule on the law governing international set-off. The respective provision (Art. 16) bears the heading ‘Statutory offsetting’ and reads as follows: ‘Statutory offsetting shall be governed by the law applicable to the obligation in relation to which the right to offset is asserted.’ The provision deals with ‘statutory offsetting’ only and prescribes, insofar, that the law of the main claim which shall be extinguished by set-off governs the questions of set-off. The Commission bases this provision on the reasoning that ‘contractual offsetting is by definition subject to the general rules in Articles 3 and 4. The aim of the solution adopted here is to make offsetting easier while respecting the legitimate concerns of the person who did not take the initiative.’2 The person who did not take the initiative is evidently the person, in fact the creditor of the main claim, against whom set-off is invoked.

III. The Present Views on the Law Governing Set-off Though the Rome Convention does not mention set-off expressly, the general view is that Art. 10 (1) (d) of the Convention (‘the various ways of extinguishing obligations [...]’) also covers set-off with the effect that set-off is governed by the law applicable to the contract.3 Taken literally, the Rome Convention provides that the law of that contractual obligation which is to be extinguished shall govern set-off. True, the debt which is set off will be extinguished, too, but this is very evidently

Explanatory Memorandum of the Commission (note 1), p. 8. See LAGARDE P., ‘Le nouveau droit international privé des contrats après l’entrée en vigueur de la Convention de Rome du 19 juin 1980’, in: Rev. crit. dr. int. pr. 1991, p. 287 et seq., at 334; LEIBLE S., in: Anwaltkommentar BGB, vol. I, Bonn 2005, Art. 32 EGBGB, n. 30; MAGNUS U., in: von Staudinger, Kommentar zum Bürgerlichen Gesetzbuch, Berlin (issue 2002), Art. 32 EGBGB, n. 61; MARTINY D., in: REITHMANN/MARTINY, Internationales Vertragsrecht, 6th ed., Köln 2004, n. 309; SPELLENBERG U., in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, vol. 10, 4th ed., München 2005, Art. 32 EGBGB, n. 64. 2 3

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Set-off and the Rome I Proposal not the contractual ‘obligation’ whose extinction Art. 10 (1) (d) of the Rome Convention envisages.4 Despite the text of Art. 10 (1) (d) of the Rome Convention, the views are split as to which law should govern set-off. Only if both the main obligation and the obligation which is set-off are governed by the same law is it common ground that this law also applies to set-off.5 If both obligations follow their own law, the now prevailing view favours the law which governs the main obligation (against which set-off is declared).6 But there are also different views. The Romanic countries, in particular France, follow their tradition and adhere to the doctrine of cumulation. The requirements of both the law governing the main obligation and the law governing the obligation which is set off must be met; otherwise, set-off cannot succeed.7 Legal doctrine has developed even further solutions: in particular, that of the two different laws available, the law which shall govern is the one which is either more favourable8 or unfavourable towards set-off.9 Another proposal suggests that each obligation should be treated according to ‘its’ law (‘soft cumulation’).10 Thus, despite a prevailing view, there is a broad variety of differing opinions. 4 But contrary for instance JUD B., ‘Die Aufrechnung im internationalen Privatrecht’: IPRax 2005, p. 104 et seq., at 105. 5 Compare BGH, in: NJW 1994, p. 1416; LEIBLE S. (note 3), n. 30; LAGARDE P. (note 3), p. 334; MAGNUS U. (note 3), n. 61; MARTINY D., in: REITHMANN/MARTINY (note 3), p. 309; SPELLENBERG U. (note 3), n. 64. 6 See for instance for Germany: BGH (note 5); VON HOFFMANN B., in: Soergel, BGB, Vol. 10, 12th ed., Stuttgart/Berlin [etc.] 1996, Art. 32 EGBGB, n. 49; HOHLOCH G., in: Erman, Handkommentar zum BGB, 11th ed., Münster 2004, Art. 32 EGBGB, n. 13; KROPHOLLER J., Internationales Privatrecht, 6th ed., Tübingen 2006, p. 474 et seq.; LEIBLE S. (note 3), n. 30; MAGNUS U. (note 3), n. 61; MANKOWSKI P., in: IPRax 2006, p. 111; MARTINY D. (note 3), n. 310; SPELLENBERG U. (note 3), n. 65; STAUDINGER A., in Bürgerliches Gesetzbuch. Handkommentar, 5th ed., Baden-Baden 2007, Art. 32 EGBGB, n. 7; for Austria: CZERNICH D., in: CZERNICH D./HEISS H., EVÜ – Das Europäische Schuldvertragsübereinkommen, Wien 1999, Art. 10, n. 32; for the United Kingdom: – although only for the legal set-off outside legal proceedings – Meridien BIAO Bank GmbH v. Bank of New York [1997] 1 Lloyd’s Rep. 437 (C.A.); DICEY A.V., MORRIS J. & COLLINS L., The Conflicts of Laws, 14th ed., London 2006, n. 7-031 and 32-208 [however, set-off declared during legal proceedings is governed by the lex fori: cf. Meyer v. Dresser (1864) 16 C.B. (N.S.) 646]. 7 See for France: BATIFFOL H./LAGARDE P., Droit international privé, vol. II, 7th ed., Paris 1983, n. 614; MAYER P./HEUZE V., Droit international privé, 7th ed., Paris 2001, n. 749; LAGARDE P. (note 3), p. 334 et seq.; in the same sense for Spain: CALVO CARAVACA A.L./CARRASCOSA GONZALEZ J., Derecho Internacional Privado, vol II, 7th ed., Granada 2006, p. 384. 8 In this sense for instance KANNENGIEßER M., Die Aufrechnung im internationalen Privat- und Verfahrensrecht, Tübingen 1998, p. 117. 9 See DÖLLE H., in: RheinZ 1924, p. 32 et seq., at 44. 10 JUD B. (note 4), p. 107 et seq.

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IV. The ECJ’s Decision of 2003 In 2003, the ECJ had to decide on set-off in a case where the two obligations at issue were governed by different laws.11 In its decision, the Court stated: ‘In so far as it extinguishes two obligations simultaneously, an out-of-court set-off between claims governed by two separate legal orders can take effect only in so far as it satisfies the requirements of both legal orders concerned. More specifically, any set-off of that nature makes it necessary to ensure, as regards each of the claims concerned, that the conditions relating to set-off provided for in the relevant legal order are not disregarded.’12 By this statement, the Court follows, evidently, the French doctrine of cumulation. However, the case underlying the ECJ’s decision was a rather peculiar one. The defendant, CEMR, was a French private organization concerned with regional cooperation. It had concluded contracts with the plaintiff, the Commission, under which it was entitled to certain payments for regional measures. The parties agreed to be bound by Belgian law. Following an audit of CEMR’s accounts, the Commission reached the opinion that CEMR had violated binding budgetary provisions and was obliged to repay certain sums. The Commission, therefore, requested that CEMR repay an amount of about 200.000 ECU. CEMR doubted the violation of budgetary provisions and objected to the request. The Commission then declared a set-off: It set off the sum of almost 200.000 ECU against the equivalent sum which was still payable to CEMR under the contracts. The ECJ held that the Commission’s contractual payment obligation was governed by Belgian law while the (disputed) repayment obligation of CEMR was governed by Community law. Since a requirement for set-off under Belgian law, namely that the set-off claim must be undisputed, was not met the set-off as a whole failed. The case is peculiar because a public body, the Commission, intended to enforce a claim against a private (legal) person by way of self-execution. It is not unusual that Member States enable their authorities to release directly enforceable payment orders. An analysis of the ECJ decision should not overlook this aspect which is characteristic of public law. The case is further peculiar as it did not involve the typical situation where the debtor of a claim declares the set-off with a claim he/she has against the creditor. In Commission v. CEMR, the creditor of the main claim,13 the Commission, intended to discount this alleged claim from the sum which it still had to pay to the debtor. Moreover, the Court mentioned neither

ECJ [2003] ECR, I-7617 (Case C-87/01, Commission v. CEMR). ECJ ibid. para. 61. 13 However, it might not be too easy to identify the main claim in this case. Generally the main claim is the claim which has been raised first and against which the defendant invokes the defence of set-off. In the ECJ case, this was the Commissions’s claim for repayment. 11 12

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Set-off and the Rome I Proposal private international law nor the Rome Convention.14 It might be, therefore, too hasty to infer from this decision that the ECJ adopted the cumulation doctrine generally in private international law. The reasoning of the decision is short. The main argument is seemingly the fact that both claims are extinguished. In consequence, the requirements established by both laws which govern the claims should be satisfied. But, this reasoning overlooks the fact that it is the mere discretion of the debtor of the main claim whether or not to declare set-off or to sue for set-off either separately or through a counter-claim.15 The creditor of the main claim can neither influence nor avoid a justified set-off. The applicable law concerning set-off is, therefore, called upon to protect the interests of the creditor rather than those of the debtor. The creditor should be able to trust that the legal requirements of his claim govern any set-off while the debtor’s interests are not impaired by such a solution, since he or she can choose between either set-off or an independent proceeding. The ECJ also did not take into account that the cumulation doctrine makes set-off more difficult because the requirements of two legal systems must be fulfilled. The only, yet hardly, convincing reason for this is the internationality of the case. Internationality is even less convincing when the aim of the internal market is envisaged where the enforcement of claims is continuously simplified. Set-off is, however, the simplest way of enforcing a claim and, thus, should not be made harder. The cumulation doctrine has a further disadvantage in that it leads to a certain number of unnecessary legal proceedings, because, under this doctrine, set-off is more often refused16 and the debtor is then forced to sue for his claim separately. One should, therefore, be reluctant to generalise the decision of the ECJ. On the contrary, it should be welcomed that the Commission’s Proposal does not adopt the solution in Commission v. CEMR.

V.

The Scope of the Proposal on Set-off

A.

Characterisation

The Proposal characterises set-off, no doubt, as part of substantive law, not of procedural law. This follows clearly from the fact that the law of the main claim Though at that time the ECJ was not competent to interpret the Rome Convention, it would have been worthwhile for the sake of argument to examine the situation under the Rome Convention. 15 This is even true if set-off is construed as functioning automatically (as the French compensation légale) because even under such a system the debtor must inform the court, in one way or the other, of the existence of the claim which is to be set off automatically (see thereto below). 16 It is always more likely that the requirements of one legal system than of two legal systems can be satisfied. 14

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Ulrich Magnus governs set-off. Had the Proposal classified set-off as a procedural matter, the lex fori would have had to been designated as the applicable law. The characterisation of set-off as substantive law also corresponds with the general view advanced under the Rome Convention.17

B.

General Rule or Limited to Contracts?

Art. 16 of the Proposal does not make clear whether its scope is limited only to setoff concerning contractual obligations or whether it also concerns set-off with or against other obligations. On the one hand, the Rome I Proposal, as such, deals only with contractual obligations. The wording of Art. 16 is, on the other hand, wide enough to cover any kind of set-off. Such a wide interpretation can be supported by the fact that the so-called Rome II Proposal, which deals with the law applicable to non-contractual obligations,18 does not contain a comparable provision on set-off; although, the issue of set-off can also arise in the field of non-contractual obligations. To fill this gap in the Rome II Proposal (or of the later Regulation), it appears to be unavoidable that Art. 16 of the Rome I instrument will be applied by analogy. In essence, Art. 16 is part of a virtual ‘Rome 0 Regulation’ which should codify all general rules on private international law (like renvoi, ordre public, internationally mandatory provisions etc.) that would otherwise have to be regulated again and again in each specific private international law instrument. The scope of the present Art. 16 of the Rome I Proposal should, therefore, be understood in a wide sense so as to include set-off with and against all kinds of obligations.

C.

Set-off Governed by the Law of the Main Obligation

According to Art. 16 of the Rome I Proposal, the law of the main claim governs set-off. The main claim, though not always easily identifiable, is generally the claim which the creditor raised and against which the debtor invoked set-off. The conflicts rule of Art. 16 is consistent with the already prevailing view under the Rome Convention.19 As compared with the cumulation doctrine, it makes set-off See for Germany: HELDRICH A., in: Palandt, BGB, 65th ed., München 2006, Art. 32 EGBGB, n. 6; VON HOFFMANN B. (note 6), n. 49; HOHLOCH G. (note 6), n. 13; LEIBLE S. (note 3), n. 30; MAGNUS U. (note 3), n. 61; SPELLENBERG U. (note 3) n. 51; SPICKHOFF A., in: Bamberger/Roth, Bürgerliches Gesetzbuch, Münich 2003, Art. 32 EGBGB n. 10; STAUDINGER A. (note 6), n. 7; for Austria: CZERNICH D. (note 6), n. 32; for the United Kingdom: – though only for the legal set-off outside legal proceedings – Meridien BIAO Bank GmbH v. Bank of New York (note 6); DICEY A.V., MORRIS J. & COLLINS L. (note 6), n. 7-031 and 32-208. 18 Amended Proposal for a Regulation of the European Parliament and the Council on the law applicable to non-contractual obligations (‘Rome II’), COM (2006) 83 final. 19 See the references above (note 6). 17

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Set-off and the Rome I Proposal easier20 and serves the aim of an efficient internal market as well as the aim of prompter and simpler enforcement of claims. The Explanatory Memorandum of the Commission indicates correctly that the proposed conflicts rule protects the legitimate concerns of the party who loses its claim without any action on its part.21 Also, in comparison to the other solutions proposed for international set-off Art. 16 Rome I Proposal appears to be preferable. The cumulation doctrine complicates set-off, as already mentioned, without sufficient reason. The solution of always applying the law most favourable to set-off facilitates set-off without a reasonable ground. And the solution of applying the law of the claim which is set off overly neglects the interests of the party who is subjected to set-off. It speaks for itself that the Swiss Statute on Private International Law of 1987,22 which has a reputation of very careful preparation and balanced solutions, has also adopted the same solution as Art. 16 of the Rome I Proposal.23 The conflicts rule proposed by Art. 16 is even suitable for legal systems which, like France and most Romanic laws, are familiar with automatic set-off, ‘compensation légale’, which automatically extinguishes the two reciprocal claims when certain conditions are satisfied, namely if mutuality, homogeneity, liquidity, and direct enforceability are given.24 Set-off need then not be declared.25 Under this system of set-off it might be more difficult to identify which of the two reciprocal claims constitutes the main claim and which one is the claim which is to be set off. But, even for the ‘compensation légale,’ it is necessary that at least in legal proceedings when a claim is brought, the debtor/defendant informs the judge of the existence of another claim which shall be legally set off. Thus, even under the French system of ‘compensation légale’ it will generally be possible to identify which of the two claims is the main one – which was first raised – and which one is secondary. Moreover, it should not be overlooked that French law and other Romanic legal systems also allow, in addition, a ‘compensation judiciaire’. This kind of set-off must be declared in legal proceedings and does not require actual liquidity and enforceability of the claim which is set off.26 In sum, the proposed conflicts rule on set-off has to be welcomed.

D.

The Meaning of Legal Set-off

Art. 16 of the Rome I Proposal deals with only ‘statutory offsetting’ (the French version of the Proposal uses the term ‘compensation légale’). First, the term ‘offSee also the Explanatory Memorandum of the Commission (note 1), p. 8. Explanatory Memorandum of the Commission (note 1), p. 8. 22 Bundesgesetz über das Internationale Privatrecht (IPRG) vom 18.12.1987. 23 See Art. 148 par. 2 IPRG. 24 See Art. 1291 French Code civil. 25 Art. 1290 French Code civil. 26 See Cour de cassation, in: D. 1967, p. 358 with note MAZEAUD; Cour de cassation: Bull. Civ. 1991, I, n. 355. 20 21

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Ulrich Magnus setting,’ in the context of set-off, is rather unfamiliar in Europe. Thus, the term setoff should be used instead.27 Further, ‘statutory offsetting’ and, in particular, its French translation ‘compensation légale’ might nourish the impression that the provision covers set-off merely in the sense in which the French term does.28 Such an understanding would exclude from the scope of Art. 16 any set-off which one party has unilaterally declared. In fact, that would be too narrow of an understanding. The Greenbook of 2003,29 which initiated the Rome I Proposal, used the term ‘statutory set-off’ only in contrast to contractual set-off, namely, where both parties agreed to set off one claim against another. From the outset, the underlying idea was that statutory setoff should cover all forms of set-off except: (1) where the parties concluded an explicit contract on the matter of set-off; and (2) where set-off is specifically linked to either civil or insolvency proceedings.30 This understanding is also supported by the Explanatory Memorandum of the Commission,31 where it is stated that ‘contractual offsetting is by definition subject to the general rules in Articles 3 and 4’ and where ‘statutory offsetting’ is evidently used in contrast to ‘contractual offsetting.’ Art. 16 of the Rome I Proposal covers, therefore, both automatic set-off (the French type) and set-off declared by one party only (the English and German type). On the other hand, a contract on set-off is governed by the law applicable to that contract. Finally, questions of set-off which arise only due to the specific procedural situation must be governed by the applicable procedural law, namely the lex fori. The distinction between procedural and civil set-off should be drawn according to whether the issue concerning set-off could arise, and also has to be decided, outside of any legal proceedings; where this is the case then the conflicts rule of Art. 16 applies. Where the set-off issue either does or can only arise because of the procedural situation (for instance in what form or under what conditions, if any, set-off can be declared in legal proceedings) then the lex fori decides.

E.

Distinction between Set-off and Mere Deduction?

It could be questioned whether a further distinction should be drawn between setoff and a mere balancing or deduction of a sum from the main claim. Such a mere

27 In the same sense, see the Opinion of the Max-Planck-Institute on the Rome I Proposal, at <www.mpipriv.de>, p. 99. 28 As discussed above under Section V.C. 29 Greenbook on the transformation of the Convention of Rome of 1980 on the law applicable to contractual obligations into a Community instrument, as well as on its modernisation of 14 January 2003, COM (2002) 654 final. 30 A special provision in insolvency matters is Art. 6 (1) Council Regulation No. 1346/2000/EC on insolvency proceedings of 29 May 2000. 31 See note 1, p. 8.

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Set-off and the Rome I Proposal balancing could be inferred from provisions like Art. 84 (2) CISG.32 This provision obliges the buyer to ‘account to the seller for all benefits which he has derived from the goods or part of them.’ This arises in a case where the contract has been terminated and the seller has to refund the (already paid) price and the buyer has to return the goods. It is commonly understood that the buyer can then claim the balance, i.e. the difference between the price and the deducted benefits.33 In fact, two reciprocal claims are set off against each other although this is often termed as an ‘equalization’34 or ‘deduction’.35 But, in essence, it is a set-off. Since no clear distinction between set-off and a ‘mere’ balancing or deduction can be drawn, both should fall within the scope of Art. 16 of the Rome I Proposal.

F.

The Requirements and Consequences of Set-off

Art. 16 does not explicitly mention which matters of set-off it covers. Nonetheless, despite this fact the answer is sufficiently clear. The conflicts rule of Art. 16 extends to all questions which concern the permissibility, conditions, execution, and consequences of set-off. The provision covers, in particular: (1)

whether – and, if so, to what extent – set-off requires reciprocity and homogeneity of the two claims;

(2)

whether – and, if so, which – prohibitions of set-off apply;36 the creditor of the main claim can invoke only such prohibitions as the law of the main claim provides for;

(3)

whether – and, if so, to what extent – the claim which is set off needs to be liquidated;

(4)

whether – and, if so, when – a prescribed claim is available for set-off (whether a claim is prescribed is, however, governed by the law of this claim).

United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980. 33 See SAENGER I./SAUTHOFF E., in: IHR 2005, p. 189 et seq.; MAGNUS U., in: Staudinger, CISG, Berlin (issue 2005), Art. 84 CISG, n. 7, n. 14. 34 See for instance HORNUNG R., in: SCHLECHTRIEM P./SCHWENZER I. (eds.), Commentary on the UN Convention on The International Sale of Goods (CISG), 2nd ed., Oxford 2005, Art. 84, n. 16. 35 See for instance SAENGER I./SAUTHOFF E. (note 33), p. 189 et seq.; MAGNUS U. (note 3), n. 14. 36 Even a jurisdiction clause which concerns the claim which is to be set off can in fact prohibit set-off; namely, if the clause does not allow the set-off of the claim to be raised in the court where the main claim is pending. 32

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Ulrich Magnus All questions concerning the execution of set-off are also covered by Art 16, in particular, whether it has to be declared or takes effect automatically. As already mentioned, only specific procedural issues are governed by the lex fori.37 The question of when the extinguishing consequence of set-off takes effect is governed by Art. 16 as well. If the law of the main claim links this effect to the declaration of set-off and the debtor, according to ‘his’ law,38 is not required to declare set-off then an equivalent point of time must be sought. It is the date at which the debtor indicated to either the court or creditor by any means that he or she wanted to invoke the existence of a claim against the creditor. Whether the claim which the debtor intends to set off exists at all depends on the law that governs this claim.

VI. Some Problems Art. 16 of the Rome I Proposal leaves some questions open. The provision does not regulate the law applicable to contractual set-off. As already mentioned, the Explanatory Memorandum of the Commission39 refers in this respect to the general rules of Articles 3 (choice of law) and 4 (generally applicable law without choice) of the Proposal. It is certainly correct that the general rules apply in order to determine the applicable law. However, this reference to Articles 3 and 4 can be easily misunderstood as excluding other conflicts rules from being applied in the case of contractual set-off. Besides Articles 3 and 4, Articles 5 (consumer contracts) and 6 (employment contracts) must also be taken into account, since contractual set-off can arise in these kinds of contracts as well. If the parties to a contract on set-off have agreed on a certain law, this law is, therefore, applicable only within the limits set by Arts. 5 and 6 of the Proposal. Since the Proposal forbids any choice of law with respect to consumer contracts, such a choice is also ineffective for a contract on set-off if one party is a consumer. Problems may further arise with respect to the objective designation of the applicable law concerning contracts on set-off. If the parties have agreed on a pure contract on set-off – for instance by way of a settlement – it is difficult to determine the applicable law. The exemplary list in Art. 4 (1) of the Rome I Proposal, which designates the applicable law for most kinds of contracts, does not mention set-off contracts. The substitute conflicts rule that then steps in and refers to the law at the seat of the characteristically performing party40 does not really help. In a See above under Section V.D. ‘His’ law is the law governing the claim which the debtor sets off against the main claim. Under this law, like in French law, set-off may function automatically and may need no declaration. 39 See note 1. 40 Art. 4 (2) sent. 1 Rome I Proposal. 37 38

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Set-off and the Rome I Proposal case of a contract covering only set-off it will generally be impossible to determine the characteristically performing party, since neither – or both – parties render performance which is characteristic for the contract. According to the Rome I Proposal, identifying the most closely connected law is the next step.41 In the worst case, rather insignificant connecting factors may then determine the applicable law. It is advocated here that in such a case an analogous application of Art. 16 should be taken into account. That would mean that the law of the main claim would apply, provided that a main claim could be identified. If, however, the contractual agreement on set-off constitutes only part of another contract, the law governing that contract would govern the set-off issues as well. Taken together, it does not appear necessary to include a separate conflicts rule on contractual set-off into the Rome I Proposal. However, the reasoning in the Explanatory Memorandum of the Commission should also be supplemented by a reference to Articles 5 and 6 of the Proposal. It would also be helpful, as well as further the uniform application of Art. 16 in all 27 EU Member States, if a short explanation of the Article’s aim and contents was included into the recitals. This would be all the more helpful since the Rome Convention does not contain a comparable provision and the usual form of publication of Regulations generally includes only the text and the recitals, but not necessarily the Explanatory Memorandum of the Commission. Art. 16 of the Rome I Proposal also does not state which law governs procedural questions of set-off. However, it is a widely accepted view that these matters are governed by the procedural law of the seized court (lex fori).42 Therefore, the Proposal need not include an explicit rule on the law applicable to the procedural aspects of set-off. Finally, it could be asked whether Art. 16 should not specifically address the issue of set-off of claims in different currencies. Some legal systems exclude set-off where the reciprocal claims are in different currencies; others allow it, at least if the currencies are freely convertible and if the parties have not agreed otherwise.43 In its true sense, this is a question of substantive law, not of private international law. However, it is a question of rather high practical importance which could and should be unified within the EU, at least as long as there is no single currency within the EU. The preferable view is that different but freely convertible currencies should not prohibit set-off unless the parties have agreed otherwise.

Art. 4 (2) sent. 2 Rome I Proposal. See for instance for Germany: BGHZ 60, 87; MAGNUS U., in: LEIBLE S. (Hrsg.), Das Grünbuch zum Internationalen Vertragsrecht. Beiträge zur Fortentwicklung des Europäischen Kollisionsrechts der vertraglichen Schuldverhältnisse, München 2003, p. 219 et seq.; STAUDINGER A. (note 17), n. 7; for the United Kingdom: Meyer v. Dresser (1864) 16 C.B. (N.S.) 646. 43 In this latter sense see for instance LEIBLE S. (note 3), n. 31; MAGNUS U., in: LEIBLE S. (Hrsg.) (note 42), p. 228 et seq.; MARTINY D. (note 3), n. 313. 41 42

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VII. Conclusions The Commission’s Proposal on international set-off is to be welcomed. It is progress that the Rome I Proposal – in contrast to the Rome Convention – contains an explicit provision on this issue, clarifies the classification of set-off as substantive and not procedural, and clearly determines the applicable law. Also, the chosen solution is convincing. Applying the law of the main claim respects the interests of the party who needs more protection, since this party cannot influence the loss of its claim through set-off; whereas the other party can choose to enforce its claim either by set-off, counter-claim, or separate legal proceedings. Some doubts are raised by Art. 16’s use of the expression ‘statutory offsetting.’ ‘Set-off’ or ‘unilateral set-off’ would clarify the idea that all kinds of set-off except contractually agreed set-off and specific procedural rules on set-off are intended to be covered. The recitals of the Rome I instrument should be supplemented by a short explanation of the aim and content of Art. 16. There is no need to add specific conflicts rules on contractual and procedural set-off. But, it seems preferable to introduce a rule according to which claims in different currencies can be set off against each other as long as the currencies are freely convertible and the parties have not agreed on strict payment in a certain currency.

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INTERNATIONAL CHILD ABDUCTION IN JAPAN Yuko NISHITANI* I. II.

III. IV.

Introduction Measures under the Japanese National Law A. Family Court Orders B. Habeas Corpus C. Penal Sanction D. Recognition and Enforcement of Foreign Return Orders E. Results The Child Abduction Convention Final Remarks

I.

Introduction

With the increasing number of mixed marriages, international child abduction is becoming a crucial issue in many countries, because after the marriage breaks down one parent often takes the child back to his/her home country in breach of the other parent’s custody rights. The Hague Convention of October 25, 1980, on the Civil Aspects of International Child Abduction (hereinafter the ‘Child Abduction Convention’ or the ‘Convention’), provides an effective instrument to tackle such an illegal, cross-border removal of children. Once a child is wrongfully removed from one member state to another, the Convention requires the country to which the child has been taken to immediately send him/her back to the country where the child was habitually resident, without going into the substantive issues of custody rights. The Convention has gained 76 member states so far1 and is considered to be

* Associate Professor at Tohoku University School of Law, Sendai/Japan. This paper is largely based on the author’s publication (in Japanese): NISHITANI Y., ‘Kokkyô wo koeta Ko no Dasshu wo meguru Shomondai’, in: Tohoku University COE Sôsho (forthcoming 2007). This article is written in memory of Professor Petar Šarčević. Our stimulating discussions on various topics of private international law in September 2004 have become an unforgettable memory since his sudden sorrowful departure. Abbreviations and Terminologies in Japanese: (1) Legislations: Kaji Shinpan Hô = Law on Family Court Decision (‘LFCD’); Kaji Shinpan Kisoku = Rules on Family Court Decision (‘RFCD’); Hô no Tekiyô ni kansuru Tsûsokuhô = Act on General Rules on Application of Laws (‘AGRAL’); Jinshin Hogo Hô = Habeas Corpus Act (‘HCA’); Jinshin Hogo Kisoku = Habeas Corpus Rules (‘HCR’); Keihô = Penal Code (‘PC’); Keiji Soshô Hô = Penal Procedure Code (‘PPC’); Minji Shikkô Hô = Civil Enforcement Code (‘CEC’); Minji Soshô Hô = Civil Procedure Code (‘CPC’); Minpô = Civil Code (‘CC’).

Yearbook of Private International Law, Volume 8 (2006), pp. 125-143 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Yuko Nishitani one of the most successful conventions adopted by the Hague Conference on Private International Law. Japan, however, has not ratified it yet. Absent measures based on the Child Abduction Convention, a parent seeking the return of a child from Japan to the country of origin must use the procedures pursuant to Japanese national law. As will be shown in this paper, the Japanese legal system does not provide effective and peremptory measures sufficient to guarantee the smooth and prompt return of the child, which is a serious impediment in dealing with cross-border child abduction.2 According to statistics on mixed marriages, Japanese men generally marry more Asian women and Japanese women marry more Western men.3 Looking at child abduction cases brought before Japanese courts – including those cases where the fact of the child abduction came about indirectly in a divorce procedure –, some children were abducted to Japan by a Japanese mother who was married to a Western man and domiciled in his home country, then returned to Japan after the

(2) Japanese Judiciary System: Chihô Saibansho = District Court; Katei Saibansho = Family Court; Kôtô Saibansho = High Court; Saikô Saibansho = Supreme Court; Taishin-In = former Supreme Court. (3) Reports of Court Decisions: Katei Saibansho Geppô = Monthly Report of Family Court (‘MRFC’); Keiroku = Taishin-In Keiji Hanketsuroku (Reports of Taishin-In Decisions in Penal Matters); Keishû = Taishin-In/Saikô Saibansho Keiji Hanreishû (Report of Taishin-In/Supreme Court Decisions in Penal Matters); Kôkeishû = Kôtô Saibansho Keiji Hanreishû (Reports of High Court Decisions in Penal Matters); Kôminshû = Kôtô Saibansho Minji Hanreishû (Reports of High Court Decisions in Civil Matters); Minroku = Taishin-In Minji Hanketsuroku (Reports of Taishin-In Decisions in Civil Matters); Minshû = TaishinIn/Saikô Saibansho Minji Hanreishû (Report of Taishin-In/Supreme Court Decisions in Civil Matters). (4) Journals: JAIL = Japanese Annual of International Law; ZJapanR/J. Jap. L., Zeitschrift für Japanisches Recht / Journal of Japanese Law. 1 . The Child Abduction Convention entered into force on Dec. 1, 1983. 2 For an overview of the Japanese national law concerning child abduction, see NISHITANI Y., ‘Enforcement of Return and Access Orders in Cross-Border Cases in Japan’, in: Judges’ Newsletter 2004 [published by the Permanent Bureau of the Hague Conference on Private International Law], pp. 34-39; ID., ‘Cross-Border Child Abduction between Canada and Japan – From a Gender Perspective’, in: Gender Law and Policy Annual Review 4 (2006), pp. 47-72. 3 According to the statistics of population in 2004, 30,907 Japanese men married foreign women. The nationalities of the wife are: Chinese (11,915), Philippine (8,397), Korean (5,730), Thai (1,640), Brazilian (256), American (179), Peruvian (137), British (64) and the others (2,589). On the other hand, 8,604 Japanese women married foreign men during the same period. The nationalities of the husband are: Korean (2,293), American (1,500), Chinese (1,104), British (339), Brazilian (268), Peruvian (122), Philippine (120), Thai (75) and the others (2783). See .

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International Child Abduction in Japan marriage broke down.4 Child abduction from Japan to a foreign country seems to happen less frequently. We have, however, had cases in which an Italian or a U.S. mother, who had been domiciled in Japan with her Japanese husband, took her children back to her home country and later filed a divorce petition in Japan.5 In addition, there has been a case where a Dutch father, living in Japan separately from his Japanese wife, tried to abduct their two-year-old daughter to the Netherlands. He was subsequently subjected to a penal sanction for his violent acts in Japan.6 In dealing with cross-border child abductions, it would be desirable for Japan to ratify the Child Abduction Convention. There are however some obstacles in the Japanese national law that would make it difficult to appropriately implement the mechanism of the Convention. In the following, the legal measures available for child abduction under the current Japanese law are examined in light of recent court decisions (Chapter II). After reviewing the mechanism of the Child Abduction Convention (Chapter III), some remarks on possible future developments in Japan conclude this paper (Chapter IV).

II.

Measures under the Japanese National Law

In Japan, the main features available to tackle child abduction cases consist of Family Court orders (Section 1) and habeas corpus proceedings (Section 2). It is also possible to impose penal sanctions upon the abductor in exceptional cases (Section 3), and to recognize and enforce a foreign return order (Section 4).

Tokyo High Court, 15 Nov. 1993, in: Kôminshû 46-3, 98, and also in: MRFC 46-6, 47; Nagoya High Court, 30 May 1995, in: Hanrei Times 891, 248; Tokyo Family Court, 9 Oct. 1995, in: MRFC 48-3, 69; Tokyo District Court, 30 Jan. 2004, in: Hanrei Jihô 1854, 51; Saitama Family Court, 8 July 2005 [unpublished]. On the other hand, Supreme Court, 29 June 1978, in: MRFC 30-11, 50 and Supreme Court, 26 Feb. 1985, in: MRFC 37-6, 25 concerned cases in which Japanese fathers, married to U.S. and Italian women, wrongfully removed the child(ren) from the U.S. and Italy respectively to Japan. In the former Supreme Court decision of 1978, the U.S. mother succesfully obtained a habeas corpus order against the Japanese father for the return of the child to the U.S. 5 Tokyo District Court, 26 Dec. 1995, in: Hanrei Times 922, 276 (Italian mother); Nagoya District Court, 24 Nov. 1999, in: Hanrei Jihô 1728, 58 (U.S. mother). In both cases, the foreign mothers who had abducted their children to there home country were provided with custody rights in the divorce judgments in Japan. 6 Supreme Court, 18 March 2003, in: MRFC 58-4, 78. The Dutch father was accused of the ‘abduction for the purpose of removing to a foreign country’ as a criminal offense (article 226 PC [prior to the amendment of 2005 by the Law No. 66]). Cf. infra, note 44. 4

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Family Court Orders

A Family Court can institute child custody measures by appointing or changing the custodian, or ordering the return of the child (article 9 (1) Otsu No. 4 of LFCD, article 53 of RFCD). The dispute resolution in Family Court is based on conciliation (articles 17 and 18 of LFCD) and geared towards an agreement between the parties. A Family Court order does not automatically have binding effects and the opposing party can challenge the order by appealing to the Supreme Court within two weeks (article 14 of LFCD, article 55 of RFCD). Family Courts have the authority to examine the facts and proofs ex officio. They are equipped with trained Family Court bailiffs who have expertise in law as well as psychology to carry out the necessary investigations (articles 7 and 7bis of RFCD). Hence, Family Courts are generally considered qualified for examining the child’s circumstances and determining the custodian in view of the ‘best interests of the child.’7 According to the majority of authors and cases, Japanese Family Courts can exercise their jurisdiction to either appoint or change the custodian in cross-border cases, so far as the child has his/her domicile in Japan (cfr. articles 70 and 72 of RFCD [article 60 mutatis mutandis]). This is because the country where the child is domiciled is in the best position to scrupulously examine the child’s circumstances and implement measures which are in the best interests of the child.8 The question OMURA A., Kazokuhô, 2nd, Tokyo 2004, pp. 170-172. 8 Tokyo Family Court, 13 June 1969, in: MRFC 22-3, 104 [the jurisdiction was granted only concerning two out of five children who were domiciled in Japan]; Tokyo Family Court, 20 June 1969, in: MRFC 22-3, 110; Tokyo Family Court, 18 Oct. 1973, in: MRFC 26-7, 50; Tokyo Family Court, 12 Aug. 1975, in: MRFC 28-6, 87; Matsuyama Family Court – Uwajima Branch Office, 9 Jan. 1976, in: MRFC 29-3, 101; Sendai Family Court, 16 March 1982, in: MRFC 38-8, 149; Tokyo Family Court, 27 April 1987, in: MRFC 39-10, 101; Shizuoka Family Court, 27 May 1987, in: MRFC 40-5, 164; Tokyo Family Court, 22 Sep. 1989, in: MRFC 42-4, 65; Naha Family Court, 1 April 1991, in: MRFC 4310, 44; Kobe Family Court – Itami Branch Office, 10 May 1993, in: MRFC 46-6, 72; Osaka Family Court, 2 Dec. 1994, in: MRFC 48-2, 150; Kanazawa Family Court – Komatsu Branch Office, 11 March 1996, in: MRFC 48-8, 102. The same principle applies to disputes over access rights. Kyoto Family Court, 31 March 1994, in: Hanrei Jihô 1545, 81; Tokyo Family Court, 9 Oct. 1995, in: MRFC 48-3, 69. For academic opinions, see, inter alia, DOGAUCHI M., ‘Shinkensha no Shitei, Henkô no Saiban-Kankatsu to Junkyôhô’, in: Hanrei Times 747 (1991), p. 472; KONO T., ‘Ko no Yôiku, Kango, Hikiwatashi – Ko no Dasshu no Minjimen ni kansuru Hague Jôyaku to Kokusai Minji-Soshôhô/Kokusaishihô no Tôitsu teki Kaishakuron no Kokoromi’, in: KOKUSAIHÔ GAKKAI (ed.), Nihon to Kokusaihô no 100 nen, Vol. 5 – Kojin to Kazoku, Tokyo 2001, pp. 177, 182-188; MATSUBARA M., ‘Shôgai teki Ko no Kango Funsô no Shori’, in: OKAGAKI M./NODA A. (ed.), Kôza Jitsumu Kaji Shinpanhô, Vol. 5, Tokyo 1990, pp. 214-229. The international adjudicatory jurisdiction of Japanese courts are determined according to the ‘Theory of reverse presumption’ in pecuniary matters (Supreme Court, 16 Oct. 1981, in: Minshû 35-7, 1224; Supreme Court, 11 Nov. 1997, in: Minshû 51-10, 4055). Following this principle, the international adjudicatory jurisdiction in custody issues is to be based on articles 70 and 72 of RFCD on territorial jurisdictions mutatis mutandis. For Japan’s jurisdictional rules in pecuniary matters, see DOGAUCHI M., ‘The Hague Draft Convention on Jurisdiction and Foreign Judgments in Civil and 7

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International Child Abduction in Japan is whether Japanese courts can exercise jurisdiction over custody issues in divorce cases, even when the children are not domiciled in Japan. Some court decisions have answered in the affirmative. 9 It should, however, be considered that the jurisdiction in divorce cases is attributed primarily to the place where the spouses’ conflicting interests can be best settled, i.e., the domicile of the defendant, and only subsidiarily the domicile of the plaintiff, when the defendant has either disappeared or abandoned the plaintiff.10 This is in contrast to custody issues, where the best interests of the child have the paramount standing. Hence, the jurisdiction for custody issues should be determined independently of divorce issues, unless the denial of an accessory jurisdiction jeopardizes the effective protection of the child.11 The Family Court procedures for child custody measures are governed by Japanese law as the lex fori, according to the principle of ‘forum regit processum’. On the other hand, the law governing the substantive issues over the legal relationship between parents and child, including custody issues at divorce, is determined by article 32 of the ‘Act on General Rules on Application of Laws’ (AGRAL).12 According to this provision, the national law of the child applies if it is the same as Commercial Matters from a Perspective of Japan’, in: Kokusaishihô Nenpô 3 (2001), pp. 80, 85-93; ID., ‘Current Litigations in Japan and the United States’, in: JAIL 37 (1994), pp. 7294; PETERSEN A., Das internationale Zivilprozessrecht in Japan, Heidelberg 2003, pp. 41212. 9 Chiba District Court, 31 March 1972, in: Hanrei Jihô 682, 50; Sapporo Family Court, 13 Sep. 1985, in: MRFC 39-6, 39; Tokyo Family Court, 23 Feb. 1988, in: MRFC 406, 65; Mito Family Court, 4 March 1991, in: MRFC 45-12, 57; Tokyo District Court, 26 Dec. 1995, in: Hanrei Times 922, 276; Nagoya District Court, 24 Nov. 1999 (note 5); Tokyo District Court 30 Jan. 2004, in: Hanrei Jihô 1854, 51. 10 The jurisdictional rules in divorce cases have been established by the Supreme Court, 25 March 1964, in: Minshû 18-3, 486 and confirmed by the Supreme Court, 24 June 1996, in: Minshû 50-7, 1451. 11 Tokyo Family Court, 13 June 1969 (note 8); Tokyo Family Court, 18 Oct. 1973 (note 8). For academic opinions, see DOGAUCHI M. (note 8), p. 473; KONO T. (note 8), p. 187; MATSUBARA M. (note 8), p. 227. 12 The Act on General Rules on Application of Laws (AGRAL), i.e., ‘Hô no Tekiyô ni kansuru Tsûsoku-Hô’ in Japanese (Law No. 78 of 2006), substituted Hôrei of 1898 whose articles 3-34 provided for conflict of laws rules. For translations of AGRAL in German and English, see SAKURADA Y./NISHITANI Y./SCHWITTEK E., ‘Gesetz über die allgemeinen Regeln über die Anwendung von Gesetzen (Rechtsanwendungsgesetz)’, in: ZJapanR./J. Jap. L. 22 (2006), pp. 265-282; ANDERSON K./OKUDA Y. in: this Yearbook (present volume); DOGAUCHI M. ET AL., ‘Act on General Rules on Application of Laws’, in: JAIL 50 (2007) (forthcoming). For the reform of Hôrei and the enactment of AGRAL, see NISHITANI Y., ‘Die Reform des Horei’, in: ZJapanR/J.Jap. L. 15 (2003), pp. 263-264; ID., ‘Die Reform des Horei (2) – Der Vorentwurf vom 22. März 2005’ –, in: ZJapanR/J. Jap. L. 19 (2005), pp. 251-263; ID., ‘Die Reform des Hôrei (3) – Das Gesetz ‘Hô no Tekiyô ni kansuru Tsûsoku Hô’ vom 15. Juni 2006’, in: ZJapanR/J. Jap. L. 21 (2006), pp. 229-230; OKUDA Y., ‘Reform of Japan’s Private International Law: Act on the General Rules of the Application of Laws’, in: this Yearbook (present volume); TAKAHASHI K., ‘A Major Reform of Japanese Private International Law’, in: Journal of Private International Law 2006, pp. 311-338.

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Yuko Nishitani that of the father or mother; otherwise, the law of the place where the child has his/her habitual residence governs. This provision stems from article 21 of Hôrei after the amendment of 1989,13 which superseded former article 20 of Hôrei pointing to the national law of the father. Article 32 of AGRAL respects the child’s welfare on the conflict of laws level by referring primarily to the child’s nationality and, subsidiarily, to his/her habitual residence as the connecting factors.14 If Japanese law is applicable under article 32 of AGRAL, a Family Court will appoint or change the custodian by comparing the conditions and circumstances of both parents in light of the best interests of the child. The criteria established in the case law consists of the continuity of custody, conditions of custody, circumstances of life and education of the child, the ‘tender years’ doctrine, intent of the child, no separation of siblings, as well as allowance of visiting rights.15 The fact that one parent wrongfully removed the child in the past is not held as conclusive in determining who should exercise custody rights in the future. The Family Court procedures, starting from conciliation, are generally timeconsuming. After the 1980 amendment of LFCD, a Family Court may take interim measures before rendering a final order (article 15ter of LFCD, article 52bis of RFCD). It presupposes, however, that an application for a Family Court order has already been made and that the judge decides whether to take interim measures by assessing the urgency and possible outcome of the decision on the merits.16 So far as the judge respects the continuity of custody, the circumstances created by the abductor may well be confirmed de facto. When the abductor does not voluntarily return the child, coercive measures should be implemented. However, the Family Court bailiff’s recommendation of performance (article 15quinquies of LFCD) does not have binding force. Furthermore, according to the majority of authors and court decisions, the enforcement of interim measures (article 15ter (3) and (6) of LFCD, article 53bis of LFCR) or a return order (article 15 of LFCD) can only be effectuated as an ‘indirect enforce13 Law No. 27 of 1989. Article 21 of Hôrei [Legal Relationship between Parents and Child]: ‘The legal relationship between parents and their child shall be governed by the national law of the child where it is the same as the national law of one of the parents or, where one parent is lacking or otherwise absent, by the national law of the other parent. In all other cases, it shall be governed by the law of the child’s habitual residence.’ Translated by ANDERSON K./OKUDA Y., ‘Horei, Act on the Application of Laws’ (Law No. 10 of 1898 (as amended 2001), at: . 14 MINAMI T., Kaisei Hôrei no Kaisetsu, Tokyo 1992, pp. 156-170; SAWAKI T., in: SAWAKI T./MINAMI T. (eds.), Atarashii Kokusaishihô – Kaisei Hôrei to Kihon Tsûtatsu, Tokyo 1990, pp. 26-27. 15 NAKAYAMA N., ‘Ko no Ubaiai to Katei Saibansho no Shihôteki Kinô’, in: Kazoku – Shakai to Hô 18 (2002), pp. 45-48. 16 KAJIMURA T. (et al.), ‘Ko no Hikiwatashi Hozen Shobun Jiken no Shori wo meguru Shomondai’, in: MRFC 47-7 (1995), pp. 1, 43-52; TANNO T., ‘Ko no Hikiwatashi ni kansuru Jinshin Hogo Seikyû no Hojûsei – Tokuni Kaji-Shinpan mae no Hozen Shobun tono Kankei ni tsuite’, in: MRFC 38-10 (1986), pp. 1, 12-13.

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International Child Abduction in Japan ment’ by the District Court, whereby the abducting parent is obliged to pay a certain amount until such time as he or she returns the child. The reasoning is: first, the Civil Enforcement Code lacks a provision which explicitly entitles the bailiff to directly enforce a return order; second, even a small child has or is going to have his/her own personality so that a personal contact with the child cannot be equated with the direct enforcement of property rights.17 On the other hand, some recent authors are in favour of sanctioning a ‘direct enforcement’ by applying article 169 of CEC on the enforcement of movables mutatis mutandis. 18 Other authors approve a direct enforcement under certain conditions, i.e. when the child lacks mental capacity19 or when the child has been removed in such a manner that a direct enforcement is justified in view of moral sense and the protection of human rights.20 Another author regards the hand over of the child as the debtor’s ‘obligation to endurance’ and puts forth that the return order, i.e., a claim of injunction (article 414 (3) of CC, article 171 (1) of CEC), can be directly enforced by either taking appropriate measures to prevent or remove hindrances caused by the debtor, or ordering the payment of damages.21 It should, however, be noted that even the authors who support a direct enforcement are generally reluctant to allow the bailiff to deprive the child of freedom of movement coercively in order to carry out the enforcement when the abductor does not hand over the child voluntarily or the child refuses to leave the venue. In addition, if the abductor changes his/her domicile and disappears with the child, a direct enforcement remains unsuccessful for want of peremptory measures to locate them. 22 Under the current Japanese law, Family Court orders are not guaranteed to be implemented effectively. Especially in a cross-border case, the According to this view, the claim to hand over the child is regarded as a claim to ‘remove impediments’ based on parental rights (article 172 of CEC), which allows but an indirect enforcement. Taishin-In, 29 Oct. 1921, in: Minroku 27, 1847; Supreme Court, 15 March 1960, in: Minshû 14-3, 430; Supreme Court, 17 Sep. 1963, in: Minshû 17-8, 968; cfr. Sapporo District Court, 8 July 1994, in: Hanrei Times 851, 299. See WAGATSUMA S., Shinzokuhô, Tokyo 1961, pp. 331-332. 18 Hiroshima High Court – Matsue Branch Office, 3 July 1953, in: Kôminshû 6-6, 356. See KANEKO H., Kyôsei Shikkôhô, enlarged ed., Tokyo 1951, p. 278; MIKAZUKI A., Minji Shikkôhô, Tokyo 1981, p. 413; KAJIMURA T., ‘Ko no Hikiwatashi Seikyû no Saiban Kankatsu to Shikkô Hôhô’, in: Shihô Kenshûjo Ronshû 98 (1997), p. 312; KAJIMURA T. (et al.) (note 16), pp. 66-67; YAMAZAKI W., ‘Ko no Hikiwatashi to Chokusetu Kyôsei’, in: Shin Saiban Jitsumu Taikei, Vol. 12 – Minji Shikkôhô, Tokyo 2001, pp. 384, 394-396; HANDA Y., ‘Yôji Hikiwatashi Seikyû to sono Kyôsei Hôhô – Tsûjô Soshô, Jinshin Hogo Tetsuzuki, Kaji Shinpan (No. 3)’, in: Chiba University Hôgaku Ronshû 2-2 (1988), pp. 49, 99-100. 19 SUZUKI R./BAI K., Jinjihô, Vol. 1, Tokyo 1980, pp. 73-75; TOMIKOSHI K., in: SUZUKI CH./MIKAZUKI A. (eds.), in: Chûkai Minji Shikkôhô, Vol. 5, Tokyo 1985, pp. 6-8; SUZUKI SH., Ibid., p. 62; SEGI H., ‘Kasai no Saiban no Shikkô to Jinshin Hogo Seikyû’, in: Kazoku – Shakai to Hô 18 (2002), pp. 82-91. 20 Osaka High Court, 14 Dec. 1955, in: Kôminshû 8-9, 692. 21 NAKANO T., Minji Shikkôhô, 5th ed., Tokyo 2006, pp. 761-763. 22 YAMAZAKI W., (note 18), pp. 398-403; TANNO T. (note 16), p. 11. 17

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Yuko Nishitani Family Court procedure is time-consuming and risks confirming the status quo once created by the abductor.

B.

Habeas Corpus

Habeas corpus, modelled at the common law system, was introduced in Japan by the Habeas Corpus Act of 1948. It aims at restoring freedom to an illegally detained person by expeditious summary proceedings (article 1 of HCA). If the captor does not abide by a habeas corpus order, penal sanctions can be charged.23 However, the habeas corpus order which is rendered in special administrative proceedings is generally deemed to lack both the binding force of res judicata and the civil enforcement title. Hence, a habeas corpus order cannot be directly enforced, but relies de facto on a voluntary submission of the captor.24 Despite these drawbacks, habeas corpus proceedings, being swift and expeditious, have proven to be effective in child abduction cases to a certain extent since the Supreme Court granted its applicability to child abduction cases in 1949 25 and established the prerequisites for its implementation in 1958.26 The international jurisdiction of habeas corpus proceedings for child abduction should be granted, in principle, when both the captor and the detainee are staying in Japan. The rationale is that habeas corpus proceedings that are designed to recover the physical freedom of the detainee should be promptly commenced in Japan only when both parties are in Japan and effective proceedings with direct hearings and investigations are assured.27 The subject matter jurisdiction is allocated to a District Court or High Court, depending on the claimant’s choice (article 4 of HCA). The law governing habeas corpus should be deemed to be Japanese law as lex fori, since both the substantive and procedural law are inextricably connected in habeas corpus procedure; also, from a pragmatic viewpoint, the application of Japanese law ensures immediate protection of the detainee for the sake of Japan’s public policy.28 The penal sanctions are: displacement or detention (article 18 of HCA), or imprisonment for less than two years or fine up to 50,000 Yen (article 26 of HCA). 24 KAJIMURA T., ‘Bekkyochû no Fûfukan ni okeru Yôji Hikiwatashi wo meguru Shomondai’, in: MRFC 28-8 (1976), pp. 1, 29; TANNO T. (note 16), p. 21; SEGI H. (note 19), pp. 73-74. Some authors contend, however, that habeas corpus should be provided with direct civil enforcement under the Civil Enforcement Code in order to be implemented effectively. See TANAKA H., ‘Jinshin Hogo Tetsuzuki’, in SUZUKI CH./MIKAZUKI A. (eds.), Shin Jitsumu Minji Soshô Kôza, Vol. 8, Tokyo 1981, pp. 415, 435-436. 25 Supreme Court, 18 Jan. 1949, in: Minshû 3-1, 10. 26 Supreme Court, 28 May 1958, in: Minshû 12-8, 1224. 27 Supreme Court, 26 Feb. 1985 (note 4). Osaka District Court, 16 June 1980, in: MRFC 33-1, 86 denied international adjudicatory jurisdiction of Japan, on the grounds that both the captors and the detainee were living in Hawaii, the U.S. 28 SAKURADA Y., in: Jurist 862 (1986), pp. 258-259. 23

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International Child Abduction in Japan Following the principle of subsidiarity, habeas corpus proceedings can be initiated when the detention is apparently unlawful and no other remedies are available (article 2 of HCA, article 4 of HCR). Habeas corpus proceedings were first applied to child abductions in general, including those between married couples with joint custody. In disputes between couples, the judge used to compare the conditions of both parents’ custody in light of ‘the best interests of the child’ when assessing whether or not the retention was ‘apparently unlawful’. Under these criteria, even the fact that the retention commenced by violent abducting acts was sometimes disregarded.29 Nevertheless, this practice imposed a difficult task on District and High Courts, which are based on adversary system and have neither the personnel nor the authority to carry out an ex officio investigation. Thus, the Supreme Court has restricted the scope of habeas corpus proceedings between couples in its decision of Oct. 19, 1993.30 In this case, because both parents were statutory custodians, the Court requested that habeas corpus be instituted solely when the exercise of custody rights by the abductor ‘conspicuously’ contravened the best interests of the child. Since then, a claim for a habeas corpus order is granted only in exceptional cases between couples,31 giving priority to Family Court orders concerning custody issues. Some scholars disagree with the present case law, considering that Family Court interim measures and orders are not provided with a peremptory enforcement.32 Even under the ‘conspicuous unlawfulness’ test, however, habeas corpus proceedings are available, inter alia, (a) when the child’s health is seriously endangered or he/she is deprived of an opportunity to receive obligatory education under the captor’s custody, 33 (b) when the captor does not return the child against an agreement reached during the conciliation proceedings for divorce at Family Court,34 or (c) when the captor does not obey the indirect enforcement of a Family 29 Supreme Court, 4 July 1968, in: Minshû 22-7, 1441; Supreme Court, 29 March 1984, in: MRFC 37-2, 141. 30 Supreme Court, 19 Oct. 1993, in: Minshû 47-8, 5099. 31 Supreme Court, 8 Feb. 1994, in: MRFC 47-2, 135; Supreme Court, 26 April 1994, in: Minshû 48-3, 992; Supreme Court, 8 July 1994, in: Hanrei Jihô 1507, 124. 32 MIZUNO N., in: Minshôhô Zasshi 113-2 (1995), pp. 281-293; HAYAKAWA SH., ‘Ko no Ubaiai ni tsuite no Ichikôsatsu’, in: Nihon Minpôgaku no Keisei to Kadai (Hoshino Eiichi Koki Kinen), Vol. 2, Tokyo 1996, pp. 1207, 1219-1220. Interestingly enough, even the Supreme Court contended in its decision of 29 March 1984 (note 29), i.e., before the case law was changed in 1993, as follows: Although one of the spouses can apply for a Family Court order to determine the custodian of the detained child and obtain interim measures to hand over the detained according to article 52bis of RFCD, it is obvious that he/she cannot fulfill the objective of protecting the detained by these measures as expeitiously and effectively as by Habeas Corpus Act. This is why the application for habeas corpus must be granted to request the return of the child. 33 Supreme Court, 26 April 1994 (note 31), obiter dictum. 34 Supreme Court, 8 July 1994 (note 31); Supreme Court, 26 April 1999, in: MRFC 51-10, 109.

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Yuko Nishitani Court order or Family Court bailiff’s recommendation of performance.35 In addition, when a custodian claims the return of the child against a non-custodian and, therefore, the detention is not based on legal authority, the habeas corpus can still be granted, unless the exercise of custody by the statutory custodian is ‘apparently unlawful.’36 In a nutshell, the current case law respects the existence of custody rights, in contrast to the previous case by case substantive assessment of the best interests of the child, and leaves it to the Family Court to decide when joint custody of a married couple should be altered. The objective is an appropriate distribution of subject matter jurisdiction between Family Court orders and habeas corpus proceedings in view of the subsidiarity of habeas corpus.37 However, considering that Family Court proceedings have certain drawbacks in terms of expeditiousness and effectiveness, it appears to be desirable to invoke habeas corpus proceedings whenever, inter alia, custody rights allocated by a Family Court order or an agreement reached in conciliation proceedings at Family Court need to be respected.38

C.

Penal Sanction

In practice, disputes over child abduction have, so far, generally been dealt with by Family Court orders or habeas corpus proceedings. However, in 2005 the Supreme Court has taken the audacious step of imposing a penal sanction in a domestic case upon a husband who abducted his son living with the wife and her parents, 39 following the path of the above-mentioned decision in 2003, concerning a Dutch father attempting to abduct his daughter to the Netherlands.40 The 2005 decision concerned the following case. The Japanese father and Japanese mother were living separately, discussing divorce, and the mother had their son under her custody. While the grandmother went to the nursery school to pick up the child, the father approached, grabbed his son, pushed him into the car violently, and drove away. The Supreme Court held that the father’s acts, removing the son by using physical force and taking control of him by detaching him from a familiar environment, constituted the criminal offence of abduction of a minor (article 224 of PC [prior to the amendment of 2005, Law No. 66]). According to Cfr. KAJIMURA T. (et al.) (note 16), p. 12. Supreme Court, 8 Nov. 1994, in: Minshû 48-7, 1337; Supreme Court, 25 May 1999, in: MRFC 51-10, 118. 37 OMURA A. (note 7), pp. 171-172; SEGI H. (note 19), pp. 62-64; MIZUNO N. (note 32), p. 292. 38 HAYAKAWA SH. (note 32), pp. 1239-1245 suggests that, modelling at the mechanism of the Child Abduction Convention, habeas corpus proceedings could be implemented to effectuate the return of the child promptly, without going into the disputes on the merits over the custody issues. 39 Supreme Court, 6 Dec. 2005, in: MRFC 58-4, 59. 40 See supra (note 6). 35 36

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International Child Abduction in Japan the majority opinion, even though the father shared custody rights, no exceptional grounds for justification for his actions (article 35 of PC) could be found. In reaching this conclusion, the court made the following fact determinations: there were no special circumstances which forced the accused to do such acts for the purpose of custody and education of the child; the acts were coarse and forceful; the child was a two-year-old infant without the mental capacity to judge or choose his surroundings; and the accused did not have any prospect of how to nurse and nurture the child after the abduction, which was indispensable at the child’s age. Making the abduction of a minor a criminal offense (article 224 PC) presupposes a denunciation by the victim (article 230 of PPC) or the custodian (article 231, paragraph 1 of PPC), except for cases in which the child was either abducted for profit or to impair his/her life or body (article 229 PC). 41 According to the majority of authors and case law, the legal interests protected by article 224 PC are freedom of the abducted and custody rights of the custodian.42 On the other hand, some recent authors regard only freedom and security of the abducted as the envisaged legal interests.43 While this latter opinion acknowledges that even a custodian could be condemned if he/she abuses custody rights instead of exercising them in the interests of the minor, the former opinion denies it. In the underlying case, this was not an issue because, in either opinion, the prerequisites were fulfilled by the father’s conducts to infringe upon the mother’s custody rights. Nevertheless, one dissenting opinion in the Supreme Court decision contended that the acts of the accused to abduct the child out of affection were to be exceptionally justified. The dissenting Justice made the argument on the grounds that the judiciary should refrain from interfering into family affairs, and that the case law of the Supreme Court since 1993, which has restricted the scope of habeas corpus to give priority to Family Court orders in child abduction between couples, should not be circumvented by a custodian who seeks a penal sanction against the other custodian as an ‘abductor of a minor.’44 41 The exception was limited to the purpose of profits before the amendment of 2005 by the Law No. 66. 42 DANDO SH., Keihô Kôyô – Kakuron, 3rd ed., Tokyo 1990, p. 476; FUJIKI H., Keihô Kôgi – Kakuron, Tokyo 1976, pp. 227-228; FUKUDA T., Keihô Kakuron, 3rd enlarged ed., Tokyo 2002, p. 175; NAKAYAMA K., Keihô Kakuron, Tokyo 1984, pp. 112-113; OTSUKA H., Keihô Gaisetsu – Kakuron, 3rd (enlarged ed.), Tokyo 2005, p. 82; OYA M., Keihô Kôgi Kakuron, 4th enlarged ed., Tokyo 1995, pp. 93-94. Taishin-In, 30 Sep. 1910, in: Keiroku 16, 1569; Taishin-In, 11 Nov. 1918, in: Keiroku 24, 1326; Taishin-In, 19 June 1924, in: Keishû 3, 502; Fukuoka High Court, 14 April 1956, in: Kôkeishû 3-8, 409. 43 NAKAMORI Y., Keihô Kakuron, Tokyo 1991, pp. 54-55; YAMAGUCHI A., Keihô Kakuron, enlarged ed., Tokyo 2005, pp. 91-92. 44 This opinion was endorsed by MATSUBARA Y., in: Jurist 1313 (2006), pp. 172173; KADOTA SH., in: Hôgaku Seminar 614 (2006), p. 123. The dissenting opinion maintained that the Supreme Court decision of 18 March 2003 concerned a completely different case, in which the Dutch father took his daughter out of the hospital by taking her legs and hanging her upside down, in order to abduct her to the Netherlands, and was condemned of the abduction for the purpose of removing to a foreign country as a criminal

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Yuko Nishitani It goes without saying that penal sanctions as a last resort should not be implemented in child abduction cases without both necessary abstention and prudent investigation. However, a far-reaching exceptional justification would contradict the provision of article 224 PC, which condemns the abduction without setting further prerequisites, such as that the accused acted for the purpose of profits or with obscene intentions.45 Furthermore, an excessive justification would mean that the judiciary approves de facto the abduction of a child by one parent as self-help or self-execution. Considering that, as mentioned before, Family Court orders are not provided with sufficient coercive enforcement measures, a possible intervention of penal sanctions may well have preventive effects and even set the path towards an effective settlement of disputes over custody rights at Family Court. The criteria for justification should be further refined by future court decisions. In any case, this Supreme Court decision, which imposed a penal sanction on a joint custodian, will have an impact on future developments in Japan. In Japan, penal sanctions can be imposed upon somebody who is subject to Japan’s adjudicatory jurisdiction in penal matters. It should be noted that the abduction of a minor as a criminal offense (article 224 PC) applies also to Japanese nationals committing the act in a foreign country (article 3 no. 11 PC). Therefore, a Japanese parent who removed his/her child unlawfully and violently from a foreign country and brought him/her back to Japan, could, theoretically, be denounced for this crime in Japanese courts.

D.

Recognition and Enforcement of Foreign Return Orders

Once a child is wrongfully removed to Japan, the parent seeking the return of the child can obtain a return order by the court in the country of origin and request its recognition and enforcement in Japan. While under article 118 of CPC recognition of a foreign judgment is ‘automatic’ and does not require any specific recognition proceedings,46 its enforcement requires an ‘exequatur’ (executory title) by a District Court in Japan (article 22 no. 6 and article 24 of CEC). In the adversary proceedings of District Court, a revision on the merits (révision au fond) is prohibited (article 24 (2) of CEC) and the judge examines solely whether the conditions of recognition (article 118 CPC) are fulfilled (article 24 (3) of CEC). The conditions for recognition of judgments in contentious matters are: (a) a final court decision which has become res judicata in the

offense in Japan (note 6), since the father’s acts were violent enough to endanger the child’s security and made a solution by Family Court difficult because of his intention to abduct the child to a foreign country. 45 TANI SH., in: Kenshû 693 (2006), pp. 11, 18. 46 The former Italian system required a ‘sentenza di delibazione’ for the recognition of foreign court decisions. This was abolished by the Private International Law Act of 1995 (Legge 31 maggio 1995 n. 218 – Riforma del sistema italiano di diritto internazionale privato), which adopted the ‘automatic’ recognition system.

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International Child Abduction in Japan rendering country (article 118, 1st sentence of CPC), (b) international jurisdiction of the rendering country (article 118, no. 1 of CPC), (c) proper service of process or general appearance of the defeated defendant (no. 2), (d) conformity with the substantive and procedural public policy of Japan (no. 3), and (e) reciprocity (no. 4). With regard to a foreign return order, it must first be classified as either belonging to ‘contentious’ or ‘non-contentious’ matters. The line is not easy to draw, though generally and comparatively speaking, measures on child custody can be classified as non-contentious matters. This is because the judge renders a decision in light of the best interests of the child by examining facts ex officio and represents the State as a kind of guardian, rather than deciding the rights and obligations of individuals in an adversary proceeding led by the principle of ‘due process’. The conditions for recognition of foreign decisions in ‘non-contentious’ matters are controversial. The majority of authors contend that only article 118, nos. 1 and 3 of CPC mutatis mutandis apply and disregard nos. 2 and 4.47 Other authors put forth that article 118, no. 2 of CPC should also be applied analogously besides nos. 1 and 3, so far as the return order has a contentious character.48 Others maintain that article 118 of CPC should be wholly applied on the grounds that measures on child custody have contentious elements under Japanese law (article 9 (1) Otsu of LFCD),49 or that the distinction between ‘contentious’ and ‘non-contentious’ matters is not relevant in the result and the wording of article 24 of CEC presupposes the application of the entire article 118.50 In my view, only article 118 nos. 1 and 3 should be applied analogously because there is no ‘defeated defendant’ in non-contentious matters, as article 118, no. 2 presupposes, and the reciprocity requirement under no. 4 is outdated and risks to create limping legal relationships, whereby court decisions in non-contentious matters concern personal status which entails both legal certainty and international harmony of decisions. A recent case concerned a U.S. father who sought the return of his daughter to the state of Texas in the U.S. The Japanese mother had been appointed ‘sole managing conservator,’ i.e., custodial parent, and the father ‘possessory conservator’ with access rights in a 1984 divorce decree in Texas. After the mother wrong-

47 SUZUKI CH., ‘Gaikoku no Hishô Saiban no Shônin, Torikeshi, Henkô’, in: Hôsô Jihô 26-9 (1974), pp. 1504-1511; NAKANO T. (note 21), p. 186; TAKAKUWA A., Shihô Hanrei Remarks 13 (1996), pp. 159-160. 48 Some authors maintain that the prerequisites of recognition should be decided according to the category of the non-contentious case concerned. SAKURADA Y., in: Jurist 1024 (1993), pp. 297-299; EBISAWA Y., ‘Hishô Jiken Saiban no Shônin’, in: SAWAKI T./AKIBA J. (eds.), Kokusaishihô no Sôten, 2nd ed., Tokyo 1996, pp. 246-247. 49 SUMITA H., ‘Minji Soshôhô 200 jô to Gaikoku Saibansho ni yoru Hishô Jiken’, in: Koseki 549 (1989), pp. 14-21. 50 KONO T. (note 8), pp. 193-194; WATANABE S., in: Jurist 1046 (1994), p. 298; MURAKAMI M., ‘Gaikoku Hishô Saiban no Shônin Shikkô Seido Saikô – Ko no Kango, Fuyô ni kansuru Saiban wo Chûshin ni’, in: Minji Soshô Zasshi 51 (2005), pp. 183, 184-185.

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Yuko Nishitani fully removed the child to Japan against a Texan court order, the father obtained a court decision in 1989, which made him the custodial parent. The father then requested that the judgment be recognized and enforced in Japan. The Tokyo District Court applied article 200, nos. 1 through 4 of CPC (the preceding provision of article 118 of CPC [prior to the amendment of 1996, Law No. 109]) and rendered an exequatur on Jan. 30, 1992.51 Upon appeal by the mother, the Tokyo High Court dismissed the claim on Nov. 15, 1993.52 Applying directly article 24 of CEC mutatis mutandis and article 200, nos. 1 and 3 of CPC, the High Court held that acceding to the claim to exequatur would violate Japan’s public policy (article 200 (3) of CPC) on the grounds that the daughter, who was almost 11 years of age after a four year stay in Japan, was already settled in new environment and could no longer speak or understand English. Thus, sending her back to her father in the U.S. would do serious harm. In view of this High Court decision, scholars started to discuss whether the circumstances occurring since the foreign decision became res judicata, i.e., the fact that the child was settled in Japan, should be taken into consideration within the framework of the public policy test (article 118, no. 3 of CPC), as the High Court did, or whether it should constitute grounds for a plea or counter-claim to object to the claim of exequatur.53 In my opinion, the judge should be allowed to take the changed circumstances into account within the framework of the public policy test for the following reasons. First, ‘automatic recognition’ means that the procedural effects of foreign decisions are extended to Japan without any specific recognition proceedings. Once recognized, a foreign decision is integrated into the Japanese legal system and equated with a decision rendered in Japan. The decisive moment for the public policy test should therefore be set when the Japanese authority adjudicates on the effects of foreign decisions and its qualification for recognition, but not when the foreign decision has become res judicata. Second, the public policy test must be effectuated ex officio and cannot be substituted by a plea or counter-claim in exequatur proceedings which are subject to the parties’ disposition under adversary system. Third, the prerequisites of recognition should, in some cases, be examined independently of enforcement – e.g. in Family Court proceedings to appoint or change a custodian.54 Hence, the logical consequence is to consider also changed

Tokyo District Court, 30 Jan. 1992, in: MRFC 35-9, 65. Tokyo High Court, 15 Nov. 1993, in: MRFC 46-6, 47. 53 With regard to this court decision, see KAMATANI M., ‘Gaikoku Hanketsu Shônin Shikkô Seido to Gaikoku Hanketsu go no Jijô no Kôryo ni tsuite – Ko no Hikiwatashi ni kansuru Heisei 5nen Tokyo Kôsai Hanketsu wo keiki ni’, in: Kyûshû Daigaku Hôgaku 83 (2001), pp. 131-171. 54 TAKADA H., in: SUZUKI M./AOYAMA Y., Chûshaku Minji Soshôhô, Vol. 4, Tokyo 1997, p. 384; TAKESHITA M., ‘Hanrei kara mita Gaikoku Hanketsu no Shônin’, in: SHINDÔ K. et al. (eds.), Hanrei Minji Soshôhô no Riron (Nakano Teiichirô Sensei Koki Shukuga), Vol. 2, Tokyo 1995, pp. 513, 546, 553; EBISAWA Y., ‘Gaikoku Hanketsu Shikkô no Ichi Danmen: Shikkô to Henkô no aida – Tokuni Ko no Hikiwatashi Hanketsu wo Chûshin ni’, 51 52

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International Child Abduction in Japan circumstances when contemplating whether the foreign return order conforms to Japan’s public policy. The final resort to public policy must be examined attentively. The criteria should be the ‘best interests of the child’ in the sense that the enforcement of a foreign return order would ‘expose the child to physical or psychological harm or otherwise place the child in an intolerable situation,’ as is stipulated in article 13 (1) (b) of the Child Abduction Convention. It should not be, as has been construed in Family Court orders, whether the father or mother is in a better position to exercise custody rights.55 This examination is not an easy task for a District Court, resting on adversary system, and some scholars have suggested de lege ferenda that the Family Court be provided with subject matter jurisdiction in these cases.56 The exequatur proceedings are time-consuming in examining conditions of recognition. Furthermore, the parties can challenge the decision of the District Court by appealing to the High Court and possibly further to the Supreme Court57, which may well result in a lengthy procedure.58 This is, again, critical in cross-border child abduction, whereby children get used to the new surroundings as time passes. The Supreme Court Decision of Feb. 26, 1985 concerned a case in which a Japanese father, who had been living in Italy separately from his Italian wife, took two of their three children back to Japan without his wife’s consent. Upon acquiring an interim return order in Italy, the Italian mother filed a habeas corpus in Japan. While examining the unlawfulness of the detention by the father, the question was raised as to whether the Italian interim return order could be recognized and enforced in Japan. According to the Supreme Court, the Italian interim return order was not a final decision that had become res judicata, therefore it could not be recognized in Japan for want of the prerequisite in article 200, 1st sentence of CPC (prior to the amendment of 1996, Law No. 109). Since the 13 and a half year in: Asahi Hôgaku Ronshû 25 (2000), pp. 1-39; ID., in: Jurist 1091 (1996), p. 257; NAKANISHI Y., in: Jurist 1224 (2002), p. 329. On the other hand, some authors put forth that the public policy test should be made at the time when the foreign decision became res judicata in the rendering foreign country. WATANABE S. (note 50), p. 298; HAYAKAWA SH., Shihô Hanrei Remarks 10 (1995), p. 176; KONO T., ‘Kokusaiteki na Ko no Ubaiai’, in: SAWAKI T./AKIBA J. (eds.), Kokusaishihô no Sôten, 2nd ed., Tokyo 1996, p. 186; ID. (note 8), pp. 195-196; KAMATANI M., ‘Gaikoku Hanketsu Shônin Yôken Jûsoku no Kijunji to Shônin no Hassei Jiten – Doitsu ni okeru Giron wo Sankô ni’, in: Kokusaishihô Nenpô 5 (2003), pp. 152-158, 168. 55 EBISAWA Y. (note 54), pp. 31-35. 56 SAKURADA Y. (note 48), p. 299. 57 After the amendment of CPC in 1996 (Law No. 109), the substantive grounds for appeal to the Supreme Court are restricted to the cases where there is a question of unconstitutionality (article 312) or important matters on interpretation are concerned, such as inconsistency with the previous case law (article 318, paragraph 1). 58 Some authors assert, therefore, that the prerequisites of recognition should be examined in summary proceedings de lege ferenda. AOYAMA Y., in: SUZUKI CH./MIKAZUKI A., Chûkai Minji Shikkôhô, Vol. 1, Tokyo 1984, pp. 367-368.

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Yuko Nishitani old son was subject to the father’s custody on his own will and the father’s custody over the 7 and a half year old daughter conformed to her best interests, the Supreme Court held that there was no ‘unlawful detention’ in terms of article 2 of HCA and article 4 of HCR. The majority of authors deny that foreign interim measures can be recognized and enforced in Japan due to the requirement of res judicata (article 118, 1st sentence of CPC). The rationale is that unsteady foreign interim measures, which can be changed or reversed by recourse to ordinary proceedings on the merits and appeal, should not obtain procedural effects in Japan.59 However, pertaining to this principle for cross-border child abduction would hamper an expeditious and reasonable dispute resolution. De lege lata, foreign interim measures should be taken into consideration as an evidence in rendering a decision on the merits.60

E.

Results

As has been observed, the Japanese national law does not sufficiently provide for effective measures concerning cross-border child abduction, which risks confirming, de facto, the status quo created by the abductor. This creates serious impediments to the custodial parent’s remedy, since children generally adapt themselves to the new surroundings right away and can therefore not be sent back to the country of origin after certain time has lapsed. In this respect, Japan may well have become a ‘safe haven’ for parents who have wrongfully removed children. 61 To tackle this problem, the Child Abduction Convention could strive for a reasonable solution.

III. The Child Abduction Convention The main feature of the Child Abduction Convention lies in securing a prompt return of the child to the State in which he/she has habitually resided (article 1 (a)), in order to prevent the abducting parent from establishing a status quo. Accord-

59 For the discussions concerning the possibility of recognizing foreign interim decisions, see NAKANO SH., ‘Kakutei Hanketsu’, in: TAKAKUWA A./DOGAUCHI M. (eds.), Kokusai Minji Soshôhô – Zaisanhô Kankei, Tokyo 2002, pp. 313-317. 60 DOGAUCHI M., in: Hôritsu no Hiroba 38-5 (1985), pp. 77-78; NAKANO SH., in: Jurist 857 (1986), pp. 127-128; MINAMI T., ‘Kokusaiteki na Ko no Dasshu to Jinshin Hogo Seikyû’, in: SAWAKI T./AKIBA J. (eds.), Kokusaishihô no Sôten, 2nd ed., Tokyo 1996, p. 188. 61 VAN LOON H., ‘The Implementation and Enforcement of the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction in Comparative Perspective: It’s Japan’s Move!’, in: Gender Law and Policy Annual Review 2 (2004), pp. 189, 190.

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International Child Abduction in Japan ingly, the issues concerning the merits of who shall have custody rights are to be decided by the judge in the State from which the child has been abducted, not in the State to which he/she has been removed (article 16). Under the Convention, ‘child abduction’ is defined as the wrongful removal or retention of a child under the age of 16. ‘Wrongful’ means that it breaches the custody rights granted ex lege or by a court order in the State in which the child has habitually resided (article 3 (a)). The Convention’s functioning is built upon co-operation between Contracting States.62 Each Contracting State designates and acts through a Central Authority (article 6). 63 Central Authorities, the key players of the Convention, exchange information concerning the child, provide assistance to the claimant who lives abroad, and concern themselves generally with the welfare of the child in question (article 7). The party requesting the return of the child may apply to the Central Authority of either the child’s habitual residence or of any other Contracting State for assistance in securing the Child’s return (article 8). Central Authorities are also supposed to take appropriate measures to secure the effective exercise of access rights (article 21). Access rights play an important role in preventing child abduction in the pre-stage and providing for a balanced solution after the child has been abducted by maintaining the child’s contact with both parents. An order for the return of the child is rendered in summary proceedings by the judicial or administrative authority of the State where the child is located, without going into issues as to the merits of custody and access rights (article 11 (1)). In general, the authority must order the return of the child forthwith (article 12 (1)). There are, however, three exceptional grounds to turn it down. First, when the proceedings have been commenced after one year has lapsed since the child’s wrongful removal, the authority may refuse to render a return order if the child is already settled in his/her new environment (article 12 (1) and (2)). Second, if there is a grave risk that the child would be exposed to physical or psychological harm or otherwise be placed in an intolerable situation, the application for a return order may be rejected (article 13 (1) (b)). The fact that the child objects to his/her return can be respected only if he/she has attained an age and degree of maturity at which it is appropriate to take into account his/her views 62 The success of the Child Abduction Convention largely owes to the monitoring activities by the Permanent Bureau of the Hague Conference on Private International Law. The Permanent Bureau regularly organizes meetings of Central Authorities and Judges to provide information on the implementation of the Convention. The monitoring activities also include an electronic database with case law on the Convention (INCADAT); the publication entitled Guide to Good Practice on implementing measures, on Central Authority practices, and on preventive measures; the creation of an electronic statistical database (INCASTAT) and a case management system (iChild). In addition, six Special Commissions of the Hague Conference have been held so far to review the operation of the Convention (the last one was held from 30 Oct. till 9 Nov. 2006). For further information, see . 63 For contact details of the Central Authorities of Contracting States, see .

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Yuko Nishitani (article 13 (2)). Third, the return of the child may be refused if it would contradict the fundamental principles of the State where the child is located relating to the protection of human rights and fundamental freedoms (article 20). All these defenses against a return order are supposed to be applied in a restricted fashion; to do otherwise would endanger the core function of the Convention, i.e., to secure the prompt return of the child. In other words, the grounds for refusal constitute the last resort to protect the child’s interests and human rights.

IV. Final Remarks The Japanese national law’s shortcomings concerning cross-border child abduction may well be removed if Japan ratifies the Child Abduction Convention. The most serious hindrance to this purpose is, however, that the ‘direct enforcement’ of a return order is not allowed in practice. In order to join the mechanism of the Convention, the Japanese judicial and/or administrative authority would have to be provided with summary proceedings to issue a return order and peremptory measures to enforce it. This would require a thorough reform of the Japanese national system and re-evaluation of the legitimacy of the legislative policy that state power should refrain from intervening in family affairs. The legal framework of the Child Abduction Convention serves international cooperation and harmonization by respecting the custody rights provided for by the country in which the child was habitually resident. Once ratified, the Convention would bring about advantages for Japan in the long run. This is so even if, under the current situation, the number of children removed to Japan by a Japanese parent and sent back to the country of origin would exceed the number of children returned to Japan.64 There are actually children who are abducted from Japan and taken to a foreign country, who then suffer a family tragedy. These children would benefit from the Convention if a prompt return to Japan were guaranteed.65 Furthermore, Japanese parents seem to be gradually disadvantaged in foreign countries, just because Japan has not ratified the Convention. According to the Canadian Central Authority, there was a divorce case in which the Canadian judge provided the Canadian parent with custody rights and the Japanese parent only with supervised access rights, because Japan has not ratified the Child Abduction Convention and that, since the Japanese parent had no connection to Canada, there See supra, Section I. See the cases mentioned above (notes 5 and 6). Also ASAKURA M./KAINO T./WAKAO N., Feminism Hôgaku – Seikatsu to Hô no Atarashii Kankei, Tokyo 2004, pp. 34 and KAINO T. (ed.), DV Bôshi to Korekara no Higai Tôjisha Shien, Kyoto 2006, pp. 29-44, report a case, in which a Chinese husband (he obtained a Japanese nationality after the marriage) married to a Japanese wife abducted both of their children from Japan to China and deprived the Japanese mother of the opportunity to have regular contact with the children. 64 65

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International Child Abduction in Japan was a risk of abduction to Japan.66 In today’s globalized world, children are critically exposed to cross-border abduction by one parent and deprived of his/her contacts with the other parent. Resolving these issues based on the national law, without following an international standard, encounters limits and impediments. Arguably, only by joining the Child Abduction Convention, will Japan be able to fulfil its obligations under the 1989 U.N. Convention on the Rights of the Child and grant children the right ‘to maintain on a regular basis […] personal relations and direct contact with both parents’ (article 10 (2)).

66

VAN LOON H.

(note 61), p. 207.

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REFORM OF JAPAN’S PRIVATE INTERNATIONAL LAW: ACT ON THE GENERAL RULES OF THE APPLICATION OF LAWS Yasuhiro OKUDA*

I. II.

IV. V.

Introduction Contractual Obligations A. Overview B. Party Autonomy C. Characteristic Performance D. Variation of the Applicable Law E. Formalities of Contract F. Consumer Contracts G. Employment Contracts Non-contractual Obligations A. Overview B. Lex Loci Delicti C. Product Liability D. Defamation E. Exception Clause F. Party Autonomy G. Cumulative Application of Japanese Law Assignment of Claims Conclusion

I.

Introduction

III.

The most important source of private international law in Japan is the Hôrei (Act on the Application of Laws)1 promulgated on June 21, 1898. At that time the Hôrei * Professor at the Chuo University, Law School. The author thanks Professor Kent Anderson (The Australian National University) for his comments and advice as well as for revising the English text. 1 For the English translation, see ANDERSON K./OKUDA Y., ‘Horei, Act on the Application of Laws, Law No. 10 of 1898’, in: Asian-Pacific Law and Policy Journal 2002, Vol. 3, p. 230, available at . See also EHRENZWEIG A.A./IKEHARA S./JENSEN N., American-Japanese Private International Law,

Yearbook of Private International Law, Volume 8 (2006), pp. 145-167 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Yasuhiro Okuda was the most progressive legislation because it created a system of multilateral conflict rules covering many legal matters such as contract, tort, family, succession, and so forth.2 However, it remained unrevised for more than a hundred years except for a revision in 1989 of the provisions regarding marriage and parental relations. 3 On the other hand, European countries without statutes on private international law have since enacted laws containing rules on the applicable law, jurisdiction, and enforcement of foreign judgments. 4 Further, EU legislation has proceeded rapidly in these fields.5 Considering the movements in Europe and increased legal disputes arising from transactions with foreign individuals and corporations, Japanese authors long argued for a total revision of the Hôrei.6 Thus, the Hôsei Shingikai (Legal System Investigation Commission) organized the Kokusai Shihô (Gendaika Kankei) Bukai (Working Group on Modernization of Private International Law) in May 2003.7 In March 2005 the Working Group published the Outline of a Tentative Draft and its Supplementary Explanation, and in July 2005 the Outline of a Draft.8 On June 15, New York 1964; HUCH R., Japanisches Internationales und Interlokales Privatrecht: Allgemeine Lehren, Würzburg 1941. 2 See SIEHR K., Das Internationale Privatrecht der Schweiz, Zürich 2002, p. 515. ‘The Japanese Hôrei was more perfect than the German EGBGB. It had wisely followed the draft of the EGBGB written in 1881 by Albert Gebhard’ (English translation is ours). 3 For the revision in 1989, see TORII J., ‘Revision of Private International Law in Japan’, The Japanese Annual of International Law 1990, No. 33, p. 54; SCHMIDT M., Die Reform des Japanischen Internationalen Privatrechts, Köln (etc.) 1992. 4 Most of the European statutes are translated into Japanese. See generally KASAHARA T. (ed.), Kokusai Shihô Rippô Sôran [Collection of the Statutes on Private International Law], Tokyo 1989. This includes the statutes of 85 countries throughout the world. For other translations, see YAMADA R., Kokusai Shihô [Private International Law], 3rd ed., Tokyo 2004, p. 26-28. Above all the Swiss Act of 1987 (last amended in 2005), the German EGBGB (last amended in 1994), the Italian Act of 1995, and the Belgian Act of 2004 are cited hereinafter for comparison. 5 EU legislation on private international law is thoroughly studied in Japan. See YAMADA R. (note 4), at 35. Above all the Rome Convention on the law applicable to contractual obligations; Rome I Proposal of 2005, COM (2005) 650 final; Rome II Proposals of 2003 and 2006 on the law applicable to non-contractual obligations, COM (2003) 427 final and (2006) 83 final are cited hereinafter for comparison. 6 See generally THE STUDY GROUP OF THE NEW LEGISLATION OF PRIVATE INTERNATIONAL LAW, ‘Draft Articles on the Law Applicable to Contractual and Non-Contractual Obligations (1) and (2)’, in: The Japanese Annual of International Law 1996, No. 39, p. 185 et 1997, No. 40, p. 57. 7 See NISHITANI Y., ‘Reform des Hôrei’, in: Zeitschrift für Japanisches Recht 2003, No. 15, p. 263. 8 Kokusai Shihô no Gendaika ni kansuru Yôkô Chûkan Shian [Outline of a Tentative Draft on Modernization of Private International Law]; Kokusai Shihô no Gendaika ni kansuru Yôkô Chûkan Shian Hosoku Setsumei [Supplementary Explanation concerning the Outline of a Tentative Draft on Modernization of Private International Law]; Kokusai Shihô no Gendaika ni kansuru Yôkô An [Outline of a Draft on Modernization of Private Interna-

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Reform of Japan’s Private International Law 2006, Parliament approved the Hô no Tekiyô ni kansuru Tsûsokuhô (Act on the General Rules of the Application of Laws, hereinafter cited as the Application of Laws Act), which was promulgated on June 21, 2006,9 and came into force on January 1, 2007.10 As to its form of legislation, the Application of Laws Act is not a new statute but a total reform of the Hôrei. While most provisions remain substantially the same as the Hôrei, there are changes in the contractual and non-contractual obligations as well as a minor change in the rules relating to persons.11 One of the main purposes of the revision was to modernize the language of the Hôrei.12 For example, the name of the Hôrei came from an ancient Chinese language13 and was replaced by modern Japanese; the name Kokusai Shihô (Private International Law) was not accepted, because the Application of Laws Act also contains provisions on the date of entry into force of the statute (Article 2) and the effect of customs (Article 3).14 This article deals only with the revised provisions on contractual obligations (II), non-contractual obligations (III), and the assignment of claims (IV).

tional Law]. In September 2005 the Legal System Investigation Commission approved this Outline of a Draft, published as Kokusai Shihô no Gendaika ni kansuru Yôkô [Outline of Modernization of Private International Law]. Hereinafter only the Outline of a Draft is cited because it is substantially the same as the Outline of Modernization. These documents are all reprinted in: Hô no Tekiyô ni kansuru Tsûsokuhô Kankei Shiryô to Kaisetsu [Materials and Comments concerning the Act on the General Rules of the Application of Laws], Special Issue of New Business Law 2006, No. 110. The Outline of a Tentative Draft, its Supplementary Explanation, and the Outline of Modernization are also available at ;http://www.moj.go.jp/PUBLIC/MINJI57/refer02.pdf ; . Further, the minutes of the Working Group are available as text files at . For a German introduction to the Outline of a Tentative Draft, see NISHITANI Y., ‘Die Reform des Hôrei (2): Der Vorentwurf vom 22. März 2005’, in: Zeitschrift für Japanisches Recht 2005, No. 19, p. 251. 9 Law No. 78 of 2006. See the English translation by ANDERSON K. and OKUDA Y. in this Yearbook. For an English comment, see TAKAHASHI K., ‘A Major Reform of Japanese Private International Law’, in: Journal of Private International Law 2006, Vol. 2, No. 2, p. 311. 10 Government Ordinance No. 289 of 2006. 11 Articles 4 to 12, 14 to 23, and 35 of the Application of Laws Act. 12 Before World War II Japanese statutes were drafted in old orthography. For several years the Japanese Government took steps to modernize the language of major statutes such as the Civil Code, Commercial Code, and Penal Code. The Hôrei was the last major statute in the old orthography. See the statement of the Minister of Justice, SEIKEN S., in: Minutes of the Committee of Justice, House of Representatives, the 164th Session of Parliament, No. 30, June 13, 2006, at 16. 13 See YAMADA R. (note 4), at 25. 14 See the statement of the witness, SAKURADA Y., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 6.

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II.

Contractual Obligations

A.

Overview

The Application of Laws Act contains six provisions regulating contractual obligations, while the Hôrei contained only three. Namely, Chapter 3, Section 2 of the revised Act provides for party autonomy (Article 7), characteristic performance (Article 8), variation of the applicable law (Article 9), formalities of contract (Article 10), as well as special rules for consumer contracts (Article 11) and employment contracts (Article 12). At first glance all the provisions seem to be similar to European laws such as the Rome Convention and the Swiss Act. However, the details are different and specific to the Japanese statute as a result of the Japanese language and legal practice. Chapter 3, Section 2 of the Act specifically covers the formation and effect of juristic acts, with the exception of acts creating rights in rem, acts establishing family relationships, and acts giving rise to succession rights, which are regulated in Section 3, 5, and 6, respectively. While many European statutes cover only contracts, the provisions in Section 2 of the Japanese Act clearly cover both contracts and unilateral acts. However, the following considerations are limited to the law applicable to contracts under this Act.

B.

Party Autonomy

Article 7 of the Application of Laws Act concerning party autonomy provides that the formation and effect of a contract shall be governed by the law that is chosen by the parties at the time of contracting. This provision covers all matters of the formation and effect of a contract except for the legal capacity of the parties laid down in Article 4 and the formalities of contract in Article 10. Like Article 7 of the Hôrei, Article 7 of the new Act is silent on dépeçage, that is, the choice of different laws to apply to different parts of a contract or the choice of a law to apply to a part of a contract. However, dépeçage is allowed under Article 7.15 The Working Group refrained from providing an express provision regulating dépeçage only because establishing its limits and thus preventing a potential contradictory result of an overly complicated choice proved difficult to express in the Japanese language.16 In my opinion, dépeçage should have been regulated, because not including an express provision, of course, does not prevent such a contradiction from occurring. 15

For the same argument under the Hôrei, see YAMADA R. (note 4), at 334-335. See also ELLENBERGER H., Wirtschaftsrelevante Kollisionsnormen im japanischn internationalen Privatrecht, Frankfurt am Main 2003, p. 102. 16 Hôsei Shingikai Kokusai Shihô (Gendaika Kankei) Bukai [Legal System Investigation Commission, Working Group on Modernization of Private International Law], Minutes of the 26th Meeting, June 14, 2005, available at .

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Reform of Japan’s Private International Law A Japanese judge must determine whether the parties chose the law applicable to the contract at the time of contracting. If the parties made the choice after contracting, then the judge must apply Article 9 on variation of the applicable law. Article 7 is silent on the question of how clear that choice must be. The Outline of a Tentative Draft contained a proposal similar to European laws requiring the choice of law to be expressed or demonstrated with reasonable certainty by the circumstances of the contract.17 However, the Working Group later decided to delete this provision. 18 Such a provision would have prevented an inappropriate determination of the choice, which in fact occurred frequently under the Hôrei. This was because judges often wanted to avoid the application of Article 7(2) of the Hôrei, which referred to the law of the place where the contract was concluded (lex loci contractus). However, under the revised Act the choice will be determined in clear cases only because, in the absence of a choice of law, the law with which the contract is most closely connected is applicable pursuant to Article 8 of the Act. Accordingly, even though a provision requiring certainty of the choice is absent, a Japanese judge is likely to reach the same result as European judges.19 Article 7 is also silent on the existence and validity of the choice. In the Outline of a Tentative Draft there was a proposal similar to European laws which provide that the existence and validity of the choice are to be determined by the law that would govern the contract if the choice were valid.20 However, some members of the Working Group argued that the existence and validity of the choice of law should rather be determined according to a substantial rule of private international law, although they did not want to include such a provision in this Act. The Working Group did not reach an agreement when deciding to delete the provision regulating this matter.21 In the past there has been no case where this question was disputed before a Japanese court.

C.

Characteristic Performance

Article 8 of the Application of Laws Act provides for the law applicable to a contract where no choice has been made under Article 7. First, Article 8(1) establishes the principle of the closest connection with the contract, that is, the formation and effect of a contract shall be governed by the law of the place with which the contract is most closely connected at the time of contracting. Secondly, Article 8(2) adopts the theory of the characteristic performance by providing that the contract shall be presumed to be most closely connected with the law of the habitual resi17

See Materials and Comments (note 8), at 94. Minutes of the 26th Meeting (note 16). 19 See SAKURADA Y., Kokusai Shihô [Private International Law], 5th ed., Tokyo 2006, p. 214; SAWAKI T./DOGAUCHI M., Kokusai Shihô Nyûmon [Introduction to Private International Law], 6th ed., Tokyo 2006, p. 200. 20 See Materials and Comments (note 8), at 94. 21 Minutes of the 26th Meeting (note 16). 18

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Yasuhiro Okuda dence of the party who is to carry out the characteristic performance of the contract. Finally, Article 8(3) makes an exception for contracts for immovables, according to which such a contract shall be presumed to be most closely connected with the law of the place where the immovables are situated (lex rei sitae). Although these rules are similar to the Rome Convention and the Swiss Act, the details of the text are different. When determining the place most closely connected with the contract, Japanese judges are required under the Act to take into account all the circumstances which are objectively clear at the time of contracting. Circumstances that arise after contracting are to be ignored when determining the applicable law because that law may be changed only by a new choice by the parties (Article 9). The presumption of the closest connection of the characteristic performance is excluded if a judge finds the matter to be an exceptional case, for example, where a guarantee contract is concluded for a bank credit.22 Although the guarantor’s performance is characteristic, the bank’s place of business will be deemed to be most closely connected with the contract in such cases. Under Article 8(2), where the party who is to carry out the contract’s characteristic performance has a place of business connected with the contract, it is to be presumed that the contract is most closely connected with the law of that place of business. Where several places of business in different countries are connected with the contract, the principal place of business is to be decisive for the presumption of the closest connection. For example, under a carriage contract the carrier’s performance is characteristic, and the contract is usually connected with two or more of the carrier’s places of business that are situated in different countries. Although Article 4(4) of the Rome Convention provides for application of the law of the carrier’s principal place of business as an exception within a specific area,23 the Japanese Act regulates the matter more broadly as a general rule. In contrast, a contract for immovables is regarded as an exception under Article 8(3) of this Act, as is Article 4(3) of the Rome Convention. Such a contract shall be presumed to be most closely connected with the law of the place where the immovables are situated (lex rei sitae). However, this presumption may be overcome, for example, in the case where a contract is concluded for the lease of one hundred vacation condominiums of which ninety are situated in Japan and ten in

22 See the Supplementary Explanation, in: Materials and Comments (note 8), at 145. See also Minutes of the 26th Meeting (note 16). 23 Article 4(4) of the Rome Convention provides that if the country in which the carrier has his principal place of business is also the country in which the place of loading or the place of discharge or the principal place of business of the consignor is situated, it shall be presumed that the contract is most closely connected with that country. However, the Rome I Proposal has deleted that exception. Article 4(1)(c) provides that a contract of carriage shall be governed by the law of the carrier’s habitual residence, and the second sentence of Article 18(1) provides that where the contract is concluded in the course of operation of an establishment, this establishment shall be considered the habitual residence.

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Reform of Japan’s Private International Law foreign countries.24 In such a case, the contract will be most closely connected with Japan.

D.

Variation of the Applicable Law

Article 9 of the Application of Laws Act provides that the parties may vary the law applicable to the formation and effect of a contract, although such variation is not to be asserted against third parties where it would be prejudicial to their rights. This provision covers two cases: first, where the parties had chosen a law at the time of contracting but later changed it to another law; and secondly, where no choice had been made at the time of contracting, but the parties chose the applicable law later. Variation of the applicable law is possible by an expressed or implied choice by the parties. It differs from Article 116(3) of the Swiss Act in that the parties may make the variation effective only regarding future acts.25 However, in my opinion, the variation is in principle retroactive to the time of contracting, unless otherwise agreed by the parties.26 The protection of third party interests is slightly different than in European laws. Article 9 of this Act confers a right of objection on third parties, who are free to accept the variation of the applicable law, even where it would be prejudicial to their interests.

E.

Formalities of Contract

Under Article 10(1) and (2) of the Application of Laws Act, the formalities of a contract shall be effective if they satisfy the requirements of either the law applicable to the formation of the contract or the law of the place of contracting (lex loci contractus). This rule, that is, locus regit actum is probably recognized by all laws worldwide. However, the details vary. Where the law applicable to the formation of the contract was changed pursuant to Article 9 of the Act, the law designated before the change is to govern the formalities under the second sentence of Article 10(1). The Outline of a Tentative Draft contained a proposal similar to Article 3(2) of the Rome Convention which provides that a change of the governing law shall not affect the formal validity of the contract.27 However, some members of the Working Group argued that it was disputable whether formalities that are void under the law designated before

24

See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 16. 25 The notes of the Outline of a Draft state that at the time of variation the parties may decide whether the variation is retroactive or effective only in the future. See Materials and Comments (note 8), at 86. 26 See SAKURADA Y. (note 19), at 212. 27 See Materials and Comments (note 8), at 95.

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Yasuhiro Okuda the change could be validated by the law after the change.28 Accordingly, the text of the proposal could be interpreted to cover only cases where formalities that are valid under the first law would be void under the law designated after the change. Thus, the Working Group sought to clarify that the law designated after the change under Article 9 was never applicable to the formalities, irrespective of whether it could validate or invalidate them. A contract concluded by parties situated in different countries, as is normally the case in international sales, shall be considered formally valid if it satisfies the formal requirements of either the law of the offeror or the law of the acceptor under Article 10(4), or the law applicable to the formation of the contract under Article 10(1). This rule is the same as Article 9(2) of the Rome Convention. Under the Act the principle of locus regit actum is excluded only for consumer contracts by Article 11(3) to (5) as mentioned below in Part F. Indeed, Article 10(5) provides that the lex loci actus shall not apply to the formalities of a juristic act that is designed to establish or dispose of a right in rem to movables or immovables or a right requiring registration. However, this provision concerns a juristic act creating a right in rem, which should be distinguished from an act creating obligations. For example, a contract for the sale of immovables is formally valid if it satisfies the formal requirements of the law applicable to the formation of the contract or the lex loci contractus, even though the transfer of ownership on the immovables must satisfy the formal and substantive requirements of the lex rei sitae under Articles 10(5) and 13. In contrast, under Article 9(6) of the Rome Convention a contract for the sale of immovables shall satisfy the formal requirements of the lex rei sitae if those requirements are absolutely applicable, irrespective of the place of contracting and the law governing the contract. Such application of a mandatory rule of the lex rei sitae is not expressly provided for in this Act, although it may be adopted eventually as an unwritten rule.

F.

Consumer Contracts

In the Hôrei no general rule was provided regarding the absolute application of mandatory rules. However, Japanese professors argued in favor of such application of lex fori mandatory rules, especially with regard to consumer and employment contracts.29 Similar to the Hôrei, the Application of Laws Act does not contain any general rules concerning the absolute application of mandatory rules, but it does provide special rules for consumer contracts. Under Article 11 either the mandatory rules or the entire law of the consumer’s habitual residence shall apply to 28

Hôsei Shingikai Kokusai Shihô (Gendaika Kankei) Bukai [Legal System Investigation Commission, Working Group on Modernization of Private International Law], Minutes of the 27th Meeting, July 5, 2005, available at ; Minutes of the 28th Meeting, July 12, 2005, available at . 29 See generally YAMADA R. (note 4), at 322-325, with further references. See also ELLENBERGER H. (note 15), at 120-130.

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Reform of Japan’s Private International Law consumer contracts in certain cases. This provision does not prejudice the absolute application of mandatory rules of the lex fori,30 which was recognized before the revision as an unwritten rule. A consumer contract is defined under Article 11(1) as a contract concluded between a consumer and a business operator where the consumer is an individual acting outside the course of trade and the business operator is a juridical person such as a corporate association or an individual acting in the course of trade. Employment contracts are excluded and covered by Article 12. Under Article 11(1), even where by choice under Article 7 or 9, a consumer contract is governed by a law other than the law of the consumer’s habitual residence, the mandatory rules of the consumer’s habitual residence law shall nonetheless be applied, when the consumer indicates to the business operator his or her intention to require the application of the mandatory rules. This provision differs significantly from European laws which also aim at protecting consumers. The Japanese Act requires a declaration by the consumer in order for a particular mandatory rule to be applied. The declaration requirement is justified by the following argument:31 If mandatory rules for the protection of a consumer were to be absolutely applied, it would be necessary to determine which rules are more favorable for the consumer, that is, the rules of the chosen law or of the consumer’s habitual residence. However, such determination would be very difficult for judges and the parties. Therefore, requiring a declaration by the consumer makes it easier to determine which rules are to be applied. Such a declaration is possible in both extrajudicial and judicial proceedings.32 No formalities are required.33 However, the consumer must specify the mandatory rule to be applied. For example, it will not suffice if the consumer simply declares the contract void under the law of his or her habitual residence. If the consumer justifies the attempt to withdraw from a contract by arguing that the contracting is still in a cooling-off period, or that he or she was forced to conclude the contract, Article 11(1) would be applicable because in this case it is possible to specify the application of a particular mandatory rule.34 30 See the notes of the Outline of a Tentative Draft and its Supplementary Explanation, in: Materials and Comments (note 8), at 96, 157. See also the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, House of Representatives, the 164th Session of Parliament, No. 30, June 13, 2006, at 26. 31 See the statement of the witness, TEZUKA H., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 12. See also the Supplementary Explanation, in: Materials and Comments (note 8), at 154. 32 See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 11. 33 See KANZAKI T., Kaisetsu Hô no Tekiyô ni kansuru Tsûsokuhô [Commentary to the Act on the General rules of the Application of Laws], Tokyo 2006, p. 92; SAWAKI T./DOGAUCHI M. (note 19), at 218. 34 See KANZAKI T. (note 33), at 91-92. See also the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 9.

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Yasuhiro Okuda The mandatory rule specified will be applied together with the law chosen by the parties. Thus, a contract is void if it is under the mandatory rule, even though it could only be withdrawn by the consumer under the chosen law.35 Article 11(3) provides for the exclusion of Article 10 concerning formalities. If the consumer indicates to the business operator his or her intention to require certain mandatory rules of the law of the consumer’s habitual residence to be applied to the formalities, only the mandatory rules shall apply to the matters covered by the rules, even where the parties have chosen another law under Article 7. Further, Article 11(4) provides for the exclusive application of the law of the consumer’s habitual residence when he or she so requests, irrespective of Article 10. It should be noted that in the latter case the consumer need not specify a mandatory rule of the law of his or her habitual residence. Where no choice has been made under Article 7, the formation and effect, including the formalities, of a consumer contract shall be governed by the law of the consumer’s habitual residence under Article 11(2) and (5). This rule is not a presumption, and thus no exception is allowed to the application of the law of the consumer’s habitual residence. All the above mentioned rules are excluded in certain cases set forth in Article 11(6). Those include cases of ‘active consumers’ and ‘innocent business operators’. A consumer is deemed active if he or she visits the country of the business operator to conclude a contract or to receive full performance of the contract (Numbers 1 and 2). However, where the consumer was invited to visit the country of the business operator, special rules for consumer contract are applicable. For example, if a business operator invites a consumer by a direct postal mail or an email, informing him or her of a more favorable price or that more items are offered only in the business operator’s country, this section will apply.36 On the other hand, a business operator is deemed innocent if, with due reason at the time of contracting, the business operator did not know the consumer’s habitual residence or mistakenly believed that the other contracting party was not a consumer (Numbers 3 and 4). As a rule, in the case of a sale at sight the seller does not know the buyer’s habitual residence. On the contrary, a seller who sends goods to the buyer will usually know the buyer’s habitual residence.37 Further, a consumer normally does not buy large quantities of goods.38 For example, if a person buys a container of wine, the seller is likely to regard him as a business operator.

35

See KANZAKI T. (note 33), at 93. See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 16. 37 See SAWAKI T./DOGAUCHI M. (note 19), at 223. 38 See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 9. 36

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Employment Contracts

Article 12 of the Application of Laws Act provides special rules for employment contracts. This provision, like Article 11, does not interfere with the absolute application of mandatory rules of the lex fori, which was also an unwritten rule prior to the revision.39 Under Article 12(1), even where an employment contract is governed by a law which was chosen under Article 7 or 9 and is not the law with which the contract is most closely connected, certain mandatory rules of the latter shall be applied, when the employee indicates to the employer his or her intention to require the application of the mandatory rules. Such a declaration is interpreted in same manner as in Article 11(1). Article 12(2) provides that an employment contract is presumed to be most closely connected with the law of the place of employment. However, employees such as the crew of a ship or an airplane on an international route do not work in any particular country. For the purpose of Article 12(1), it is to be presumed under Paragraph 2 that an employment contract for such employees is most closely connected with the law of the employer’s place of business through which the employee was engaged. However, if a judge determines an exceptional case, the presumption is excluded under Article 12 (2), just as under Article 8(2) and (3). In the absence of a choice of law under Article 7, the same presumption rule is applicable under Article 12(3).

III. Non-contractual Obligations A.

Overview

The Hôrei provided in Article 11(1) that agency by necessity, unjust enrichment, and tort were all governed by the law of the place where the events causing the claims occurred. In contrast, the Application of Laws Act regulates on the one hand agency by necessity and unjust enrichment in Articles 14 to 16, and on the other hand tort in Articles 17 to 22. The general rules, exception clauses, and principle of party autonomy are all similar for these non-contractual obligations; however, tort is regulated in greater detail. Namely, special rules for product liability and defamation are in place, and the cumulative application of Japanese law remains the same as provided in Article 11(2) and (3) of the Hôrei. In effect, the Japanese Government relaxed the principle of the lex loci delicti in light of European laws such as the Swiss Act and the Rome II Proposals, but maintained the broad application of the lex fori as a result of lobbying by Japanese businesses. The lack of provisions concerning the infringement of intellectual property is also questionable. For example, the Supreme Court of Japan has held that injunction of prohibition and abandonment should be governed by the lex loci protectionis, whereas claims for damages are to be determined according to the cumula39

See note 30 above.

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Yasuhiro Okuda tive application of the lex loci delicti and Japanese law under Article 11 of the Hôrei.40 However, the rationale of this judgment is not convincing. Since prohibition and abandonment, on the one hand, and the damages, on the other hand, are all effects of claims arising from the same infringement of intellectual property, they should be governed by one law designated by a written provision of the Act.41 That is, the lex loci protectionis should be applied in principle.42 However, the Japanese Government decided not to provide a choice of law rule for intellectual property. In my opinion, the argument that Japanese academics had not sufficiently considered the issue and that it would therefore be better for the Japanese Government to wait for an enactment by foreign countries and international organizations such as WIPO43 is not convincing. I submit that, as a sovereign State, the Japanese Government should autonomously create its own choice of law rule for intellectual property, as the Swiss Government did.44

B.

Lex Loci Delicti

The general rules for tort laid down in Article 17 of the Application of Laws Act provide that the formation and effect of tort liability shall be governed by the law of the place where the resulting harm occurred. However, where that place could not have been foreseen in normal circumstances, the law of the place where the damaging acts were done shall apply. In most cases, the resulting harm will occur in the same country where the damaging acts were done. Two typical cases of distant tort, that is, product liability and defamation, are regulated by Articles 18 and 19. Other cases of distant tort such as environmental pollution and unfair 40 Supreme Court, September 26, 2002, in: Minshû, Vol. 56, No. 7, p. 1551; also in: The Japanese Annual of International Law 2003, No. 46, p. 168. 41 See OKUDA Y., ‘Hô no Tekiyô ni kansuru Tsûsokuhô no Fuhôkôi Jyunkyohô ni kansuru Kitei [The Law Applicable to Tort Liability in the Act on the General Rules of the Application of Laws]’, in: Japanese Yearbook of Private International Law 2006, No. 8, p. 42. 42 In this case, the exception clause, party autonomy, and double actionability provided in Articles 20 to 22 of the Act should be excluded. Further, matters other than the infringement should not always be governed by the lex loci protectionis: For example, the contractual relations between the parties to an assignment or license are governed by the law applicable to the contract; ownership of a patent created during an employment relationship is governed by the law applicable to the employment contract; the first author of a movie is determined by the law of the producer’s place of business. See OKUDA Y., ‘Kokusai Shihô no Gendaika ni kansuru Yôkô Chûkan Shian ni tsuite [Some Remarks on the Outline of a Tentative Draft on Modernization of Private International Law]’, in: Chuo Law Journal 2005, Vol. 2, No. 2, p. 19. 43 See the statements of the Minister of Justice, SUGIURA S., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 15-16. 44 Article 110(1) of the Swiss Act. See also Article 8(1) of the Rome II Proposal of 2003 and Article 9(1) of the Rome II Proposal of 2006.

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Reform of Japan’s Private International Law competition are covered by Article 17. In my opinion, such distant torts are normally committed by a business which should be able to foresee where harm might occur as a result of its activity.45 Accordingly, the predictability requirement was unnecessary as a precondition for the application of the law of the place where the resulting harm occurs. In the parliamentary debate, an official of the Japanese Government noted a hypothetical case where the smoke of a factory was carried further than expected due to abnormal weather, causing acid rain in a foreign country which damaged the agriculture there.46 However, it seems questionable whether such an example justifies the predictability requirement. Rather, this requirement was the result of vague anxiety on the part of Japanese businesses, fearing that application of the law of the place where harm occurred as a result of their activity might be disadvantageous to them in certain cases. In the debate of the Working Group some members argued against the predictability requirement, 47 fearing that legal proceedings would be delayed because, where the law of the place of occurrence of the harm created an advantage for one party, the other party would always try to rebut its predictability.48 Accordingly, Japanese courts should clarify as soon as possible that the issue of the unforeseeability of the place where harm occurs as a result of a tort arises only in extreme cases.

C.

Product Liability

Pursuant to Article 18 of the Application of Laws Act, product liability shall be governed by the law of the place where the injured person received the product. However, where the delivery of the product in that place could not have been foreseen in normal circumstances, the law of the producer’s or distributor’s principal place of business shall govern. This provision differs from its counterpart in the Swiss Act and the Rome II Proposals of 2003 and 2006 in three points. First, although the Swiss Act provides for a choice of law by the injured person49 and the Rome II Proposals refers to the law of the injured person’s habit-

45

OKUDA Y. ‘Tort Liability’ (note 41), at 43-44; OKUDA Y. ‘Outline of a Tentative Draft’ (note 42), at 16; NISHITANI Y., ‘Shin Kokusai Shihô ni okeru Huhôkôi no Junkyohô Kettei Rûru ni tsuite [Some Remarks on the Rules Concerning the Governing Law of Tort in the New Act on Private International Law]’, in: New Business Law 2005, No. 813, p. 38. 46 See the statements of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 9. 47 Minutes of the 26th Meeting (note 16). 48 Not only the tortfeasor but also the injured person could attempt to rebut its predictability. For example, the law of the place where the harm occurs might be less favorable for the injured person than the law of the place where the damaging acts were done. 49 Article 135(1) of the Swiss Act. See also Article 63 of the Italian Act.

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Yasuhiro Okuda ual residence,50 the Japanese Act designates the law of the place of delivery of the product. This rule is justified by virtue of its fairness for both parties.51 A choice of law by the injured person protects him or her disproportionately at the cost of the producer or distributor. Similarly, the application of the law of the injured person’s habitual residence is unfair for the producer or distributor on this level of private international law, even though similar products of the same producer are marketed by chance in that place.52 In contrast, the place of delivery of the product will be neutral for both parties in most tort cases. Secondly, the Swiss Act and the Rome II Proposals make an exception for cases where the product was marketed in the place of delivery or the injured person’s habitual residence without the consent of the producer or original distributor.53 In order for the exception to apply, the Japanese Act goes a step further by requiring that the delivery of the product in that country could not have been foreseen in normal circumstances. In my opinion, it seems misleading that the exception in Articles 17 and 18 was drafted similarly.54 As mentioned above in Part B, the exception in Article 17 should be admitted only in extreme cases. Since a product will often be resold in countries other than those expected by the producer or original distributor, it follows that the exception in Article 18 should be admitted more readily than in Article 17. That is, where the product was marketed without consent of the producer or original distributor in the place of delivery, the law of his or her principal place of business should be applicable, just as in the Swiss Act. Thirdly, the Japanese Act refers to the law of the place where the ‘injured person’ received the product. Thus, such a place does not cover the case of a bystander. Suppose that an airplane crashed because of a defect and all the passengers are killed. In the parliamentary debate, an official of the Japanese Government argued that in this case the general rule for tort would apply, because neither the

50

Article 4 of the Rome II Proposal of 2003 and Article 6 of the Rome II Proposal of 2006. See also Article 99(2)(iv) of the Belgian Act. 51 See the statement of the witness, SAKURADA Y., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 13; the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 11. 52 According to the Explanatory Memorandum of the Rome II Proposal of 2003 the law of the injured person’s habitual residence applies even where the person acquired abroad the product that was also marketed in his or her habitual residence. See COM (2003) 427 final, at 14. However, strictly stated, the product marketed and acquired abroad is not always the same as the product marketed in the injured person’s habitual residence. For example, Japanese cars are marketed in Japan, the United States, and Europe often with different names, performance, and so forth, even though they seem very similar in their appearance. 53 See notes 49 and 50 above. 54 See OKUDA Y., ‘Tort Liability’ (note 41), at 45-46; OKUDA Y., ‘Outline of a Tentative Draft’ (note 42), at 18.

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Reform of Japan’s Private International Law passengers nor their family received the airplane.55 While some authors support such interpretation, 56 in my opinion, the argument is not convincing. Article 18 covers all aspects of product liability, even though it refers to a nonexistent law in the case of the bystander. This is similar to tort cases that occur on the high seas, the Antarctic Continent, or in outer space. 57 In this case, the gap caused by the nonexistent applicable law should be filled by the rule of reason by applying the law of the principal place of business of the airline to both the contract liability of the airline and the product liability of the producer because they are often jointly responsible for an airplane accident.58

D.

Defamation

The special rule laid down in Article 19 of the Application of Laws Act provides that defamation shall be governed by the law of the injured person’s habitual residence. This simple rule reflects the legal practice in Japan, as there is no convention or organization devoted to assisting courts in identifying the content of foreign laws.59 Thus, if the laws of all the countries where damage arises due to defamation were applicable, the legal proceedings would be even more delayed and complicated than usual. Under these circumstances the law of the injured person’s habitual residence is justified because it is usually the place where the greatest harm occurs as a result of the defamation. However, the right of reply or other similar rights should be governed by the law of the habitual residence of the person who might be liable,60 because these rights are closely connected with the freedom of 55 See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 10. 56 SAKURADA Y. (note 19), at 235; SAWAKI T./DOGAUCHI M. (note 19), at 242; KANZAKI T. (note 33), at 129. 57 According to an unwritten rule argued by the majority of Japanese authors, a tort on a ship on the high seas is governed by the law of its flag, and a collision of ships on the high seas is governed by the law of their common flag, or where that is not the case, cumulatively by both laws of their flags. See generally YAMADA R. (note 4), at 366-367; ELLENBERGER H., (note 15), at 180-182. 58 See OKUDA Y., ‘Tort Liability’ (note 4), at 47; OKUDA Y. ‘Outline of a Tentative Draft’ (note 42), at 17-18. However, the Montreal Convention for the Unification of Certain Rules for International Carriage by Air is applied, irrespective of the law applicable to the contract and the tort. 59 Cf. the situation in Europe where the European Convention on Information on Foreign Law was adopted in 1968 by the Council of Europe, and institutions such as the Swiss Institute of Comparative Law and the Max Planck Institutes do research on foreign laws. 60 See OKUDA Y. ‘Tort Liability’ (note 41), at 49; OKUDA Y., ‘Outline of a Tentative Draft’ (note 42), at 17; NISHITANI Y. (note 42), at 44. See also Article 139(2) of the Swiss Act; Article 6(2) of the Rome II Proposal of 2003. However, in the Rome II Proposal of

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Yasuhiro Okuda expression of the potentially liable person. Although there is no provision to this effect in the Act, it warrants being recognized as an unwritten rule. The subject matter of Article 19, precisely stated, is Meiyo mataha Shinyô no Kison (injury of honor or reputation). Injury of honor is regulated in Articles 710 and 723 of the Minpô (Civil Code) and Articles 230 to 232 of the Keihô (Penal Code), while injury of reputation is regulated in Article 233 of the Penal Code. The former concerns the honor of an individual, and the latter the reputation of an enterprise with regard to business.61 Other similar rights relating to personality such as privacy are not expressly regulated in the Civil Code, the Penal Code, or other Japanese statutes. The Application of Laws Act covers these other statutes and regulates only the injury of honor or reputation. However, Article 19 is applicable mutatis mutandis also to other rights relating to personality,62 although remedies not recognized under Japanese Law are excluded by Article 22.

E.

Exception Clause

The Application of Laws Act lacks a general exception clause like the one in Article 15 of the Swiss Act but contains a special one for tort instead. Namely, Article 20 provides an exception to the lex loci delicti rule laid down in Articles 17 to 19. To the extent that there is one State with which the tort claims are manifestly more closely connected than with the place of tort, this State’ law applies by way of exception. For this purpose, the judge is to take account of all the circumstances, including whether at the time of the tort both parties had their habitual residence in the same country or whether the tort was committed in breach of the contractual obligations between the parties. Such an exception clause is slightly different than that of European laws in that the common habitual residence and the contractual relationship between the parties are regarded as one of the circumstances to be considered for admitting an exception under Article 20 of the Japanese Act. In contrast, in the Rome II Proposals of 2003 and 2006, as well as the Swiss Act, the reference to the law of the common habitual residence and/or the reference to the law applicable to the contract are regulated independently of any exception clause.63 The Working Group found such a separate regulation inappropriate for the following reasons.64 First, where several tortfeasors or injured persons are involved in the same tort, some of whom 2006 the infringement of privacy or personal rights by media is excluded from its scope of application (Article 1(2)h). 61 See KANZAKI T. (note 33), at 134. 62 See SAWAKI T./DOGAUCHI M. (note 19), at 246. 63 For both references, see Article 133(1) and (3) of the Swiss Act. See also Articles 99(1)(i) and 100 of the Belgian Act. For the reference to the law of the common habitual residence, see Article 3(2) of the Rome II Proposal of 2003 and Article 5(2) of the Rome II Proposal of 2006. See also Article 40(2) of the German EGBGB. 64 Minutes of the 26th Meeting (note 16).

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Reform of Japan’s Private International Law have their habitual residence in the same country, the reference to the law of the common habitual residence should normally be excluded because otherwise the law governing the tort differs among the parties. Secondly, regarding the reference to the law applicable to the contract, there could be a case of abuse if the tortfeasor forces the injured party to agree on the choice of a law which provides less protection to the latter. The first reason, however, is not convincing because pursuant to Article 21 some of the parties could agree to change a governing law that otherwise differs from the law applicable to the other parties. The second reason is also not convincing because such a case of abuse could be prevented by Articles 11 and 12, which permit the weaker party to invoke the application of a particular mandatory rule. Accordingly, reference to the law of the common habitual residence and reference to the law applicable to the contract should be in principle recognized, unless other truly exceptional circumstances exist. This would be the case, for example, where a Japanese traveller rented a car abroad and hit a person who by chance was also a Japanese citizen travelling abroad. Reference to the law applicable to the contract should generally be given priority over reference to the law of the common habitual residence65 because the former is more significant for the case than the latter. 66 Circumstances other than the common habitual residence or the contractual relationship between the parties should rarely influence the law governing a tort.67 A preferable approach would be to have the laws governing intellectual property, product liability for a bystander, and the right of reply in the case of defamation determined by clear rules as outlined above in Parts A, C, and D, rather than providing solutions that could differ from case to case under Article 20.

F.

Party Autonomy

Article 21 of the Application of Laws Act provides for party autonomy in tort by permitting the parties to a tort to vary the governing law after the tort occurs. However, such variation is not to be invoked against third parties where it would prejudice their rights. This provision is similar to the Rome II Proposals of 2003 and 2006.68 However, it is questionable whether the Japanese legal practice really needs party autonomy in tort.69 Indeed, in 1997 the District Court of Chiba decided that 65

See KANZAKI T. (note 33), at 139; NAKANISHI Y., ‘Tokushû Hô no Tekiyô ni kansuru Tsûsokuhô no Seitei: Fuhôkôi no toriatsukai ni tsuite [Symposium to the Act on the General Rules of the Application of Laws: Tort]’, in: Hôritsu no Hiroba 2006, Vol. 59, No. 9, p. 40. See also the note on the Outline of a Tentative Draft, in: Materials and Comments (note 8), at 99. 66 See the Supplementary Explanation, in: Materials and Comments (note 8), at 190. 67 See SAWAKI T./DOGAUCHI M. (note 19), at 248-249. 68 See Article 10(1) of the Rome II Proposal of 2003 and Article 4(1) of the Rome II Proposal of 2006. See also Article 42 of the German EGBGB as well as Article 101 of the Belgian Act. 69 See OKUDA Y., ‘Tort Liability’ (note 41), at 51; OKUDA Y. ‘Outline of a Tentative Draft’ (note 42), at 15.

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Yasuhiro Okuda Japanese law should apply to a tort committed in Canada, arguing that both of the parties had chosen it during the legal proceedings,70 even though party autonomy in tort was not recognized under the Horei.71 However, that case concerned the collision of Japanese skiers, both of whom had participated in a ski trip from Japan to Canada. Thus, under the Application of Laws Act the judge would reach the same result because both of the parties had their habitual residence in Japan. This solution is easier and sufficient for the Japanese legal practice. In other cases where the parties have no relationship with each other before the tort, they are unlikely to agree on a governing law that would lead to results clearly different than those under the lex loci delicti. Similarly, if the results are uncertain, they would not run the risk of changing the law governing the tort. Further, Article 21 of the Act could lead to results prejudicial to the injured person. Where a business causes injures to an individual, it is likely be have greater possibilities to collect information on foreign laws than the individual. Therefore, due to differences in the possibility to gather information, the injured person will be at greater risk of agreeing on a choice of law favorable to the injuring business.72 In my opinion, Article 21 of the Act should be interpreted more restrictively than Article 9 concerning variation of the law applicable to a contract.73 A choice of the law applicable to a tort must be expressed or demonstrated with reasonable certainty by the circumstances of the case,74 although this is not expressly provided. This is required especially where the choice changes the applicable law from Japanese to a foreign law, or where the choice was made before legal proceedings were initiated. A complicated question arises where the law applicable to a contract also governs a tort due to the fact that the tort was committed by an act in breach of a contractual obligation between the parties. If the contracting parties were entitled to change the law governing the tort to another law by invoking Article 21, then the tort and the contract would be governed by different laws. Such a result would contravene the purpose of the reference to the law applicable to the contract under Article 20. Further, as regards the contract, a choice of law or variation of the law pursuant to Article 7 or 9 shall not prejudice the application of a mandatory rule under Articles 11(1) and 12(1). A variation under Article 21 could circumvent the protection of the weaker party. In my opinion, in cases where the law applicable to 70

District Court of Chiba, July 24, 2007, in: Hanrei Jihô, No. 1639, p. 86. Article 11 of the Hôrei provides only the principle of the lex loci delicti and the cumulative application of Japanese law. Accordingly, there is no reason for admitting the choice of law by the parties to tort under the Hôrei. 72 The Working Group found the restriction to the choice of law after tort sufficient for protecting the weaker party. Minutes of the 26th Meeting (note 16). However, this argument is not convincing. 73 See KANZAKI T. (note 33), at 152. 74 Some members of the Working Group argued that the choice of law must be expressed, but this argument was rejected. Minutes of the 26th Meeting, above n.16; Minutes of the 27th Meeting (note 28). 71

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G.

Cumulative Application of Japanese Law

Article 22 of the Application of Laws Act provides for the cumulative application of Japanese Law to the formation and effect of torts, as did Article 11 (2) and (3) of the Hôrei. Such double actionability is wider under the Japanese Act than in European laws. The Swiss Act limits the cumulative application of Swiss law only to the amount of damages awarded in cases of product liability and unfair competition.76 The Rome II Proposal of 2006 provides that damages of disproportionately high amount violate public policy.77 Both are clearly designed to target punitive damages under American law. Even the United Kingdom has limited double actionability to defamation since 1995.78 Article 11 (2) and (3) of the Hôrei, however, followed the ancient common law rule.79 During the debate in the Japanese Parliament it was admitted that business lobbing had influenced the decision to retain broad double actionability.80 Further, a Japanese Supreme Court judgment upholding double actionability 81 was often mentioned in this context in the debates of the Parliament and the Working Group.82 The case concerned a Japanese company that induced infringement by its sister American company of the U.S. patent of another American company. According to the judgment, the lex loci delicti was American law because the results of the act occurred in the United States: Under the American Patent Act an act committed abroad to induce an infringement of a patent registered in the United States constitutes a tort. However, the Court held that the U.S. Patent Act was not applicable because an act committed abroad to induce an infringement of a patent does not constitute a tort under Japanese law. The Working Group regarded the judgment as a good example illustrating that the Japanese Court reached an 75

See KANZAKI T. (note 33), at 153. Articles 135(2) and 137(2) of the Swiss Act. 77 The second sentence of Article 23 of the Rome II Proposal of 2006. See also Article 24 of the Rome II Proposal of 2003. 78 Articles 10 and 13 of the Private International Law (Miscellaneous Provisions) Act 1995 (c. 42). 79 See the statement of the witness, SAKURADA Y., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 10. 80 Id. 81 Supreme Court, September 26, 2002 (note 40). 82 See Minutes of the 26th Meeting, above n.16; the statement of the witness, SAKURADA Y., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 10; the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 8. 76

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Yasuhiro Okuda appropriate conclusion thanks to the cumulative application of Japanese law under Article 11(2) of the Hôrei. However, this evaluation is questionable. It seems that the judgment is appropriate only in so far as it favors the interests of the Japanese defendant, whereas it is unfair towards the American plaintiff. Further, an act inducing a tort is also considered a tort under Article 719 of the Japanese Civil Code. Accordingly, the application of Article 11(2) of the Hôrei by the Supreme Court was a mistake. 83 Thus, it is not appropriate to refer to the judgment as a justification of double actionability. Nonetheless, Article 22 of the revised Act has entirely replaced Article 11(2) and (3) of the Hôrei. Thus, questions of interpretation remain. The first question concerns the position of Article 22. Since it follows Articles 17 to 21, this normally means that Japanese law should always apply cumulatively, irrespective of Articles 17 to 21. However, Article 20 refers to the law applicable to the contract between the parties, and Article 21 recognizes the parties’ choice of law. In both cases the applicable law may be a foreign law. The cumulative application of Japanese law under Article 22 results in a discrepancy between the laws governing the contract and the tort. Further, the application of Japanese law will be contrary to the parties’ will indicated by their choice of a foreign law. In my opinion, Article 22 should be excluded where the tort is governed by a foreign law as a result of a reference accessory to the law applicable to their contract or a choice of law by the parties,84 although the Working Group stated a different opinion.85 The second question concerns the wording of Article 22(2), which provides that an injured person may not request compensation of damages or any other remedy not recognized under Japanese law, as did Article 11(3) of the Hôrei. The plain meaning of this provision suggests that it does not apply to matters of prescription. The preparatory materials of Article 11(3) of the Hôrei support this conclusion. Nobushige Hozumi, draftsman of the Hôrei, mentioned only the need to apply Japanese law cumulatively to measures and amounts of damages, without referring at all to prescription.86 In my opinion, Article 22(2) should not apply to prescription,87 although a different opinion was stated in the parliamentary debate.88 83

See YAMADA R. (note 4), at 392. See OKUDA Y., ‘Tort Liability’ (note 41), at 54-55. For the choice of laws by the parties, see also KANZAKI T. (note 33), at 156-157. 85 Minutes of the 26th Meeting (note 16). 86 See HÔMUDAIJIN KANBÔ SHIHÔ HÔSEI CHÔSABU [Secretariat of Minister of Justice, Legal System Research Department] (ed.), Hôten Chôsakai Hôrei Ghiji Sokkiroku [Law Research Committee, Preparatory Work of the Hôrei], Nihon Kindai Rippô Shiryô Sôsho Tokyo 1986, Vol. 26, p. 125. 87 See OKUDA Y., ‘Tort Liability’ (note 41), at 55-56; NAKANISHI Y. (note 65), at 42. See also OKUDA Y., ‘The Law Applicable to Governmental Liability for Injuries to Foreign Individuals during World War II: Questions of Private International Law in the Ongoing Legal Proceedings before Japanese Courts’, in: this Yearbook 2001, p. 133. 88 See the statement of the witness, SAKURADA Y., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 10, April 13, 2006, at 10. 84

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IV. Assignment of Claims The Application of Laws Act is silent on the assignability of a claim, as was the Hôrei. However, the Working Group argued that the assignability of a claim is governed by the law applicable to the claim,89 even though there is no provision to this effect in the Act. As regards the effect on a debtor or other third parties, Article 23 of the new Act designates the law governing the claim as applicable, although Article 12 of the Hôrei referred to the law of the debtor’s domicile. In the Outline of a Tentative Draft it was agreed that the effect on a debtor should be governed by the law governing the claim, whereas it was proposed that the effect on other third parties be governed by the law of the assignor’s habitual residence.90 This proposal is similar to Article 13(3) of the Rome I Proposal and Article 22 of the UNCITRAL Convention on Assignment of Receivables in International Trade. The proposal was supported by the argument that the application of the law of the assignor’s habitual residence could serve to promote the global mobilization of claims, thus facilitating the assignment of future claims or of a large number of claims by a single contract.91 In such a modern type of assignment, the assignee will usually authorize the assignor to collect the claims.92 The application of the law of the assignor’s habitual residence is justified because the activity of the assignor is the most important aspect of the external relationship in the assignment of claims. Such relationship is regulated by a single law – the law of the assignor’s habitual residence – irrespective of the laws governing the various claims and whether the claims have already been created. On the contrary, in a traditional case where a single claim that has already been created is assigned, the claim will be collected by the assignee. Where the claim was assigned to several persons, the debtor shall pay the person having priority under the law governing the claim. However, according to the above mentioned proposal, the law of the assignor’s habitual residence should apply to the relationship between the assignees. Under this law, priority may be conferred on a person other than the one who has priority under the law governing the claim. To prevent such a contradictory result, the Working Group decided that the law governing the

89 See Minutes of the 26th Meeting, (note16). The same view was taken by the majority of Japanese authors commenting on the Hôrei. See generally YAMADA R. (note 4), at 377; ELLENBERGER H. (note 15), at 192-194. 90 Materials and Comments (note 8), at 102. 91 See the Supplementary Explanation, in: Materials and Comments (note 8), at 208. Further, one of the main purposes of the revision of the Hôrei was to promote the global mobilization of claims. Id., at 112. 92 See KITAZAWA A., ‘Saiken Ryûdôka to Kokusai Shihô [Mobilization of Claims and Private International Law]’, in: Japanese Yearbook of Private International Law 2004, Vol. 6, p. 3.

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Yasuhiro Okuda claim should apply to the effect of the assignment on both the debtor and other third parties.93 Further, the Japanese banking sector supported such a decision.94 Certainly, the assignment of future claims or of a large number of claims by a single contract is difficult under Article 23 of the Act. However, in my opinion, such an inconvenience may be avoided by requiring the absolute application of the Dôsan oyobi Saiken no Jyôto no Taikô Yôken ni kansuru Minpô no Tokurei tô ni kansuru Hôritsu (Act for Exemption from the Civil Code and other Rules concerning the Effect on Third Parties of an Assignment of Movables or Claims)95 as a mandatory rule.96 That is, it should be applied in all cases under the said Act where the assignment of claims is registered in Japan at the place of the assignor’s habitual residence, irrespective of the law governing the claims. Further, such absolute application should also be admitted with respect to a foreign law if the assignment is registered in the country where the assignor has his or her habitual residence. Article 23 of the Application of Laws Act covers only other situations of assignment. This solution should be satisfactory for both traditional and modern types of the assignment of claims.

V.

Conclusion

As mentioned in the introduction, Japan had already enacted a comprehensive statute on conflict rules at the end of the nineteenth century. It proved to be more difficult to radically revise the old statute than it would have been to enact a new progressive statute. Some proposals for protecting weaker parties were restrained by lobbying on the part of Japanese businesses. Other proposals to enact more detailed provisions were opposed based on the argument that the case law and legal scholarship were not yet sufficiently refined to create new rules. Further, other proposals to approve a general rule on the application of mandatory rules or a general exception clause were discussed only briefly and rejected.97 Only the tradi93 See the statement of the government witness, TERADA I., in: Minutes of the Committee of Justice, Upper House, the 164th Session of Parliament, No. 11, April 18, 2006, at 11-12. 94 See Hôsei Shingikai Kokusai Shihô (Gendaika Kankei) Bukai [Legal System Investigation Commission, Working Group on Modernization of Private International Law], Minutes of the 25th Meeting, May 31, 2005, available at . 95 Law No. 104 of 1998, last amended by Law No. 87 of 2005. 96 OKUDA Y., ‘Outline of a Tentative Draft’ (note 42), at 22. 97 See Hôsei Shingikai Kokusai Shihô (Gendaika Kankei) Bukai [Legal System Investigation Commission, Working Group on Modernization of Private International Law], Minutes of the 14th Meeting, June 15, 2004, available at ; the Supplementary Explanation, in: Materials and Comments (note 8), at 235-236.

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Reform of Japan’s Private International Law tional rules for determining national law and habitual residence, interpersonal law, renvoi, and public policy (Articles 38 to 42) remain the same as in the Hôrei. In effect, the fundamental ideas of private international law were not sufficiently discussed in the Working Group and Parliament. Nonetheless, the Japanese Application of Laws Act offers some new ideas for conflict rules in contract and tort that differ slightly from their counterpart in European laws. Further, it should be noted that the reform of Japanese private international law still continues. Since November 2005 legislation on comprehensive rules for conflicts of jurisdiction is being studied in the Shôji Hômu Kenkyûkai (Commercial Law Center) under the auspices of the Ministry of Justice,98 although such matters are now regulated by unwritten rules. Thus, Japan’s private international law will continue to develop more rapidly than before.

98 See ONOSE A., ‘Minjisoshôhô tô no Dôkô [Developments of Civil Procedure Law and so forth]’, in: New Business Law 2006, No. 824, p. 33.

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SAME-SEX MARRIAGES, DOMESTIC PARTNERSHIPS AND PRIVATE INTERNATIONAL LAW: AT THE DAWN OF A NEW JURISPRUDENCE IN THE UNITED STATES Robert G. SPECTOR∗

I. II.

VII.

Introduction Same-Sex Marriages, Civil Unions and Domestic Partnerships: From Hawaii to Vermont to Massachusetts and Beyond The Defense of Marriage Acts The State Constitutional Amendments Traditional American Private International Law Rules on Marriage The Dawn of a New Jurisprudence? A. Evasive Marriages B. Validly Married Same-Sex Couples Who Move C. Transitory Marriages D. Outsider Marriages Conclusion

I.

Introduction

III. IV. V. VI.

I first had the pleasure of meeting Petar Šarčević during the negotiations for the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in Respect of Parental Responsibility and Measures for the Protection of Children. That the negotiations came to such a successful conclusion were in no small part due to his wisdom, wit, and general good sense. More importantly I came to realize the depth of Petar’s knowledge of private international law at the Fifth European Conference on Family Law sponsored by the Council of Europe and the Ministry of Justice of the Netherlands held in The Hague on March 15-16, 1999, which focused on the new Netherlands law concerning domestic partnerships. Petar delivered an address outlining the major problems in working with domestic partnerships in private international law.

∗ Glenn R. Watson Chair and Centennial Professor of Law, University of Oklahoma Law Center.

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Printed in Germany

Robert G. Spector My responsibility at that conference was to present the response from the United States to this new institution. At the time same-sex marriages did not exist anywhere, although the United States had expressed concerns about it due to the Hawaiian experience. A domestic partnerships was an unknown institution in the United States. This article covers developments in the United States with regard to same-sex marriages and domestic partnerships with some thoughts concerning the private international law issues as to whether there is any possibility that Europeans currently involved in same-sex marriages or domestic partnerships have any possibility of having them recognized in the United States.1 The United States has a federal system of government where some of the functions are performed by the national government and others are performed by the individual unit states. Domestic relations issues, including the subjects of marriage, divorce or dissolution of marriage, maintenance, division of marital property, custody and access to children, as well as other areas of parental responsibility, are almost exclusively within the control of the individual states.2 Even if a federal court were to have jurisdiction over the parties on an independent federal ground, such as diversity of citizenship,3 the federal court will abstain from deciding issues of domestic relations when it finds that individual state courts are a more appropriate forum.4 Since each individual state is solely competent to decide cases involving problems of domestic relations, like marriage, they relate to each other in the same way as independent countries. Therefore, it has become necessary to develop some method to determine which state will have jurisdiction to decide the various family law issues, the law applicable to those issues, and to determine which family law judgments shall be enforced by other states.

This article uses the term ‘domestic partnership,’ ‘civil union,’ and ‘registered partnership’ interchangeably to mean a status relationship that is either the equivalent of marriage, or nearly so. Although, it has become very clear that ‘registered partnerships’ exist in a wide variety of types in Europe, not all of which involve a status relationship. For an exhaustive treatment of the subject see CURRY-SUMNER I., All’s well that ends registered? – the substantive and private international law aspects of non-marital registered relationships in Europe : a comparison of the laws of Belgium, France, The Netherlands, Switzerland and the United Kingdom, Antwerp 2006. In addition to same-sex marriage, this article also focuses on status relationships between same-sex couples, although in a number of European countries a registered partnership is also available to opposite-sex couples. 2 The federal government does play a peripheral role in some family law areas that are of national concern. For example, pursuant to the Full Faith and Credit Clause of the United States Constitution, the federal government may regulate the effect that the judgments and the laws of one state have in another state. See the discussion in SCOLES E./HAY P./BORCHERS P./SYMEONIDES S., Conflict of Laws, 4th ed., St. Paul 2004, pp. 1257-1337. 3 28 U.S.C. §1332 (2005). 4 Barber v. Barber, 62 U.S. 583 (1858); Ex parte Burrus v. Burrus, 136 U.S. 586 (1890). 1

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Same-Sex Marriages and Partnerships in the U.S.

II.

Same-Sex Marriages, Civil Unions and Domestic Partnerships: From Hawaii to Vermont to Massachusetts and Beyond

In the case of Baehr v. Lewin,5 the Hawaii Supreme Court held the Hawaii statute which limited marriage to opposite-sex couples was subject to attack on the basis of the state’s constitution. The case was remanded for the trial court to hold a hearing on whether the state could show a compelling purpose in so limiting marriage. On remand a Hawaiian circuit court did determine that the state’s ban on same sex marriage was unconstitutional.6 Ultimately, the Hawaii voters passed an initiative in 1998 to amend the Hawaii constitution so as to authorize lawmakers the power to reserve marriage to opposite-sex couples.7 However, in 1999 the Vermont Supreme Court decided that Vermont was constitutionally required to extend to same-sex couples the benefits and protections that flow from marriage under state law. The court left it up to the legislature to decide whether this entitlement should take the form of inclusion within the marriage laws itself or a parallel domestic partnership.8 The Vermont Legislature passed, and the governor signed, an extensive ‘civil union’ bill giving same sex couples the same rights as married couples.9 852 P.2d 44 (Haw. 1993). Baehr v. Milke, 1996 WL 694235 (Hawaii Cir.Ct. 1st Cir, Dec. 3, 1996). 7 The Hawaii Supreme Court said that this amendment took the statute out of the ambit of the state constitution’s equal protection clause and therefore mooted the case. Baehr v. Milke, 994 P.2d 566 (Haw. 1999). The same thing occurred in Alaska. An Alaskan trial court determined that the state could not validly limit marriages to a man and a woman. Brause v. Bureau of Vital Statistics, 1998 WL 88743 (Alaska Super. Ct., Feb. 27, 1998). The voters then amended the Alaska Constitution. 8 State v. Baker, 744 A.2d 864 (Vt. 1999). 9 26 Family Law Reporter (BNA) 1255 (2000) (hereinafter cited as Fam. L. Rep.). Other states have also passed domestic partnership or civil union statutes. The most recent is Connecticut which established a civil union modeled on that of Vermont which accords couples in civil union all the rights and benefits of marriage. Other states have established domestic partnerships that confer some, but not all, the rights of married couples upon those in domestic partnerships. These states include California, Hawaii, and Maine. California’s domestic partnerships are the closest to a complete status relationship. The only distinction between a domestic partnership and a marriage is that domestic partners are required to use the same filing status for state income tax purposes as they use for federal tax purposes. The federal government does not recognize same-sex status relationships and therefore requires same-sex couples from both marriage and civil union states to file as individuals and not as married couples. See IRS Chief Counsel Advise Memorandum, 32 Fam. L. Rep. (BNA) 1214 (2006). Some cities, to the extent they are allowed to do so under state law, have also attempted to give some limited benefits to same-sex couples. For example, New York City 5 6

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Robert G. Spector The most celebrated case came in 2003 when the Massachusetts Supreme Court held that the state’s ban on same-sex marriage could not survive a challenge under the state constitution.10 In a later decision the court determined that ‘domestic partnerships’ or ‘civil unions’ were not an acceptable substitute for marriage.11 No other state has followed the Massachusetts example. Other states where the issue has been litigated have determined that same-sex couples do not have a fundamental right to marry.12 However a few states have decided that it does violate their constitution to deny a same-sex couple a particular benefit that is available to opposite-sex couples. For example, Alaska held that its constitution prohibits denying same-sex partners the same benefits that are granted to same-sex spouses of public employees.13 Montana held that the state universities’ policy of denying health benefits to same-sex domestic partners of employees while extending such benefits to declared common-law spouses of heterosexual employees violated the Equal Protection Clause of the Montana Constitution.14 Thus at the time of this writing, same-sex marriage exists only in Massachusetts. Civil unions that have all of the rights and responsibilities of marriage exist in Connecticut, Vermont, and, with one exception, in California. On October 26, 2006, New Jersey joined this list when its Supreme Court determined that it violated the Equal Protection Clause of the New Jersey Constitution to deny to same-sex couples the benefits that the law provides for opposite-sex couples.15 The court gave the legislature 180 days to either provide for same-sex marriages, or, in

established a registry for domestic partners, and extended certain rights and benefits to domestic partners of city employees and city residents registered as domestic partners. A New York appellate court found that the city ordinance did not impermissibly legislate in the area of marriage. All provisions of the ordinance related to areas in which New York City had long and properly legislated, and did not conflict with state law or public policy. Slattery v. City of New York, 697 N.Y.S.2d 603 (N.Y.App.Div.1999). See also Lowe v. Broward Cty, 766 So.2d 1199 (Fla. Dist. Ct. App. 2000) (approving a county ordinance giving certain benefits to domestic partners). 10 Goodridge v. Department of Public Health, 798 N.E.2d 941 (Mass. 2003). 11 In re Opinion of the Justices, 802 N.E.2d 565 (Mass. 2004). An attempt to have a federal court declare that the result of the decision denied Massachusetts a ‘republican form of government’ failed. Largess v. Supreme Judicial Court of Massachusetts, 373 F.3d 219 (1st Cir. 2004). 12 See e.g., Standhardt v. Superior Court, 77 P.3d 451 (Ariz. Ct. App. 2003); Hernandez v. Robles, 821 N.Y.S.2d 770 (N.Y. 2006); Anderson v. King County, 138 P.3d 963 (Wash. 2006). But see Deane v. Conway, 32 Fam. L. Rep. (BNA) 1135 (Md. Cir. Ct. 2006), where a Maryland trial court held that the state’s ban on same-sex marriages violated the state’s Equal Rights Amendment and was unrelated to any legitimate state interest. Whether this decision will be upheld on appeal has yet to be determined. 13 Alaska Civil Liberties Union v. State, 122 P.3d 781 (Alaska 2005). 14 Snetsinger v. Montana, 104 P.3d 445 (Mont. 2004). 15 Lewis v. Harris, 908 A.2d 196 (N.J. 2006).

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Same-Sex Marriages and Partnerships in the U.S. the alternative, to provide for civil unions that would confer the same status benefits as marriage.16

III. The Defense of Marriage Acts After the Hawaii case, the focus of the debate concerning same-sex marriage soon shifted to the issue of whether, if Hawaii chose to authorize same-sex marriages, the remainder of the states would or would not be required to recognize the Hawaiian marriages. The debate originally focused on two issues. The first was whether the Full Faith and Credit Clause of the United States Constitution17 was applicable to marriage in the same strength that is applicable to divorce. The answer to this question was quite clearly in the negative. Marriage may be a public act but it is not a judgment of a court in the same way that dissolution of marriage is a court judgment. Therefore, the restrictive rules concerning when one state may disregard a judgment of another state, such as a divorce or dissolution of marriage judgment, are not applicable. States have long had the ability to choose to apply their own law in their own court system whenever their policy requires it.18 The second issue was whether as a matter of the conflict of laws a state should recognize a marriage between two people of the same gender, should that be authorized by the law of Hawaii. The vast majority of scholarly writing on the subject in the United States19 is to the effect that a state should not apply its public 16 On December 14, 2006, the New Jersey legislature passed a civil union act which accords same-sex couples all the rights and responsibilities of married opposite-sex couples. The governor has indicated that he will sign the bill. See 33 Fam. L. Rep. (BNA) 1043 (2006). 17 That clause, Article IV §1, requires that ‘Full Faith and Credit shall be given in each State to the Public Acts, Records, and Judicial Proceedings of every other State,’ and ‘Congress may by general Laws … prescribe the effect thereof.’ 18 See e.g. Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981) (holding that the forum state can apply its own law rather than the law of another state, provided it has a ‘significant contact or other significant aggregation of contacts’ with the parties and the occurrence or transaction to which it is applying its own law). With respect to judgments however, the rules are very restrictive concerning when one state may refuse to respect the judgment of another state. See Fauntleroy v. Lum, 210 U .S. 230 (1908). States do have some freedom to reject judgments that are not money judgment or judgments regarding the dissolution of marriage. Baker v. Gen. Motors Corp., 522 U.S. 222, 233 (1998). However the court also said that ‘our decisions support no roving ‘public policy exception’ to the full faith and credit due judgments.’ Id. 19 The number of articles on this subject is extremely lengthy and growing longer. A recent search on Westlaw using the parameters of ‘same-sex marriage’ and ‘conflict of laws’ produced 467 articles, the vast majority of which favor the recognition of same-sex marriages or civil unions from states that authorize them.

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Robert G. Spector policy to refuse to recognize a marriage between two people of the same gender that has been validly entered into in another state.20 However, regardless of the current state of academic concern, most of the individual states have adopted legislation that precludes recognition of such marriages. In this, the states were aided by the Congressional passage of the Defense of Marriage Act (DOMA)21. The statute provides that: ‘No State, territory, or possession of the United States, or Indian tribe, shall be required to give effect to any public act, record, or judicial proceeding of any other State, territory, possession, or tribe respecting a relationship between persons of the same sex that is treated as a marriage under the laws of such State, territory, possession or tribe, or a right or claim arising from such marriage.’ Another section of the same statute requires that for purposes of federal law, a marriage may be only between a man and a woman, regardless of the law of any individual state.22 Although the statute arguably did not provide the states with any more authority than they already had, most states assumed that the statute authorized them to enact legislation that would refuse recognition to same-sex marriages. As of this writing, forty of the fifty states have passed these ‘little-DOMA’ laws. These statutes vary widely from state to state. Some refer specifically to same-sex marriage 20 In the United States the ‘public policy,’ or ‘ordre public,’ defense is rarely used as a defense to the application of the law of another state and is not available as a defense to the enforcement of a money judgment. However, in the many states which, as indicated in the next section, have adopted specific statutes on the subject, the defense is likely to be invoked. In the few states, such as Rhode Island, which have no statutes on the subject, the defense is likely to be unavailable. 21 Public L. No. 104-109, 110 Stat. 2419 (codified at 28 U.S.C. §1738C). Whether the Defense of Marriage Act is itself constitutional is a matter of great debate in the United States and beyond the scope of this short article. The very few cases that have actually considered the constitutionality of DOMA have upheld the statute. See e.g., Wilson v. Ake, 354 F.Supp.2d 1298 (M.D. Fla. 2005) (upholding the statute against a Massachusetts same-sex married couple who sought a declaratory judgment that their marriage was valid in Florida); In re Kandu 315 B.R. 123 (Wash. 2004) (refusing to recognize for bankruptcy purposes, a Washington couple’s same-sex marriage that had been entered into in Canada). 22 This part of the Defense of Marriage Act is codified at 1 U.S.C. §7. This represented a tremendous change for the United States government. Formerly the federal government deferred to state law to determine whether a couple was or was not married. The effect of this section is to deny to same-sex couples that have a status relationship under state law, the benefits that federal law authorizes to opposite-sex couples who are married. Thus, for example, a Massachusetts same-sex married couple may not file a federal joint income tax return which would have the effect of lowering the tax they would have to pay, although such a return is available to opposite-sex married couples. It is estimated that there are over 1,000 provisions in the federal law in which marital status provides rights or benefits.

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Same-Sex Marriages and Partnerships in the U.S. only. Others encompass non-recognition of civil unions or domestic partnerships as well.23

IV. The State Constitutional Amendments Following the decision of the Massachusetts court in the Goodridge case,24 a number of states passed amendments to their state constitutions in order to prevent the courts in their states from following the Massachusetts’ example. In the fall elections of 2006 Colorado, Idaho, South Carolina, Tennessee, Texas, Virginia and Wisconsin became the latest states to enact such amendments, bringing the total number of states with such amendments to twenty.25 Arizona became the first state in the United States where the voters actually rejected such an amendment. These amendments vary as widely as the ‘little-DOMA’ statutes. In addition to ensuring that no official in the state issues a marriage license to a same-sex couple, they also prohibit recognition of same-sex marriages that take place in other states. Some of the amendments appear limited only to same-sex marriages. Others seem to encompass civil unions and domestic partnerships as well.26

If the state statute only prohibits recognition of same-sex marriages from others states, it can be thought of as leaving open the question of recognition of civil unions. Courts have used this line of thought to avoid ruling on the constitutionality of these statutes. See e.g., Bishop v. State of Oklahoma ex rel. Edmondson, 447 F.Supp.2d 1239 (N.D. Okla. 2006), where the court held that an Oklahoma same-sex couple who entered into a civil union in Vermont did not have standing to challenge the constitutionality of either the Oklahoma little-DOMA or the recent state constitutional amendment prohibiting recognition of same-sex marriages. The court noted that in Vermont a civil union is clearly not a marriage, even though couples in civil unions have all the rights and responsibilities of marriage partners. 24 See note 10 above. 25 33 Fam. L. Rep. (BNA) 1023 (2006). 26 As with any change in the law, there may very well be unintended consequences. Thus two Ohio appellate courts disagreed on whether provisions of its domestic violence statute that protected people ‘living as a spouse’ violate its constitutional amendment which prohibited the state from recognizing a legal status for relationships of unmarried individuals. Compare State v. Ward, 2006 WL 758540 (Ohio Ct. App. 2006) (unpublished; text in Westlaw) (does violate the provision); with Gough v. Triner, 2006 WL 1868330 (Ohio Ct. App. 2006) (unpublished; text in Westlaw) (does not violate the provision). In Ohio unpublished opinions are considered as precedential as published opinions. Ohio Sup. Ct. R. 4(A). 23

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V.

Traditional American Private International Law Rules on Marriage

In the United States, the rules of private international law on the recognition of marriage, as well as the rules on the validity of marriages, are the prerogative of the individual states. Although these rules of private international law vary slightly from state to state, the generally accepted formulation is stated by the Restatement (Second) Conflict of Laws §283 (1971): ‘(1)The validity of a marriage will be determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the spouses and the marriage. (2) A marriage which satisfied the requirements of the state where the marriage was contracted will everywhere be recognized as valid unless it violates the strong public policy of another state which had the most significant relationship to the spouses and the marriage at the time of the marriage.’ The above rule was generated by a large number of cases where persons who, under the law of their domicile, are prohibited from marrying, go to another state under whose law no such prohibition exists.27 Ordinarily, the validity of the marriage will be determined by the law of the place of celebration. This traditionally has had the effect of promoting the policies of protecting the reasonable expectations of the parties, legitimating children and ensuring that established relationships are marriages rather than meretricious cohabitation. Although there have been occasional attempts to distinguish between the validity of a marriage when raised in a suit between the parties for an annulment, and a suit external to the marriage involving the incidents of the marriage, most courts will apply the same choice of law rule to both fact patterns. The following are typical of the scenarios where the rule was applied:

27 There are no rules in the United States restricting where a couple can marry. Thus there is no legal difficulty for a couple that is habitually resident or domiciled in Minnesota to marry in Florida, simply because they wish to marry in a warm climate during the winter. This is apparently not the case in Europe. See CURRY-SUMNER I. (note 1), p. 124, noting that in order to marry in The Netherlands a person must possess Dutch nationality, or must have his or her domicile in The Netherlands, or must have permanent residency in The Netherlands. With regard to same-sex marriages, civil unions, and domestic partnerships in the United States, only Massachusetts prohibits a couple from marrying in that state if they could not marry in the state of their domicile. See Cote-Whitacre v. Dept. of Public Health, 844 N.E.2d 623 (Mass. 2006). There is nothing in the law of Vermont, California, Connecticut, New Jersey, or Canada (which allows same-sex couples to marry) which would restrict the entry into marriage, a civil union, or domestic partnership to habitual residents or domiciliaries of those states or countries.

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Same-Sex Marriages and Partnerships in the U.S. 1.

When the place of the celebration allowed first cousins to marry, although the domicile did not. This prohibition was generally not thought of as serious by courts of the domicile and therefore a reference to the place of celebration sustained the marriage.28

2.

When the law of the domicile prohibited remarriage for a certain period of time or, in some cases, by totally banning remarriage by the ‘guilty’ party to the marriage. Normally courts of the domicile state would find that their invalidating policy was not strong enough to refuse a reference to the place of celebration. Today these prohibitions on remarriage have almost totally disappeared and with them, the cases.

3.

When the place of the celebration had a lower age for marriage than the domicile. Normally the age differences between the two states were slight (one state might have a minimum age of 18 and another 17). Unless the state of the celebration allowed a marriage at a totally unacceptable age, such as 13, the state of the domicile would accept the marriage as valid. Most states now agree that the minimum age to marry is 18, or 16 with parental consent, and therefore the cases involving this fact pattern have almost totally disappeared.

If, however, the law of the place of celebration was deeply offensive to the sensibilities of the place of the domicile, the court would apply the public policy of the domicile and invalidate the marriage. This would only occur when the marriage was polygamous or when the parties were so closely related that the law of the domicile would view the parties’ marriage with horror. Although there are several cases applying the law of the domicile to invalidate a marriage valid by the place of celebration, they are not very numerous.29 However, with regard to the recognition of same-sex status relationships, this traditional rule has now been displaced in the forty states that have enacted ‘little-DOMA’ statutes as well as by the new state constitutional amendments in the states that have passed them. How these statutes and amendments will apply to same-sex couples caught in the conflict of laws is, perhaps, the most important family private international law issue of our time.30 A few states still will not recognize marriages between first cousins that take place in other states. See e.g., Cook v. Cook, 104 P.3d 857 (Ariz. Ct. App. 2005). 29 There are for all practical purposes no cases on polygamy. The cases where the public policy defense has been invoked primarily concern incestuous relationships. See e.g., Catalano v. Catalano, 170 A.2d 726 (Conn. 1961) (holding invalid a marriage between a Connecticut domiciled uncle and his Italian niece entered into in Italy and valid under Italian law). 30 Obviously the problem will affect Europe as well as the United States. There are several countries in the European Union which authorize either registered partnerships or same-sex marriage, or both in varied and different forms. CURRY-SUMNER I. (note 1), p. 7 notes a same-sex Dutch marriage was not recognized in Italy on the grounds of public policy, while the German reaction was to treat a Dutch same-sex marriage as a non-marital 28

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Robert G. Spector

VI. The Dawn of a New Jurisprudence? A.

Evasive Marriages

The interstate movement of same-sex couples and its legal consequences are just beginning to reach the courts. The obvious fact patterns involve issues before a court of a state that does not recognize same-sex marriages or civil unions that arise from the interstate movement of such couples.31 There are several basic fact patterns that arise in the cases.32 The first involves couples who go to another state to marry when they are prohibited from doing so by the law of their domicile. The great impetus for the enactment of the Defense of Marriage Act was the fear that citizens of the other 49 states would travel to Hawaii, enter into a same-sex marriage and then return to the state of their domicile. Under this factual situation, it is very unlikely that a state which does not recognize same-sex status relationships would recognize the status relationship created by another state or country, regardless of the context in which the issue arises. In the cases that have been decided that involve couples from one state that went to another state to enter into a same-sex marriage or civil union, recognition has been denied. For example, in Burns v. Burns,33 the parties’ divorce decree prohibited either party from having an unrelated adult spend the night while the child was present. The mother and her partner traveled to Vermont and entered into a civil union there. The Georgia court rejected the mother’s argument that her partner was not an unrelated adult, since Georgia would not recognize the civil union. registered partnership. Attempts to provide a framework to deal with these institutions in private international law are extremely difficult and complex. See generally CURRY-SUMNER I. (note 1), Part III, noting that the variation in types of registered partnership can lend itself to different characterizations, which could produce varied results with regard to recognition. 31 Obviously the issue could also arise in front of a court of a state that does recognize same-sex marriages or civil unions. It is likely that those states would recognize the status relationship between same-sex couples created by other states. Both California and New Jersey have specific statutes requiring recognition. See e.g., California Family Code §297.5. 32 The definitive classification of these fact patterns was set forth by Andrew Koppleman. He identifies four basic fact factual situations. First, ‘evasive marriages’ where couples travel to another state to enter a marriage prohibited by their home states. Second, ‘migratory marriages’ whereby a couple gets married in their home state where such a marriage is allowed and moves to a state where the marriage is prohibited. Third, ‘visitor marriages’ where a validly married couple find themselves temporarily in a state which does not recognize the marriage. Fourth, ‘extraterritorial marriages’ where the couple never enters the state where the marriage is prohibited, but the issue of the validity of the marriage is thought relevant to an ongoing issue in the state. See KOPPLEMAN A., ‘Interstate Recognition of Same-Sex Marriage and Civil Unions: A Handbook for Judges’, in: University of Pennsylvania Law Review 2005-2006, p. 2143. 33 560 S.E.2d 47 (Ga. Ct. App. 2002).

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Same-Sex Marriages and Partnerships in the U.S. In other cases, New York refused to extend the right to sue for wrongful death to the survivor of a Vermont civil union when the couple were New York residents who went to Vermont to enter into the civil union.34 Connecticut, prior to the enactment of its civil union laws, held that trial courts do not have jurisdiction to dissolve, in Connecticut, a Vermont civil union.35 A federal bankruptcy court refused to allow a joint filing by a same-sex couple from the state of Washington, who entered into a marriage in Canada.36 These results will probably continue. There is little reason for a state which has prohibited its citizens of the same sex from entering into a status relationship to recognize attempts to evade such laws by an excursion to a state or country which allows them.

B.

Validly Married Same-Sex Couples Who Move

However, the major problems involving the issue of the recognition of same-sex relationships is likely to arise in three other fact patterns. First, when the couple has not attempted to evade the law of any state which prohibits same-sex relationships, but rather has entered into the relationship in the state where they were habitual residents or domiciliaries. Thereafter, either the couple, or one of the partners, moves to a state which does not recognize such relationships. Second, where neither of the partners has ever resided in a state that does not recognize the relationship, but the existence of the status is relevant to an issue being litigated there. Typically, this would involve issues of inheritance of property and enforcement of money judgments. Third, where the same-sex couple is simply a visitor in a state that does not recognize such a status and an issue arises concerning an aspect of the status, such as a hospital visit. The first of these fact patterns presents the most serious issue. Within a family law context it is likely to arise in the area of parental responsibility and child maintenance. A case currently being litigated illustrates the problem. Janet and Lisa Miller-Jenkins, residents of Virginia, traveled to Vermont and entered into a civil union. They returned to Virginia and decided to conceive a child by artificial insemination. Lisa bore the child. Subsequently they moved to Vermont where they became habitually resident or domiciled. Several years later they separated and Lisa moved to Virginia while Janet remained in Vermont. Lisa returned to Vermont for the purpose of seeking a dissolution of the civil union. The Vermont trial court entered an order dissolving the civil union and granted Janet visitation, or access, since in Vermont a child born to one member of a civil union is considered the child of both partners. Lisa, dissatisfied with the Vermont order, Langan v. St. Vincent’s Hospital, 802 N.Y.S.2d 476 (App. Div. 2005). Rosengarten v. Downes, 802 A.2d 170 (Conn. Ct. App. 2002). 36 In re Kandu, 315 B.R. 123 (Bank. W.D. Wash. 2004). See also Morrison v. Sadler, 821 N.E2d 15 (Ind. Ct. App. 2005) (upholding Indiana’s ‘little-DOMA’ statute against a challenge by three Indiana couples who entered into civil unions in Vermont). 34 35

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Robert G. Spector moved back to Virginia where she sought a Virginia order granting her sole parental responsibility for the child. She also appealed the order of the Vermont trial court. The resolution of the case involves the interrelationship of two sets of laws. First, in Virginia, as in all states, interstate child custody cases are governed by the Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA), or its predecessor, the Uniform Child Custody Jurisdiction Act (UCCJA). However, since Virginia is one of the states that has enacted a ‘little-DOMA’ statute there is an issue as to whether that statute limits the application of the UCCJEA. Second, there is a federal statute, the Parental Kidnaping Prevention Act (PKPA), which provides that states must give full faith and credit to child custody determinations that are made in accordance with its terms. However, since the Defense of Marriage Act was enacted subsequently to the PKPA, there is an issue as to whether DOMA impliedly authorizes states to not enforce custody determinations that arise out of civil unions or same-sex marriages, as an exception to the PKPA. By the way of background to the problem of interstate custody litigation, it should be noted that the first major attempt to provide uniform rules of private international law in cases involving custody of children occurred in 1968 when the National Conference of Commissioners on Uniform State Laws (NCCUSL) promulgated the Uniform Child Custody Jurisdiction Act.37 The UCCJA was ultimately adopted by all fifty states, the District of Columbia and the Virgin Islands. A number of adoptions, however, significantly departed from the original text as promulgated by NCCUSL. In addition, almost thirty years of litigation since the promulgation of the UCCJA produced substantial inconsistent interpretations by state courts. As a result, the goals of the UCCJA were rendered unobtainable in many cases.38 The National Conference of Commissioners on Uniform State Laws attempts to bring about national uniformity by developing laws which they hope will be adopted by all fifty states. It is somewhat different from organizations like the Hague Conference on Private International Law which attempt to bring about uniformity among different countries by promulgating treaties regarding jurisdiction, applicable law and recognition. However, some of the products of NCCUSL are similar to those of the Hague Conference in that they concern the competence of individual state courts to decide certain issues. The Uniform Child Custody Jurisdiction Act, as well as its replacement the Uniform Child Custody Jurisdiction and Enforcement Act, are such products. 38 One of the main reasons why the goals of the UCCJA were not accomplished is because the goals were incompatible. The UCCJA embodied two main goals: First to prevent parental kidnaping of children by attempting to provide clear rules of jurisdiction and enforcement. Second to provide that the forum which decided the custody determination would be the forum that could make the most informed decision. These goals proved to be mutually incompatible. As a result courts rendered decisions that were doctrinally inconsistent as they provided for the primacy of one goal or another depending on the result they wished to accomplish in an individual case. GOLDSTEIN A., ‘The Tragedy of the Interstate Child: A Critical Reexamination of the Uniform Child Custody Jurisdiction Act and the Parental Kidnaping Prevention Act’, in: University of California Davis Law Review 1992, 37

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Same-Sex Marriages and Partnerships in the U.S. In 1980, the federal government enacted the Parental Kidnaping Prevention Act39 to address the interstate custody enforcement problems that continued to exist after the adoption of the UCCJA. The PKPA mandates that state authorities give full faith and credit to other states’ custody determinations, so long as those determinations were made in conformity with the provisions of the PKPA. The PKPA provisions regarding bases for jurisdiction, restrictions on modifications, preclusion of simultaneous proceedings, and notice requirements are similar to those in the UCCJA. There are, however, some significant differences.40 To further complicate the process, the PKPA partially incorporates individual state UCCJA law in its language. As documented in an extensive study by the American Bar Association’s Center on Children and the Law,41 inconsistency of interpretation of the UCCJA and the technicalities of applying the PKPA, resulted in a loss of uniformity of approach to child custody adjudication among the states. This study suggested a number of amendments which would eliminate the inconsistent state interpretations and harmonize the UCCJA with the PKPA.42

p. 845 (exhaustively and authoritatively documenting how the inconsistency of the UCCJA goals produced inconsistent court decisions). Ultimately the Drafting Committee of the replacement for the UCCJA, the Uniform Child Custody Jurisdiction and Enforcement Act concluded that no coherent act could be drafted which attempted to maintain the primacy of both goals. Therefore, while trying not to lose sight of the promise of individual decision making, the focus of the UCCJEA is that it is more important to determine which state has jurisdiction to make a determination than to find the ‘best’ state court to make the determination. SPECTOR. R., ‘Uniform Child Custody Jurisdiction Act’, in: Family Law Quarterly 1998, p. 336 39 28 U.S.C. §1738A. 40 For example, the PKPA authorizes continuing exclusive jurisdiction in the original decree state so long as one parent or the child remains there and that state has continuing jurisdiction under its own law. The UCCJA did not directly address this issue. 41 GIRDNER L./HOFF P. (eds.), Final Report: Obstacles to the Recovery and Return of Parentally Abducted Children, Washington 1993. 42 In addition in 1994 NCCUSL’s Scope and Program Committee adopted a recommendation of the NCCUSL Family Law Study Committee that the UCCJA be revised to eliminate any conflict between it and the PKPA. In the same year the Governing Council of the Family Law Section of the American Bar Association unanimously passed the following resolution at its spring 1994 meeting in Charleston, South Carolina: ‘WHEREAS the Uniform Child Custody Jurisdiction Act (UCCJA) is in effect in all 50 of the United States, and the Federal Parental Kidnapping Prevention Act (PKPA), 28 U.S.C.A. §1738A, governs the full faith and credit due a child custody determination by a court of a U.S. state or territory, and WHEREAS numerous scholars have noted that certain provisions of the PKPA and the UCCJA are inconsistent with each other, THEREFORE BE IT RESOLVED the Council of the Family Law Section of the American Bar Association urges the National Conference of Commissioners on Uniform State Laws (NCCUSL) to study whether revisions to the UCCJA should be drafted and promulgated in a revised version of the uniform act.’

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Robert G. Spector In 1995 NCCUSL appointed a Drafting Committee to revise the Uniform Child Custody Jurisdiction Act. That revision, the Uniform Child Custody Jurisdiction and Enforcement Act, was promulgated in 1997 and, as of this writing, has been adopted in forty-four of the American states.43 When the Miller-Jenkins case was tried in Virginia, the trial court found that Virginia’s ‘little-DOMA’ Act prevented the state from recognizing a Vermont civil union. Janet’s right to visitation or access grew out of Vermont law that a child born to one of the members of the civil union is the child of the couple.44 Therefore, the trial court reasoned that to enforce the Vermont judgment would be contrary to Virginia law. It also found that the ‘little-DOMA provision superseded the UCCJEA. The trial court also determined that the PKPA was not applicable. It reasoned that since DOMA was enacted after the PKPA, DOMA impliedly created an exception to the PKPA’s command of recognition for cases involving a right arising out of a relationship between persons of the same sex that is treated as a marriage. Janet appealed to the Virginia Court of Appeals (an intermediate appellate court) which held the appeal in abeyance, pending a decision of the Vermont Supreme Court. On August 4, 2006, the Vermont Supreme Court affirmed the trial court’s determination, over Lisa’s objection that Vermont should recognize the decision of the Virginia trial court.45 It noted that its prior decisions were clear that Vermont would recognize a custody determination of another state only if the decision of that state was made in accordance with the PKPA. In this case it was clear to the Vermont Supreme Court that the Vermont decision was made in conformity with PKPA and that Virginia’s was not. The PKPA requires that interstate enforcement of custody determinations is mandatory if the court that made the custody determination had jurisdiction under its own law, and one of four conditions is met.46 In this case the Vermont decision met one of the conditions in that Vermont was the home state of the child within six months before the date of the commencement of the proceeding in Virginia, and the child is absent from the state because of his removal or retention by a person seeking custody or visitation with the child and a person seeking custody or visitation continues to reside in the home state. Because the Vermont decision was pending when Lisa filed her proceeding in Virginia, the Virginia court lacked jurisdiction under the PKPA47 and could hear 43 For a full discussion of the UCCJEA see SPECTOR R., ‘The Uniform Law With Regard to Jurisdictional Rules in Child Custody Cases in the United States, in: this Yearbook 2000, pp. 75-99. 44 Vt. Stat. Ann. tit. 15 §1204(f) (2002) provides that ‘[t]he rights of parties to a civil union, with respect to a child of whom either becomes the natural parent during the term of the civil union, shall be the same as those of a married couple, with respect to a child of whom either spouse becomes the natural parent during marriage.’ 45 Miller-Jenkins v. Miller-Jenkins, 912 A.2d 951. 46 28 U.S.C. §1738A(c)(A)-(D). 47 28 U.S.C. §1738A(g) provides that: ‘A court of a State shall not exercise jurisdiction for a custody or visitation determination commenced during the pendency of a pro-

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Same-Sex Marriages and Partnerships in the U.S. the case only if jurisdiction was no longer present in Vermont. Jurisdiction was still proper in Vermont because Vermont, under its own law, continues to exercise jurisdiction over a custody determination so long as one party to that determination continues to reside in the state. The PKPA confirms this approach by forbidding modification in another state so long as the first state has continuing jurisdiction under its own law and a party to that determination continues to reside there.48 The court did not address the issue of whether DOMA created an exception to the PKPA. That issue was not relevant for the Vermont proceeding since the only issue presented in Vermont was whether Vermont was required to recognize the Virginia decision. Having determined that it did not have to recognize the decision, further analysis of whether the Virginia trial court was correct about the relationship between DOMA and the PKPA was not necessary. That determination would have to be made by a Virginia appellate court. On November 28, 2006, the Virginia Court of Appeals rendered its opinion reversing the trial court.49 The court concluded, as did the Vermont Supreme Court, that the PKPA prohibited Virginia from exercising jurisdiction over this proceeding. The court also rejected Lisa’s argument that DOMA created an exception to the PKPA. It noted that the purpose of the PKPA was to require states to enforce custody and visitation determination of other states under the Full Faith and Credit Clause of the United States Constitution. There is nothing in the wording or the legislative history of DOMA that would indicate that Congress intended that act to affect the PKPA. It then held that this case did not require recognition of the Vermont civil union. It only raised the question of whether Virginia was required to recognize the visitation order entered by the Vermont court. Therefore only the PKPA was applicable to this case. Lisa’s final argument that Virginia Marriage Affirmation Act prohibited recognition of the Vermont order50 was also rejected, since, even if that Act did apply it was preempted by the PKPA. Given that the court based its decision on the PKPA, it decided that it did not have to address the relationship between the ceeding in a court of another State where such court of that State is exercising jurisdiction consistently with the provisions of this section to make a custody or visitation determination.’ 48 28 U.S.C.§1738A(f). 49 Miller-Jenkins v. Miller-Jenkins, 637 S.E.2d 330 (Va. Ct. App. 2006). Further appeal to the Virginia Supreme Court is still possible. Since there are two federal statutes involved, it is possible that an appeal will also be taken to the United States Supreme Court. As of this writing there is no indication of whether Lisa will continue to pursue the appellate process. 50 Virginia Code §20-45.3 provides: ‘A civil union, partnership contract or other arrangement between persons of the same sex purporting to bestow the privileges or obligations of marriage is prohibited. Any such civil union, partnership or other arrangement entered into by persons of the same sex in another state or jurisdiction shall be void in all respects in Virginia and any contractual rights created thereby shall be void and unenforceable.’

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Robert G. Spector UCCJEA and Virginia’s laws prohibiting recognition of same-sex status relationships. Hopefully this decision will represent the outcome of this class of cases. While there is never a guarantee that one’s marriage will be recognized by all other states or countries, it represents a sensible approach to the problem. A couple that enters into a status relationship in a state where such relationship is possible should not have to be concerned that upon moving such a status can be destroyed. If this is correct then decisions involving ‘migratory’ fact patterns will, in the future, focus more on the incidents of the status, rather than on the validity of the relationship.51 If this analysis is correct, then it would solve a number of cases where same-sex couples, or one member of the couple, move from one state where the status is recognized to another where it is not. For example, in the Miller-Jenkins case, Vermont recognizes Janet’s right to parental responsibility. Such responsibility includes not only the ability to seek an access order, but also imposes responsibility for support.52 Suppose that after the entry of a child support judgment in a state which recognizes same-sex status relationships, the obligor moves to a state which does not. The issues involved would be very similar to those involved in the Miller-Jenkins case. It would again involve a discussion of the relationship between two pairs of statutes. At the federal level the conflict would be between the Full Faith and Credit to Child Support Orders statute53 and DOMA. At the state level, the conflict would be between the Uniform Interstate Family Support Act (UIFSA)54 and the state’s statute which provides for non-recognition of same-sex status relationships. Both the federal full faith and credit statute and UIFSA would mandate recognition of the support judgment. Since there is no indication in the legislative history of DOMA that Congress intended to that act to be an exception

51 See the discussion in KOPPLEMAN A. (note 32), p. 2143 and SCOLES E./HAY P./BORCHERS P./SYMEONIDES S. (note 2), p. 669. The most important incident of marriage is, of course, cohabitation. After Lawrence v. Texas, 539 U.S, 558 (2003), states may no long prohibit sexual intercourse between couples of the same sex, whether or not they are married. Koppleman has also suggested, correctly I think, that if the incidents can be conferred by contract and be valid regardless of marriage, such as health care decisions, then there should be absolutely no objection to two people using a status relationship to arrive at the same point. 52 The same would be true for other states which recognize same-sex status relationships. See Eisa B. v. Superior Court, 117 P.3d 660 (Cal. 2005) (imposing support obligations on one partner for a child born during the domestic partnership to the other partner). 53 28 U.S.C. §1738B. Congress enacted this statute to require states to enforce child support orders from other states that are made in accordance with its terms. The relationship between this statute and UIFSA is similar to the relationship between the PKPA and the UCCJEA. 54 For a discussion of the Uniform Interstate Family Support Act see SPECTOR R., ‘Maintenance in Private International Law in the United States: Harmonization of Divergent Rules and the New Hague Maintenance Convention’, in: this Yearbook 2005, pp. 63-83.

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Same-Sex Marriages and Partnerships in the U.S. to the full faith and credit obligations of states with regard to child support judgments, the result should be the same as in the Miller-Jenkins case.55

C.

Transitory Marriages

This fact pattern involves some serious issues which have yet to be considered in the cases. It involves a same-sex couple which has entered a status relationship in a state which authorizes such relationships. The couple then visits another state where such a relationship is not authorized. During the visit an incident arises which requires a determination of the status relationship. For example, a couple in a domestic partnership in California flies to New York. However, the plane crashes in route and one partner is taken to a hospital. Health care decisions have to be made that can only be made by a spouse. If the hospital is located in a state which does not recognize domestic partnerships, will the domestic partner be denied the right to make such decisions?56 There appears to be no case which even comes close to answering this question. There is, however, dicta in one very old case which deals with the problems of miscegenation statutes.57 In Ex parte Kinney,58 the court, in the context of 55 Indeed the result should be the same whenever the fact pattern involves one partner moving to avoid an otherwise valid obligation regardless of whether the obligation has been reduced to judgment. In the child support scenario discussed in the text the result should be the same if the obligor moves to a state which does not recognize same-sex relationships prior to the entry of a judgment and that state is asked to establish a support obligation. Although the issue at that point is one of the applicable law as opposed to recognition of a judgment, the result should be the same. The problem is even more acute outside of the family law area. Suppose a Massachusetts same-sex married person is killed in Massachusetts by a Massachusetts defendant. The survivor of the couple obtains a wrongful death judgement. The defendant, and the defendant’s money, move to a state which has a statute and a constitutional amendment providing for non-recognition of same-sex status relationships. The unilateral move by the defendant should not be allowed to defeat the monetary obligations. See the discussion by WEINTRAUB R.J., Commentary on the Conflict of Laws, 4th ed., New York 2001, Supplement, p. 39. 56 If the flight was from California to Boston and the plane crashes near the northern border of Massachusetts, the hospital where the domestic partner is taken could be in Vermont, New Hampshire, Connecticut, or Massachusetts. In three of the states, the status would be recognized. However, if the hospital is in New Hampshire, recognition could well be denied. Such happenstance concerning where the closest hospital is located renders the validity of the status relationship to randomness. 57 The miscegenation statutes prohibited people of different races from marrying. These statutes were declared unconstitutional by the Supreme Court in the case of Loving v. Virginia, 388 U.S. 1 (1967). It has been persuasively argued by Andrew Koppleman that these old cases that were decided prior to the Loving decision are the most relevant precedents for deciding cases involving same-sex marriages in the conflict of laws. KOPPELMAN A., ‘Same-Sex Marriage and Public Policy: The Miscegenation Precedents’, in: Quinnipiac L. Rev. 1996, p. 105.

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Robert G. Spector upholding Virginia’s right to prosecute a Virginia resident who traveled to the District of Columbia to marry another Virginia resident of a different race, opined that there were limits to the reach of Virginia law, in that Virginia could not totally exclude from its borders citizens of other states who were validly married to a member of another race. ‘That such a citizen would have a right of transit with his wife through Virginia, and of temporary stoppage and of carrying on any business here not requiring residence, may be conceded, because these are privileges following a citizen of the United States.’59 It may be that there is a right to travel60 that is embodied in the Privileges and Immunities Clause of the Constitution61 that will protect these transitory marriages. However, there is no case which holds that such right also includes the right to carry with you your status. In any event, it does appear that these cases are the ones that are in most urgent need of resolution.

D.

Outsider Marriages

This category constitutes same-sex couples who have never entered the state which prohibits same-sex status relationships. The clearest examples are inheritance and, perhaps, enforcement of money judgments. In the first situation, property owned by one member of a same-sex couple that lives in a state which recognizes such status relationships, is located in a state which does not. If the owner dies without a will, should the state where the property is located apply the intestacy law of the state where the same-sex couple has their habitual residence or domicile, or should the state where the property is located apply its own law? The second situation is where there is a wrongful death judgment against a defendant in a state which recognizes same-sex status relationships. The defendant’s money is located in a bank in a state which does not recognize the relationships. It would seem that to allow the inheritance or to recognize the judgment does little harm to the policy of the state which does not recognize such relationships. That state will not be required to countenance the living together as a couple of two people of the same sex within their boundaries. This was the result under the miscegenation statutes.62

14 F. Cases 602 (C.C.E.D. Va. 1879). Id. at 606. 60 In other contexts the Supreme Court has noted that there is a right to travel and has invalidated state laws that discriminate against persons who have recently moved into the state in welfare and election cases. See e.g., Shapiro v. Thompson, 394 U.S. 618 (1968). 61 United States Constitution, Article 4, section 2. 62 See e.g., Muler v. Lucks, 36 So.2d 140 (Miss. 1948). 58 59

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Same-Sex Marriages and Partnerships in the U.S.

VII. Conclusion Same-sex status relationships are apparently here to stay. While there will be continued debate over whether a particular state should or should not recognize such relationships, the focus is beginning to shift to how these relationships should be handled by the conflict of laws. The jurisprudence is slowly beginning to develop. Hopefully, the analysis will enable these couples to have some ideas as to whether their status will or will not be respected should they choose to leave the territorial unit which established the status. Justice Robert Jackson of the United States Supreme Court once opined that ‘If there is one thing that the people are entitled to expect from their lawmakers, it is rules of law that will enable individuals to tell whether they are married and, if so, to whom.’63 Fifty-nine years later, we are still a long way from reaching that goal.

63

Estin v. Estin, 334 U.S. 542,553 (1948) (Jackson J., dissenting).

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THE HAGUE CONFERENCE AND THE DEVELOPMENT OF PRIVATE INTERNATIONAL LAW IN AFRICA: A PLEA FOR COOPERATION Richard Frimpong OPPONG∗ I. II. III. IV.

Private International Law and Africa: An Introduction Africa and the Hague Conference: Membership, Ratifications and Involvement Africa and the Hague Conference: A Future of Cooperation Conclusion

‘Every doctrine goes to The Hague. And after they go back to their origins they are never the same. They come back fertilized by the dialogue that took place at the Conference.’ (A. Boggiano)

I.

Private International Law and Africa: An Introduction

Perhaps, there is no task more difficult and challenging than that of convincing African governments that the development of the arcane subject of private international law should be an essential part of national and continental development. Labouring under the scourge of civil wars, famine, AIDS and excruciating poverty, private international law is, sadly, very low on the politicians’ priority list; private international law issues are not vote-winning issues! But even a cursory examination of what the subject deals with reveals its importance. Private international law deals with matters within the national legal system involving a foreign element. This foreign element can be an act done in another country or the law of another legal system chosen by the parties. The status of the subject in a state is a function of the degree to which that state is connected with the outside world. We live in a constantly ‘moving’ and interdependent world; people, goods, capital, and services are constantly moving between states. These movements, which private interna-

∗ LLB. BL. (Ghana), LL.M (Cantab), LL.M (Harvard), PhD Candidate at the University of British Columbia. The writer, who is assessing private international law issues in Africa, thanks the Graduate Program at the Faculty of Law, U.B.C. for providing the support and environment that made this work possible. Contact: [email protected].

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Richard Frimpong Oppong tional law plays a key part in regulating,1 propel national development. Thus, any nation that seeks to benefit from these movements would do well to pay attention to its private international law regime. Private international law performs useful functions for states and individuals transacting across national boundaries. Persons transacting across national boundaries will like to be sure that the law chosen to govern their legal transactions will be respected in all jurisdictions; that courts will not assume jurisdiction where they have contracted to exclude it or on grounds which are uncertain; that irrespective of where litigation takes place, they will have access to efficient and effective means of serving documents and gathering evidence unrestrained by the fact of where that needs to be done; and that a judgment obtained in any resulting litigation will be recognised and enforced in other national courts outside the court where the judgment was given. Ensuring stability and certainty in international legal relationships is a key object of private international law. The subject aims at ensuring effective protection for cross-border legal relationships. A properly operative system of private international law also facilitates international commerce, which is a prerequisite for development. As Justice La Forest once noted ‘the rules of private international law are grounded in the need in modern times to facilitate the flow of wealth, skills and people across state lines.’2 Substantively, private international law ensures that the appropriate law governs the legal relationship between the parties. The idea is that litigation before a court need not necessarily be governed by the lex fori. In appropriate cases, the interest of justice is best served by applying the law chosen by the parties or that to which the transaction is most closely connected. Also, in some instances, a court may have to decline jurisdiction in favour of another forum if such a decision will better serve the cause of justice. Procedurally, the subject provides rules for ensuring that the mere absence of a defendant or relevant evidence from the forum of the litigation does not defeat the cause of justice. The rules for the service of documents, and the taking of evidence abroad, are meant to facilitate this. As a discipline with both national and international dimensions, private international law provides a barometer for measuring the confidence individuals transacting across national boundaries have in the legal systems of the countries engaged. For example, choice-of-forum and choice-of-law clauses in commercial contracts provide an indication of the perception of individuals as to the adequacy of a national legal system to provide solutions to legal problems anticipated under their contract. The more frequently parties try to contract out of the legal system of a particular state, the greater the need to assess the adequacy of the national legal system to provide efficient and effective rules to regulate the transactions involved. 1 See generally WAI R., ‘Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalisation’, in: Columbia Journal Transnational Law 2001-2002, p. 209-274; MUIR-WATT H., ‘Integration and Diversity: The Conflict of Laws as a Regulatory Tool’, in: The Institutional Framework of European Private Law (CAFAGGI F. ed.), Oxford 2006, p. 107-148. 2 Morguard Investments v. De Savoye, [1990] 3 S.C.R. 1077-1096, S.C.

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Private International Law and Africa This need for assessment becomes even more compelling when agreements among national governments contract out their own legal systems!3 In other words, a neglected private international law regime will be part and indicative of a more profound malaise with a legal system. It is no happenstance that all advanced legal systems, U.K., U.S.A., Canada and the European Union, to mention but a few, have well-developed private international law regimes or at least pay attention to it, and are very active participants in its international development. Within integrated economies, such as those currently contemplated in Africa,4 private international law also has a key role to play in regulating the relationships between the component legal systems. Private international law impacts on the free movement of persons, goods, services and capital often envisaged within integrated economies. Well-integrated economies have definite rules on the enforcement of judgments, jurisdiction and choice-of-law. Professor Casad, for example, has identified ‘an effective scheme for the mutual recognition and enforcement of civil judgments’ as one feature of any economic integration initiative ‘likely to achieve significant integration.’5 As early as 1959, it had also been noted in the context of the emerging European Economic Community that, ‘a true internal market between the six States will be achieved only if adequate legal protection can be secured. The economic life of the Community may be subject to disturbance and difficulties unless it is possible […] to ensure the recognition and enforcement of the various rights arising from the existence of a multiplicity of legal relationships.’6 Thus, within the European Community, the harmonization of the rules of private international law is seen as having a part to play in creating the internal market. It helps promote equal treatment, certainty in transactions, and protection 3 For example, the recently concluded West African Gas Pipeline International Project Agreement between the sovereign States of Ghana, Nigeria, Togo and Benin and the West African Gas Pipeline Company Limited has ‘the laws of England’ as the governing law. It is ironic that four sovereign states will agree to a ‘foreign law’ as the governing law of their contract. Arguably, it reflects a lack of confidence in the suitability of their own laws to meet the demands of modern commerce. See article 51 of West African Gas Pipeline International Project Agreement 22 May 2003. 4 For example, Treaty establishing the African Economic Community [AEC Treaty]: reprinted in: African Journal of International and Comparative Law (A.J.I.C.L.) 1991, p. 792-839, I.L.M. 1991, pp. 1241-1282 envisages, among others, the establishment of a common market of the whole of Africa; the gradual removal among member states of obstacles to the free movement of persons, goods, services, capital; and the right of residence and establishment. I examine the role private international law can play in these initiatives elsewhere: see generally OPPONG R.F., ‘Private International Law and the African Economic Community: A Plea for Greater Attention’, in: I.C.L.Q. 2006, p. 911-928. 5 CASAD R. C., ‘Civil Judgment Recognition and the Integration of Multi-state Associations: A Comparative Study’, in: Hasting International and Comparative Law Review 1980/1981, p. 1-86. 6 Note sent to member states on 22 October 1959, quoted in Council Report by Mr. Jenard on the Convention of 27 September 1968 on Jurisdiction and Enforcement of Judgment in Civil and Commercial Matters (OJ 1968 C 59/1).

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Richard Frimpong Oppong for citizens of the European Union, as well as other economic actors, transacting or litigating in the internal market by subjecting them to a uniform and certain legal regime. Harmonization boosts certainty in the law, reducing transaction and litigation cost for economic actors. All these should serve to situate the subject at the heart of both national and continental development, especially in cases where, as noted above, some degree of integration at the continental level is envisaged. However, in Africa, private international law has received little attention, both at the national and continental level. African states have not attempted to position the development of the subject as a key component of the national legal infrastructure, and the various initiatives aimed at integrating the economies of Africa have not addressed the role of the subject in those processes. Indeed, none of the over fourteen (14) regional economic communities in Africa has private international law on its agenda.7 Also, ignoring bilateral agreements for the recognition and enforcement of judgments, there does not exist an African states’ negotiated international convention on any aspect of the subject. This state of affairs has partly been made possible by the academic disinterest in the subject in Africa. Writing on South Africa, perhaps the only country in Africa where the subject receives some systematic attention, Leon observed twenty years ago: ‘Conflict of laws is not a subject which commands great attention amongst South African lawyers. Indeed it occupies a modest part of the average university curriculum and is, as an academic subject, something of an unknown quantity to the older generation of practising lawyers.’8 Professor Forsyth has also observed recently that private international law in Africa is ‘the Cinderella subject seldom studied [and] little understood.’9 Developing private international law in Africa will demand both national efforts and international engagement. At the national level, there is the need to codify some of the rules of the subject into legislation after careful consultation and an assessment of the adequacy of the rules to meet present challenges.10 South Africa

7 Article 126 of the Treaty of the East African Community which enjoins member states to ‘encourage the standardisation of judgments of courts within the Community’, and ‘harmonise all their national laws appertaining to the Community’, may broadly be interpreted to encompass issues of private international law. The author is however not aware of any initiative taken under these articles of significance for private international law. 8 LEON P.S.G., ‘Roma non locuta est.: the Recognition and Enforcement of Foreign Judgments in South Africa’, in: Comparative and International Law Journal of Southern Africa (C.I.L.S.A.) 1983, p. 325-349. 9 FORSYTH C.F., Private International Law, Cape Town 2003, p. 43. 10 On the increasing role of legislation in private international law, see generally NORTH P., ‘Private International Law: Change or Decay,’ in: I.C.L.Q. 2001, p. 477-508; FORSYTH C.F., ‘The Eclipse of the Private International Law Principle? The Judicial Process, Interpretation and the Dominance of Legislation in the Modern Era’, in: Journal of Private International Law (J. Priv. Int’l. L.) 2005, p. 93-113.

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Private International Law and Africa is embarking on this in some aspects of the subject.11 Existing international conventions on the subject could serve as a useful basis for some of the contemplated legislation.12 National legislative efforts are an important complement to judicial decisions, which although historically at the forefront of the development and reform of the subject13 suffer from the inherent limitation of having to wait until there is a case exposing inappropriateness of a pre-existing rule. The danger with national development of private international law without international engagement is the possibility of prioritising national interest and ignoring the international dimensions of private international law problems.14 This is the reason why international engagement should be an essential complement to national initiatives. This paper discusses how Africa’s engagement with one international forum, the Hague Conference on Private International Law (the Conference), can assist in the development of the subject at both the national and the continental levels.

II.

Africa and the Hague Conference: Membership, Ratifications and Involvement

The Hague Conference on Private International Law is the principal international body, which aims at the progressive unification of the rules of private international law.15 It also promotes cross-border cooperation among national judicial and administrative bodies especially in the areas of international civil procedure. The Conference began its life in 1893 when the first Conference was organised.16 In 1951, the work of the Conference was put on sound institutional footing with the adoption of the Statute of The Hague Conference on Private International Law. The Statute entered into force on 15 July 1955. The Conference has dealt with a See e.g. South African Law Reform Commission, Consolidated Legislation Relating to International Cooperation in Civil Matters, Paper 106, Project 121 (2004) . 12 See generally SIEHR K., ‘National Private International Law and International Instruments’ in: Reform and Development of Private International Law: Essays in Honour of Sir Peter North (FAWCETT J. ed.), Oxford 2002, p. 335-347. 13 See BLOM J., ‘Reform of Private International Law by Judges: Canada as a Case Study’, in: Essays in Honour of Sir Peter North (note 12), p. 31-49. 14 MCLACHLAN C., ‘Reforming New Zealand’s Conflicts Process: The Case for Internationalism’, in: Victoria University of Wellington Law Review 1984, p. 443-462. 15 The are other international and regional organisations such as the United Nations Commission on International Trade Law (UNCITRAL), the European Union and the Organization of American States that also do some work in the area as part of their principal functions or goals. 16 See generally LIPSTEIN K., ‘One Hundred Years of the Hague Conference on Private International Law’, in: I.C.L.Q. 1993, p. 553-653. 11

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Richard Frimpong Oppong wide range of subjects including family law, succession, tort, contract, civil procedure, trust, and securities. Between 1955 and 2006, the Conference has adopted over 30 conventions. The work of the Conference continues to shape the development of the subject in various jurisdictions.17 In common law jurisdictions, it has influenced the gradual introduction of legislation on various aspects of the subject, and the reception of concepts like ‘habitual residence’ as a connecting factor.18 In Latin America, the gradual reception of the principle of party autonomy in contracts has been attributed partly to the influence of the work of the Hague Conference.19 The approach adopted by the Conference in its conventions does not require the unification of the substantive laws of states. It allows for diversity in substantive laws while providing uniform rules on choice-of-law, jurisdiction, the recognition and enforcement of judgments and international civil procedure. The Conference’s approach of unifying private international law rules whilst leaving the substantive laws diverse has its merits.20 It entails only a minimal disturbance in national legal systems. Rules of private international law address themselves to only matters involving foreign elements. That is not so with substantive law. Thus, the Conference’s approach should appeal to the politician with an eye on preserving his/her country’s unique or perceived superior legal system or legal tradition. Also the process could be much simpler; a whole branch of substantive law may be covered by a few choice-of-law clauses. There are currently 65 states that are members of the Conference. The membership spans all the regions of the world, and covers all the notable legal traditions: civil law, the common law and socialist legal tradition. Africa’s engagement with the work of the Conference has been both direct and indirect, albeit minimal. Currently, of the 53 African states only 3 are members of the Conference.21 They are Morocco, Egypt, and South Africa. Compared with membership from other regions, Africa is highly under-represented. Membership 17 See generally ‘The Hague Conference on Private International Law 1893-1993’, in: Netherlands International Law Review (N.I.L.R.) 1993, p. 1-142. 18 MCCLEAN J.D., ‘The Contribution of the Hague Conference to the Development of Private International Law in Common Law Countries’, in: Recueil des Cours 1992, p. 267 at 281-283; NORTH P.M., ‘Hague Conventions and Reform of English Conflict of Laws’, in: Dalhousie Law Journal 1981, p. 417-448. 19 BOGGIANO A., ‘The Contribution of the Hague Conference to the Development of Private International Law in Latin America’, in: Recueil des Cours 1992, p. 99 at 132-136. But see STRINGER D., ‘Choice of Law and Choice of Forum in Brazilian International Commercial Contracts: Party Autonomy, International Jurisdiction and the Emerging Third Way’, in: Columbia Journal of Transnational Law 2006, p. 959-991. 20 HAY P./LANDO O./ROTUNDA R.D., ‘Conflict of Laws as a Technique for Legal Integration’ in: Integration through Law Europe and the American Experience Vol. 1(2) (CAPPELLETTI M./SECCOMBE M./WEILER J.) Berlin, New York 1989, p. 161-169. 21 In 2004, Zambia was admitted to the Conference but is yet to accept the statute of the Conference. Until then it can attend proceedings of the Conference as an observer.

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Private International Law and Africa of the Conference is not a condition for becoming a party to its conventions. However, the absence of African participation in the negotiation process may lead to situations where the interests of Africa are not fully accounted for during the negotiating process. Currently, there are 18 African countries that are party to various conventions of the Conference.22 The Appendix to this paper provides a list of these countries and the relevant conventions. There are inherent problems with a state becoming party to a convention it played no part in negotiating. Because domestic political processes such as consultation with parliament were absent during the negotiation, there may be difficulties with implementation. There will be no sense of domestic ‘ownership’ of the convention. Parliamentary approval or domestic implementing legislation may also be less forthcoming due to the absence of an engagement with the domestic political processes during the negotiation of the convention. This may be especially so in dualist countries where national legislative measures are needed for the convention to have domestic effect. In other words, the absence of engagement in the negotiating process creates obstacles to domestic implementation of conventions. Even more important, the opportunity to influence the content of conventions is best available when one is present at the table during negotiations. Once negotiations are concluded, and excluding the possibility of reservations, a state is faced with a take it or leave it scenario. Aside from directly participating in the work of the Conference, it can be safely assumed that some African countries, especially Commonwealth Africa, are indirectly involved in the work of the Conference through the Commonwealth. Indeed, of the 18 African countries that have signed, ratified or acceded to at least one convention of the Conference, 9 are members of the Commonwealth.23 The Commonwealth has a long tradition of co-operation with the Conference.24 It regularly takes part in the negotiation of conventions, review meetings concerning existing conventions and meetings on the general affairs and policy of the Conference. This has ensured the ‘presence’ at The Hague of those Commonwealth members that are not yet members of the Conference.25

This covers signatures, accessions and ratifications. Signing means a state expresses, in principle, its intention to become party to the Convention. The signature does not, in any way, oblige the state to take further action such as for example to ratify the convention once it is in force. Ratification imposes a legal obligation on the ratifying state to apply the Convention. The term is ordinarily reserved for member states. Accession is usually reserved for non-members, and occurs only after the relevant convention enters into force. 23 South Africa, Botswana, Lesotho, Malawi, Mauritius, Namibia, Seychelles, Swaziland, Zimbabwe (former member). 24 VAN LOON H., ‘Legal Developments – The Hague Conference on Private International Law’, in: Commonwealth Law Bulletin 2004, p. 598-605. 25 VAN LOON H. (note 24), p. 598. 22

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Richard Frimpong Oppong The Permanent Bureau of the Conference also maintains ‘close links’26 with the Asian-African Legal Consultative Organization (formerly Asian-African Legal Consultative Committee).27 Currently there are fifteen African states that are members of the Organization.28 Although the link between the two institutions appears so far not formalised as, for example, into cooperation agreement or memorandum of understanding, its existence even on an informal level is important. It provides an opportunity for the sharing of jurisprudence and for the African membership of the Organization to participate in the work of the Conference. Indeed, the work of the Organization on the service of process and taking of evidence,29 which promoted bilateral initiatives in this regard, was heavily influenced by similar work of the Conference in that area. Aside this Organization, the Conference also cooperates with the United Nations Commission on International Trade Law, which has a large African membership. The work of the Conference also indirectly influences African countries through national legislation based on similar legislation implementing a Hague convention in other jurisdictions. The legislative draftsman looks to precedents from other jurisdictions in his work. Thus, the draftsman may occasionally draw on legislation that implements a Hague convention in other states. For example, an examination of section 15, 16 and 17 of the Wills Act of Ghana30 and section 22(4) of the Wills Act of Zimbabwe31 reveals that apart from insignificant changes in wording, they appear to be wholly based on the Wills Act of the U.K.32 which implements the Hague Convention on the Conflict of Laws relating to the Form of Testamentary Dispositions. These provisions significantly expanded the number of systems of law that can govern the validity of the execution of a will. They provide greater detail and coverage than comparable legislation in other countries.33 It will be difficult to determine the extent to which this channel of influence operates in Africa, partly because the draftsman seldom refers to the true source of his draft! However, the presence of this influence cannot be denied.34 There is a disadvantage MCCLEAN J.D. (note 18), p. 285. < http://www.aalco.org/>. 28 Arab Republic of Egypt, Botswana, Gambia, Ghana, Kenya, Libya, Mauritius, Nigeria, Senegal, Sierra Leone, Somalia, South Africa, Sudan, Tanzania, Uganda. 29 See Model for Bilateral Arrangements on Mutual Assistance for the Service of Process and the Taking of Evidence Abroad in Civil and Commercial Matters, at . 30 Wills Act, 1971 (Act 360). 31 Wills Act [Chapter 6: 06] Act 13 of 1987. 32 Wills Act 1963 (UK) C. 44. See TSIKATA F. S., ‘The Wills Act 1971 (Act 360)’ in: Review of Ghana Law 1972 p. 5-16 where he notes that the Ghanaian Act ‘reproduces, with slight verbal modifications’ the English Act enacted to bring English law in line with the Hague Convention of the Form of Testamentary Dispositions. 33 See e.g. section 16 of Law of Succession Act Chapter 160 of Kenya. 34 A more careful study in this regard is recommended as a research agenda. 26 27

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Private International Law and Africa with this approach, which is not very evident with the testamentary convention, but becomes very evident when one examines those conventions that establish definite mechanisms such as a ‘central authority’ for the national implementation of the rules. Although a state may adopt the rules of such a convention, it will lose the benefit of the implementing mechanism established by the convention, and in use in states that are party to the convention. Aside from the participation of states in the work of the Conference, it is also important to examine the degree of African academic or intellectual involvement in the work of the Conference. None of the African textbooks on private international law devotes any significant attention to the work of the Hague Conference and its significance for Africa.35 I was also unable to find any major article in any of the leading African law journals36 on the work of the Conference and Africa. This neglect of the work of the Conference in African writings is ‘reciprocated’ by an equal absence of perspectives from Africa in academic works that routinely report and analyse the works of the Conference. For example, an examination of the Recueil des Cours,37 which regularly contains courses on private international law and the work of the Conference, between 1983-2006 reveals only one course devoted specifically to a private international law issue in Africa.38 Similarly, of the 7 volumes of this Yearbook (1999-2005), which devotes attention to the important work and research carried out by the Conference, only the 2005 volume contains material on Africa, in this case South Africa.39 African academics

See e.g. FORSYTH C.F. (note 9); KIGGUNDU J., Private International Law in Botswana, Cases and Materials, Gaborone 2002; AGBEDE I.O., Themes on Conflict of Laws, Lagos 1989. As part of his chapter on the history and theory on private international law, Professor Forsyth discusses at p. 49-51 the role of the Conference in the unification of private international law. See also YAKUBU J. A., Harmonisation of Laws in Africa, Ibadan 1999, p. 45-50 where he provides a descriptive account of the workings of the Conference but in no way relates it to Africa. 36 See e.g. Journal of African Law, and African Journal of International and Comparative Law. In 1997 the Journal of African Law (Vol 41, p. 150) in its International Developments section published a list of Hague Conventions to which African states are party. The Comparative and International Law Journal of Southern Africa, however, contains articles on the Child Abduction Convention. See e.g. LABUSCHAGNE J.M.T., ‘International Parental Abduction: Remarks on the Overriding Status of the Best Interest of the Child in International Law’, in: C.I.L.S.A. 2000, p. 333-347; BATES F., ‘Child Abduction, the Hague Convention and Australian Law-A Specific Overview’, in: C.I.L.S.A. 1999, p. 7297; NICHOLSON C.M.A., ‘The Hague Convention on the Civil Aspects of International Child Abduction-Pill or Placebo?’, in: C.I.L.S.A. 1999, p. 228-246. 37 They are published by The Hague Academy of International Law. 38 UCHE U.U., ‘Conflicts of Laws in a Multi-ethnic Setting: Lessons from Anglophone Africa’, in: Recueil des Cours 1991, p. 273-438. 39 NEELS J.L., ‘Private International Law of Succession in South Africa’, in: this Yearbook 2005, p. 183-203. Significantly, the foreword to vol. VII-2005 of this Yearbook by Professors A. Bonomi and P. Volken notes this article as a ‘first step towards filling this 35

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Richard Frimpong Oppong have a crucial role to play in any future cooperation between the Conference and the continent. There is need for a more careful study of the work of the Conference, and an exploration of how Africa may potentially benefit from it. Books and journals are important forums for this study and for the articulation of interests. It is hoped that this paper will inspire study and discussion among African academics and within the corridors of government. It is further hoped that as similarly purposed writings elsewhere did,40 this paper will encourage African governments to reconsider their relationship with the Conference.

III. Africa and the Hague Conference: A Future of Cooperation There is need for increased cooperation between the Conference and Africa. The channels for cooperation are many, and can be mutually beneficial. African countries have for long battled with the complex issues involving internal conflict of laws. Their unique and diverse solutions to the domestic problems arising thereunder can shed some light on private international law issues, and may assist in the international development of conflict rules.41 A study of these internal conflict of laws solutions reveals that conflict of laws is not merely a conflict among laws, but also a battle for supremacy among ideals, values, and belief all encapsulated in law.42 As Bennett has noted internal conflict of laws reflects a profound social fact.43 This suggests that the resolution of conflict of laws problems, especially in areas of family law, has both procedural and substantive dimensions. In private international law, this substantive dimension is often left unarticulated. By having regard to these African approaches to internal conflict of laws, the substantive lacuna’ which saw ‘an entire most promising continent, Africa’ absent up to that time from this Yearbook. 40 See KUHN A.K., ‘Should Great Britain and the United States be Represented at the Hague Conference on Private International Law?’, in: American Journal of International Law 1913, p. 774-780; CASTEL J-G., ‘Canada and the Hague Conference on Private International Law: 1893-1967’, in: Canadian Bar Review 1967, p.1-34; MCLACHLAN C., (note 14). United Kingdom (1955), United States of America (1964), Canada (1968) and New Zealand (2002) subsequently became members of the Conference. 41 See generally TIER A.M., ‘Conflict of Laws and Legal Pluralism in the Sudan’, in: I.C.L.Q. 1990, p. 611-640; BENNETT T.W., ‘Conflict of Laws – The Application of Customary Law and the Common Law in Zimbabwe’, in: I.C.L.Q 1981, p. 59-103; SANDERS A.J.G.M. (ed.), The Internal Conflict of Law in South Africa, Durban 1990. 42 In the private international law realm reference can be made in this context to the changing attitude of the common law towards polygamous marriages and the role of public policy in resolving private international law issues. 43 BENNETT T.W. (note 41), p. 61.

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Private International Law and Africa aspects of private international law may be brought to the fore. On the other hand, the experience of the Conference with private international law dates back to the 19th century. Its international character, its methods, and the presence of diverse legal traditions can become an important source of knowledge for the development of the subject in Africa. The Hague conventions and methods of the Conference could serve as a model for the development of African conventions on private international law.44 The method of the Conference is not to attempt a codification of all the subjects of private international law, but rather to provide relevant rules for specific problematic areas. Currently, there is no African convention on any aspect of the subject. There is an urgent need for such conventions in Africa. Regional initiatives in the area of private international law need not necessarily be seen as a challenge to the international unification efforts of the Conference.45 Although all members of the European Union and some Latin American countries are members of the Conference, there are still regional efforts in the area of private international law in both regions. The Organization of American States, through its Inter-American Specialized Conferences on Private International Law, has supervised the negotiation and adoption of over twenty (20) conventions on the subject by its members.46 These conventions cover various aspects of the subject including, the recognition and enforcement of judgment and choice-of-law in contract.47 Recent Conference topics have focused on the free trade agenda of the region.48 Indeed, the history of cooperation in the field of private international law in the Americas dates back to the 19th century.49 As early as 1928 the Pan-America Code on Private International BOGGIANO A. (note 19), p. 118. See generally VAN LOON H., ‘Global and Regional Co-operation in the Field of Private International Law: A Challenge for the Hague Conference’, in: Japanese Yearbook of Private International Law (Japanese Y.P.I.L.) 2005, p. 2-19; VAN LOON H, ‘A Perspective from the Hague Conference’ in: Foundations and Perspectives of International Trade Law (FLETCHER I./MISTELIS L./CREMONA M. eds.), London 2001, 67-72. 46 See generally JUENGER F., ‘The Inter-American Convention on the Law Applicable to International Contracts: Some Highlights and Comparisons’, in: Am. J. Comp. L. 1994, p. 381-393; GARRO A., ‘Unification and Harmonization of Private Law in Latin America’, in: Am. J. Comp. L. 1992, p. 587-616; AMADO J.D., ‘Recognition and Enforcement of Judgment in Latin American Countries: An Overview and Update’, in: Virginia Journal of International Law, 1990/1991, p. 99-124; CASTRO L.P., ‘Some Aspects Concerning the Movement for Development of Private International Law in the Americas through Multilateral Conventions’, in: N.I.L.R. 1992, p. 243-266. 47 See Inter-American Convention on the Law Applicable to International Contracts (1994) and the Inter-American Convention on Jurisdiction in the International Sphere for the Extra Territorial Validity of Foreign Judgments (1984). 48 FERNÁNDEZ ARROYO D.P./KLEINHEISTERKAMP J., ‘The VIth Inter-American Specialized Conference on Private International Law (CIDIP VI): A New Step Towards Inter-American Legal Integration’, in: this Yearbook 2002, p. 237-254. 49 GARRO A.M. (note 46), p. 587-589. 44 45

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Richard Frimpong Oppong Law better known as the ‘Bustamante Code,’ often hailed as the first world attempt at the unification of private international law rules,50 had been adopted. Similarly, the European Union, after the coming into force of the Treaty of Amsterdam,51 is witnessing an ‘impressive and continuous rhythm’ in the creation of a European system of private international law.52 The fields of judgment enforcement and jurisdiction,53 contract,54 non-contractual obligations,55 insolvency56 family law57 wills and succession58 and more59 have all been touched. These pose significant challenges but offer great opportunities too to the Conference.60 With regional initiative operating side by side with international efforts, there is the danger of having ‘too many cooks’61 at the table, and the possibility of conflicting norms or solutions. However, regional initiatives are important especially as not all matters may be of interest or get treated with the same degree of urgency at the international level. Negotiations at the international level can also be protracted. Regional initiatives can, indeed, become an important avenue for the ‘progressive’ unification of private international law. It is in this regard that I advocate an input from the Conference in the development of regional conventions in

GARRO A.M. (note 46), p. 587-592. Article 65 of the Treaty grants the Community competence in the field of private international law. Article 65 must be read together with Article 61(c), 95 and 67. For comments on this article, see generally, DICKINSON A., ‘European Private International Law: Embracing New Horizons or Mourning the Past’, in: J. Priv. Int’l. L. 2005, p. 197-236; BOELE-WOELKI K./VAN OOIK R. H. ‘The Communitarization of Private International Law’, in: this Yearbook 2002, p. 1-36. 52 Foreword of this Yearbook 2002, by P. Šarčević and P. Volken. 53 Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matter EC Regulation No. 44/2001(Brussels I Regulation), European Enforcement Order for Uncontested Claims (EC Regulation No. 805/2004). 54 Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I) COM (2005) 650 final. 55 Proposal for Regulation of the European Parliament and the Council on the Law Applicable to Non-Contractual Obligations (Rome II) COM (2003) 427 final. 56 Council Regulation EC Regulation No. 1346/2000 of 29 May 2000 on Insolvency Proceedings. 57 See e.g.: Council Regulation (EC) No. 2201/2003 of 23 November 2003 Concerning jurisdiction and the Recognition and Enforcement of judgments in Matrimonial matters and the matters of Parental Responsibility, repealing Regulation (EC) 1347/2000. 58 Green Paper on Wills and Succession COM (2005) 65 Final. 59 See BAUR M. O. ‘Projects of the European Community in the Field of Private International Law’ in: this Yearbook 2003, p. 177-190. 60 See generally TRAEST M., ‘Development of a European Private International Law and the Hague Conference’, in: this Yearbook 2003, p. 223-259. 61 NORTH P.M. (note 18), p. 438. 50 51

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Private International Law and Africa Africa.62 Within the Southern Africa region, Forsyth has suggested the possibility of a regional code on defined aspects of private international law63 and the Institute of Private International Law, which is part of the University of Johannesburg, has the development of such regional codes as one of its principal goals. These goals are worth pursuing. When the time comes, and one hope it is sooner, the experience, and active involvement of the Conference in the process is recommended. Any attempt to systematise and unify the rules of private international law in Africa should be encouraged. There exist diverse approaches to all aspect of the subject in Africa. On the enforcement of judgments, the doctrine of reciprocity, notwithstanding its contested utility, lies at the heart of many statutory schemes for the enforcement of foreign judgments in Africa. The determination of which countries’ judgments benefit from reciprocal treatment differs among jurisdictions. Some countries make it an executive determination,64 others leave it to the judiciary,65 and some do not demand reciprocity at all.66 Additionally, most countries limit the enforcement of judgments to only foreign money judgments but some do not.67 On jurisdiction, whilst common law countries found jurisdiction on presence and residence and shun domicile and nationality as basis of jurisdiction, that does not appear to be the case with the civil law countries. Additionally, some doctrines of the common law on jurisdiction seem unavailable in some countries. Thus, there is doubt as to the existence of the doctrine of forum non conveniens in the RomanCurrently, UNIDROIT is helping the Organisation for the Harmonisation of Business Law in Africa (OHADA) to develop a uniform law of contract. This can provide a model of cooperation between the Conference and Africa in the area of private international law. 63 FORSYTH C., ‘The Provenance and Future of Private International Law in Southern Africa’, in: TSAR 2002, p. 60. See also THOMASHAUSEN A.E.A.M., ‘Private International Law in Africa’, Paper presented at the ‘Private International Law Seminar’ of 7 August 2000 Faculty of Law Rand Afrikaans University (South Africa), who proposes a Model Act of Private International Law for the continent. 64 Courts Act 1993 of Ghana section 81(1). 65 See art. 296 of the Egyptian Civil and Commercial Procedure Law of 1968; art. 319 of the Tunisian Code of Civil and Commercial Procedure; art. 458(a) of Ethiopian Civil Procedure Code of 1965. See generally, TESHALE S., ‘Reciprocity with Respect to Enforcement of Foreign Judgments in Ethiopia: A Critique of the Supreme Court’s Decision in the Paulos Papassinous Case’, in: A.J.I.C.L. 2000, p. 569-578. 66 See e.g. Enforcement of Foreign Civil Judgments Act 32 of 1988 of South Africa; Civil Matters (Mutual Assistance Act 14 of 1995 of Zimbabwe 67 For example, section 3(1)(b) of the Foreign Judgments (Reciprocal Enforcement) Act (Cap 43) of Kenya allows for the registration of an order or judgment from a designated court in civil proceedings under which movable property is ordered to be delivered to any person. On the enforcement of non-money foreign judgments see generally OPPONG R.F., ‘Enforcing of Foreign Non-Money Judgments: An Examination of some Recent Developments in Canada and Beyond’, in: University of British Columbia Law Review 2006, p. 257286. 62

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Richard Frimpong Oppong Dutch law of South Africa.68 In the area of choice-of-law, the extent to which, for example, parties are free to choose the governing law of their contract varies not only among jurisdictions but also with the character of the transaction. While it has been suggested that the position of the concept of party autonomy in the RomanDutch law of South Africa is ‘equivocal,’69 that cannot be said of the common law.70 All these lead to uncertainty. This paper advocates a more careful study of all aspects of the subject in Africa with a view to harmonising and unifying the rules. An African convention on the aspect so studied will be a necessary product of this effort. The experience and expertise of the Conference will be indispensable and invaluable in this regard. The europeanization of English private international law, propelled by the need to have private international law rules that are responsive to the needs of the European common market, also suggests that common law countries in Africa, who do not necessarily share in the internal market ideal, may have to look elsewhere for their jurisprudence on private international law.71 Ordinarily, common law Africa drew on the jurisprudence of the English courts. Increasingly however, such jurisprudence is being europeanised. Fundamental changes are being effected in the common law in response to the specific demands of European integration. African countries may have to decide whether to continue to draw on the European inspired English jurisprudence on private international law or seek more neutral jurisprudence. It is suggested that the Conference can be one such forum to look to. Originally tilted towards the civil law, the Conference is now pursuing a more neutral agenda, accommodating the demands of both civilian and common lawyers. It offers an alternative avenue that African countries can look up to for the developments of their private international law regimes. The work of the Conference can provide rules for the development of areas where the response of the common law has been inadequate or non-existent. Consequently, there is need for a larger number of ratifications of Hague conventions by African countries. This should be done after a comprehensive assessment of the benefits of these conventions for the relevant country. Three broad categories of conventions may be of interest to African countries. What I suggest here is not an outright endorsement of these conventions, but an invitation for their closer study by governments in Africa with a view to assessing how they meet present needs, national and continental, and the potential benefits of becoming party. First are the conventions that aim at improving the international administration of justice. Domestic litigation is increasingly taking on international dimen68 SCHULZE C., ‘Forum non conveniens in Comparative Private International Law’, in: South African Law Journal 2001, p. 812 at 827-828; FORSYTH C.F. (note 9), p. 173-176. 69 FORSYTH C.F. (note 9), p. 298. 70 See generally NNONA G., ‘Choice of Law in International Contracts for the Transfer of Technology: A Critique of the Nigerian Approach’, in: Journal of African Law 2000, p. 78-85. 71 See DICKINSON A. (note 51), p. 197.

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Private International Law and Africa sions; evidence abroad may be needed, documents may have to be served abroad, and cooperation from other national courts may generally be needed for effective domestic adjudication. All these are important components of the emerging area of transnational civil procedure.72 One can not be sanguine about the adequacy of existing national civil procedure rules to meet the challenges of this emerging area; some countries have civil procedure rules that date back to the 1960’s and have not seen any significant reforms to take account of current demands of international litigation. One area where problems are likely to arise in the future relates to cooperation among national courts, and between national courts and the emerging international courts73 and arbitral institutions74 in areas like the taking of evidence and ensuring the attendance of witnesses. Existing national judicial cooperation legislation provides uncertain responses to these problems and merits attention. Significantly, the Zimbabwe Civil Matters (Mutual Assistance) Act75 allows the Minister to extend the provisions of the Act to ‘any international tribunal.’ An international tribunal is defined as ‘any court or tribunal which, in pursuance of any international agreement or any resolution of the General Assembly of the United Nations – (a) exercises any jurisdiction or performs any function of a judicial nature or by way of arbitration, conciliation or inquiry; or (b) is appointed, whether permanently or temporarily, for the purpose of exercising any jurisdiction or performing any such function.’76 There is the need for judicial cooperation to be made an essential part of any initiative at integration in Africa.77 72 See generally MCCLEAN J.D., International Co-operation in Civil and Criminal Matters, Oxford 2002, p. 11-149; SCHLOSSER P., ‘Jurisdiction and International Judicial and Administrative Co-operation’, in: Recueil des Cours 2000, t. 284, p. 9-418; MCLACHLAN C., ‘International Litigation and the Reworking of the Conflict of Law’, in: Law Quarterly Review 2004, p. 580-616. 73 E.g. The Court of Justice of the African Union. 74 In the Canadian case of B.F. Jones Logistics Inc. v. Rolko (2004) 72 O.R. (3d) p. 355, the Ontario Superior Court of Judicature held that it had no jurisdiction either at common law or under statute (similar in terms with some African statutes in this regard) to enforce a letter of request from a private arbitrator requesting an examination of a witness resident in Ontario. In Viking Insurance Co. v. Rossdale [2002] 1 Lloyd’s Rep. 219, it was also held that the English court had no jurisdiction under the Evidence (Proceedings in Other Jurisdictions) Act 1975 to enforce a letter of request issued by a private arbitral tribunal. See generally GOODFELLOW D./COTTON B.E., ‘Enforcement of Letters Rogatory Issued by a Foreign Arbitral Tribunal’, in: Advocates’ Quarterly 2005, p. 316-333; PENNY M., ‘Letters of Request: Will a Canadian Court Enforce a Letter of Request from an International Arbitral Tribunal?’, in: American Review of International Arbitration 2001, p. 249-261; CHUKUM ERIJE O., International Judicial Assistance: Revitalising Section 1782’, in: George Washington International Law Review 2005, p. 649-685. 75 Chapter 8:02. 76 Section 3 (2). This section is consistent with legislation in other countries see e.g. section 6(1) of the UK Evidence (Proceedings in Other Jurisdictions) Act 1975 which allows the Queen to extend the operation of the Act to international tribunals, including arbitration tribunals appointed pursuant to international agreements or resolution of the General As-

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Richard Frimpong Oppong The Conference has been a pioneer in the area of transnational civil procedure78 and is generally acclaimed as having achieved remarkable success in the area. The Convention on the Service of Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters (1965) and the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (1970) have 55 and 43 states as party to them respectively. Four African countries are party to the Service convention79 and two are party to the Evidence convention.80 These international conventions can be an important complement to existing bilateral agreements in this area in Africa. The text and implementing mechanisms of these conventions can provide guidelines for any initiative aimed at improving judicial cooperation in the area of international civil procedure in Africa. The reliance of these conventions on judicial and administrative channels through the ‘central authority’ mechanism can provide a useful and cost effective means of overcoming the challenges of using diplomacy and consular offices, as currently contemplated under most Africa statutes, which are often ‘notoriously slow’.81 Second are those that provide solutions to areas where the common law has proved inadequate or unsatisfactory. One such notable area is the law on child abduction.82 The approach in most common law jurisdictions is to apply the statutory formula of the ‘welfare of the child’83 or the principles developed in the Privy

sembly of the United Nations. In the USA Section 1782(a) of the United States Code, Chapter 28 applies to ‘international tribunals.’ 77 See generally GLENN H. P., ‘Prospect for Transnational Civil Procedure in the Americas’, in: 8 Uniform Law Review 2003, p. 485-491. Within the European Union there exists regulations to enhance cooperation among the member states such an in the area of taking evidence and serving documents. See Council Regulation (EC) No. 1206/2001 (May 18, 2001) on Cooperation between the Courts of the Member states on the Taking of Evidence in Civil or Commercial Matters 2001 O.J. L 174/1 and Council Regulation (EC) No. 1348/2000 (May 29, 2000) on the Service in the Member States of Judicial and Extra Judicial Documents in Civil or Commercial Matters (2000) O.J. L160/37. For similar developments within MERCOSUR see PARRATA-DORIA R.A. Jr., Mercosur: The Common Market of The Southern Cone, Durham 2005, p. 79-94. 78 See generally ‘Symposium: The Hague Conference on Private International Law’, in: Law and Contemporary Problems 1994, p. 1-331. This is a collection of essays marking the centennial of the Conference and addressing the Conference’s efforts in facilitating civil litigation across national boundaries. 79 Egypt, Botswana, Malawi and Seychelles. 80 South Africa, Seychelles. 81 MCCLEAN J.D. (note 72), p. 16. In the Kenya case of Fonville v. Kelly III [2002] 1 East Africa Law Reports 71, possibly anticipating the slow pace of service through diplomatic channels, the court ordered that service of notice of summons be served on the defendant through DHL, a private international courier company. This service was held a nullity. 82 MCCLEAN J.D. (note 72), p. 299-302. 83 Ghana Children’s Act.

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Private International Law and Africa Council decision of McKee v. McKee.84 Generally, the statutory formula buttresses the common law principles, and often abduction cases are treated as similar to other issues such as custody. While the statutory formula provided so flexible an approach as to render it an uncertain guide to judicial decision, the latter McKee principles have been given differing interpretations in various jurisdictions. The Hague Convention on Civil Aspects of International Child Abduction distinctly identifies child abduction cases, introduces a summary mechanism for the immediate return of abducted children, and provides a clear framework with defined criterion for decision-making.85 This framework, while not denying the paramountcy of the best interest of the child in applications involving children,86 operates on the presumption that such interest is best served by the prompt return of the child to his/her place of habitual residence. There are currently four African countries that are party to the Abduction Convention.87 As one of the most successful international initiatives on child protection, it is hoped that many more African countries will ratify this convention. Indeed, African governments should see the ratification of the Abduction Convention, together with other Hague conventions on children88 as partially fulfilling their commitment assumed under various international treaties to protect children’s rights.89 Another means by which ‘effect’ can be given to the Abduction Convention, at least to achieve its ends, is for judicial authorities to rely on decided cases from other jurisdictions, which have applied the principles of the convention in cases where the convention itself, by vir[1951] A.C. 352, H.L. See generally BEAUMONT P.R./MCELEAVY P.E., The Hague Convention on International Child Abduction, Oxford 1999. 86 Sonderup v. Tondelli [2001] 1 S.A. 1171 (CC) where a constitutional challenge to a South African legislation given effect to the convention on the ground that it obliged the court to act in a manner inconsistent with the best interest of the child was rejected. 87 South Africa, Burkina Faso, Mauritius, and Zimbabwe. See South Africa, the Hague Convention on the Civil Aspects of Child Abduction Act 72 of 1996 as amended by the Judicial Matters Amendment Act, No. 42 of 2001 and the Zimbabwe Child Abduction Act [Chapter 5: 05] Act 12 of 1995 which give domestic effect to the Hague convention. For some cases decided using the convention framework in South Africa see e.g. Pennello v. Pennello [2004] 3 S.A. 117; Senior Family Advocate, Cape Town v. Houtman [2004] 6 S.A. 274; Chief Family Advocate v. G [2003] 2 S.A. 599 88 E.g. Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children 1996 (only Morocco has ratified this Convention); Convention on Protection of Children and Co-operation in respect of Intercountry Adoption 1993 (South Africa, Burkina Faso, Burundi, Guinea, Madagascar, Mali, and Mauritius are party to this convention). At a recent seminar organised by the Conference for judges and experts from the Southern and Eastern African Region, it was recommended that the African Union ‘raise and promote awareness’ among Member States of the Hague Child Protection Conventions. 89 E.g. African Charter on the Rights and Welfare of the Child (entered into force in November 1999). 84 85

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Richard Frimpong Oppong tue of non-ratification or non-incorporation into domestic law did not apply.90 Such an approach by the judiciary is, however likely to meet with resistance as an inappropriate exercise of judicial power.91 Another area where the common law has been identified as unsatisfactory is that of the recognition and enforcement of foreign divorce decrees. The common law remains unsettled as to whether domicile or real and substantial connection should have been the basis of the foreign courts’ jurisdiction. Kiggundu has suggested that the Hague Convention on the Recognition of Divorces and Judicial Separation can provide a useful model in designing a legislative response.92 Professor Forsyth has also advocated South Africa’s accession to this convention.93 This convention uses habitual residence as the basis of jurisdiction. Currently, only one African country, Egypt, is party to this convention. For common law Africa, it is significant that the United Kingdom, from whom they inherited the existing unsatisfactory common law regime, has moved on to become a party to this convention, and with appropriate legislative intervention, reformed their law on this area.94 Indeed, the recognition rules laid down by the English Family Law Act are exclusive. The implication of this for common law Africa is that they are unlikely to benefit from the pure common law persuasive authorities in this area, at least from the English courts. Finally one can mention those Hague conventions that aim at promoting and facilitating trans-boundary commercial activities. Within this context the conventions of the Hague Conference could provide a useful complement to the harmonisation of substantive commercial law currently going on in Africa especially under the aegis of the Organisation for the Harmonisation of Business Law in Africa. These substantive harmonisation efforts will not be complete without a careful See CHEONG C. W., ‘The Law in Singapore on Child Abduction’, in: Singapore Journal of Legal Studies 2004, p. 444 at 458-461 where the writer discusses a Singapore case in which the judge held that although Singapore was not a signatory to the Abduction Convention, its principle that it was in the best interest of the child for questions of custody to be decided by the court of habitual residence unless there were exceptional circumstances, should be followed. There have been rare instance where some African courts have relied on international conventions, which have not yet been incorporated into domestic law. These instances have however been restricted to cases where the country involved had ratified the relevant convention. See Unity Dow v. Attorney General (1991), 13 Human Rights Quarterly 614-623 (High Court Botswana, Misca. 124/90); Dow v. Attorney General 103 International Law Reports 128, at 159-162, 175-179 (1996) (Court of Appeal Botswana, 3 July 1992); New Patriotic Party v. Inspector General of Police [1993-94], 2 Ghana Law Reports 459-466, S.C. 91 See generally YOUNG J., ‘The Constitutional Limits of Judicial Activism: Judicial Conduct of International Relations and Child Abduction’, in: Modern Law Review 2003, p. 823-836. 92 KIGGUNDU J. (note 35), p. 350. 93 FORSYTH C.F. (note 9), p. 419. 94 Family Law Act 1986 (UK) Part II. 90

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Private International Law and Africa look at the private international law regime. As Professor Goode admits, ‘every substantive law harmonised reduces the scope of the conflict of laws […]. It is clear however that since there are practical limits to what can be harmonised, private international law will remain of considerable importance in the resolution of cross border disputes for the foreseeable future.’95 Substantive unification of private law does not eliminate the potential for private international law problems: ‘the law of conflict of laws is not so easily banished from the realm of foreign trade.’96 One benefit of having international standards to govern international commercial relationships is that they minimise the possibility of domestic consideration having an overbearing place in the resolution of disputes. A number of Hague conventions may be a useful complement to existing national commercial laws. One example is the Hague Convention on the Law Applicable to Contracts for International Sale of Goods (1986), which unifies the private international law rules on international sale of goods. There is currently no African state party to this convention.97 The convention could be a useful complement to national commercial law regimes as well as the UN Convention on Contracts for International Sale of Goods, to which seven African countries are currently party.98 There is also the need for improved and increased participation in the work of the Hague conference through both membership and attendance of Conference proceedings. States in Africa, individually and collectively, through the African Economic Community (an integral part of the African Union) should work towards forging closer relationship with the Conference. This can begin with the sending of official delegations to participate in the proceedings of the Conference. This can serve as an important prelude to ultimate membership. An official delegation will be able to give the interest of Africa a place in the proceedings, serve as a training ground on the workings of the Conference, and provide an opportunity for a more considered assessment of the importance of the Conference’s work to the needs of Africa. In an increasingly globalized world, we cannot be oblivious to developments elsewhere.99 It is significant that although all members of the European UnGOODE R., ‘Rule, Practice and Pragmatism in Transnational Commercial Law’, in: I.C.L.Q. 2005, p. 539-541. 96 DARBY J., ‘The Conflict of Laws and International Trade’, in: San Diego Law Review 1967, p. 45-70. 97 Niger is party to the 1955 Hague Convention on the Law Applicable to Contracts for International Sale of Goods. 98 Gabon, Ghana, Guinea, Lesotho, Liberia, Mauritania and Uganda. Although Ghana signed the convention in 1980 it has not ratified it. 99 KRUGER T., ‘The South African Litigant and European Union Rules of Civil Procedure’, in: C.I.L.S.A. 2005, p. 75; KOTUBY C.T., ‘Internal Developments and External Effects: The Federalization of Private International Law in the European Community and its Consequences for Transnational Litigants’, in: Journal of Law and Commerce 2001/2002, p. 157-180; FAWCETT J.J., ‘The Europeanisation of Private International Law: The Significance for Singapore’, in: Singapore Journal of International and Comparative Law 1997, p. 69-90. 95

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Richard Frimpong Oppong ion are also members of the Hague Conference, the Union is still seeking membership of the Conference.100 This will give it a stronger voice in shaping the rules emerging from the Conference. It is only through participation that we can learn, be heard and make the emerging international conventions on the subject take account of our special needs and interests. The Conference can encourage participation by officially inviting African non-member states and economic organisations to participate in the proceedings of the Conference especially those leading to the conclusion of conventions. A potential means for expanding African involvement and membership of the Hague Conference will be to use the various regional economic communities in Africa.101 Notable among these are the African Economic Community, Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC). By impressing on these communities that true integration should not aim only at the removal of socioeconomic and political obstacles to the movement of persons, goods, services, and capital but also the removal of legal barriers, and that an under-developed or neglected private international law regime is one such legal barrier, African states may be more willing to get involved. This could be seen as part of the Conference’s mandate of seeking the progressive unification of the rules of private international law. In this regard, it is significant that suggestions for co-operation between the Hague Conference and the Common Market of the Southern Cone (MERCOSUR) have been made, and an agreement concluded between the Conference and the Inter-American Children’s Institute, a specialised organisation of the Organization of American States, has been concluded.102 It is suggested that this cooperation with regional institutions and organisations should be extended to Africa. Apart from co-operation with regional economic communities, there is the need to explore the possibility of allowing regional economic organisations to become party to Hague conventions including the Statute of The Hague Conference. The current amendment to the Statute allows for regional economic integration organisations, such as the European Union,103 to become members of the Conference.104 The inclusion of clause 30 of the Convention on Choice of Court Agree100 See Recommendation to the Twentieth Session of the Hague Conference on Private International Law on the Admission of the European Community to the Hague Conference on Private International Law 31 March-1 April 2005. 101 See ‘Hague Conference on Private International Law: Strategic Plan 2002’, available at the Conference’ website: , at [306]-[307], [434]-[435]. 102 Available at the Conference’ website: . 103 See Recommendation (note 100). 104 See article 3 of the Statute of the Hague Conference on Private International Law. It provides among others that ‘to be eligible to apply for membership of the Conference, a Regional Economic Integration Organisation must be one constituted solely by sovereign States, and to which its Member States have transferred competence over a range of matters within the purview of the Conference, including the authority to make decisions binding on

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Private International Law and Africa ments, and clause 18 of the Convention on the Law Applicable to Certain Rights in Respect of Securities held by an Intermediary, which allow for regional economic integration organisation to become party to them are also significant and welcomed moves in the direction of fostering greater participation of regional economic integration organisations in the work of the Conference. This will ensure wider application of conventions of the Conference. The Conference should also strengthen and deepen the already existing indirect channels of co-operation between the Conference and African countries. These channels include, as already identified, the Commonwealth and the Asian-African Consultative Organization. To this can be added the various regional economic communities in Africa. These channels could become an important medium for spreading the work of the Conference pending eventual membership of the individual states. Cooperation with these channels should be matched by the creation of some form of presence of the Conference in Africa. This will increase and facilitate awareness about the work of the Conference. It is heartening in this regard that discussions are currently underway to establish a Conference document centre for the Southern African region. Finally, given the underdeveloped state of the subject in Africa, there is the need for the Conference to interpret its mandate broadly so as to encompass the promotion of the academic development of the subject, especially in Africa.105 This will require the forging of links with the departments of private law at the various faculties of law, and in law institutes, such as the Institute of Private International Law at the University of Johannesburg, in Africa. The internship program of the Conference can also be used to train upcoming African academics and practitioners with an interest in the subject. These trainees will ultimately serve as ambassadors for the Conference in their respective countries creating awareness, and promoting the work of the Conference.

IV. Conclusion A sound private international law regime is an indispensable part of the legal infrastructure of any legal system that interacts with other legal systems. A neglected and underdeveloped private international law regime will not be able to meet the challenges thrown by such interactions, and indeed, may be evidence of the absence of interaction. In an increasingly globalising world, this is not a fate any its Member States in respect of those matters.’ This amendment came into force on 1 January 2007. 105 See also KONO T., ‘100 Years of Hague Conference of Private International and Japan-Past and Future’, in: Japanese Y. P. I. L. 2005, p. 20-27, advocating the Conference organises educational events to disseminate information on the conflict of laws and make the subject familiar to more people.

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Richard Frimpong Oppong legal system should contemplate, let alone allow itself to be consigned to. Legal isolationism is a dangerous path to tread in these times. This paper has noted the underdeveloped and neglected state of private international law in Africa. This state of affairs should count as a developmental challenge, and elicit the needed attention. International engagement is a key aspect of meeting this challenge. Cooperation with the Hague Conference on Private International Law has been identified as an indispensable element in this engagement. There is the need for African countries to increase their participation, both in attending proceedings of the Conference and in becoming members. There is also the need for a comprehensive study of existing conventions with a view to ratifying those that meet the needs of the respective countries. The Conference should encourage the active participation of African countries in its work; formal invitation to attend proceedings, cooperation with existing regional economic communities, faculties of law, and institutions dedicated to private international law and law in Africa are important channels to explore. African academics, and all who have the development of the subject at heart have a crucial role to play. It is my sincere hope that on the occasion of the 150th anniversary of the Conference in 2043, a more impressive story of the relationship between Africa and the Conference will be told.

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Appendix

Statute of Hague Conference Civil Procedure Sale of Goods Transfer of Title* Sale-Choice of Court* National Law/ Law of Domicile* Recognition of Companies* Maintenance Children-Applicable Law Maintenance ChildrenEnforcement Protection of Minors Form of Wills Legalisation (Apostille) Adoption Service Abroad Choice of Court* Enf. of Judgments Protocol on Jurisdiction DivorceRecognition Traffics Accidents Taking of Evidence Admin. of Estates Product Liability Maintenance Enforcement Maintenance Applicable Law

I II III

Egypt Morocco South Africa Botswana Burkina Faso Burundi Guinea Lesotho Liberia Madagascar Malawi Mali Mauritius Namibia Niger Seychelles Swaziland Zimbabwe

Convention/States

Number

Hague Conventions and African States

A A A A A A

IV V VI VII VIII IX X XI

A A

A

XII

A A

A A

A A

A A

A A A

XIII XIV XV XVI

R

A

A

A

XVII XVIII XIX XX XXI XXII XXIII XXIV

R A

A

Matrimonial Property Marriage Agency Child Abduction Access of Justice Trust

Egypt Morocco South Africa Botswana Burkina Faso Burundi Guinea Lesotho Liberia Madagascar Malawi Mali Mauritius Namibia Niger Seychelles Swaziland Zimbabwe

Number

Convention/States

XXV XXVI XXVII

S A

XXVIII XXIX XXX XXXI

Sales Contract* SuccessionApplicable Law*

XXXII

AdoptionCooperation

XXXIII

Protection of Children Protection of Adults* Securities*

XXXVI

Choice of Court*

XXXVII

XXXIV

A

A

A

S

R A A

R

A A

R

XXXV

Prepared by author from information available at the website of the Hague Conference on Private International Law. Current as at 1 January 2007 June 2006. A= Accession; R= Ratification; S= Signature; *= Convention not yet entered into force.

THE FRENCH DIPTYCH ON FOREIGN LAW: AN ANALYSIS THROUGH ITS MOST RECENT RETOUCHING Serge BILLARANT∗ I. II. III. IV.

Introduction The First Touch-Up: the Equivalence between the Applicable Law and the Law Applied The Second Touch-Up: the Ascertainment of Foreign Law Conclusion

I.

Introduction

French law concerning the application of foreign law has evolved notably in 2005.1 This will come as no surprise to the reader, knowing the variations and reversals of French jurisprudence in this area.2 We must therefore paint a picture of French *

Senior Lecturer (maître de conférences), University of Maine (France). The author of this paper wishes to express his gratitude to Ms. Karen Jeanneret-Druckman, A.B., J.D., L.L.M., legal counsel at the Swiss Institute of Comparative Law and lecturer at the Law Faculty at the University of Lausanne for her assistance in the preparation of the English version of the text. 1 Three cases deserve attention: – Cass. 1re civ., 11 January 2005, Barluschke v. Agent judiciaire du Trésor, in: Rev. crit. dr. int. pr. 2006.85, note SCHERER M., Clunet 2006.955, note GODECHOT-PATRIS S., Dalloz 2005.2924, note MAHINGA J.-G., Defrénois 2005.1064, obs. MASSIP J., Droit de la famille 2005.n° 197, note FARGE M., Gazette du Palais 24-26 février 2006, n° 56, p. 21, note NIBOYET M.-L.; – Cass. 1re civ., 28 June 2005, M.F. Aubin v. M.H. Bonal et société MFP, in: Revue critique de droit international privé 2005.645, note ANCEL B./MUIR WATT H., Dalloz 2005.2853, note BOUCHE N.; – Cass. com., 28 June 2005, Société Itraco v. Fenwick Shipping Services et autres, in: Rev. crit. dr. int. pr., 2005.645, note ANCEL B./MUIR WATT H., Dalloz 2005.2748, note KENFACK H., Droit & patrimoine novembre 2005, p. 107, obs. ANCEL M.-E., and ANCEL B./ LEQUETTE Y., Les grands arrêts de la jurisprudence française de droit international privé, 5th ed., Paris : Dalloz, 2006, n° 82-83. 2 See e.g. AUDIT B., ‘Le droit international privé en quête d’universalité. Cours général (2001)’, Recueil des cours 2003, t. 305, p. 9-488, spec. n° 102; JÄNTERÄ-JAREBORG M., ‘Foreign Law in National Courts. A Comparative Perspective’, Recueil des cours 2003, t. 304, p. 181-385, spec. p. 230, 273 and 291. Yearbook of Private International Law, Volume 8 (2006), pp. 213-229 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Serge Billarant positive law that reflects the changes made to the French diptych of foreign law, comprised, on the one hand, of the question of application of the conflict of laws rule and, on the other hand, of that of establishing the substantive foreign law. Changes, yes, but nothing revolutionary; indeed, most aspects of French law concerning these questions remain unchanged. Here follows a brief review of the subject matter: a. – First, adopting implicitly, albeit necessarily, the pluralist theory,3 the Cour de cassation recognized in 1993 that the foreign law has legal value rather than being assimilated to a fact. In Consorts Coucke v. Mme Hoste et autres,4 the Cour de cassation held that ‘notwithstanding the lack of judicial review by the Cour de cassation, [the foreign law in question] is a rule of law.’5 In so doing, the court clearly aligned French jurisprudence with the position long defended almost unanimously by the doctrine.6 No matter how important this may be from a 3

The French doctrine that assimilated foreign law to a fact was based on a monistic position, inspired by Dutch authors of the 17th century (FOELIX J.-G., Traité du droit international privé, 4th ed. by DEMANGEAT Ch., t. I, Paris: Marescq Ainé, 1866, n° 18, p. 34; Hello’s conclusions on Cass. civ., 6 February 1843, de Bonneval v. de Bonneval, in: Sirey 1843.1.209, esp. p. 217). The dualist theory, remarkably well developed in Italy at one time, also leads to the treatment of foreign law as if it were a fact, at least until such foreign law’s naturalisation, since this theory is also based on the exclusivity of legal orders (see AGO R., Teoria del diritto internazionale privato, Padova: CEDAM, 1934, n° 15, and the solution previously adopted by the Corte di Cassazione, 16 February 1966, Finaly v. Bounin e altri / Comune di Firenze v. Finaly, in: Riv. dir. int. priv. proc. 1966.571, Riv. dir. int. 1966.408). We find traces of this concept in France in the dogmatic praetorian of the 19th century, viewing the rule of conflict as Blankettnorm nationalising the foreign law (see e.g. conclusions Reverchon on Cass. Req., 23 February 1874, Compagnie des Messageries maritimes v. Compagnie universelle du canal maritime de Suez, in: Sirey 1874.1.145, spec. p. 149; and, more ambiguous, Lasagni’s observations on Cass. Req., 20 December 1841, Bousquet v. Dasque, in: Sirey 1842.1.321, spec. p. 324). On the other hand, French private international law doctrine has refused to adopt the dualistic theory. That said, one might note that the position defended by Henri BATIFFOL (Aspects philosophiques du droit international privé, Paris: Dalloz, 1956, n° 50-54, reprint 2002, foreword by LEQUETTE Y.), according to which only the foreign law’s rational element, but not its imperative element, can cross national borders, is similar to the Italian theses, despite the criticisms of this eminent author. By replacing the terms ‘rational element’ and ‘imperative element’ by the words ‘substantive content’ and ‘authoritative powers’, the analogy becomes almost troubling. Nonetheless, these two explanations are not quite the same since they are based on different concepts of law: Batiffol repudiates Kelsen’s concept of law which is similar to the above-mentioned Italian theories. 4 Cass. 1re civ., 13 January 1993, in: Rev. crit. dr. int. pr. 1994.78, note ANCEL. 5 ‘La loi étrangère (…), malgré l’absence de contrôle de la Cour de cassation, est une règle de droit’. 6 Concerning this question, see ZAJTAY I., Contribution à l’étude de la condition de la loi étrangère en droit international privé français, Paris: Pedone, 1958, n° 19-38; YASSEEN M. K., ‘Problèmes relatifs à l’application du droit étranger’, Recueil des Cours 1962, t. 106, p. 505-596, esp. p. 508-520; MELIN F., La connaissance de la loi étrangère par

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French Diptych on Foreign Law theoretical viewpoint, however, this solution has not uniformly influenced the regime of foreign law, as demonstrated by the Cour de cassation’s refusal, in Coucke v. Mme Hoste et autres to review the interpretation of the foreign law. This should not come as a surprise: the doctrine has already pointed out the lack of consistent application of the theoretical position to the question of foreign law.7 Resolution of this question depends equally on pragmatic considerations8 which result from the difficulties encountered in obtaining access to foreign law, precisely because it is foreign.9 b. – Second, the judge’s application of the French rule of conflict continues to be based on a dichotomy depending on the nature of the litigation, a distinction which is widespread in comparative law10 despite the criticisms to which it has been subject.11 Even then, the international nature of the litigation must be clear at least from a review of the file, otherwise the litigation will appear to be purely internal and, as a result, the French judge will apply only the lex fori.12 If, on the other hand, the international character of the litigation is apparent, it must be determined whether the disputed rights are waivable or non-waivable. If the disputed rights are non-waivable, the judge must apply the French conflict of laws rule.13 If the disputed rights are waivable, there are two potential hypotheses: (1) one of the parties has expressly invoked a foreign law which such party proves it supports the les juges du fond (recherches sur l’infériorité procédurale de la loi étrangère dans le procès civil), Aix-Marseille: PUAM, 2002, n° 10-42. This position is quite old: see, e.g., LAURENT F., Droit civil international, t. II, Bruxelles/Paris: Bruylant-Christophe/A. Marescq, 1880, n° 264-281. 7 DAVID C., La loi étrangère devant le juge du fond, Paris: Dalloz, 1965, n° 7; HARTLEY T.C., ‘Pleading and Proof of Foreign Law: the Major European Systems Compared’, I.C.L.Q. 1996, p. 271, esp. p. 272; JÄNTERÄ-JAREBORG M. (note 2), p. 238; SAUVEPLANNE G., ‘L’interprétation du droit étranger par le juge national et les conséquences de l’ignorance du contenu de ce droit’, in: Revue hellénique de droit international 1960, p. 7, esp. p. 10 and 16. 8 MUIR WATT H., ‘Loi étrangère’, Encyclopédie Dalloz Droit international, 2nd ed., t. II, n° 6; JÄNTERÄ-JAREBORG M. (note 2), p. 195-197, 220, 238, 265-268 and 297-298. 9 See e.g. YASSEEN M.K. (note 6), p. 520 and 528; NICOD M., ‘Un droit venu d’ailleurs: la loi étrangère désignée par la règle de conflit’, in: Libres propos sur les sources du droit. Mélanges en l’honneur de Philippe Jestaz, Paris: Dalloz, 2006, p. 417-428, esp. p. 420 and 425-428. 10 JÄNTERÄ-JAREBORG M. (note 2), p. 237. 11 FAUVARQUE-COSSON B., Libre disponibilité des droits et conflits de lois, Paris: LGDJ, 1996, n° 307-364. 12 Cass. civ., 1re sect., 11 July 1961, Dame Bertoncini v. Bertoncini, in: Rev. crit. dr. int. pr. 1962.124, note BATIFFOL H., Clunet 1663.132, note GOLDMAN B., and ANCEL B./LEQUETTE Y. (note 1), n° 32-34. 13 Cass. 1re civ., 26 May 1999, M. Belaid A. v. Mme E., in: Rev. crit. dr. int. pr. 1999.707, note MUIR WATT H., Semaine juridique 1999.II.10192, note MELIN F., Répertoire Defrénois 1999.1261, note MASSIP J., and ANCEL B./LEQUETTE Y. (note 1), n° 74-78.

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Serge Billarant claim made,14 in which case the French judge must apply the conflict rule; or (2) the party asserting the applicability of the foreign law has not demonstrated that he has a real interest in the application of the foreign law, in which case the judge’s application of the conflict of laws rule is discretionary.15 c. – Third, the parties can, within the limited context of their litigation, set aside the conflict of laws rule through a procedural agreement,16 in favour of the substantive law of the forum or, it would appear, of a foreign substantive law.17 The power thus accorded to the parties is not without limit: it presupposes that the disputed rights are waivable, a condition that also appears in certain foreign laws.18 Although these three aspects of positive French law have not been retouched – other than incidentally for the procedural agreement19 – two other points have undergone renovations important enough to merit an analysis. The jurisprudence has carved out the exception of substantive equivalence (II) as well as altering the regulation concerning the ascertainment of the substantive content of the foreign law (III).

II.

The First Touch-Up: the Equivalence between the Applicable Law and the Law Applied

When the French judge applies the French conflict of laws rule, a decision that he has handed down based on a misunderstanding of his mission will nonetheless 14 Cass. 1re civ., 28 January 2003, M. Justin S. Colin v. Jaloc Associates et autres, in: Rev. crit. dr. int. pr. 2003.462, note ANCEL B., Les Petites Affiches 30 octobre 2003, p. 9, note H. C. 15 Cass. 1re civ., 26 May 1999, Société Mutuelle du Mans IARD v. M. Boëdec et autres, in: Rev. crit. dr. int. pr. 1999.707, note MUIR WATT H., Gazette du Palais 2 March 2000, n° 61-62, p. 39, obs NIBOYET M.-L., and ANCEL B./LEQUETTE Y. (note 1), n° 74-78. To determine whether the conflict rule is optional is a another issue: see DE BOER Th. M., ‘Facultative Choice of Law. The Procedural Status of Choice-of-Law Rules and Foreign Law’, Recueil des Cours 1996, t. 257, p. 227-427, p. 410. 16 Cass. 1re civ., 6 May 1997, Société Hannover international et autre v. M. R. Baranger et autre, in: Rev. crit. dr. int. pr. 1997.514, note FAUVARQUE-COSSON B., Clunet 1997.804, note BUREAU D., and ANCEL B./LEQUETTE Y. (note 1), n° 84. 17 Cass. 1re civ., 26 May 1999, Société Delta Draht Gmbh v. Société Crédit industriel d’Alsace et Lorraine et autres, in: Gazette du Palais 2 March 2000, n° 61-62, p. 39, obs. NIBOYET M.-L. 18 JÄNTERÄ-JAREBORG M. (note 2) p. 338-339. 19 As noted by Professors B. ANCEL and H. MUIR WATT and in their note on the Société Itraco and M.F. Aubin decisions (note 1), n° 22, the Société Itraco opinion seems implicitly to require that the procedural agreement result from an express agreement or be a clear and necessary result of the circumstances of the case at hand.

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French Diptych on Foreign Law escape censure when the solution offered by the law mistakenly applied is equivalent to the solution under the law that should have been applied. Such is the teaching of Barluschke v. Agent judiciaire du Trésor, an opinion rendered by the Première chambre civile of the Cour de cassation on 11 January 2005. The facts were as follows. A French court had placed a German citizen, at his request, under guardianship (‘curatelle’) pursuant to Article 512 of the French Civil Code. A subsequent judgment lifted the guardianship following an improvement of the German’s condition. The German then sued the Treasury for damages resulting from the imposition of the protective order and the management of his assets during the guardianship. Both the judges of first instance and the Cour d’appel de Paris, applying French law, rejected the claim, but not without noting, incidentally, that the protective order fell within the scope of application of § 1896 of the Bürgerliches Gesetzbuch. Before the Cour de cassation, the plaintiff argued that only German law, by virtue of its being the personal law of a German national, was applicable. In a decision of 11 January 2005, the Cour de cassation rejected the plaintiff’s request for reversal and remand. The Cour de cassation held that ‘the equivalence between the law applied and that which the conflict rule would designate as applicable – in that the facts as determined by the judge would have given rise to the same legal consequences under both of these laws – justifies the holding based on the application of a law other than the applicable law.’20 In other words, the fact that the concrete solutions resulting from the application of German and French law were identical was sufficient to justify the setting aside of the law applicable pursuant to the conflict of laws rule – i.e. German law – in favour of the law of another legal order – i.e. French law. It must be said that this solution is not entirely new.21 Prior decisions of the highest French court had refused to overturn decisions of lower courts in which was applied a law other than that which would ordinarily have been applicable.22 It 20 ‘L’équivalence entre la loi appliquée et celle désignée par la règle de conflit – en ce sens que la situation de fait constatée par le juge aurait les mêmes conséquences juridiques en vertu de ces deux lois – justifie la décision qui fait application d’une loi autre que la loi compétente’. 21 For a comparative view, see GEEROMS S., Foreign Law in Civil Litigation. A Comparative and Functional Analysis, Oxford: Oxford University Press, 2004, n° 2.20, 2.30 and 2.46. 22 Cass. 1re civ., 11 January 1988, Mme Cassan v. Prince Vin Thuy, in: Rev. crit. dr. int. pr. 1989.81, note GAUTIER P.-Y.; Cass. 1re civ., 16 February 1994, Ammache v. National Commercial Bank, in: Rev. crit. dr. int. pr. 1994.341, note MUIR WATT H.; Cass. 1re civ., 13 April 1999, Cie Royale belge v. Société Lilloise d’assurances et autres, in: Rev. crit. dr. int. pr. 1999.698, note ANCEL B. and MUIR WATT H., Clunet 2000.315, note FAUVARQUECOSSON B., Semaine juridique 2000.II.2061, note LÉGIER G., Dalloz 2000.268, note AGOSTINI E., Gazette du Palais 2000.42, obs. NIBOYET M.-L.; Cass. 1re civ., 3 April 2001, M. X v. Mme White et autres, in: Rev. crit. dr. int. pr. 2001.513, note MUIR WATT H., Gazette du Palais 13 December 2001, n° 346-347, p. 34 and the commentary of GROUD TH.A. ‘L’exception d’équivalence dans la méthode des conflits de lois’, p. 22 et seq. See also the original interpretation that H. Batiffol proposed of the decision rendered by the Chambre des

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Serge Billarant is evident from that jurisprudence that it matters little whether the law deemed to have been applied in error be French law or a foreign law.23 This equivalence functions in both cases, indiscriminately. Moreover, the notion of equivalence mooted requests for reversal and remand in cases where the court had abstained from determining the applicable law, to the extent that the potentially applicable laws would have given rise to the same result.24 Although the procedure of substantive equivalence is not a complete novelty, the decision rendered 11 January 2005 by the Cour de cassation offers an important and salutary refinement. Whereas some of the earlier opinions were satisfied with an abstract equivalence, determined on the basis of the substantive rules of French and foreign laws or the legal principles of French and foreign laws,25 the opinion discussed here clearly takes a concrete approach to equivalence: it is the results of the application of French and foreign laws to the facts of the case that are compared. When discerned in concreto, this equivalence of results saves a holding that has applied a law different from that designated by the conflict rule. The function assigned to equivalence can be seen as the direct expression of a conflict of laws theory,26 more specifically, of two partially related theories, both of which are tinted with unilateralism. It can, on the one hand, be linked to Professor Jessurun d’Oliveira’s theory of ‘anti-choice’.27 In a word, the French Cour de cassation, like the Hoge Raad, would not choose between the different laws that might be applicable before the conflict rule comes into play, where such different laws are substantially identical. One author has, indeed, noted with finesse that, in the various decisions that have escaped the thunder of the French supreme court, the lower court judge had chosen an inapplicable law rather than having abstained from choosing between different laws.28 This remark does not argue against a relationship between the present case and the doctrine of antichoice, as a direct consequence of the latter is that an appeal by the party arguing Requêtes of the Cour de cassation on 19 November 1941 (Bonnefous et Wormser v. Administration de l’Enregistrement, in: Sirey 1942.1.129, esp. p. 130, col. 1). 23 Cass. 1re civ., 11 January 1988; Cass. 1re civ., 13 April 1999 (note 22). 24 Cass. 1re civ., 16 février 1994; Cass. 1re. civ., 3 April 2001 (note 22). 25 See, for instance, Cass. 1re civ., 3 April 2001 (note 22). 26 GAUTIER P.-Y. (note 22), n° 3, p. 83. 27 De antikiesregel. Een paar aspekten van de behandeling van buitenlands recht in het burgerlijk proces, Amsterdam: Kluwer-Deventer 1971, p. 455-473 (abstract in French). Adopting this explanation but with a critical de lege ferenda eye, GAUTIER P.-Y. (note 22), n° 4-7; GAUDEMET-TALLON H., ‘Le pluralisme en droit international privé: richesses et faiblesses (Le funambule et l’arc-en-ciel)’, Recueil des cours 2005, t. 312, p. 9-488, n° 373; ID., ‘De nouvelles fonctions pour l’équivalence en droit international privé’, in: Le droit international privé: esprit et méthodes. Mélanges en l’honneur de Paul Lagarde, Paris: Dalloz, 2005, p. 303-325, spec. p. 310. 28 FAUVARQUE-COSSON B. (note 11), n° 386. Adde GODECHOT-PATRIS S. (note 1), p. 966.

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French Diptych on Foreign Law for the application of a law substantively identical to that designated by the lower court judge is barred for lack of standing.29 Better yet, as we have seen, several decisions of the Cour de cassation based on equivalence have saved a lower court’s decisions that had expressly avoided choosing between two bodies of law that they deemed to be identical. On the other hand, there is another possible explanation: the Cour de cassation’s reliance on substantive equivalence appears to correspond to Ehrenzweig’s hypothesis of ‘non-conflict’.30 Ehrenzweig, along with other authors, defends the theory that the lex fori should be applied directly without needlessly following the detour of the conflict rule analysis when the substantive laws in question, of which forum law is one, are identical. In other words, the existence of a close community of law renders useless any recourse to the conflict rule. It should be noted, in this respect that, contrary to what is usually noticed, this community of national laws paralyzes rather than assures the proper function of the conflict resolution mechanism. The analogy between the ‘non-conflict’ and the French solutions is, at first glance, striking.31 It is not, however, perfect. Substantive equivalence can operate in favor of the lex fori just as well as a foreign law. It follows, then, that the application of the forum law is not systematic; it is only one aspect of the solution. As a result, it cannot be claimed that this is another manifestation of lex forism, to whose charms French positive law has not always been indifferent. Consequently, and definitively, the doctrine of anti-choice appears only to offer a theoretical private international law foundation to the solution for which the Cour de cassation has opted. Nonetheless, it is a practical, or better yet, technical reason, rather than a theoretical basis, however pertinent it may be, that appears to govern the solution retained in the case on which this article comments.32 This reason resides in a consistent jurisprudence of the Cour de cassation, the finality of which is nothing 29

JESSURUN D’OLIVEIRA H.U. (note 27), p. 462-463. EHRENZWEIG A.A., A Treatise on the Conflict of Laws, St Paul: West Publishing Co., 1962, § 102, p. 310-311. The ‘non-conflict’ is notable in the event of identity of substantive content between the potentially applicable laws. At first glance, then, it coincides with the question envisioned by the French jurisprudence. Nonetheless, the ‘false problem’ hypothesis identified by CURRIE B. (Selected Essays on the Conflict of Laws, Durham: Duke University Press, 1963, p. 107, 109-110 and 727) is distinguishable from the ‘non-conflict’ theory (LEFLAR R.A., MCDOUGAL L.L. III, FELIX R.L., American Conflicts Law, 4th ed., Charlottesville: The Michie Company, 1986, § 92) and the French solution. The ‘false problem’ hypothesis presupposes an identity of the underlying interest or interests in the potentially applicable laws. This identity of interests, however, is of no concern to the Cour de cassation, who relies only on the equivalence of the solutions. 31 For a comparison, see GAUDEMET-TALLON H., ‘Le pluralisme’ (note 27), n° 373374 and ‘De nouvelles fonctions’ (note 27), p. 311; more cautiously, MUIR WATT H., on Cass. 1re civ., 16 February 1994 (note 22), p. 346. 32 See FAUVARQUE-COSSON B. (note 22), n° 9-13; ID., ‘Le juge français et le droit étranger’, in: Dalloz 2000.125, n° 23; LEGIER G. (note 22), n° 17; GODECHOT-PATRIS S. (note 1), p. 965 and 967. 30

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Serge Billarant but a certain procedural economy. In accordance with a fairly well established principle,33 a judgment justified under the rule of applicable law will not be overturned, even if the lower court judges have based their decision on another rule of law which was not appropriate to the case. In other words, to the extent that the decision rendered by application of an erroneous law causes no harm to the appellant, reversal of the lower court judge’s opinion is not justified. An old opinion of the highest court expressed this thought in excellent terms: ‘whatever error of law could be pleaded concerning the rationale of the decision being attacked, there is no possibility for cassation because the holding of the judgment conforms to the legal consequences of the facts of the case as determined by the Cour d’appel’.34 It is undoubtedly the temporal conflicts of laws that have offered the most significant illustrations of the principal of substantive equivalence. Many decisions have held that the moyen de cassation35 based on the improper application of the prior law or of the new law cannot succeed if the decisions required under the law that should have applied and under the law that the court actually applied in error were identical.36 This is the same process of procedural economy that we find in the case commented herein.37 That said, this process also has its antithesis in the private international law context: in a case in which only Belgian law was applicable, a previous opinion had held that a pourvoi en cassation to set aside the lower court’s judgment and order based on the violation of articles 972 and 973 of the Civil Code without specifying whether it referred to the French or Belgian Civil Code, could be heard because the holdings under both bodies of law would be substantively 33

BORE J., La cassation en matière civile, Paris: Dalloz, 1997, n° 2499; FAYE E., La Cour de cassation, 1903, reprint, Paris: La Mémoire du droit, 1999, p. 128. 34 ‘Quelque erreur de droit qui puisse être relevée dans les motifs de l’arrêt attaqué, il n’en résulte aucune ouverture à cassation, puisque le dispositif dudit arrêt est juridique et conforme aux conséquences légales de l’état des faits que le Cour d’appel a constaté’: Cass. Req., 19 December 1892, Mavroïdi et Banque impériale ottomane v. Compagnie d’assurances générales de Dresde et autres, in: Sirey 1895.1.225, note TISSIER A. Adde Cass. Req., 19 August 1834, Macusson v. Camonin et Parmentier, in: Sirey 1834.1.538; Cass. Req., 3 February 1864, Vassoudevamodely v. Sellatanny, in: Dalloz Périodique 1864.1.118. 35 Ed. note: Roughly equivalent to the legal error forming the grounds for appeal in the common law system. 36 Cass. com., 19 April 1961, in: Bulletin civil, III, n° 178; Cass. 1re civ., 30 juin 1965, Société immobilière Neuilly-Saint-Pierre v. Laporte, in: Bulletin civil, I, n° 439. This is not a new solution: see, e.g. Cass. Req., 1er December 1840, Lesage-Prieur v. Syndics Lepeltier, in: Dalloz Jurisprudence générale, t. 24, v° Faillite et banqueroute, n° 268, p. 113, note 2. 37 See in a similar vein, the premonitory developments – based on an Italian decision which seems to presage the French solution (Cass. Torino, 9 mai 1882, Magnan v. Auvrey, in: Monitore dei Tribunali 1882.860, in: Sirey 1882.4.33) – of LEWALD H., ‘Le contrôle des cours suprêmes sur l’application des lois étrangères’, Recueil des Cours 1936, t. 57 p. 205324, esp. p. 269-273.

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French Diptych on Foreign Law equivalent.38 The solution retained by the case that concerns us here could consequently be deemed to result from the technique of cassation; it seeks a purely pragmatic goal – that of procedural economy, in particular the eradication of dilatory appeals. This substantive equivalence, therefore, is not an avatar of the community of law – whose modern denomination is none other than ‘substantive equivalence’! – that nourishes the rule of bilateral conflict. The equivalence in question here is an autonomous, strictly procedural notion.39 And yet, it would be imprudent to limit it to the confines of procedure. Once imported into the conflict of laws, it is not without consequences in private international law. Firstly, admission of the procedural equivalence exception provides an additional confirmation of the regulatory nature of the rule of conflict. If one recognizes that the identity of solutions alone can justify the setting aside of the conflict of laws rule on the grounds that it engenders no legal consequence for the parties to the litigation, the only purpose of the abandoned conflict rule can be the assumption of jurisdiction over purely private interests. Inversely, if the conflict of laws rule’s purpose is to allocate the legislative competences of the various States among them, the substantive equivalence exception would have no place, as its application would contradict the sovereignty of those States.40 It may be feared, however, that the privatist concept adopted in the holding of 11 January 2005 has been exceeded, in view of the recent evolution in private international law.41 The allocation concept has not remained as ‘sterile’ as some authors have claimed.42 The growing tendency to take the interests of public law into account in the law of conflicts might lead to the conclusion that substantive equivalence should not be called into play in all types of litigation. It is doubtless reasonable de lege ferenda to confine its application to disputes concerning only private interests. In the present case, the identity of solutions could allow the Cour de cassation not to reverse a decision referred, to the extent that the organization of the guardianship of an adult does not concern, at least in principle, a state interest.43

38

Cass. civ., 12 February 1879, Duhamel v. Frélier et autres, in: Sirey 1879.1.121, Clunet 1881.152. 39 Compare GODECHOT-PATRIS S. (note 1), p. 959. 40 Accord, ANCEL B./MUIR WATT H. (note 22), n° 6. 41 See, e.g. MUIR WATT H., ‘Droit public et droit privé dans les rapports internationaux (Vers la publicisation des conflits de lois ?)’, in: Archives de la philosophie du droit, t. 41, Le privé et le public, p. 207-214, esp. n° 11-12, and ‘Aspects économiques du droit international privé (Réflexions sur l’impact de la globalisation économique sur les fondements des conflits de lois et de juridictions)’, Recueil des Cours 2004, t. 307 p. 25-383, esp. n° 181. 42 VANDER ELST R., ‘Conflits de lois et conflits de souverainetés’, in: Revue de droit international et de droit comparé 1954.85, n° 5. 43 On this point see LEQUETTE Y., Protection familiale et protection étatique des incapables, Paris: Dalloz, 1976, n° 262 et 395-397.

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Serge Billarant Secondly, recourse to substantive equivalence modifies the role of the judge in the application of the conflict rule, both for waivable and non-waivable rights, as in the present case. By establishing the identity of substantive solutions, the judge has the ability to exonerate himself in advance in connection with any lacunae in the application of the conflict of laws rule and, as the case may be, in the proof of the foreign law. As a result, if the judge provides sufficient arguments to justify his decision concerning an equivalence count,44 knowing that the Cour de cassation will not review the interpretation of the foreign law,45 his judgment will not be reversed to the extent that the final holding will not change, regardless of which law is applied. Although this procedure may weaken the authority of the conflict rule, the damage should not be exaggerated. On the one hand, the application of the equivalence exception presupposes that the judge rise to the challenge of establishing the similarity of the solutions that are imposed under French and foreign law.46 This is a perilous exercise.47 It is therefore quite probable that the judge deciding the case on its merits will try to avoid it whenever possible. Moreover, the small number of opinions in which the equivalence exception has been applied testifies to this trend. On the other hand, given that the conflict rule serves a regulatory function with respect to private interests, it is not overly shocking that the law applied not be the designated law where the solution is similar in both cases, with the same benefit for the parties – a legal and an economical benefit. More to the point, in view of the courts’ practice, the forum law will be applied more correctly than the foreign law.48 Finally, only the prestige of the bilateral conflict rule comes out slightly battered – and that, to the advantage of procedural economy and a substantive justice which remains unchanged. 44

The French Cour de cassation, in addition to verifying that the foreign law is not distorted, verifies the grounds in the sense that it requires that the judges determine precisely the foreign law rules that they apply and explain their interpretation of such rules (see AUDIT B., Droit international privé, 4th ed., Paris: Economica, 2006, n° 283). 45 AUDIT B. (note 44), n° 281. 46 At the very least, only when the law incorrectly applied is the French law, because if the law applied in error is the foreign law, the equivalence can be established directly by the Cour de cassation since that court is requested to find that the application of French law – the terms of which it undoubtedly knows – would have given a similar result. See DE VAREILLES-SOMMIERES P., ‘Glossaire de l’application judiciaire de la loi étrangère’, Etudes offertes à J. Normand. Justice et droits fondamentaux, Paris: Litec, 2003, p. 487-505, esp. p. 495-496. 47 GAUTIER P.-Y. (note 22), n° 6; GAUDEMET-TALLON H., ‘De nouvelles fonctions’ (note 27), p. 307; JORGE J., ‘La loi étrangère devant le juge du fond: accord procédural et équivalence des lois’, in: Estudos em homenagem à Professor Doutora Isabel de Magalhães Collaço, vol. I, Coimbra: Almedina, 2002, p. 217-229, esp. p. 227. See for instance Cass. 1re civ., 23 January 2007, Caisse d’épargne de Sarrebruck v. SCI de l’Uzège, pourvoi n° 0313422. 48 JÄNTERÄ-JAREBORG M. (note 2), p. 312-313. For older examples, see DARRAS A., ‘De la connaissance, de l’application et de la preuve de la loi étrangère’, in: Clunet 1901.209, 442 and 672, esp. n° 7.

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III. The Second Touch-Up: the Ascertainment of Foreign Law Until recently, the notion of equivalence, in a form other than that which has just been described, was also found at another stage of the reasoning: that of establishing the terms of the foreign law applicable to the case. The solution differed depending on the waivable or non-waivable nature of the subject of the dispute. When the rights in dispute were non-waivable, it was the duty of the French judge to determine the terms of the foreign law.49 When the disputed rights were waivable, however, the positions of two chambers of the Cour de cassation diverged.50 For the Chambre commerciale, the judge was required to implement the foreign law provided that the party arguing for the application of the foreign law offered proof of a substantive difference between the French law and the foreign law, failing which, the French law was applied by virtue of its subsidiary authority.51 In other words, absent proof to the contrary, French law and foreign law were presumed to be equivalent.52 As for the Première chambre civile, in this context, it ultimately repudiated the distinction between waivable and non-waivable rights, holding that in any event the judge was required to determine the terms of the designated foreign law.53 This divergence between the two chambers of the Cour de cassation no longer exists. The cases M.F. Aubin v. M. H. Bonal et Société MFP of the Première chambre civile and Société Itraco v. Fenwick Shipping Services Ltd et autre of the Chambre commerciale54 sealed the reconciliation of the jurisprudence of the two chambers. These cases held that ‘it falls to the French judge who deems a foreign Cass. 1re civ., 1er July 1997, M. Driss Abdou v. Mme B., in: Rev. crit. dr. int. pr. 1998.60, note MAYER P., Dalloz 1999.275, note MASSIP J. 50 Divergence whose scope is uncertain, in accordance with part of the doctrine: MAYER P./HEUZE V., Droit international privé, 8th ed., Paris: Montchrestien, 2004, n° 186; JOBARD-BACHELLIER M.-N., ‘La répartition des tâches entre juge et parties dans l’établissement du contenu de la loi étrangère’, in: Gazette du Palais 25-26 June 2003, n° 177, p. 1625-1628, esp. p. 1628. 51 Cass. com., 16 November 1993, Société Amerford et autre v. Compagnie Air France et autres, in: Rev. crit. dr. int. pr. 1994.332, note LAGARDE P., Clunet 1994.98, note DONNIER J.-B. 52 Close to English law: CHESHIRE G.C., Private International Law, Oxford: Clarendon Press, 1935, p. 69. 53 Cass. 1re civ., 18 September 2002, Société D.&J. Sporting Ltd v. Société Orchape SA, in: Rev. crit. dr. int. pr. 2003.86, note MUIR WATT H., and the commentary of LARDEUX G., ‘La reconnaissance du statut de règle de droit à la règle de conflit de lois’, in: Dalloz 2003.1513. 54 Note 1. Since then, see Cass. 1re civ., 6 December 2005, Société Dynargie v. Société Do It, in: Bulletin civil, 2005, I, n° 461, p. 389; Cass. 1re civ., 23 January 2007, Griguer v. Société Pet Technologies Ltd, pourvoi n° 04-16018. 49

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Serge Billarant law to be applicable to establish, either sua sponte or upon the request of the party invoking the foreign law, the provisions of such law, with the help of the parties or personally, if necessary, and to respond to the disputed question with a solution in conformity with the foreign positive law’.55 All reference to the waivable or nonwaivable nature of the rights has disappeared. Moreover, if the disputed rights were waivable in the Société Itraco case – concerning maritime transport under a bill of lading – they were non-waivable in the M.F. Aubin case – based on the weight of proof of a notary’s act. This clearly shows that, since the solution is the same under both hypotheses, the criterion of the waivable nature of rights is inoperative. As a result, the French judge must, in any case, establish the terms of the foreign law designated by the conflict of laws rule: if necessary, he can solicit the assistance of the parties, which will certainly be quite customary in practice.56 Such is the French positive law, even if two subsequent cases might lead one to believe, after a quick reading, that the Cour de cassation has come back to the criterion of the waivable nature of the contested rights. These two decisions57 have held that the judge must apply the conflict rule sua sponte and determine the terms of the foreign law applicable to non-waivable rights. Nonetheless, the recourse to the criterion of the alienability of the disputed rights is limited in reality to the question of applicability of the conflict of laws rule. The question of proof of the foreign law is mentioned only incidentally. The Société Itraco and M.F. Aubin cases are therefore still relevant today. The eviction of the criterion of the waivable nature of the disputed rights shows that the two panels of the diptych – the application of the conflict rule and the ascertainment of foreign law – benefit from a certain autonomy each with respect to the other. This autonomy is clearly relative, to the extent that the question of establishment of the terms of the foreign law proceeds from the response to the question of applicability of the conflict of laws rule. The result, from a technical point of view, is that a certain degree of coherence must be maintained. It is in this way that an author have correctly noted that the applicability sua sponte of the conflict of laws rule for non-waivable disputes required that the burden of determining the terms of the foreign law lies with the judge and not with the parties, otherwise the parties would have been able to prevent the foreign law from applying by failing to inquire about the terms of such law.58 The same was true for a 55 ‘Qu’il incombe au juge français qui reconnaît applicable un droit étranger, d’en rechercher, soit d’office soit à la demande d’une partie qui l’invoque, la teneur, avec le concours des parties et personnellement s’il y a lieu, et de donner à la question litigieuse une solution conforme au droit positif étranger’. 56 For instance, see Cass. 1re civ., 30 January 2007, M. X. v. Société Universal City Studios Inc. et autres, pourvoi n° 03-12354. 57 Cass. 1re civ., 7 June 2006, M. Z. X. v. Mme Y., pourvoi n° 04-17225; 20 June 2006, Mme X. v. M. Y., pourvoi n° 04-19636. 58 LEQUETTE Y., ‘L’abandon de la jurisprudence Bisbal (à propos des arrêts de la Première chambre civile des 11 et 18 octobre 1988)’, in: Rev. crit. dr. int. pr. 1989.277, n° 53, p. 336.

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French Diptych on Foreign Law procedural agreement, whose usefulness was reduced when, in a litigation concerning waivable rights, the party bearing the burden of proving the terms of the foreign law could simply remain passive.59 Nonetheless, the two questions remain distinct, as the cases show and which, in addition, is implicitly indicated by the grammatical situation of the parenthetical ‘either sua sponte or upon the request of the party invoking’ after the verb ‘establish’ – with respect to knowledge of the foreign law – and not after the phrase ‘who deems a foreign law to be applicable’ – with respect to the applicability of the conflict rule. If we know in what way the two panels of the diptych are autonomous (criterion of the waivable nature of the dispute) we can legitimately wonder about the reasons for such autonomy, traditionally affirmed60 but cast into doubt by the jurisprudence prior to the Société Itraco and M.F. Aubin cases. It would appear that the justification lies in the bilateral character of the conflict of laws rule which, as is often the case, has, rightly or wrongly, served as a paradigm. The bilateral nature of the conflict of laws rule implies a distinction between the conflict rule and the foreign substantive law that it designates, as opposed to the unilateral rule indissolubly linked to the substantive rules whose international applicability such rule determines. As a result, two stages must be distinguished, that of the application of the bilateral rule and that of the application of the foreign law. The object of the application of the conflict rule problem is a norm enacted as part of the legal order of the forum; it must be determined whether the judge must apply the rule sua sponte as is the case for the rules of internal law. On this point, the conflict rule will not always be subject to a regime similar to that of the rules of internal law. Thus, in French internal law, the judge must apply the rules of law (article 12, paragraph 1, of the New Code of Civil Procedure), unless the parties have otherwise agreed in a procedural agreement, to the extent that the rights are waivable (article 12, paragraph 3, of the New Code of Civil Procedure). The transcription of these rules relating to the application of the law has given rise to a significant adaptation, as the criterion of the waivable nature of the disputed rights has come so far as to direct even the application of the conflict rule by the judge: the judge must apply the conflict rule when the rights in question are nonwaivable and, when the rights are waivable, he has the possibility, but not the obligation, to apply the conflict rule.61 The determination of the foreign law presents a different problem. The object is no longer a norm of the forum, the conflict rule, but rather a rule enacted as part of the foreign legal order whose application has been confirmed – subject to 59

FAUVARQUE-COSSON B. (note 11), n° 287. For instance, PONSARD A., ‘Loi étrangère’, in: Encyclopédie Dalloz Droit international, 1st ed., t. II, n° 36 and 59. For a contrary view, see MAYER P., ‘L’office du juge dans le règlement des conflits de lois’, in: Travaux du Comité français de droit international privé 1975-1977, p. 233-268, esp. p. 242. 61 A power that becomes an obligation if one of the parties has pleaded in detail his interest in the applicability of the foreign law to the extent that it differs from the French law (see supra, Part I). 60

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Serge Billarant the private international law exception for public policy – in that it is the legal consequence of the conflict of laws rule applied by the forum judge. As soon as the norm applied is a foreign norm, more generally, that such norm does not issue directly from the authorities of the forum State, such as would be the case for a customary or contractual norm, the question of the determination of its terms can legitimately be posed. Adequate procedures must be established for this undertaking and it must be determined who – the parties or the judge – is to implement it. In this regard, the rules of proof, of facts or of legal acts, might possibly serve as a model. But in that case, just as in the internal law, in which the rules of proof have little to do with the rules that govern the application by the judge of the rule of law, the rules that govern the ascertainment of the terms of the foreign law are different from the rules relating to the applicability of the conflict rule. In particular, the rules of proof in the internal law do not recognize the distinction between waivable and non-waivable rights. As a result, the abandon – validated by the two decisions discussed – of the criterion drawn from the waivable nature of the disputed right is in no way inconsistent. If, indeed, the pertinence of this criterion can be defended in the context of the application of the conflict of laws rule, its position seems much weaker in the context of the proof of the terms of the foreign law. The choice, made by both the Société Itraco and the M.F. Aubin cases not to take into consideration the nature of the disputed rights in allocating the roles as among the parties and the judge with respect to the determination of the terms of the foreign law, is evidence of a particular conception of the conflict rule. The French judge’s obligation in all circumstances to establish the terms of the foreign law, tempers the privatist character of the conflict rule, notably illustrated by the admission of the equivalence exception. The power to determine the terms of the foreign law, at least concerning the rights of which the parties have free disposal, no longer comes under the jurisdiction of the parties – whose minimal activity or ignorance62 does not henceforth lead to the supplanting of the conflict of laws. Moreover, the sanction for failure to establish the terms of the foreign law can no longer be the rejection of the petition – a procedural sanction – but rather the application of the law of the forum as a subsidiary authority63 – a private international law remedy. In other words, as Professors H. Muir Watt and B. Ancel64 have demonstrated, the purely private interests of the parties are partially supplanted by the consideration of specifically international interests.65 Furthermore, we shift partially from a monistic logic, evaluating the situation only from the point of view

62 More than the bad faith against which the previous jurisprudence fought by requiring the party arguing for the application of the foreign law to prove the difference between such law and the lex fori. 63 See ANCEL B./LEQUETTE Y. (note 1), n° 32-34, § 17. 64 See above (note 1), n° 9-11. 65 Which the exigency of a procedural agreement which does not result exclusively from the concomitant silence of the parties also tends to indicate: see above (note 19).

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French Diptych on Foreign Law of the forum, to a pluralist logic,66 according to which we accord greater consideration to the foreign law – law which cannot be set aside as a result of a voluntary or involuntary act by the parties to the litigation. This brings us back to the principle affirmed by the Consorts Coucke v. Mme Hoste et autres case,67 pursuant to which the foreign law is a rule of law, but a rule of law that preserves its particularity to the extent that it is a foreign rule.

IV. Conclusion The three decisions presented in this article have retouched, slightly or more notably, the diptych of foreign law. The first, the Barluschke v. Agent judiciaire du Trésor case, put the final touch on the procedural exception known as the exception of substantive equivalence, which, we have seen, is no more than an illustration of the more general practice of procedural time-saving: the substantive equivalence between the law applied in error and the law ordinarily designated must be evaluated in concreto. The two subsequent cases, M.F. Aubin v. M.H. Bonal et société MFP and Société Itraco v. Fenwick Shipping Services et autres, mark an important stage in the evolution of the determination of the terms of the foreign law regime by holding that it falls to the French court to establish the content of the foreign law, with the collaboration of the parties, if it chooses to solicit their assistance. Having noted these modifications, it is clearly useful to propose a schematic description of the diptych.68

A. – When the Disputed Rights Are Non-Waivable : 1. –

The judge must apply, if necessary sua sponte, the conflict of laws rule; in the event of an error concerning the applicable law, the exception of substantive equivalence may apply.

2. –

The judge must determine the terms of the foreign law, if need be by requesting the assistance of the parties.

66

For which the fact that the bilateralist method would offer it a better environment within which to blossom has not been demonstrated: see BODEN D., L’ordre public: limite et condition de la tolérance, thesis Paris I, 2002, vol. II, n° 425-523. 67 See above (note 4). 68 See the schematic description of Professors ANCEL B. and MUIR WATT H. (note 1), p. 658-659.

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Serge Billarant 3. –

The parties cannot enter into a procedural agreement concerning the applicable law.

B. – When the Disputed Rights Are Waivable: 1. –

If neither of the parties has pleaded in a detailed manner the applicable law, that is to say, has presented arguments concerning the interest of applying such law in the context of his claims in the litigation: 1.a) – The judge can apply the conflict of laws rule, but he is not bound to do so; in the event of error concerning the applicable law, the substantive equivalence exception may apply. 2.b) – If the judge decides sua sponte to apply the conflict rule, he must determine the terms of the foreign law, if necessary with the assistance of the parties.

2. –

If one of the parties has made a detailed pleading concerning the law, by demonstrating his interest in the application of such law with respect to his claims: 2.a) – The judge must apply the conflict of laws rule; in the event of error concerning the applicable law, the substantive equivalence exception may apply. 2.b) – The judge must determine the terms of the foreign law, if necessary with the assistance of the parties.

3. –

The parties can sign a procedural agreement – but which cannot be only the result of their respective silences concerning the question of applicable law – and choose to subject this specific litigation to the forum law or to a foreign law; such a procedural agreement binds the judge.

This is the photograph that we can offer of the current foreign law regime in the French private international law jurisprudence. It must be noted, however, that this photograph is valid only for the bilateral conflict rule. The image is, or should be, different, when the rule is a unilateral private international rule69 or a rule which

69 See e.g. Cass. 1re civ., 25 May 1987, M. X. v. M. Y., in: Rev. crit. dr. int. pr. 1988.60, note LEQUETTE Y., Clunet 1987.927, note GAUDEMET-TALLON H., Semaine juridique 1988.II.20976, note COURBE P.

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French Diptych on Foreign Law takes into consideration another law.70 These rules merit opinions which are as pedagogical as those which the Cour de cassation has offered in the three cases examined in this paper.

See e.g., Cass. 1re civ., 10 March 1993, Mme. T. v. M. A., in: Rev. crit. dr. int. pr. 1993.456, note ANCEL B. 70

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LAW RELATING TO INTERNATIONAL COMMERCIAL ARBITRATION IN INDIA Nidhi GUPTA∗ and Rajnish KUMAR SINGH∗∗

I. II. III. IV.

V. VI. VII. VIII.

IX. X.

International Commercial Arbitration: Definition Appointment of Arbitrators Termination of Mandate of Arbitrator Jurisdiction of the Arbitral Tribunal A. Competence of Arbitrators B. Competence of Arbitral Tribunal to Rule on Its Own Jurisdiction The Conduct of Arbitral Proceedings Stay of Suits Interim Measures Enforcement of Awards A. Enforcement of Domestic Awards B. Enforcement of Foreign Awards 1. Enforcement of Convention Awards 2. Enforcement of Non-Convention Awards Choice of Law and Party Autonomy Conclusion

Alternative Dispute Resolution (‘ADR’) methods have gradually come to be preferred over litigation to resolve commercial as well as non-commercial disputes. While domestic arbitration, considered as the most appropriate substitute to litigation, always received legislative attention, it is only recently that the Indian legislature has addressed international commercial arbitration. This article aims to highlight some important features of the Indian law relating to international commercial arbitration. The Arbitration and Conciliation Act of 1996 (hereinafter the ‘Act’) is the latest in a series of legislative attempts to modernize and reform Indian law on arbitration and alternative dispute resolution. Accepting the United Nations’ recommendation, aimed at achieving unification and harmonization of the law of arbitration in different jurisdictions, the 1996 Act gives due consideration to the Model Law adopted by the United Nations Commission on International Trade *

Assistant Professor, National Law University, Jodhpur, India. Lecturer, Faculty of Law, Banaras Hindu University, Varanasi, India.

**

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Printed in Germany

Nidhi Gupta and Rajnish Kumar Singh Law (UNCITRAL) on June 21, 1985.1 As a response to the changing nature of the world of commerce in the wake of globalization, the Act aims to serve the main requirements of international business: expeditious disposal of disputes, flexible and informal procedures for dispute resolution, party autonomy, specialized and expert adjudicators, neutrality and equality in the choice of law. Making a significant departure from the previous law, this Act provides a specific framework for international commercial arbitration. It incorporates provisions aimed at promoting institutional arbitration.2 The Act also aims to simplify the law relating to arbitration, by consolidating and amending the laws relating to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards.3

I.

International Commercial Arbitration: Definition

There are voices from different quarters which advocate the use of different laws for dealing with domestic arbitration and international arbitration. In India, however, the same set of provisions, that is part I of the 1996 Act, govern both domestic and international arbitration, provided that the arbitration takes place in India. It is one of the Act’s distinctive features that it gives a clear definition of international commercial4 arbitration as well as of domestic and foreign awards. According to this Act, it is only the parties’ nature which makes arbitration either domestic or international. Section 2(1)(f) provides that international commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India. In addition, at least one of the parties must meet one of the following requirements: (a) an individual who is a national of, or habitually resides in, any country other than India; (b) a corporate body which is incorporated in any country other than India; (c) a company, association, or body of individuals whose 1

Preamble, The Arbitration and Conciliation Act, 1996. There was no specific reference to institutional arbitration in the earlier law, The Indian Arbitration Act, 1940, though such arbitration has long been established and extensively resorted to. The 1996 Act expressly recognizes the role of arbitral institutions and encourages parties to dispute to resort to institutional arbitration. Section 6 of the Act provides that the parties or the arbitral tribunal, with the consent of the parties, may arrange for administrative assistance of a suitable institution. 3 The 1996 Act replaces three statutes: The Indian Arbitration Act, 1940; The Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. 4 The Act does not offer any definition of the word, ‘commercial.’ It has been held by the Supreme Court that the expression ‘commercial’ should be construed broadly having regard to the manifold activities which are integral part of international trade today, R.M. Investment and Trading Co. Pvt. Ltd. v. Boeing Co., in: AIR 1994 SC 1136. 2

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International Commercial Arbitration in India central management and control is exercised in any country other than India; or (d) the Government of a foreign country. Section 2(2) provides that Part I of the Act applies to all arbitrations5 where the place of arbitration is in India.6 According to section 2(7) an arbitral award made under Part I of the Act shall be considered a domestic award. These provisions’ combined effect is that international commercial arbitration may give rise to domestic awards and will accordingly be governed by the Act’s enforcement and finality provisions.7 Foreign awards arise from arbitration that takes place in a country where one of the two international conventions relating to foreign arbitral awards, to which India is a party, apply.

II.

Appointment of Arbitrators

Like the Model Law, the Act follows the following three-tier scheme: giving the parties freedom to decide upon their own tribunal,8 offering provisions in case parties, for any reason, fail to make explicit choices,9 and on third tier, offering the possibility of judicial involvement when there is a disagreement between the parties.10 Aimed at promoting party autonomy and minimal court intervention,11 the Act gives the parties freedom to control both the number and choice of arbitrators.12 Deviating from the Model Law in this particular aspect, section 10 of the Act provides that the parties are free to determine the number of arbitrators, provided that

5

Section 2(2) is in conformity with the broad principle applicable to international commercial arbitrations, that arbitration is governed by the law of the country where it is held, namely, the seat or forum of arbitration. 6 The Supreme Court, after a series of diverging opinions, has held that Part I of the Act can be applicable to arbitrations that take place out of India, Bhatia International v. Bulk Trading, in: AIR 2002 SC 1432. 7 Sections 34, 35 and 36. 8 Section 11(2). 9 Section 11(3). 10 Section 11(4), (5),(6). 11 ‘The court’s role is limited to cases where either the arbitral process needs assistance, or where there has been, or is likely to be, a clear denial of justice’, AHMADI A.M., ‘International Arbitration: Position in India and UK’, in: SHEFFIELD W. and RAO P.C. (eds.), Alternative Dispute Resolution, New Delhi 2004, pp. 1-12 (2). 12 The Indian law does not lay down any specific qualifications for arbitrators. Every person who is of age and of sound mind can be appointed as an arbitrator. Also, according to section 11(1) parties to arbitration are free to appoint a person of any nationality as an arbitrator.

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Nidhi Gupta and Rajnish Kumar Singh the number is not even.13 If the arbitration agreement is silent about the number of arbitrators, section 10(2) provides that the arbitral tribunal is to consist of a sole arbitrator. Section 11, which provides for the appointment of arbitrators, aims to strike a balance between party autonomy, minimal court intervention, and meaningful court intervention. Therefore, while this section gives the parties freedom in choosing the arbitrators, it is the highest judicial authority, that is, either Chief Justice of India14 or the person or institute designated by him, whose intervention is sought for appointment of arbitrators in cases of international commercial arbitration.15 Subsection 7 of this section fulfills the requirement of expeditious disposal 13

Although the Act requires an uneven number of arbitrators, the Supreme Court has held that an agreement for appointment of only two arbitrators does not become void for that reason alone, Narayan Prasad Lohia v. Nikunj Kumar Lohia, (2003)2 SCC 251. It was held that in case an agreement is for the appointment of two arbitrators, the appointed arbitrators can appoint the third arbitrator. In this case, the respondent did not object to the validity of the tribunal and presented his case before the two member tribunal. He was not allowed to object to the award on that ground alone. There was waiver of the right to object. The Supreme Court held that section 10 was a derogable provision, and respondents, not having raised any objection to the composition of the arbitral tribunal, must be deemed to have waived their right to object. Some commentators do not favor this stand of the court. For example, Kwatra states, ‘this is tantamount to judicial legislation as it wipes out the proviso in section 10(1), which in imperative language states that such number shall not be an even number’, KWATRA G.K., Arbitration and Conciliation Law of India, Indian Council of Arbitration, New Delhi 2004, p.16. 14 While for the purposes of domestic arbitration, reference to the chief justice is to be read as Chief Justice of the High Court, section 11(12) (a) says that where the matters referred to in sub-section (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to ‘Chief Justice’ in those sections shall be construed as a reference to the ‘Chief Justice of India.’ 15 Since extent of the role of courts vis-à-vis arbitration proceedings has been a dominant concern in the country, there has been controversy regarding the nature of power that is to be exercised by the Chief Justice in making the appointments. For a long time, the courts held the view that the power of appointment is an administrative power. However, recently, in the case of S.B.P. and Co. v. Patel Engineering Ltd. (2005)8 SCC 618, a seven judge bench of the Supreme Court held that it is judicial power. The court said, ‘it appears to us that while functioning under Section 11(6) of the Act, a Chief Justice or the person or institution designated by him, is bound to decide whether he has jurisdiction, whether there is an arbitration agreement, whether the applicant before him, is a party, whether the conditions for exercise of the power have been fulfilled and if an arbitrator is to be appointed, who is the fit person, in terms of the provision. Section 11(7) makes his decision on the matters entrusted to him, final.’ It was further held, ‘we are inclined to the view that the decision of the Chief Justice on the issue of jurisdiction and the existence of a valid arbitration agreement would be binding on the parties when the matter goes to the arbitral tribunal and at subsequent stages of the proceeding except in an appeal in the Supreme Court in the case of the decision being by the Chief Justice of the High Court or by a Judge of the High Court designated by him.’ Concerning the powers of other institutions that are to be designated by the Chief Justice for constituting the arbitral tribunal, the majority mentioned, ‘one of the objects of conferring power on the highest judicial authority in the State or in the

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International Commercial Arbitration in India of cases as it provides that the decision of the Chief Justice or the person or institution designated by him is final. Section 11 of the Act gives the parties freedom over the procedure to be adopted for appointing an arbitrator or arbitrators. Taking care of the situation where parties may fail to make any such agreement, sub-section (3) and (5) prescribe the default procedure for the appointment of arbitrators in an arbitration with three arbitrators or with a sole arbitrator respectively. Subsection (3) provides that in an arbitration with three arbitrators, each party shall appoint one arbitrator. It is then the two appointed arbitrators who shall appoint the third arbitrator, who shall also act as the presiding arbitrator. While prescribing the default procedure, the Act also attempts to ensure that the parties’ disagreement or lack of a decision at any stage does not become a reason for stalling the arbitration proceedings. Subsection (4), which applies in situations where three arbitrators are required, allows for court intervention in two different circumstances: (1) where a party fails to appoint an arbitrator within 30 days of another party’s request; or (2) when the two appointed arbitrators fail to agree on a third arbitrator within 30 days of their appointment. In both instances, the Chief Justice of India, or any person or institution that he designates, shall make the appointment upon a party’s request. Sub-section 6 controls the situation where one or both of the parties fail to abide by the agreed upon procedure for the appointment of arbitrators. It accords the Chief Justice of India, or his appointee (which can be any person or an institution), the authority to take all necessary measures in the directing the appointment of arbitrator in three situations: (1) where a party fails to act as required under that procedure, or (2) where either the parties or the two appointed arbitrators fail to reach the agreement expected of them under that procedure or (3) where a person, country for constituting the arbitral tribunal, is to ensure credibility in the entire arbitration process and looked at from that point of view, it is difficult to accept the contention that the Chief Justice could designate a non-judicial body like the Chamber of Commerce to decide on the existence of an arbitration agreement and so on, which are decisions, normally, judicial or quasi judicial in nature. Where a Chief Justice designates not a Judge, but another person or an institution to nominate an arbitral tribunal, that can be done only after questions as to jurisdiction, existence of the agreement and the like, are decided first by him or his nominee Judge and what is to be left to be done is only to nominate the members for constituting the arbitral tribunal.’ The Supreme Court held in this case that decision of the Chief Justice will be ‘final,’ implying the absence of any opportunity to challenge this decision. Supreme Court has clarified the expression ‘final’ in a recent case, decided on July 11, 2006, Jain Studios Limited through its President v. Shin Satellite Public Co. Ltd, AIR 2006 SC 2682, held that review of the order passed by Chief Justice or his nominee is possible under Article 137 of the Constitution of India. Article 137 of the Constitution says, ‘Subject to the provisions of any law made by Parliament or any rules made under Article 145, the Supreme Court shall have power to review any judgment pronounced or order made by it.’ The court mentioned, ‘[a]n order passed by the Chief Justice of India or his nominee under Section 11(6) of the Act is indeed an “order” within the meaning of Article 137 of the Constitution and is subject to review under the aforesaid provision.’

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Nidhi Gupta and Rajnish Kumar Singh including an institution, fails to perform any function to which they have been entrusted under that procedure.

III. Termination of Mandate of Arbitrator The 1996 Act makes a substantial departure from the repealed 1940 Act by taking away the court’s discretion to revoke the authority of an arbitrator.16 Keeping in mind the objective of ‘party autonomy’ in arbitration matters, the parties are entitled to agree to terminate the arbitrator’s authority. Simultaneously, this new Act also specifies the grounds by which either party can revoke an arbitrator’s authority when there is no agreement in place. Section 14 of the Act provides that the mandate of an arbitrator shall terminate under the following circumstances: (a) he becomes either de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to terminate his mandate. Section 14 provides the court a role by establishing the possibility for terminating an arbitrator’s mandate through a court decision ‘if a controversy remains as to his inability to act de facto or de jure or about the failure to act without undue delay. This authorization to resort to the court is only available when the parties have not agreed otherwise. Section 15 provides two additional grounds on which the mandate of an arbitrator terminates. One is the arbitrator’s withdrawal from office for any reason, the other is that the parties have either by their agreement, or in pursuance there of, terminated his mandate.17

16 Section 14 of the 1996 Act replaces section 11 of the 1940 Act. The expression ‘termination of mandate’ has been used instead of ‘removal’ which was used in the 1940 Act. 17 Section 15 reads as: (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate (a) where he withdraws from office for any reason; or (b) by or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.

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IV. Jurisdiction of the Arbitral Tribunal Aimed at giving the tribunal chosen by the parties an increased scope of authority, the Act, following the Model Law, incorporates provisions which give the arbitral tribunal jurisdiction with respect to two important aspects, deciding its own competence as well as that of the individual arbitrators.18

A.

Competence of Arbitrators

Fair and impartial disposition of disputes is the key to the success of the arbitration procedure. In order to ensure that arbitration remains fair, section 12 of the Act imposes a duty on the arbitrators to disclose, in writing, any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.19 Moreover, with the aim of according maximum satisfaction to the parties as to the arbitrators’ impartiality, the parties have also been given the freedom to agree on a procedure for challenging an arbitrator.20 While the arbitrators’ fairness and impartiality is an important concern for the legislators, the Act makes a significant departure, not only from the earlier law but also from the Model Law, in giving power to the arbitral tribunal itself to determine its arbitrators’ fairness and impartiality.21 Subsection 2 of section 13 provides that in case the parties have not agreed upon the procedure for challenging an arbitrator, a party who intends to challenge the arbitrator shall send a written statement of the reasons for challenge to the arbitral tribunal. This challenge shall be made within the fifteen days of the constitution of the arbitral tribunal or after becoming aware of any circumstances that give rise to justifiable doubts as to impartiality or independence of the arbitrator, or that the arbitrator does not possess the qualifications agreed to by the parties. The 1996 Act differs from the Model Law because it blocks the possibility of immediate court control upon the failure of a party’s challenge of an arbitrator. With a view to prevent dilatory tactics, subsection 4 of section 13 further provides that if a challenge pursuant to either a procedure agreed upon by the parties or under sub-section (2) is not successful, the arbitral tribunal shall continue the proceedings and make an award. In other words, the unsuccessful party does not have an opportunity to immediately challenge the appointment when its challenge before the arbitrator has been unsuccessful. The Act requires such a party to wait to lodge the challenge after the arbitral award has been made. Giving preference to con18

AHMADI A.M. (note 11), pp. 1-12. The appointment of an arbitrator may be challenged only if, (a) circumstances exist that give rise to justifiable doubts about his independence or impartiality; or (b) he does not possess the qualifications agreed to by the parties. 20 Section 13(1). 21 VENUGOPAL K.K., Justice R.S. Bachawat’s Law of Arbitration and Conciliation, 4th ed., Nagpur 2005, p. 635. 19

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Nidhi Gupta and Rajnish Kumar Singh tinuation of arbitral proceedings over immediate court control, subsection 5 of section 13 gives the party challenging the arbitrator the opportunity to apply to have the award set aside, in accordance with section 34 of the Act.

B.

Competence of Arbitral Tribunal to Rule on its Own Jurisdiction

Section 16 of the Act, incorporating the principles of Kompetenz-Kompetenz and severability, makes it possible for the arbitral tribunal to rule on its own jurisdiction. Subsection (1) of section 16 provides that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. For that purpose, the following rules apply: (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. The Act has attempted to contain the role of the courts by requiring that a challenge to the jurisdiction/competence of the tribunal must be raised before the tribunal itself.22 The Act once again deviates from the Model Law, in order to give preference to the continuation of arbitral proceedings, by restricting the possibility of the immediate court control. The parties have a right to go the court under section 37(2)(a) only if the objection to the tribunal’s jurisdiction is accepted. If the tribunal rejects the challenge to its competence, it can continue with the proceedings, and make the arbitral award.23 The parties are allowed to seek the court’s intervention only at the post-award stage, as subsection (6) provides that a party aggrieved by such an award may make an application for having it set aside in accordance with section 34.

V.

The Conduct of Arbitral Proceedings

Along with party autonomy, concern for procedural flexibility finds expression under the Act’s scheme, as arbitral tribunals are not bound by the 1908 Code of Civil Procedure or the Indian Evidence Act of 1872.24 Moreover, the parties are 22

Section 16(2) says, ‘a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense; however a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.’ Section 16(3) provides that a plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. 23 Section 16(5) says, ‘the arbitral tribunal shall decide on a plea referred to in subsection (2) or subsection (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.’ 24 Section 19(1).

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International Commercial Arbitration in India free to agree on the following: the place of the arbitration,25 the language or languages to be used in proceedings,26 and the procedure to be followed by the tribunal in conducting its proceedings.27 Substantially amplifying the powers of the arbitrator, the Act provides that in absence of any agreement between the parties, the tribunal may do the following activities: conduct the proceedings in the manner it considers appropriate,28 decide upon the place of arbitration,29 determine the language or languages to be used in the arbitral proceedings,30 appoint experts,31 determine the law to resolve the dispute,32 seek the court’s assistance in taking evidence, and award interest. While parties have greater freedom under the Act to determine procedure, the Act also contains express provisions aimed at thwarting obstructive tactics adopted by parties in arbitration proceedings. Thus, the Act provides that a party who knowingly kept silent will not be allowed to suddenly raise a procedural objection. According to the Act, either the parties or the tribunal are free to determine the required elements of a claim and defence as well as the time within which the claimant must state the facts supporting his claim, the points at issue, the relief or remedy sought, and whether or not the respondent must state his defense with respect to these particulars. The parties are also free to agree on the procedure for amending the claim or defence during the course of proceedings. The tribunal, however, in order to ensure speedy disposal of the case, can disallow any kind of amendment.33 The Act also provides for autonomy to agree on the kind of hearings. Section 24 provides that unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, the tribunal is required to hold oral hearings, at an appropriate stage of proceedings, on a request by a party. That is unless the parties have agreed that no oral hearing shall be held. The arbitral tribunal has the authority, subject to agreement of the parties, to appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal. It also has the power to require a party to give the expert any 25

Section 20(1). Section 22(1). 27 Section 19(2). 28 Section 19(3); According to section 19(4) the power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality, and weight of any evidence. 29 Section 20(2), in deciding upon the place of arbitration, the tribunal is required to have regard to the circumstances of the case, including the convenience of the parties. 30 Section 22(2). 31 Section 26. 32 Section 28. 33 Section 23(1). 26

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Nidhi Gupta and Rajnish Kumar Singh relevant information or to produce or provide access to any relevant documents, goods, or other property for his inspection.34 Furthermore, the Act also offers the possibility for resorting to other methods of dispute resolution. Even in absence of any provision to that effect in the arbitration agreement, the arbitral tribunal can, with the express consent of the parties, mediate or conciliate with the parties to resolve the disputes referred for arbitration.35

VI. Stay of Suits The Act, in conformance with the Model Law, uses the terminology ‘power of judicial authority to refer parties to arbitration,’ in place of the ‘stay of suits’ language that was used in the earlier Arbitration Act of 1940. However, while Part I of the Act governs most issues relating to International Commercial Arbitration which takes place in India, authority of a court to stay the proceedings or to refer the parties to arbitration is derived from sections 4536 and 5437 in Part II. Part II is 34

Section 26(1); subsection (2) says, ‘unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his oral or written report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue.’ Subsection (3) says, ‘unless otherwise agreed by the parties, the expert shall, on the request of a party make available to that party for examination all documents, goods or other property in the possession of the expert with which he was provided in order to prepare his report.’ 35 Section 30: ‘Settlement’ (1): ‘It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute, and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation, or other procedures at any time during the arbitral proceedings to encourage settlement. (2) If during arbitral proceedings the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. (3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that it is an arbitral award. (4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.’ 36 Section 45, which concerns New York Convention Awards says: ‘Power of judicial authority to refer parties to arbitration’: ‘Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties, or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. 37 Section 54, which concerns Geneva Convention Awards, reads as: ‘Power of judicial authority to refer parties to arbitration: Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being seized of a

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International Commercial Arbitration in India the part of the Act which deals with the enforcement of foreign (Convention) awards. Part I of the Act contains a provision, section 8, which is similar to Article 8 of the Model Law which authorizes the court to refer the parties to arbitration. There has been controversy over the issue whether or not the courts, in referring the parties to arbitration in cases involving international commercial arbitration agreement, derive their power from section 8 or sections 45 and 54. Settling this controversy in one of its recent judgments, the Supreme Court declared that for the purposes of international commercial arbitration sections 45 and 54, not section 8, will be applicable. The issue of the applicability of sections 8 or 45 remains relevant not only for technical reasons, but also for the difference in the language of these sections, which has implications for the role of the court vis-à-vis arbitration proceedings. While sections 45 and 54 clearly prescribe that the court, before making a reference to arbitration, should determine that there exists a valid and enforceable arbitration agreement between the parties, section 8 contains no such specific mandate.38 Given the persistent concern for restricting the court’s role in arbitration proceedings, the court’s power under sections 45 and 54 has been a matter of controversy in India. In a recent case, Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and Anr.,39 the Supreme Court of India considered the following issue: ‘Whether the finding of the court made under Section 45 of the Act that the arbitration agreement, falling within the definition of Section 44 of the Act, is or is not “null and void, inoperative or incapable of being performed” should be a final dispute regarding a contract made between persons to whom section 53 applies and including an arbitration agreement, whether referring to present or further differences, which is valid under that section and capable of being carried into effect, shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative.’ 38 Section 8 says, ‘a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration’. Indian Supreme Court in P. Anand Gajapathi Raju v. P.V.G. Raju, in: AIR (2000) 4 SCC 539, emphasised that the language of section 8 is pre-emptory and the court is obliged to refer the parties to arbitration if the following conditions are satisfied: (1) there is an arbitration agreement; (2) a party to the agreement brings an action in the Court against the other party; (3) subject matter of the action is the same as the subject matter of the arbitration agreement; (4) the other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute. Also, Rashtriya Ispat Nigam limited v. Verma Transport Co., AIR 2006 SC 2800. An effect of these judgments is that even though section 8 does not give a specific mandate to the court for determining the validity and enforcement of arbitration agreement, the court’s order of reference to arbitration is subject to its conclusion that there exists a valid and enforceable arbitration agreement. For discussion on this issue see VENUGOPAL K.K. (note 21), pp. 314-320. 39 AIR (2005)7 SCC 234.

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Nidhi Gupta and Rajnish Kumar Singh expression of the view of the court or should it be a prima facie view formed without a full-fledged trial?.’ In this three-judge bench decision, the majority held that the court’s decision as to the arbitration agreement’s validity cannot be taken as a final expression of the court’s view. The court must take it as prima facie proof that a valid and enforceable arbitral agreement exists.

VII. Interim Measures Amidst general concern for limiting the court’s role, the 1996 Act provides the possibility of seeking interim relief through recourse to the court. Section 9 of the Act, like many other provisions, is based on the Model Law; nevertheless, it contains a significant deviation. The Model Law offers the possibility for applying certain parts of the State’s arbitration statutes to international arbitrations outside the State. Article 1(2) of the Model Law states that the provisions of law, except articles 8, 9, 35, and 36, apply only if the place of arbitration is within the territory of the State. The court’s power to issue interim relief, covered by Article 9, is one such provision which can be applied outside the State. However, Part I of the Act, or section 9, which corresponds to Article 9 of the Model Law, does not include any such provision giving the courts in India power to grant interim relief to parties when place of arbitration is outside of India. The Act’s failure to apply section 9 to the international arbitration outside India has been a cause of controversy in Indian courts, as there have been cases where the courts refused to grant interim relief to an Indian national against a foreign party’s property. After a series of conflicting decisions, where some courts took the view that the interim measures could be granted in the cases of international arbitration outside India and others took the contrary view, the Supreme Court seems to have settled this controversy, absent legislative action.40 The Supreme Court, in Bhatia International v. Bulk Trading,41 decided that Indian courts do have the power to grant interim relief for arbitrations that take place outside India.42 It held that in cases of international commercial arbitrations held outside of Indian territory, provisions of Part I would apply, unless the parties by either express or implied agreement exclude all or any of its provisions.

Also, 176th Report on Arbitration and Conciliation (Amendment) Bill, Law Commission of India, Delhi 2001. 41 AIR 2002 SC 1432. 42 Although it can be said that this Supreme Court decision takes care of a legislative oversight, the reasoning adopted by the court to arrive at this conclusion is subject to criticism. The decision makes the whole of Part I subject to the consent of the parties, as it says that ‘in cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions.’ 40

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VIII. Enforcement of Awards A.

Enforcement of Domestic Awards

The 1996 Act introduces an important change as far as the issue of enforcement of domestic awards is concerned. Doing away with the requirement that in order to be enforceable, an arbitral award had to be filed in the court, section 36 accords an arbitral award the status of a decree. The section says, ‘where the time for making an application to set aside the arbitral award under section 3443 has expired, or such 43 The Act severely cuts down the grounds on which awards may be challenged before the court. Error of law is not one of the grounds for challenging an award; however, the Supreme Court, in one of the recent judgments, has included error of law as part of public policy making it a ground for challenge, Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd., in: AIR 2003 SC 2629. Section 34 reads as: Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if (a) the party making the application furnishes proof that (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matter beyond the scope of the submission to arbitration – provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation – Without prejudice to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal – provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of

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Nidhi Gupta and Rajnish Kumar Singh an application having been made, it has been refused such award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court.’

B.

Enforcement of Foreign Awards

1.

Enforcement of Convention Awards

Enforcement of foreign awards, which was governed by two different sets of legislation: the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961, is now regulated by Part II of the Act.44 A foreign award can be enforced in India under the multilateral international conventions, the New York Convention45 and the Geneva Convention,46 three months if may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. 44 For a comparison between enforcement of a domestic award and a foreign award: Jindal Drugs Ltd. v. Noy Vallesina Engg. Spa, in (2002) 2 ArbLR 323 (Bom). 45 Sections 44 to 51 deal with the recognition and enforcement of New York Convention awards, whereas sections 53 to 60 are concerned with Geneva Convention awards. Under section 44, which deals with New York Convention awards, ‘foreign award’ means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960 (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and (b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies. 46 Section 53 of the Act deals with the Geneva Convention awards and according to this section ‘foreign award’ means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924, (a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and (b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and (c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.’

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International Commercial Arbitration in India subject to two reservations. First, the award must have been made in a country which has ratified either the New York or Geneva Convention and which has made reciprocal provisions for the enforcement of Indian awards in its country. Second, only those awards which concern differences arising out of legal relationships, considered ‘commercial’ under Indian law, may be enforced.47 Any foreign award requires the satisfaction of the court for the purposes of enforcement. The Act provides that any person interested in enforcing a foreign award may apply in writing to any court having jurisdiction over the subject matter of the award. The party seeking enforcement of a foreign award is required to produce before the court the necessary evidence in order to prove that the award is a foreign award. As a matter of general practice the following documents are considered sufficient for prima facie evidence: (1) the original award or a duly authenticated copy of the award. The authentication is to be made in accordance with the law of the country wherein award was made; (2) the original arbitration agreement or certified copy thereof.48 The application is numbered and registered in the court as a suit between the applicant as the plaintiff and the other party as a defendant. According to section 49, the foreign award becomes a decree of the court, when the court is satisfied that the foreign award is enforceable according to the provisions of section 48. The Supreme Court declared in Fuerst Day Lawson Ltd. v. Jindal Export Ltd.,49 that for enforcement of a foreign award, there is no need to take separate proceedings, such as one for deciding enforceability of award to make it a rule or decree of the court and another to take up execution thereafter. Section 48 of the Act provides an exhaustive list of the grounds for refusing enforcement of a foreign award. The court is bound to enforce the award unless it is satisfied that one or more of the conditions set forth in the section exists.50 In order to meet the objective of minimal court intervention the Act restricts the possibility of appeal from the court’s order to the following two circumstances: (1) refusal to refer the parties to arbitration under section 45 or (2) refusal to enforce a foreign award under section 48.51 The Act does not allow for second appeal, without effecting, however, the right of appeal to Supreme Court.

47

R.M. Investment and Trading Co. Pvt. Ltd. v. Boeing Co., in: AIR 1994 SC 1136. A parallel provision for Geneva Convention Awards under section 56 requires that the party applying for enforcement of a foreign award shall produce before the court (a) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made; (b) evidence proving that the award has become final; and (c) such evidence as may be necessary to prove that the conditions mentioned in clauses (a) and (c) of sub-section (1) of section 57 are satisfied. 49 AIR 2001 SC 2293. The court mentioned, ‘once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again’. 50 The grounds for refusal of enforcement of foreign awards are similar to those for setting aside a domestic arbitral award under section 34. 51 Section 50. 48

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Nidhi Gupta and Rajnish Kumar Singh 2.

Enforcement of Non-Convention Awards

Foreign awards which are made in countries not bound by either the Geneva or the New York Convention cannot be enforced in the same manner as foreign awards from countries where those Conventions apply. Such foreign awards are, however, enforceable in India on the same grounds, and in the same circumstances, in which they are enforceable under the general law: justice, equity, and good conscience. Therefore, they can be enforced in an action brought before a court of law. A foreign award will not be enforced by courts if its enforcement would be contrary to public policy or the laws in India.52

IX. Choice of Law and Party Autonomy Indian law accepts the general principle of respecting and promoting party autonomy, in international contracts as well as in international commercial arbitration agreements. The Supreme Court of India in National Thermal Power Corporation (NTPC) v. Singer53 mentioned that the parties have freedom to choose the law governing an international commercial arbitration agreement. According to the court this freedom extends to make a choice, either expressly or by implication, for substantive law as well as the procedural law governing the conduct of arbitration. The Act gives statutory recognition to this principle. The Act, however, provides this recognition only with respect to the substantive law. According to section 28, in deciding the disputes the arbitral tribunal is required to give preference to the rules of law designated by the parties.54 In cases where parties do not make a choice as to the law that is to govern the substance of the dispute, the tribunal has to apply the rules of law that it considers appropriate. The tribunal has to take into account all the circumstances surrounding the dispute in order to determine the appropriate law.55 Specifically excluding application of the principle of renvoi, section 28 makes it clear that any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country, not to its conflict of law rules.56 The Act is silent as to whether the law chosen by the parties would also govern the matters relating to the validity of arbitration agreement, arbitrability of the dispute, or the procedural rules of arbitration. The answers to these questions are to be derived from the Supreme Court in the above-mentioned NTPC case. 52

KWATRA G.K. (note 13), pp. 42-43. AIR 1993 SC 998. 54 Section 28(b)(i). 55 Section 28(b)(iii). 56 Section 28(b)(ii). 53

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International Commercial Arbitration in India This decision states that the freedom to choose the procedural law governing the arbitration agreement remains available only when either of the parties have made an express choice to this effect or such choice can be inferred by necessary implication. In absence of choice to this effect, the court suggests, the matters relating to the arbitration can be divided into two parts, substantive and procedural. Different rules of law may govern different parts. The substantive matter, according to the court, includes the following: (1) validity, effect, and interpretation of an arbitration agreement; (2) the scope of arbitration agreement, in other words, to determine whether the arbitration clause is wide enough to cover the dispute between the parties; (3) validity of the arbitration agreement in case one of the parties claim that the contract as a whole is void, or voidable or illegal or that such contract has been discharged by breach or frustration; (4) applicability of the arbitration clause to a different contract between the same parties or between one of those parties and a third party. The substantive matters will be governed by what court refers as the ‘proper law of arbitration agreement’ and the law of the place where arbitration is to be held will govern the arbitration proceedings. The proper law of arbitration agreement, like the ‘proper law of contract’57 is to be determined by express or implied choice or by objective determination by the court by applying ‘real and closest connection test’. According to the court in cases where the parties have neither made any specific reference with respect to the law that will govern the arbitration agreement nor the terms or the circumstances the contract lead to any implication, but have expressly chosen the law to govern the contract as a whole, the proper law of arbitration agreement will be same as the law chosen by the parties to govern the contract.58 The court adds that where, however, there is no express choice of the law governing the contract as a whole, or the arbitration agreement as such, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement.59 57 The court has explained the term proper law of contract using the following passage from DICEY A.V. and MORRIS J., The Conflict of Laws, vol. II, 11th ed., London 1987: ‘Rule 180 – The term proper law of contract means the system of law by which parties intend their contract to be governed, or, where their intention is neither expressed nor to be inferred from circumstances, the system of law with which the transaction has its closest and most real connection.’ 58 The court, although, it accepts the applicability of principle of severability to arbitration agreements, states that arbitration agreement which, though collateral or ancillary to the main contract, is nevertheless a part of such contract. 59 This decision has implication for determining proper law of contract, in absence of choice. It establishes that the choice of the country where arbitration is to be held as a strong element in establishing ‘real and closest connection of the contract’ to a particular place. The court states, ‘where there is no express choice of the law governing the contract as a whole, or the arbitration agreement in particular, there is, in the absence of any contrary indication, a presumption that the parties have intended that the proper law of the contract as well as the law governing the arbitration agreement are the same as the law of the country in which the arbitration is agreed to be held.’

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Nidhi Gupta and Rajnish Kumar Singh In other words, if the parties have specifically chosen the law governing the conduct and procedure of arbitration, the arbitration proceedings will be conducted in accordance with that law, so long as it is not contrary to the public policy or the mandatory requirements of the law of the country in which the arbitration is held. If no such choice has been made by the parties, expressly or by necessary implication, the procedural aspect of the conduct of arbitration (as distinguished from the substantive agreement to arbitrate) will be determined by the law of the place or seat of arbitration. It has been emphasized by the court that ‘the overriding principle is that the courts of the country whose substantive laws govern the arbitration agreement are the competent courts in respect of all matters arising under the arbitration agreement, and the jurisdiction exercised by the courts of the seat of arbitration is merely concurrent and not exclusive and strictly limited to matters of procedure. All other matters in respect of the arbitration agreement fall within the exclusive competence of the courts of the country whose laws govern the arbitration agreement.’

X.

Conclusion

As the above description highlights the Indian legislature has attempted to keep pace with international developments. The 1996 Act strikes a new path as it makes an important departure from the previous law with regard to judicial intervention in the process and product of arbitration. This Act makes it mandatory for the judicial authorities to direct the parties to resort to arbitration, if, prima facie, an arbitration agreement exists. It also severely cuts down the grounds on which an arbitrator’s award may be challenged. Under the new law the challenge will now be permitted only on few grounds such as the agreement’s invalidity, want of jurisdiction on the part of arbitrator, want of proper notice to a party of the appointment of arbitrator or of arbitral proceedings or inability of a party to present its case. The Act amplifies the arbitrators’ powers. The most significant change is the authority that the Act grants the arbitral tribunal to decide the questions of both its jurisdiction and the competence of arbitrators. It also attempts to check the obstructive tactics sometimes adopted by the parties in arbitration proceedings, namely by inclusion of an express provision disallowing a party, who knowingly keeps silent, from suddenly raising a procedural objection. In order to impart greater authority and legitimacy to arbitration proceedings, particularly in international commercial arbitration, the Act gives the power to nominate arbitrators to the Chief Justice of India, when there is a dispute between the parties. Some other important provisions are the clear definition of foreign and domestic awards, no time limit for making the award, the requirement of reasoned awards, and the vesting of domestic awards with the status of a decree of the court.

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CODIFICATION OF PRIVATE INTERNATIONAL LAW IN THE CIVIL CODE OF QATAR Marie-Claude NAJM∗ I. II.

III.

IV.

Preamble Overview of the Private International Law Codification A. Origins of the Private International Law Codification B. Method of the Private International Law Codification C. Scope of the Private International Law Codification Provisions of the Private International Law Codification A. Conceptual Approach to the Conflict of Laws 1. Sources of the Rules Governing Conflict of Laws a) Internal Sources: Relevant Provisions of the Civil Code b) International Sources: International Conventions and Treaties c) A Specific Source: Principles of Private International Law 2. Methods and Techniques Governing Conflict of Laws a) Classical Choice-of-Law Methods b) Particularities in Personal Status Issues B. General Rules of Conflict of Laws 1. Qualification 2. Reverse Reference (Renvoi) 3. Conflit Mobile 4. Ordre Public 5. Multiple Legal Systems C. Special Rules of Conflict of Laws 1. Legal Capacity and Capacity to Act a) Natural Persons b) Legal Entities 2. Family Law a) Marriage b) Filiation c) Tutorship and Guardianship d) Maintenance Obligations 3. Inheritance and Wills 4. Real Rights 5. Contractual Obligations a) Substantive Provisions b) Formal Requirements 6. Extra-contractual Obligations Conclusion

∗

Professor, Faculty of Law and Political Sciences, Saint-Joseph University, Beirut. Yearbook of Private International Law, Volume 8 (2006), pp. 249-266 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Marie-Claude Najm

I.

Preamble

The State of Qatar is a hereditary Emirate, located on the Persian Gulf and ruled by the Al-Thani family since the end of the 19th century. From its earliest history, the country has come under Persian, Ottoman and British influence. In 1916, Britain and Qatar signed a Treaty of Protection by which Qatar became a British protectorate. Qatar declared its independence in 1971 and became a member of the United Nations. Despite the short history of the country, the Qatari legal system is quite developed. The sources of the law in Qatar are in fact both ancient and modern. On the one hand, Article 1 of the Constitution (Permanent Constitution of the State of Qatar) declares Islam to be the State religion and provides that the ‘Shari’a shall be a main source of the legislation’. The law is therefore mainly based on the Islamic legal teachings, and more precisely on the Hanbali School which is, under the influence of Saudi Arabia, the predominant Islamic doctrine in Qatar. On the other hand, Qatar has engaged since 1961 in a modern legislative process, which began with Law n°1 establishing the Official Gazette (for law reporting). Since then, several modern laws – often inspired by the French legal system – have been adopted in various fields of law: Regulation of the Courts of Justice (Law n°13/1971), Criminal Code (Law n°14 of 1971), Law of Civil and Commercial Matters (Law n°16/1971), Civil and Criminal Procedure Code (drafted and published in 1972, but never officially promulgated), Civil and Commercial Procedure Code (Law n°13/1990), and so on. This modernisation process has developed further since 1995, the State being headed from that time by the Emir Hamad Bin Khalifa Al-Thani, who appears to be more liberal than his father and predecessor Khalifa Bin Hamad Al-Thani. The new ruling Emir has initiated several social and political reforms. In 2003, he gave the State a new Constitution, which creates a consultative council – Majlis alChoura – of which 45 members are elected by direct public vote, and guarantees freedom of religion.1 The legislative process has also been in continuous development. In 1999, Qatar enacted a new law governing the organisation of the judiciary (Law n°6/1999, which took effect in 2003 and supplanted Law n°13/1971). The traditional dual judicial structure, composed of religious (Shari’a) courts staffed by qadis and of civil (Adli’a) courts – thus reflecting the duality between ancient religious law and modern secular law – is unified by the new law into a single structure. At the base of the new judicial system, are the Courts of Justice and the Shari’a Courts of First Instance: the Courts of Justice try civil, criminal, 1

He also created the famous Al-Jazira satellite TV channel, known as the ‘Arab CNN’: the first on-going news channel in the Arab world, based in Doha and entirely funded by the State of Qatar, Al-Jazira is watched by over 45 million Arabs in the world; with its latest English edition, it also became the first and only English-speaking Arab channel broadcasting throughout the world.

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Codification of Private International Law in Qatar and commercial cases, while the Shari’a Courts adjudicate cases involving personal status.2 The judgments made in these courts may be appealed to the Appeal Court of Justice and to the Shari’a Court of Appeal. The Court of Cassation is the third tier of the judicial system: there is a chamber for Shari’a cases and another for Court of Justice appeals. Following the development of economic international relations, Qatar enacted in 2000 a new law regulating the participation of foreign capital in the economic activities in Qatar (Law n°13/2000). Most importantly, the Law of Civil and Commercial matters, issued in 1971, has recently been redrafted into two separate laws: the Civil Code and the Commercial Code. The latter, covering all aspects of commercial transactions, is to be promulgated imminently. As for the Civil Code, it was enacted by Law n°22/2004 and promulgated on August 8, 2004. It regulates contracts and obligations and does not include any provisions related to family law. It does, however, regulate conflicts of laws in time and space. The third section of its first chapter, entitled ‘Conflict of Laws in space’ and composed of twenty-nine articles (article 10 to 38), is the first codification of Private International Law in Qatar. The Law of Civil and Commercial matters (Law n°16/1971), previously applicable, made no reference to conflict of laws, this being one of its important lacunae, at a time where the expansion of trade beyond the borders of Qatar, and the contemporary evolution of means of communication between people in different countries, made it necessary to regulate relations that included a foreign element. This article seeks to give an outline of the Private International Law rules in the Qatar Civil Code, while adopting a comparative approach to Private international law rules in other Arab countries as well as in Western countries. The paper is divided into two main parts. The first consists of an overview of the Private International Law codification, addressing the origins, method and scope of the codification (II). The second contains an analysis of the Private International Law provisions in the new law, addressing the conceptual approach, general rules and special rules of Conflict of laws (III).

II.

Overview of the Private International Law Codification

The idea of a new codification of Civil Law (and thus of Private International Law) was born during the past decade, together with the set of reforms initiated by the new ruling Emir of Qatar. It comes thus as a reflection of the on-going economic situation in Qatar.

2

However, pursuant to Article 4 of the Civil and Commercial Procedure Code (Law n°13/1990), the Civil Courts shall have jurisdiction in personal status cases involving nonMuslims.

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Marie-Claude Najm The Private International Law codification in the Qatari Civil Code is inspired, almost copied, from the Egyptian Civil Code of 1949. A considerable number of neighbouring countries (Syria, Iraq, Kuwait, Libya, Jordan, Yemen, Bahrain, Algeria…) had previously also imitated the Egyptian model. Like other Arab states, Qatar did not really adopt a Private International Law code in the full sense of the word, but simply introduced into the body of its civil legislation, and following the rules relating to ‘Conflicts of laws in time’, provisions on ‘Conflicts of laws in space’. Compared to other contemporary acts – for instance those of Switzerland, Germany, Italy, Belgium or of ex-socialist countries – the Arab Private International Law codifications appear to be very brief.3 The Egyptian origins of the Qatari Private International Law codification (A) thus explain both the method (B) and scope (C) of the codification.

A.

Sources of the Private International Law Codification: the Egyptian Model

As in most Islamic countries, the religious nature of the legal system in Qatar has considerably delayed the birth of a conflict of laws system.4 After the fall of the Ottoman Empire, the political presence of western powers and the development of international economic relationships, mostly in the second part of the 20th century, have opened the Islamic countries to foreign systems and required the emergence of relevant legal instruments. The western influence was decisive, in the absence of a local tradition of Private International Law. The Qatari Civil Code imitated, almost literally copied, the Egyptian Civil Code of 1949, whose first version was initially drafted by Abdel-Razzak AlSanhuri, a judge with the mixed courts, with the assistance of Dean Edouard Lambert of the University of Lille (which explains the influence of the French model on the Egyptian Civil Code). Since the Conflict of laws provisions in the Egyptian Civil Code of 1949 were themselves inspired by the Italian Civil Code of 1942 (articles 17 to 31, abolished by the Italian Private International Law Code of 1995), the Conflict of laws provisions in the Qatari Civil Code of 2004 come from the same source. The 2004 Qatari rules derive their inspiration, thus, not from the Italian provisions of 1995, but from those of… 1942! Furthermore, since the Egyptian Civil Code was imitated in numerous countries of the region, the Qatari provisions on Private International Law are very 3

On the Arab Private International Law codifications see GANNAGE P., ‘Observations sur la codification de droit international privé dans les Etats de la Ligue arabe’, in: Mélanges R. Ago, Milano 1987, p. 105; ID. ‘Regards sur le droit international privé des Etats du Proche-Orient’, in: Revue internationale de droit comparé 2000, p. 417. 4 ARMINJON P., ‘Le droit international privé en droit interne, principalement dans les pays de l'Islam’, in: Clunet 1912, p. 698 and 1030; CARDAHI Ch., ‘La conception et la pratique du droit international privé dans l’Islam (Etude juridique et historique)’, in: Recueil des Cours 1937-II, p. 507.

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Codification of Private International Law in Qatar similar to those adopted in other Arab countries although they present some specificities which will be dealt with below. One might wonder why Qatar followed the Egyptian model, rather than a more recent act. In point of fact, this is not at all surprising, since most Qatari codes are drafted by jurists from Egypt and Sudan. Furthermore, the Qatari civil courts are very often staffed with judges from other Arab countries (mainly from Egypt, but also from Sudan, Jordan and Syria), and these judges even tend, in cases where a point is not covered by legislation, to apply legal principles inspired by the law of their native State. The Egyptian influence is thus very important, and Qatari court decisions often include references to Egyptian doctrine.5 The poorness of the Qatari legal tradition therefore explains the current situation of legislation and judiciary. It also explains the lack of Qatari references in this paper. There is indeed no doctrine on Private International Law (discussion regarding this subject matter is inexistent), and decisions of the Qatari courts are not published (which is sometimes explained by the fact that there is no doctrine of binding precedent under Qatari law).

B.

Method of the Private International Law Codification: Incorporation of Private International Law Provisions in the Civil Code

Foreign practice shows two main methods of codification of Private International Law: -

either by incorporating its provisions into the civil codes, within the narrow scope of civil relations. This approach prevailed for almost two centuries, beginning with the French Civil Code of 1804 which contained a few rules of Private International Law, leaving to the courts the primary role in developing such rules. The German BGB, promulgated a century later (but considerably modified in 1986), as well as the Italian Civil Code of 1942, contained many more Private International Law rules.

-

or by adopting separate laws on Private International Law. This approach is more common in the second part of the 20th century, as may be seen, for example, in the latest acts adopted in Switzerland, Austria, Turkey and the exsocialist countries. Italy has also adopted in 1995 a separate law on Private International Law, and the relevant articles of the Civil Code were abolished.

Instead of establishing a separate code of Private International Law, Qatar, like most Arab countries, introduced provisions related to Conflicts of laws in space into its civil legislation. Based on the legal history of the State of Qatar, and of the codification of Civil law following the Egyptian model of 1949, one is not surprised to see that the codification of Private International Law was done within the 5 For example: Court of Appeal of Doha, 3 Feb. 1997, in: Lebanese Review of Arab and International Arbitration, n° 7, p. 98 [in Arabic].

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Marie-Claude Najm framework of the new Civil Code. Such classical thinking reflects the conceptual approach dominating in the middle of the 20th century. The same can be said of the scope and contents of the codification of Private International Law rules.

C.

Scope of the Private International Law Codification: Limitation to Conflict of Laws

The scope of the Private International Law codification in the Qatari Civil Code is limited to Conflict of laws. Issues relating to nationality and the status of foreigners, to international civil procedure (procedural rights of foreigners, grounds for jurisdiction of Qatari courts, cases of exclusive jurisdiction, recognition and enforcement of foreign judgments, etc…) and to international commercial arbitration, are to be found in different laws. One might prefer a full codification, including international civil procedure, as is prevalent in the latest acts. For instance, the Canadian province of Quebec incorporated, in its Civil Code, both conflict of law rules and rules of international civil procedure. But the issue was most probably not discussed in Qatar, since the model followed was the Egyptian one which goes back to 1949. Even in the scope of Conflict of laws itself, the Qatari Code, while addressing general rules of Conflict of laws, neglects some important issues, such as the legal grounds for applying foreign law and the role of the judge in this respect (for instance, is the judge compelled to put into force the applicable foreign law before the silence of the parties?), the determination of the contents of foreign applicable law (should foreign law be determined in accordance with its official interpretation, and with the practice and the doctrine of the foreign country? Does the Qatari law apply when the court or the parties fail to determine the content of the provisions of the foreign law?), the application of mandatory rules (lois de police) or the evasion of law (fraude à la loi). Thus one can say that, compared to modern European acts, the Qatari law on Private International Law contains many gaps in regulation.

III. Provisions of the Private International Law Codification This part addresses the conceptual approach to the Conflict of laws in the Qatari Civil Code (A), before analysing the few articles dealing with general rules (B) and the others establishing special rules of Conflict of laws in respect of the various institutions (C).

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Codification of Private International Law in Qatar A.

Conceptual Approach to the Conflict of Laws

In order to perceive the theoretical approach to the Conflict of laws in the Qatari Civil Code, it is necessary to consider both the sources of the rules governing Conflict of laws (1) and the methods and techniques underlying the rules of Conflict of laws (2).

1.

Sources of the Rules Governing Conflict of Laws

Private International Law rules derives its sources from both internal law (a) and international law (b), to which must be added a specific source, namely, the Principles of Private International Law (c).

a)

Internal Sources: the Relevant Provisions of the Civil Code

The rules of Conflicts of laws are derived from the relevant provisions of the Civil Code, which are addressed in this paper (below, part III-B and III-C).

b)

International Sources: International Conventions and Treaties

International conventions are also a source of Private International Law in Qatar: article 33 of the Civil Code gives their provisions precedence over national Private International Law rules layed down in the Code. Qatar shall indeed, as provided for in article 6 of its Constitution, ‘respect the international charters and conventions, and strive to implement all international agreements, charters, and conventions to which it is party’. But the international conventions signed and ratified by Qatar are usually tempered by a general reservation on any provisions ‘incompatible with Islamic Law’, which considerably reduces the impact of conventions. This is the case, for instance, with the Convention on the Rights of the Child (adopted by a General Assembly Resolution of the United Nations on 20 November 1989 and entered into force on 2 September 1990), signed by Qatar in 1992 and ratified in 1995. Upon signature of this convention and upon its ratification, Qatar entered a general reservation concerning provisions inconsistent with Islamic Law.

c)

A Specific Source: the Principles of Private International Law

Article 34 of the Qatari Civil Code provides that ‘The principles of private international law apply in the case of a conflict of laws for which no provision is made in the preceding articles’. This article is literally copied from the Egyptian legislation

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Marie-Claude Najm (and also exists in other Arab civil codes6). The reference to principles of Private International Law is justified – as mentioned in the preparatory works of the Egyptian Civil Code (Part I, p.308) – by the fact that these principles ‘possess the attributes of precision and clarity which makes them more favourable than the principles of natural law due to their specialized concern with a specific aspect of law’. The ‘principles of private international law’ are a subsidiary source of law. But the brevity of the Private International Law codification, and its many lacunae, may increase their importance, giving the judge a way of ruling through non-written principles. Reception of such informal sources of Private International Law in Qatar may be compared to the on-going evolution in some European countries, mainly France, where courts rely, more and more, on general principles of Private International Law, either to strengthen solutions already established or to justify changes deemed necessary. The recourse to the Private International Law ‘principles’, where the law is silent, is all the more significant since article 1, para. 2 of the Qatari Civil Code already establishes a hierarchy of the sources of law in the absence of statute: first, Shari’a law; failing that, custom; failing that, rules of equity. The combination of article 1 (general provision, opening the Civil Code) and of article 24 (special provision, related to the ‘principles of Private International Law’) reveals the importance of the latter. The general provision of article 1 indicates to the judge the path to follow in the absence of legal provision. If the drafters of the Code deemed it necessary to lay down another provision related to the sources of law, specific to Private International Law, this means that article 1 did not appear sufficient in this field, which requires its own, distinctive, principles. Judges are therefore invited to draw solutions from principles that are specific to Private International Law. But the question is how to determine such principles. By giving judges the possibility to rule according to non-written principles of Private International Law, does not the legislator rely on the discretion of the judge? Egyptian doctrine prescribes in this respect the recourse to a comparative approach: the principles must be found in the various legal systems existing in the world, but in a manner respecting the tradition and the distinctive character of the forum legal system.7 The same can be said of the Qatari system. Having to fill a gap in legislation, a judge in Qatar can hardly choose a rule which would ruin the harmony of his own system. For instance, he would hardly oppose the Shari’a teachings. As mentioned in the preamble, article 1 of the Qatari Constitution provides that the Shari’a shall be ‘a main source of the legislation’. This issue actually raises an important and wider debate related to the role of the Shari’a in the Qatari Civil Code, which was addressed by the doctrine, under 6

For instance, article 26 of the Syrian Civil Code, article 25 of the Jordanian Civil Code, article 24 of the Libyan Civil Code, article 69 of the Kuwaiti Law n°5/1961. Article 34 of the Yemeni Civil Code, article 13 of the Sudanese Code of civil transactions and article 30 of the Iraqi Code also adopt similar provisions. 7 ABDALLAH E., ‘Présentation du droit international privé égyptien’, in: Bulletin du CEDEJ, n° 13, Dec. 1981, esp. at 198. Adde: YASSEN M.K., ‘Principes généraux du droit international privé’, in: Recueil des Cours 1965-III, p. 387, esp. at 400.

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Codification of Private International Law in Qatar Law n°16/1971, in the following terms: ‘The vital point at issue here is, of course, the extent to which in the Qatari system, the Shari’a must, in view of the wording in the Constitution, be regarded as paramount: that is to say, must the sources of law referred to in the Civil and Commercial Code be read subject to the provision that they be not contrary to the Shari’a? (…) The matter is, of course, controversial. However, the Shari’a is not prescribed in the Qatari Code to be the sole source of law and in my opinion to give absolute paramountcy to the Shari’a in the context of the Civil and Commercial Code would be a false interpretation of the provisions of Qatari law’.8 Thus, if the law is silent, then the Shari’a, as the principal source of law, must fill the lacunae. This view can also be justified by the content of article 1 of the Civil Code, by virtue of which Shari’a is applicable in the absence of a relevant legal provision.

2.

Methods and Techniques Governing Conflict of Laws

Methods and techniques underlying choice-of-law rules in the Qatari Civil Code reflect classical western tendencies of Private International Law (a). But it also reveals – whenever personal status is involved – its own particularities, often linked to the religious nature of the State (b).

a)

Classical Choice-of-Law Methods

The private international law rules of the Qatari Civil Code include only choice-oflaw rules, not substantive ones. Besides, these choice-of-law rules are established on the model traced by Savigny: by their bilateral character, they can lead to the application of a foreign law as well as to the application of the lex fori, respecting the equality between the laws in presence.

b)

Particularities in Personal Status Issues

(i)

Global Vision of Categories and Institutions

Contrary to modern western Private International Law systems, where the evolution is towards the parcelling of the institutions, the Qatari legislation groups the institutions in wide unified categories. The various elements of family law – for instance, consequences of marriage and divorce, as well as matrimonial settlements – all fall under the same law. The explanation of this global vision of categories and institutions, which can be seen in most Arab Private International Law systems, probably lies in the impossibility for the religious law to coexist with foreign laws. 8 BALLANTYNE W. M., Essays and Addresses on Arab Laws, Richmond (Curzon Press) 2000, p. 66.

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Importance of the Nationality Connection

The determination of the connecting factor in personal status cases is also a result of the religious nature of family law in Qatar. The personalist tradition, which always prevailed in Middle Eastern countries, explains the importance of the nationality connection, not only for classical institutions of personal status such as capacity and family relationships, but also for successions, marriage settlements and donations. National law still plays a considerable role, at a time when modern codifications of Private International Law, both at the national (Belgium, Italy, Switzerland, Germany…) and international (mainly the Hague conventions) levels, tend more and more to favour the domicile or the place of residence. (iii)

Unilateral Connections

Although most choice-of-law rules are bilateral, unilateral ones prevail in some issues. For example, notwithstanding the bilateral choice-of-law rule established for the substantive requirements of marriage (below, part III-C-2-a), article 13, para. 2 of the Qatari Civil Code states that, if one of the spouses is Qatari at the time of the marriage, such substantive requirements are governed by Qatari law. The Qatari nationality of one of the spouses leads to the imperative application of Qatari law. Thus, as long as a Qatari is involved, the courts will apply all Shari’a requirements, including discriminatory ones, such as the prohibition of marriage between a Muslim woman and a non-Muslim man. This example illustrates the looming presence of the Shari’a underneath the Conflict of law rules. The unilateral choice-of-law rule of article 13, para. 2 – which lays down a privilege of nationality, and, implicitly, a privilege of religion – is used to extend the scope of the lex fori, in order to guarantee the application of religious law to the Qataris even within international relations. But this is not necessarily a protective law for the benefit of Qatari citizens, because the application of the law may be against the interests of the national party in the specific issue. In any case, such unilateral choice-of-law rules, though exceptional and attached to bilateral ones, are not appropriate. Serving the sole interest of the forum State – here through the application of the Shari’a to the legal requirements for marriage – they are internationally inefficient. Luckily, Qatar limited this unilateral rule to the scope of substantive requirements of the marriage, whereas the Egyptian model extended it also to the consequences of marriage and divorce (art. 14 of the Egyptian Code9). It nonetheless remains inappropriate, and we hope, in the interests of harmonisation, for the suppression of such rules in future changes to the law. (iv)

Obsolete Connections

Some of the connections applied in family issues reflect the traditional structure of the Qatari family and society, for example the national law of the husband (articles 9 The same provision exists in other Arab codes following the Egyptian model, such as article 15 of the Syrian Code.

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Codification of Private International Law in Qatar 16.1 and 17 of the Code) or of the father (articles 19 and 20 of the Code). Such connections appear nowadays to be obsolete compared to modern codifications of Private International Law, where the use of the common domicile, in case the spouses have different nationalities, is seen as more respectful of the principle of equality between spouses.

B.

General Rules of Conflict of Laws

1.

Legal Qualification

Pursuant to article 10 of the Civil Code, the process of qualification – sometimes also referred to as classification or characterization – must be made in accordance with the law of the forum. The Qatari Civil Code therefore establishes the classical rule of lege fori qualification.

2.

Reverse Reference (Renvoi)

According to article 37 of the Civil Code, a reference to an applicable foreign law means a reference to the substantive law of the State concerned, not a reference to the Private International Law (choice-of-law rules) of that State. Therefore no effect is given by the forum to the Conflict of laws’ rules of another State: neither reverse reference to Qatari law (renvoi au 1er degré), nor reference to the law of a third country (renvoi au 2ème degré), is accepted in Qatar. This rule, taken from the Egyptian Civil Code (article 27), was inspired by the Italian Civil Code of 1942 (article 30). It also exists in most other Arab codifications, which categorically reject renvoi (article 29 of the Syrian law, article 31-2 of the Iraqi law, article 27 of the Libyan law, article 28 of the Jordanian law, article 16-1 of the Sudanese law, article 72 of the Kuwaiti law).10 The rejection of renvoi is justified, in cases of personal status, by the wish to avoid the application of Muslim law to persons or families totally foreign to Islam. It is difficult indeed to submit foreigners, by reverse reference to the Qatari law, to a religious law. Even the new Tunisian Code of Private International Law rejects renvoi,11 whereas Tunisian law, unified and to a large extent secularized, may well be applied to foreigners. This rule indicates that Islamic law, even modernized, remains too specific to be extended to foreigners.

10

With the exception of the ‘heretical’ provision of article 26 of the Civil Code of the United Arab Emirates of 1985, which states the application of the renvoi au premier degré. 11 See Section III of the contribution by BOSTANJI S./BEN KHAMMASSI A., ‘Comment on Art. 54(1) of the Tunisian Code of Private International Law – The Mysterious Article 54(1): A Source of Useless Complication?’, in this volume of the Yearbook, under Section ‘Texts, Materials and Recent Developments’.

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Marie-Claude Najm But the absolute refusal of renvoi, as stated in the Qatari Civil Code as well as in other Arab legislations, seems exaggerated. If selectively used, the technique may be a useful instrument of cooperation. For instance, reverse reference to the law of a third country, or more generally reverse reference in fields other than personal status, could easily be implemented. This is indeed the position of the Lebanese courts, which only refuse renvoi in cases of personal status.12

3.

Conflit Mobile

Conflit mobile designates a situation combining a conflict of laws both in time and space, due to a change occurring in the connecting factor (for instance, change of nationality or of domicile, change of the lex situs, and so on). The Qatari Civil Code tends, in general, to maintain the application of the original law. For example, pursuant to article 16.1 of the Civil Code (reproducing article 13.1 of the Egyptian Civil Code), the national law of the husband at the time of the celebration of the marriage, continues to govern the consequences of marriage even if the nationality of the husband happens to change. This rule increases the stability of the matrimonial status, since it avoids changes in the rules governing the marriage and its effects as a result of a change in the nationality of the spouses. The rules applicable to the consequences of marriage are therefore definitively determined at the time of celebration of the marriage. But article 16.2 of the Code introduces another rule which is not found in the Egyptian Code: if the change of nationality occurring after the marriage unifies the nationality of the spouses, then the law of their new common nationality shall govern the consequences of marriage. Qatar also did not follow the Egyptian Code with respect to separation and divorce. In this subject matter, and pursuant to article 13.2 of the Egyptian Civil Code, the nationality of the husband to be taken into consideration is the one existing at the time of the institution of legal proceedings. This differentiation, with respect to the conflit mobile rule, between the consequences of the marriage and divorce (which is also, in a way, a consequence of marriage), does not seem convincing. On the contrary, according to article 17 of the Qatari Code, most probably inspired by the Kuwaiti law (article 40), the law applicable to divorce is the law of the most recent common nationality of the spouses, and, failing that, the nationality of the husband at the time of the marriage. Thus Qatari law, in the absence of a common nationality of spouses, gives prevalence to the law of the original nationality of the husband, both for the consequences of marriage and for divorce.

12

Lebanese Court of Cassation, 21 Sept. 1961, in: Clunet 1966, p. 870, obs. GANNAGÉ P.; 11 Feb. 1970, in: Al-Adl (Review of the Beirut Bar) 1970, p. 449; 28 May 1998, in: Rec. Hatem 1999, vol. 215, p.11, in: Al-Adl 1998. 239, note SLIM H., in: Clunet 2001. 873, obs. GANNAGÉ P.; for an extensive analysis, see KASSIR W., in: Rec. Hatem 1999, vol. 215, pp. 38-64.

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Codification of Private International Law in Qatar 4.

Ordre Public

Pursuant to article 38 of the Qatari Civil Code, where the application of foreign law would be in conflict with ordre public and moral standards of good behaviour (bonnes moeurs), Qatari law should be applied instead. Foreign law shall therefore not be applied in cases where this is incompatible with the fundamental principles of the legal order of Qatar. This classical ordre public provision, found in almost all Private International Law codifications in the world, is to be understood in Qatar in reference to the importance of the Shari’a in Qatari law and society. Article 22 of the Constitution strongly states that ‘the family is the basis of the society’ and that ‘a Qatari family is founded on religion, ethics and patriotism’. The Qatari society is attached to the protection of the legitimate family and refuses liberal family models such as cohabitation or same-sex unions. One might therefore easily expect that western laws, authorising the judicial ascertainment of natural paternity, fully recognizing children born of adultery or giving legal effects to transexualism, will be rejected in Qatar. If the ordre public provision is to apply as far as traditional family values are involved, we should note that foreign law will not be deemed contrary to public order in Qatar merely because it differs from the provisions of Shari’a, at least as long as the parties concerned are not Muslim.

5.

Multiple Legal Systems

The Civil Code also provides, in article 36, special rules regarding cases where the law applicable is that of a State with multiple legal systems. In such cases, the relevant legal system is to be chosen in accordance with the law of this State.

C.

Special Rules of Conflict of Laws

The Civil Code also establishes specific choice-of-law rules for the principal institutions of private law. Compared to choice-of-law rules existing in most western codifications, Qatari rules show many resemblances with respect to the law of property, contracts and obligations: for instance, property is governed by the lex rei sitae, the form of legal acts by the lex loci actus, extracontractual obligations by the lex loci delicti, and so on. The differences lie rather in family law, where tradition and religion are still very strong. We shall demonstrate this while setting down the various choice-of-law rules, following the order of the articles of the Code itself.

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Legal Capacity and Capacity to Act

a)

Natural Persons

Lex personalis governs legal capacity and the capacity to act. For a natural person, the main connecting factor in this respect is nationality (article 11 of the Qatari Civil Code). But if, in a pecuniary transaction concluded and having effect in Qatar, one of the contracting parties is a foreigner without legal capacity, and such lack of capacity is due to a reason that cannot be easily detected by the other party, the legal capacity of such a foreigner shall be subject to Qatari law. This unilateral choice-of-law rule is, in reality, almost a substantive rule, since it maintains the validity of the act (under the condition that the foreigner has the capacity to act under the Qatari law of the place of conclusion of the act) despite the incapacity of the foreigner according to his personal law, when this incapacity cannot be easily detected by the other party. It reproduces, albeit in a different way, the rule laid down in the Lizardi case in France.13 It remains however a unilateral and incomplete rule, since it does not extend to the acts concluded abroad by a Qatari (incapable according to Qatari law but capable under the foreign provisions of the place of conclusion of the contracts). The unilateral nature of the rule thus diminishes its international effect, limiting it to the preservation of the stability of the internal commerce. It today appears obsolete, compared to the provisions of many modern instruments establishing bilateral rules in this respect, for the preservation of the needs of international commerce.14

b)

Legal Entities

For legal entities, the personal law governing capacity is, according to article 12 of the Code, the law of the country in which such legal entities have established their effective principal seat of management. By way of exception, Qatari law shall be applied if the legal entity carries out its main activities in Qatar.

2.

Family Law

a)

Marriage

The legislation subjects the substantive requirements of marriage – such as capacity, consent, abiding by legal prohibitions – to the national law of the spouses at the time of the celebration of the marriage (article 13, para. 1). The right to enter into a marriage shall thus be defined by the personal law of each person entering into the 13 Req., 16 Jan. 1861, in: Dalloz Périodique 1861.1.193, and in: Sirey 1861.1.305, note MASSÉ. 14 See article 2 of the Rome Convention of 1980 on the law applicable to contractual obligations.

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Codification of Private International Law in Qatar marriage. But if one of the spouses is Qatari at the time of the marriage, such substantive requirements – except capacity – are governed by Qatari law (article 13, para. 2). Thus, if Qatari law is designated, the courts will have to apply all discriminatory rules of the Shari’a: for instance, a marriage between a Muslim woman and a non-Muslim man is null and void. The scope of the unilateral rule set forth in article 13, para. 2 of the Qatari Civil Code, is luckily more limited than its Egyptian model (see above, part III-A-2-b), where the marriage relationship itself is governed by Egyptian law if one of the spouses is Egyptian. It nevertheless remains inappropriate. Pursuant to article 14 of the Qatari Civil Code, the formal conditions of marriage – such as religious forms – are governed by the law of the State where the marriage was celebrated (by application of the locus regit actum rule) or by the national law of one of the spouses or by the law of their common domicile. Therefore, for the marriage to be valid in form, it is enough to satisfy the formalities of any of these designated laws. The consequences of marriage – both personal and financial – are governed by the national law of the husband at the time of the celebration of the marriage (article 16.1), even if the nationality of the husband happens to change afterwards. But if a change of nationality occurring after the marriage unifies the nationality of the spouses, then the law of their new common nationality shall govern the consequences of marriage (article 16.2). As for separation, divorce and repudiation, they are governed by the law of the country of which the spouses, or the husband in case the spouses are of different nationality, are nationals at the time of the divorce or of the institution of legal proceedings (article 17).

b)

Filiation

Filiation issues such as the recognition or disputing of fatherhood – but not the judicial ascertainment of fatherhood, forbidden by the Shari’a – shall be determined by the national law of the father at the time of the birth of the child, or at the time of the death of the father if it occurs before the birth of the child (article 19).

c)

Tutorship and Guardianship

The national law of the father is also applicable to personal tutorship and to guardianship (article 20). But the law applicable to the protection of minors, or of adults having no capacity or a limited capacity (for instance, appointment and rescinding of tutors or curators), is the national law of the person needing protection (article 22).

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Maintenance

Maintenance obligations arising from family relationships shall be determined in accordance with the law of the debtor (article 21).

3.

Inheritance and Wills

Qatar does not differentiate between movables and immovables with respect to succession issues. Inheritance is subject to the national law of the prepositus prevailing at the time of his death (article 23.1). This law shall apply to all matters related to the determination of the shares in the estate and their ranking, the elements of the inheritance and its conditions, the means of transmitting the estate, and so on. Pursuant to article 23.2, Qatari law – i.e. the Shari’a, according to article 51 of the Constitution which states that the right of inheritance shall be governed by Shari’a law – is applicable to inheritance in Qatar in the absence of any heirs. As to wills (and other acts having effects after death), the law differentiates between the substance and the form. The substance of the will is subject to the national law of the testator prevailing at the time of his death (article 24.1). The form of the will is governed by the national law of the testator at the time the will was made or by the law of the country in which it was made (article 24.2). It is therefore sufficient that the form of a will meets the requirements of one of these two designated laws.

4.

Real Rights

The legislation subjects real rights to the lex rei sitae, without differentiating in this respect between immovables and movables. Thus, all rights in rem relating to immovable and movable property, and ownership in particular, shall be determined according to the law of the country where such property is located (articles 25.1 and 26). This rule should apply only to provisions related to real rights (their nature and scope, the ways in which they can be acquired and extinguished, and other provisions related to the regime of property itself). The lex situs connection may be problematic concerning movable property, since the place of movables can change. Article 26 of the Code settles this problem by designating the law of the place where the movable was situated at the time of the occurrence of the event which resulted in the acquisition or loss of possession, ownership or any other real rights. As to the determination of the movable or immovable nature of a property, it is to be made in accordance with the law of the country in which such property is located (article 25.2).

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Codification of Private International Law in Qatar 5.

Contractual Obligations

a)

Substantive Provisions of a Contract

Pursuant to article 27, para. 1 of the Code, contracts are governed by the law of the country in which the common domicile of the contracting parties is located, and, in the absence of a domicile in a common country, by the law of the country where the contract was concluded (this is also a truly obsolete connection in contracts law nowadays). These provisions are applicable unless the contracting parties agree otherwise, or unless circumstances indicate that they intended to apply another law. Though using a different wording, the Qatari Civil Code guarantees the quasiuniversal principle of the autonomy of will in determining the law applicable to international contracts. As to the way in which the lex voluntatis must be expressed, the law adopts a liberal approach: the choice of applicable law must be expressed clearly by the parties, or result tacitly but certainly from the circumstances of the case. Thus, in the absence of an agreement, the judge shall have the power to ascertain the tacit intention of the parties from the circumstances, by virtue of his authority to interpret contracts. The Code does not say anything on the determination of the moment when parties may choose the applicable law. It is also silent on the possibility for the parties, according to modern tendency in international commercial relations, to choose the transnational rules of lex mercatoria. The Code lays down special rules for certain types of contracts. Pursuant to article 27, para. 2, the law of the intention of the contracting parties does not apply to contracts related to immovables, which are subject to the law of the place where the immovable is situated. Also, according to article 28, labour contracts are subject to the law of the country in which the seat of management of the employer’s business is located. If this seat is situated abroad and the branches, which concluded the contract, are situated in Qatar, then Qatari law shall govern the contract. These rules differ from the European approach to labour contracts, which gives parties the right to choose the applicable law, but states that this law should not deprive the employee of the rights enjoyed under the mandatory rules of a country, of which the law would have been applied in the absence of a choice of law.15

b)

Formal Requirements of a Contract

Article 29 provides an optional conflict of law rule relating to the formal requirements of a contract. The form of contracts is subject to the law of the place where they are concluded (lex loci actus), but can also be governed by the law applicable to the substantive provisions of the contracts (lex causae), or to the law of the domicile of the contracting parties or to their common national law. The contract15 See article 6 of the Rome Convention of 1980 on the law applicable to contractual obligations.

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Marie-Claude Najm ing parties are therefore free to choose one of these designated laws to govern the form of the contract.

6.

Extra-contractual Obligations

According to article 30, para. 1, extra-contractual obligations are governed by the law of the country in which the act that gave rise to the obligation took place (lex loci delicti). This provision however does not apply to a tort which has occurred abroad and which, although considered unlawful under the law of the country in which it occurred, is considered lawful in Qatar (article 30, para. 2). This rule, leading to the non-application of the foreign lex loci delicti if the tort for which compensation in requested is not considered unlawful under Qatari law, is not justified in our opinion. It must be noted that Qatari law does not follow the global modern tendency to strengthen the protection of the aggrieved party, by giving the plaintiff the right to choose between a wide range of laws, for example the law where the tort, or any of its circumstances, occurred, or the law of the State in which the damage occurred, or even the law of his permanent place of residence. The law of the country where the act that gave rise to the obligation took place is also applicable, pursuant to article 31 of the Code, to obligations incurred because of unjust enrichment.

IV. Conclusion Notwithstanding the abovementioned disadvantages and lacunae, the new Private International Law rules in the Qatari Civil Code should be considered as a serious step towards modern conflict of laws regulation. It includes the basic requirements of conflict of laws, meeting in many aspects international standards thereof, and shall bring considerable progress to the legislative practice of Private International Law in Qatar. With the on-going economic and social development of Qatar, Private International Law is expected to become an increasingly important area of law. The next step in this respect should be the further development of statutory law, but also of other sources, mainly court practice – which requires that court decisions applying and interpreting the provisions of the new law be reported – and, above all, a doctrine of Private International Law.

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COURT DECISIONS ________________

CHINA ENFORCEMENT OF ARBITRATION CLAUSES: REMARKS ON TWO MAY 10, 2005 DECISIONS OF THE SUPREME PEOPLE’S COURT OF CHINA∗ Fang XIAO ∗∗ and Yujun GUO∗∗∗

I. II. III.

IV.

Introduction Facts of the Decisions Legal Issues A. Enforcement of an Arbitration Clause in a Tort Action B. Enforcement of an Arbitration Clause in Cases Concerning Third Parties 1. The Case Shall Be Resolved in the Court 2. Part of the Case Shall Be Taken to Arbitration 3. The Whole Dispute Shall Be Submitted to Arbitration Conclusion

I.

Introduction

In 1987, China joined the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In 1995, the Arbitration Law of the People’s Republic of China entered into force. Pursuant to these two legal instruments, ∗ Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan (2005) Min Si Zhong Zi Di 1 Hao Minshi Caidingshu (May 10, 2005) and Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan (2005) Min Si Zhong Zi Di 16 Hao Minshi Caidingshu (May 10, 2005). Both decisions are available at ‘Chinese Civil and Maritime Trial Involving Foreign Elements (Zhongguo Shewai Shangshi Haishi Shenpan Wang)’. ∗∗ Master of International Law, Doctoral Candidate in International Law at the Research Institute of International Law, Wuhan University, China. ∗∗∗ Doctor of International Law, Professor of Law at the Research Institute of International Law, Wuhan University, China.

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Printed in Germany

Fang Xiao and Yujun Guo valid arbitration agreements effectively exclude judicial courts from having jurisdiction.1 Accordingly, Chinese courts should decline jurisdiction where parties have entered into a valid arbitration agreement. Thus, China is becoming friendlier towards arbitration. However, two 2005 decisions of the Supreme People’s Court of China may have regressed away from a more tolerant approach. The Fourth Civil Tribunal delivered two decisions in the case of W.P. Int’l Group Inc. v. Songmei Acetic Acid Co., Ltd. & Jilin Chemical Industry Joint Stock Company (the ‘WP Int’l Group case’), regarding objections to jurisdiction. The Supreme People’s Court affirmed the lower court’s rulings and held that the arbitration clause between W.P. Int’l Group and Jilin Chemical should not be enforced because ‘the case was compulsory joint action of co-infringement’ and the two defendants were made a party under the compulsory joinder rules. The Supreme Court’s position in these decisions will both make it easy for plaintiffs to avoid arbitration clauses and damage the international commercial arbitration system in China.

II.

Facts of the Decisions

W.P. Int’l Group Inc., an American company (‘WP Int’l Group’), entered into a contractual joint venture contract with Jilin Chemical Industry Joint Stock Company (‘Jilin Chemical’), a Chinese company, to set up and operate a contractual joint venture in China, Songmei Acetic Acid Co., Ltd. (‘Songmei Acetic’). The contract included a typical arbitration clause stating that any dispute arising during either the performance or in connection with the contract shall be submitted to arbitration with the China International Economic and Trade Arbitration Commission (CIETAC). First, WP Int’l Group brought a tort action against both Jilin Chemical and Songmei Acetic before the Highest People’s Court of the province of Jilin. WP 1

See Article II.3 of the 1958 New York Convention and Article 5 of the 1995 Arbitration Law of the People’s Republic of China. Article 5 of the 1995 Arbitration Law stipulates: ‘A people’s court shall not accept an action initiated by one of the parties if the parties have concluded an arbitration agreement, unless the arbitration agreement is invalid.’ Furthermore, the 1991 Civil Procedure Law of the People’s Republic of China provides an analogous article specially aimed at cases involving a foreign element. Article 257 of the 1991 Civil Procedure Law stipulates: ‘In the case of a dispute arising from the foreign economic, trade, transport or maritime activities of China, if the parties have had an arbitration clause in the contract concerned or have subsequently reached a written arbitration agreement stipulating the submission of the dispute for arbitration to arbitral organ in the People’s Republic of China handling cases involving foreign element, or to any other arbitral body, they may not bring an action in people’s court. If the parties have not had an arbitration clause in the contract concerned or have not had an arbitration clause in the contract concerned or have not subsequently reached a written arbitration agreement, they may bring an action in a people’s court.’

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Enforcement of Arbitration Clauses in China Int’l Group alleged that the two defendants had been acting in collusion to deceive them during the exploitation and management of Songmei Acetic. Accordingly, WP Int’l Group argued that Jilin Chemical and Songmei Acetic should be held jointly liable for the tort damages. The two defendants demurred, separately, questioning the jurisdiction of the court by virtue of the arbitration clause and requested an order compelling WP Int’l to submit the claim to arbitration. The court rejected the demurrer and held that the arbitration clause was only binding upon the two parties of the agreement, but not in a mandatory joint action in tort. Jilin Chemical and Songmei Acetic separately appealed the ruling to the Supreme People’s Court. The two appellants argued that the lawsuit was based on a dispute over contract itself, not in tort. They claimed that even though the plaintiff brought tort claims and added Songmei Acetic as a co-defendant, it could not evade the arbitration agreement. In contrast, WP Int’l Group argued that there was neither an arbitration clause between itself and Songmei Acetic nor a common arbitration clause among the three parties. Moreover, it argued that the two defendants cooperated in the infringement. The Supreme People’s Court rejected the appeals and affirmed the trial court’s rulings in two final decisions. The Court stated the following reasons: (1) because WP Int’l Group initiated an action in tort against Jilin Chemical and Songmei Acetic and the defendants had no right to change the plaintiff’s claims, the lawsuit was in tort, not in contract; (2) Songmei Acetic did not have the right to request for an order compelling arbitration because it is not party of the arbitration clause and the case is not an action in contract; and (3) although there was an arbitration clause between Jilin Chemical and WP Int’l Group, it could not cover the dispute of co-infringement among all three parties.

III. Legal Issues It can be found that, in fact, the result of the case is that the plaintiff has evaded having the arbitration clause enforced by simply suing in tort and adding a codefendant. The defendants argued with the aim of convincing the court that these two means could not affect the clause’s enforcement, but they were rejected. With these decisions in mind, it arises the question as to how would the Chinese people’s courts handle arbitration clauses in these two situations: (1) one party to the arbitration clause sues in tort but not in contract; and (2) one party to the arbitration clause adds a third party, or third parties, as co-defendants. These two situations will be discussed separately.

A.

Enforcement of an Arbitration Clause in a Tort Action

In some cases, both contract and tort law could be applied to the same wrong, because the action involves a combination of the two categories. In China, whether Yearbook of Private International Law, Volume 8 (2006)

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Fang Xiao and Yujun Guo the case is an action in tort or in contract is considered as a classification issue. The determination of this classification was in the scope of the judges’ discretion, and the relevant judicial practices in making this determination were inconsistent. The promulgation of the 1999 Contract Law of the People’s Republic of China has remedied the previous confusion. According to Article 122 of the 1999 Contract Law,2 the plaintiff now has the right to choose what suit he brings when concurrent or alternative liabilities in both contract and tort exist. Neither the court nor the defendant has the right to change the category of the plaintiff’s claim. In this case, a concurrence of contract and tort liabilities exists, because the plaintiff and one defendant are parties to the contractual joint venture contract and the alleged infringement took place during performance of the contract. Therefore, WP Int’l Group has the right to choose the category of claim which will define the classification of the action. The court legally confirmed that the case was a suit in tort and the two defendants had no right to change the case’s classification. Nevertheless, in two important previous cases, the Chinese People’s Courts had manifested contrary positions. The first case is China Technology Import & Export General Company v. Swiss Industrial Resources Company Inc. (the ‘China Technology case’).3 As a court of second instance, the Shanghai Highest People’s Court held that the fraud of the defendant constituted infringement and, therefore, the case was an action in tort, not contract. The court then found that the arbitration clause was not binding upon the dispute. This decision invited hot debates, and most scholars did not agree with the holding. Their criticisms were mainly based on the fact that an infringement during performance of the contract should not nullify an arbitration clause and that the infringement dispute is arbitrable.4 The second case is Light and Textile Industries Corporation of Jiangsu Material Group v. Yuyi Group Ltd. (Hong Kong) & Taizi Development Ltd. (Canada) (the ‘Jiangsu Material case’).5 The Supreme Court held that although the 2 Article 122 of the Contract Law stipulates: ‘In case that the breach of contract by one party infringes upon the other party’s personal or property rights, the aggrieved party shall be entitled to choose to claim the assumption by the violating and infringing party of liabilities for breach of contract according to this Law, or to claim the assumption by the violating and infringing party of liabilities for infringement according to other laws.’ 3 The plaintiff concluded a contract, including an arbitration clause, with the defendant to buy rolled steel. When a dispute arose, the plaintiff sued in tort before the Shanghai Intermediate People’s Court alleging that the defendant committed commercial fraud and requested compensation for damages. Having lost in the lower court, the defendant appealed before the Shanghai Highest People’s Court on the ground that the arbitration clause in the contract prevented the court from exercising jurisdiction. The court rejected the appeal. See Gazette of the Supreme People’s Court of the People’s Republic of China (Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan Gongbao), 1989, No. 1. 4 See DING W./CHEN Z. (eds.), On Conflicts Law (Chongtufa Lun), Law Press, Beijing 1996, p.343; LI S. (ed.), China and the Unification of Private International Law (Zhongguo Yu Guoji Sifa Tongyihua Jincheng), Wuhan University Press, Wuhan 1998, p. 146. 5 In the court of first instance, the Highest People’s Court of the Province of Jiangsu rejected the defendant’s objection to jurisdiction and stated: (1) because the defendant

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Enforcement of Arbitration Clauses in China defendant had committed fraud the parties should still be bound by the arbitral clause, and, thus, referred the dispute to arbitration. In its decision, the Supreme Court focused on whether the arbitration institution had the power to arbitrate the tort dispute or, in other words, whether tort disputes were beyond the scope of arbitration. Article 2 of China’s 1995 Arbitration Law and Article 2 of the 1998 CIETAC Arbitration Rules allow tort issues to be submitted to arbitration.6 In the Jiangsu Material case, the alleged infringement took place during the performance of the contract and after China’s new arbitration law had been implemented. Therefore, the people’s court had no jurisdiction. In the latter decision, the Supreme People’s Court changed its position when dealing with the enforcement of arbitration clauses in tort actions. It did so by accepting the scholars’ opinions, confirming that the defendant should not be able to escape an arbitration clause by merely suing in tort. This decision clarified the confusion created by the local people’s courts’ divergence in approaches when addressing the issue. This decision was repeatedly praised throughout Chinese law reviews. It was considered to be a clever interpretation of Article 19 of the 1995 Arbitration Law, which stipulates the independence of an arbitration agreement. Some scholars even believe that the decision was of epoch-making significance, establishing a principle that conformed to the new age and essence of the Chinese arbitration system.7 Based on both legislation and judicial practices, we conclude that in China it is generally understood that an arbitration agreement’s enforcement has nothing to do with either the nature of the plaintiff’s suit or the court’s classification of the case (action in contract or tort). But, why should the dispute be submitted to arbitration? Neither the Supreme Court nor scholars have given a convincing explanation. In the China Technology case mentioned above, the issue centered around whether fraud made the arbitration clause inapplicable. Because the principle of ‘independency of the arbitration clause’ is widely accepted in China, the answer is committed fraud by means of contract, the reason for the suit was a dispute over the assumption of damages for infringement; and (2) the plaintiff has the right to raise an action in tort and the arbitral clause was not binding upon the parties. The judgment was reversed by the Supreme People’s Court on appeal. See Gazette of the Supreme People’s Court of the People’s Republic of China (Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan Gongbao), 1989, No. 3, pp. 109-110. 6 Article 2 of the 1995 Arbitration Law of the People’s Republic of China stipulates: ‘Disputes over contracts and disputes over property rights and interests between citizens, legal persons and other organizations as equal subjects of law may be submitted to arbitration.’ Article 2 of the 1998 CIETAC Arbitration Rules stipulates: ‘China International Economic and Trade Arbitration Commission (…) independently and impartially resolves, by means of arbitration, disputes arising from economic and trade transactions of a contractual or non-contractual nature.’ 7 CHEN Z., International Commercial Arbitration (Guoji Shangshi Zhongcaifa), Law Press, Beijing 1998, p. 55.

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Fang Xiao and Yujun Guo clear. But, merely confirming this principle should not provide sufficient grounds for finding that the issue should be resolved by arbitration. The Supreme Court took the issue of whether the disputes concerning fraud could be arbitrated as the focus of the controversy.8 But, whether the dispute may be resolved by arbitration and whether the dispute should be resolved by arbitration are not the same problems. The disputes in a case may be arbitrable, but they also may be resolved by litigation. Their susceptibility to arbitration alone cannot explain why they should be submitted to arbitration. In fact, in cases involving concurrent tort and contract liability, the special dual nature of the case determines that there are two concurrent or alternative approaches to resolving the disputes: one in tort and the other in contract. The two approaches both have their own legislative and theoretical bases. It is impossible to determine which one is right and which one is wrong. However, what we can do is determine which one is more rational. When concurrent liability exists, the better solution is that if the court is unable to confirm that the arbitration clause is invalid, it should refer the case to arbitration. There are three reasons why this should, in our opinion, be regarded as the best approach. First, if it is determined that the tort action should not be resolved by arbitration, the parties are provided with an opportunity to evade the arbitration clause. This is because classifying a case as tort is determined in a large degree on what suit the plaintiff brings. It would be unfair to allow one party to unilaterally escape a jointly agreed upon arbitration clause. Second, if a judge could exclude the enforcement of an arbitration clause by means of classification, it would demonstrate an unfriendly attitude toward arbitration. The facts of the case will be identical regardless of how the judge classifies the case. Therefore, the only result of classifying the case as a tort action is to preclude the enforcement of the arbitration clause. Finally, from the perspective of avoiding conflicts between litigation and arbitration over the same case, ordering the case to arbitration may be more appropriate for resolving the dispute. In the WP Int’l Group and the China Technology cases, the courts searched for a basis for jurisdiction through classification of the case and the number of parties, but, regardless, they could not judge the validity of the arbitration clause. Theoretically speaking, the parties could still take the case to arbitration on basis of both Article II of the 1958 New York Convention and Articles 5 of the Chinese Arbitration Act. 9 In fact, there are also practices which allow concurrent litigation and arbitration of the same case.10 In these situa-

8 See Gazette of the Supreme People’s Court of the People’s Republic of China (Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan Gongbao), 1989, No. 3, pp. 109110. 9 Furthermore, the UNCITRAL Model Law on International Commercial Arbitration expressly provides for the settlement of this situation. See Article 8(2) of the 1985 UNCITRAL Model Law on International Commercial Arbitration. 10

See SUN N., ‘Conflict of Jurisdictions and Judicial Review over Civil and Commercial Cases with Foreign Elements (Shewai Minshangshi Anjian De Guanxia Chongtu Yu

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Enforcement of Arbitration Clauses in China tions, not only are social resources squandered, but there is also no guarantee of a fair and just resolution of the dispute. In the WP Int’l Group case, when the Supreme People’s Court rejected the appeal of the Jilin Chemical, a party to the arbitration clause, it did not refer to the case’s classification as tort as the ground of rejection. However, it merely stated, ‘the arbitration clause can not bind the indivisible co-infringement dispute among three parties.’ Thus, it escaped suspicion that the judges acted against the principle established in the Jiangsu Material case. By contrast, in the case rejecting Songmei Acetic’s appeal, who was a third party to the contract, the Court expressly stated, ‘the case is not a dispute over breach of contract but infringement.’ This classification then constituted one of the grounds for the rejection. It demonstrated that the court had changed its previous position in the Jiangsu Material case. This is a regression of logic by the court.

B.

Enforcement of an Arbitration Clause in Cases Concerning Third Parties

In the WP Int’l Group case, another ground for the plaintiff’s plea, which was ultimately accepted by the Supreme Court, was that although there was an arbitration clause it could not bind a third party to the contract. In all actuality, if the parties cannot easily evade an arbitration clause by bringing a tort claim, the situation is even more delicate when a third party is added as co-defendant. Theoretically speaking, there are three methods to resolve these conflicts between litigation and arbitration: (1) the court decides that the case should be resolved in the court; (2) the court states that it has no jurisdiction over the dispute between the parties to the arbitration clause; or (3) the court confirms that it has no jurisdiction and orders the parties to arbitration.

1.

The Case Shall Be Resolved in the Court

This is the position of the Supreme People’s Court in the WP Int’l Group case. The bases for this position are as follows: First, from the point of view that there must be consent to submit to arbitration, only the parties expressly mentioned in the arbitration agreement could appear in the arbitral proceedings. This basic rule is recognized internationally by virtue of Article II of the 1958 New York Convention.11 Second, because third parties cannot participate in the arbitral proceedings, the latter cannot completely and properly resolve multi-party disputes. But, any Sifa Shencha)’, in: International Law Review of Wuhan University (Wuda Guojifa Pinglun), Vol. 4, Wuhan University Press, Wuhan 2006, pp. 103-105. 11 See HANOTIAU B., ‘Problems Raised by Complex Arbitrations Involving Multiple Contracts – Parties – Issues’, in: Journal of International Arbitration 18(3) 2001, p. 256.

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Fang Xiao and Yujun Guo interested party can intervene or be joined to protect its interests in front of the court. In these situations, the judge is able to fully understand the dispute and give a more just decision. This solution better protects the interests of all the parties to the dispute, including third parties. Third, it avoids the risk that the court and the arbitration tribunal will make conflicting decisions over the same disputes. This is so because the parties to the arbitration clause will not have to attend the arbitration proceedings and the litigation at the same time. In fact, on a theoretical basis, the idea that arbitration clauses can only bind the parties who signed them is no longer absolute. Extending the arbitration clause to non-signatories will be discussed latter in the text. In practice, it is reasonable that the whole dispute could be resolved in one procedure, but why it must be litigation? The consequence of choosing litigation is that it will impact the system of arbitration: the arbitration clause will be meaningless because of the joinder of a third party into the litigation. The clause’s binding effect is then easily evaded. As for the protection of the parties’ interests, enforcement of the agreement to arbitrate also profoundly concerns those interests, because the arbitration clause is a result of free consent. By ignoring the effects of arbitration agreements, the court impacts the parties’ will as well as the respect of party autonomy. It is a bad choice to protect one at a cost of impacting the other. Moreover, this solution cannot completely evade the situation where concurrent procedures of litigation and arbitration have been initiated in the same case. This happens when the judge cannot invalidate the arbitration clause and the parties are free to take the disputes to arbitration. Finally, on account of the divergent positions that different countries have taken with respect to this problem, it is possible that foreign courts may refuse to enforce the decisions given by a national court.12 As to the practice of the China Supreme People’s Court, in the Jiangsu Material case, it touched upon the effect of an arbitration clause over third parties. It seems that the Court did not approve of negating the effects of the arbitration clause for reasons of either the convenience of the procedure or the protection of the parties interests, when the dispute concerns a third party.13 From this point of 12 In a case which concerned a Peruvian court’s decision, the Swiss Federal Tribunal stated: ‘the refusal by that court to enforce the arbitration agreement constituted a violation of Article II (3) of the New York Convention […]’. For the Federal Tribunal, the mere possibility of conflicting decisions which may occur if certain litigants are not parties to the arbitration clause could not be considered as a valid ground for a finding of the inoperativeness of the clause.’ See PERRET F., ‘Parallel Actions Pending before an Arbitral Tribunal and a State Court: The Solution under Swiss Law’, in: Arbitration International, Vol. 16 No. 3, 2000, pp. 336-337. 13 In the Jiangsu Material case, the plaintiff pleaded to the defendant’s objections to the court’s jurisdiction: ‘as the case concerns the third party […] only the people’s court can make a thorough investigation of the facts and protect the interests of the parties.’ But, the Supreme Court indicated: ‘although the dispute concerns the third party and the court can not judge its liability […] (the plaintiff) could bring another lawsuit against the third party. The interests of the parties could still be protected.’ See Gazette of the Supreme People’s Court of the People’s Republic of China (Zhonghua Renmin Gongheguo Zuigao Renmin Fayuan Gongbao), No. 3, 1989, pp. 109-110.

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Enforcement of Arbitration Clauses in China view, there is a contradiction between the Supreme Court’s positions in the WP Int’l Group and the Jiangsu Material cases. 2.

Part of the Case Shall Be Taken to Arbitration

On the basis of the foregoing analysis, since there is no reason to allow a party to evade an arbitration clause by adding a co-defendant, the court should confirm its lack of jurisdiction over a dispute between the clause’s signatories and order the enforcement of the arbitration clause. The dispute between the plaintiff and the remaining, non-signatory defendants will still be resolved by the court. The Highest People’s Court of the Anhui Province used this rationale in a 2004 decision. In Baishida Corp. Ltd. (American) v. Anhui Hotel, He Zongkui, Zhang Fucheng – as defendants – & Anhui Jincheng Hotel Management Corp., Liquidation Council of Anhui Hotel Ltd. – as third parties – (the ‘Baishida’ case),14 there was a valid arbitration agreement between the plaintiff and one of the defendants. Based on this, the court gave two specific holdings: (1) the dispute between the two parties to the arbitration agreement should be submitted to arbitration; and (2) any disputes between the plaintiff and all other parties would still be ruled by the court. The court retained jurisdiction over the second group of defendants (as well as third parties) because they were not bound themselves by the plaintiff’s arbitration clause and there was no proof that they had concluded a separate arbitration agreement with the plaintiff. With respect to the facts and relevant legal issues, the Baishida case and the WP Int’l Group case are analogous. They are both disputes among parties to joint venture contract and the joint venture itself. From the perspective of both legislation and theory, this solution is more reliable and will create fewer disputes. However, its shortcomings are evident. Just as some scholars have pointed out, this solution divides a necessary joint action into two parts, which will have to be separately resolved through both arbitration and litigation. This separation will result in errors as to cognizance of the facts, defendants’ share of obligations, and the actual judgments rendered. Because of these problems, an arbitration tribunal cannot grant one party an award based on joint liability. The same rule applies to the courts. As a result, some defendants are able to get away with less liability than they should have been allocated.15 These comments come from a concern to obtain the just resolution of a case. In this light, this solution may allow for conflicting decisions of courts and arbitration tribunals. 14 ‘Anhui Sheng Gaoji Renmin Fayuan (2004) Wan Min San Chu Zi Di 1 Hao Minshi Caidingshu’. The decision is available at ‘Chinese Civil and Maritime Trial Involving Foreign Elements (Zhongguo Shewai Shangshi Haishi Shenpan Wang)’. 15 HUANG J./LI Q./DU H., ‘Commentary on the Chinese Judicial Practices of Private International Law in 2005’ (2005 Nian Zhongguo Guoji Sifa Sifa Shijian Shuping), in: Chinese Yearbook of Private International Law and Comparative Law (Zhongguo Guoji Sifa Yu Bijiaofa Niankan), Vol. 9, Law Press, Beijing 2006, p. 17.

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Fang Xiao and Yujun Guo At the same time, it should be admitted that dividing the dispute between litigation and arbitration is a more secure method for the moment, and it is a compromise which splits the difference between having a whole case heard in either court or an arbitration tribunal. Indeed, one could choose a different approach and render the whole dispute to arbitration, avoiding these kinds of problems. But, it is necessary to recognize that compelling a third party to submit to arbitration is still a controversial issue.16 In the present framework of the 1958 New York Convention, if a party objects to the recognition and enforcement of an arbitral award based on the lack of an arbitration agreement, it is still doubtful that the award would be recognized and enforced by foreign courts. Furthermore, as to the present situation in China, the 1995 Arbitration Law does not address third parties in its arbitration procedure. In addition, there is also no precedent in judicial practice which sustains third party participation in arbitration. On the other hand, the arbitration practices of Chinese arbitration organs manifest a negative position towards third party involvement.17 In these circumstances, it is necessary to take into account ways to settle the aforementioned disadvantages concerning the possible conflicts between arbitration and litigation. In the face of the procedural problems present in these kinds of cases, the resolutions used in American courts include: (1) allowing the courts to help the parties to the arbitration agreement conclude another agreement with a third party allowing multiparty arbitration; (2) staying the present suit against a third party until the arbitration tribunal renders a decision in the issue that must be submitted to arbitration; and (3) in some states, such as California, the court may order a stay of the ongoing arbitration proceeding until the litigation involving a third party comes to an end.18 These solutions are such that they deserve the attention of the Chinese People’s Courts.

3.

The Whole Dispute Shall Be Submitted to Arbitration

The two above-mentioned methods, which state that the dispute should be wholly or partly resolved by courts, represent traditional arbitration theory and legislation. In fact, a look at both legislation and practice shows that submitting the whole dispute to arbitration should be the favored solution. First, both the legislation of some countries and the arbitration rules of some international arbitration institutions expressly stimulate the system to allow third

16

There are controversies in China concerning a third parties involvement in arbitration. Some scholars negate the introduction of the system of third party to arbitration in many aspects. See LIN Y., ‘On Arbitration and the Third Party (Lun Zhongcai Yu Disanren)’, in: Law Review (Faxue Pinglun) 2000, No. 1, pp. 91-97. 17 See LIN Y. (note 16), p. 96. 18 See AKSEN G./DORMAN W.S., ‘Application of the New York Convention by United States Courts: A Twenty-Year Review’, in: The American Review of International Arbitration 2(1) 1991, p. 76.

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Enforcement of Arbitration Clauses in China parties into arbitration.19 It is worth mentioning that the newly established Swiss Rules of International Arbitration also includes such provision.20 This demonstrates the trend of accepting third parties in arbitration proceedings. This large acceptance of third parties offers both the foundation and possibility for courts to force a whole dispute to be submitted to arbitration. Furthermore, in some countries courts have confirmed that disputes involving both a party to an arbitration agreement as well as a third party should be resolved in arbitration. 21 In the United States, the doctrine of ‘equitable estoppel’ favors this trend. This doctrine is generally used as a response to an action in which a party to the arbitration agreement claims tort damages against an affiliate of a third party to the agreement.22 According to this doctrine, the plaintiff cannot claim tort damages against the defendant based on their contract and also deny the effects of the arbitration clause at the same time.23 As to the decision of the Supreme People’s Court of China in the WP Int’l Group case, the plaintiff alleged that ‘in the course of production and management, Songmei Acetic colluded with Jilin Chemical to cheat WP Int’l Group by means of [...] faking the facts of the loss [...],’ and that those actions constituted co-infringement. The basis of the plaintiff’s tort claim was solely the terms of the ‘contractual joint venture contract’ concluded with Jilin Chemical. Without the contract, the management actions of two defendants, especially that of Songmei Acetic, would never be considered as infringement of the plaintiff’s interests. It is unfair that WP Int’l Group was allowed to protest the classification of the action as ‘tort’ so as not to be bound by the arbitration clause. Finally, the special relationship between the plaintiff (a signatory to the arbitration agreement) and the third party may constitute a reason for the court’s decision that the third party should participate in the arbitration. The doctrine of ‘piercing the corporate veil’ offers a perspective with which to clarify the relationship between the non-signatory and signatory of the arbitration agreement. According to American case law, when the conditions of the doctrine are satisfied, the arbitration clause can bind the non-signatories as related corporations, sharehold-

19

As to the legislations of states, see Article 1045 of the 1986 Code of Civil Procedure of The Netherlands and Article 1696 bis of the 1998 Belgian Judicial Code; in the United States, the legislations of some states as South Carolina, have also the stimulation about joinder of parties to arbitration, see Section 15-48-60 of South Carolina Code of Laws. As to arbitration rules, see Article 22.1(h) of 1998 LCIA Rules and Rule 43 of 2006 JCAA Commercial Arbitration Rules. 20 See Article 4(2) of the 2004 Swiss Rules of International Arbitration. 21 For instance, in 1997, the Court of Appeals of Munich in Germany has dealt with a case of this kind. Judgment of February 13, 1997, in: NJW Rechtsprechung, Report 1998, 198. See SANDROCK O., ‘Intra and Extra-Entity Agreements to Arbitrate and their Extension to Non-Signatories under German Law’, in: Journal of International Arbitration 19(5), 2002, p. 440. 22 HANOTIAU B. (note 11), p. 264. 23 See HANOTIAU B. (note 11), pp. 264-265.

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Fang Xiao and Yujun Guo ers, and officers of the signatory corporation.24 In the WP Int’l Group case, whether the influences of the Jilin Chemical over Songmei Acetic were sufficient to satisfy the prerequisites of veil piercing is not what we want to discuss here. What is important is the affirmation of some kind of specific affinity between the two defendants. Apparently, the dispute between WP Int’l Group and Songmei Acetic is one between the contractual joint venture itself and one party to the venture. Because the reason for the dispute was that the alleged actions damaged the interests of one party of the cooperation, the dispute was in fact a problem of distribution of interests between the two parties to the contract. Resolution of these kinds of disputes should not be the same as the resolution of disputes between cooperating parties and subjects other than the contractual joint venture. In the latter cases, the arbitration agreement in the cooperation contract will probably not be binding upon the parties to the dispute.

IV. Conclusion Both in theory and judicial practice, it is unacceptable in China for a party to evade the effects of an arbitration clause by bringing a tort action. But the issue becomes more delicate when third parties who are not bound by the arbitration agreement are added as co-defendants. There are three possible resolutions for this kind of case: (1) the entire case could be resolved in the court; (2) part of the case could be taken to arbitration with the remaining issues resolved in court; and (3) the whole dispute could be submitted to arbitration. In the two decisions emanating from the WP Int’l Group case, the Supreme People’s Court of China used the first solution. Some local courts have chosen the second solution. Based on the analysis contained in this article, it is our opinion that the first solution should not be chosen. Nevertheless, in China’s present situation, the second solution, as a compromise, is more reasonable than resolving the full dispute in court. As for the third solution of submitting the full dispute to arbitration, it is reasonable to predict that it will be more and more accepted in the world. This can already be seen through the recent trend of accepting third parties to submit to arbitration even when they are not bound by an arbitration agreement. The court’s attitude toward arbitration is the dominant element of consideration in the treatment of these cases. The particularity and complexity of cases involving concurrent liability in both contract and tort are deeply rooted in traditional civil law theories. When they encounter the international commercial arbitration, we have to make a choice between the rules for normal civil and commercial cases and the more liberal rules supporting arbitration. Considering the imperative need for the development of international commerce, response should, in our opinion, definitely trend toward the latter liberal approach. The court should limit itself 24 See EISEN L.Ch., ‘What arbitration agreement?: Compelling non-signatories to arbitrate’, in: Dispute Resolution Journal, May-July 2001.

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Enforcement of Arbitration Clauses in China and establish the rule that the existence of an arbitration clause can exclude its jurisdiction. In the two decisions from the WP Int’l Group case, the Supreme People’s Court of China manifested a strong inclination for limiting international commercial arbitration, which attitude needs to be carefully reconsidered.

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GREECE THREE RECENT GREEK CASES ON THE BRUSSELS CONVENTION Haris P. MEIDANIS∗ I. II.

III.

The Jurisdiction Clause Case (Areios Pagos, Judgment 1252/2005) The Enforcement Cases A. Court of Appeal of Piraeus, Judgment 110/2004 B. Areios Pagos, Judgment 1321/2004 Conclusion

Three recent Greek judgments on certain aspects of the Brussels Convention of 1968/Regulation 44/2001 (the ‘Brussels I Regulation’1) will be presented in this paper. The first case concerns the validity of a jurisdiction clause and the other two cases deal with specific questions on the enforcement of foreign judgments under the Brussels Ι Regulation scheme, namely the control of such judgments by article 34, points 1 (public policy / ordre public) and 3 (irreconcilable judgments).

I.

The Jurisdiction Clause Case (Areios Pagos, Judgment 1252/2005)

In the Areios Pagos2 1252/2005 case, the Court considered the validity of a jurisdiction clause that two companies, a German producer of optical goods and their Greek distributor, included in a series of invoices exchanged during their years of cooperation. The German producer regularly included a German courts jurisdiction clause on the back of the invoices it sent to the Greek distributor. The distribution agreement began in 1979 as an oral agreement between the German company and a Greek entrepreneur. In 1987, a company established by ∗ Ph.D., Teaching Fellow at the Panteion University of Athens, Lawyer at the Athens Bar. 1 Although all three judgments have been issued under the Brussels Convention, the Brussels I Regulation numbering will be used in parallel for ease of reference. 2 In Greece, Areios Pagos is the Cassation Court (Supreme Court) as regards civil, commercial and criminal cases. The Symvoulio tis Epikrateias (largely similar to the Conseil d’état) is the Cassation or Supreme Court, and in some cases also a first instance court, in administrative law cases. Yearbook of Private International Law, Volume 8 (2006), pp. 281-288 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

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Haris P. Meidanis that Greek entrepreneur and his daughter took over the distribution. A further change occurred in 1991, when a new company, established by the two daughters of the initial distributor, succeeded the above company. All of these successions were made through oral agreements with the German producer, thus extending the duration of the distribution agreement from 1979 to April 1, 1995, when it was terminated by the German producer. The reasoning thereof, namely poor performance of the distributor, was contained in a letter sent by the German producer dated January 31, 1995 (being sent following two prior meetings of the parties involved). In the same letter, the producer allowed the distributor a six-month period in which to sell the remaining stock. Nevertheless, upon expiration of the six month period, the distributor was unable to sell the goods. Therefore, it remained with a stock of considerable value, which was purchased while the agreement was still in force (at that time the value was 566.433,94 DM, German marks), that it could not dispose of. Following the termination, the distributor filed a lawsuit before the Greek courts asking for compensation equal to the amount of loss it had sustained, claiming that the German producer had violated good faith and moral principles. Not surprisingly, the German producer raised the issue of the Greek courts lack of jurisdiction, based on the jurisdiction clause contained in the invoices that were issued during the operation of the distribution agreement. The case reached Areios Pagos pursuant to an appeal in cassation by the German producer, claiming that the Court of Appeal had mistakenly dismissed its argument that the Greek courts lacked jurisdiction. Areios Pagos found that Greek courts would be competent to hear the case, because ‘under the true meaning of article 17 of Brussels Convention (now article 23 of Brussels I Regulation) the jurisdiction agreement should always be in writing (even if the related agreement is oral) and special, in the sense that it is not sufficient for it to be part of the general contract terms included in invoices or dispatch orders.’ The Court, without further argumentation, reached the conclusion that the jurisdiction clause under discussion could not be considered to be either in writing or special in the above sense. Further, the Court found that Greek law should apply by virtue of article 4 of the Rome Convention, Greece being the place where the person who performs the characteristic performance in the contract has its principal place of business. This argument was used by Areios Pagos in order to pinpoint the place of performance of the distribution agreement and thus establish the international jurisdiction of the Greek courts, as per article 5 par. 1 of the Brussels I Regulation. The second part of this argumentation can only be welcomed, since it correctly applies the provision contained in article 5 point 1 of the Regulation. However, this is not the case with the first part of the decision, which, in the mind of the present writer, is less satisfactory for the following reasons: firstly, the Court emphasised the need for a written jurisdiction clause, which is, in fact, only one of the possible ways to create a valid jurisdiction clause under the Brussels Convention/Regulation; secondly, in the reasoning of its judgement, the Court did not consider points b and c of article 17 of the Convention (par. 1 points b and c of 282

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Three Greek Cases on the Brussels Convention article 23 the Regulation) or the ECJ interpretation acquis of article 17 of the Convention (23 of the Regulation). The facts of this case are very similar to the facts of the ECJ judgment in MSG/Les Gravières C-106/95.3 Just as in the case above, the invoices that were issued included a jurisdiction clause. In its judgment, the ECJ emphasised the fact that the invoices had been paid and that the jurisdiction clause had not been contested during the contract’s operation. The crucial issues for the court were whether entering into a jurisdiction agreement constituted a standard practice in the specific trade and whether the parties thereto were or should have been aware of such practice. The ECJ went on to say that these last two questions should be examined and answered by the national courts. These same points should have been crucial in the case under discussion, but were neither examined in detail nor answered by Areios Pagos. More particularly, the Court did not examine whether the uncontested inclusion of the clause in the producer’s invoices (and also the invoices of the subsequent distributors) could be considered to be a longstanding usage of the parties. Furthermore, the Court did not examine whether such clauses are valid in cases involving international distribution agreements. It should also be noted that in the Castelletti/Trumpy C-159/97 case, the ECJ reiterated the position expressed in MSG and further developed it by giving specific guidelines to national courts for examining both the presumed consent of the parties and their awareness of the existence of such a practice. In fact, one would expect that these guidelines would be applied, or alternatively that a preliminary question would be addressed to the ECJ in this respect, in order to clarify the application of such guidelines to the specific trade. Finally, Areios Pagos completely failed to examine point b of article 17(23), which refers to a practice established between the parties. In summary, this judgment does not have a satisfactory argumentation because the Court does not seem to have taken into account the above ECJ judgments and its interpretation guidelines.

II.

The Enforcement Cases

A.

Court of Appeal of Piraeus, Judgment 110/2004

The Court of Appeal of Piraeus Judgment 110/2004 is, in my mind quite interesting, because it dealt with the violation of Greek public policy by an English antisuit injunction. An anti-suit injunction is a well-known common law court injunction, issued by common law courts with the view of preventing the defendant (or potential defendant) from filing a lawsuit against the claimant in a different jurisThis and the rest of the ECJ cases mentioned in this article can be found at the site of the Court <www.curia.europa.eu>. 3

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Haris P. Meidanis diction.4 The most usual reason for issuing such an injunction is to protect either a choice of courts or arbitration clause. In the context of jurisdiction or arbitration clauses, it is suggested that it is less likely to interfere with the third state’s jurisdiction, since the injunction is issued to uphold the will of the parties.5 Found almost exclusively in common law, both the anti-suit injunction and the theory of forum non conveniens are very closely linked and are considered expressions of the principle of natural forum.6 According to the prevailing view, an anti-suit injunction is addressed not to the foreign courts, but to the persons participating in the proceedings.7 It should be mentioned, however, that the injunction does eventually interfere with other national courts jurisdiction rights,8 creating a conflit de jurisdictions. Nevertheless, the prevailing view seems to have been upheld in this case. More particularly, the text of the English anti-suit injunction stated that the English judgment was addressed to the litigants themselves and not to foreign courts. Indeed, in this case, the anti-suit injunction issued by the High Court of Justice, Queens Bench Division, forbade two specific companies, i.e. one non-Greek ship-owning company and one Greek-based management company, as well as two natural persons from initiating proceedings in Greece against a Cyprus based Protection Indemnity club (P&I club). In effect, the anti-suit injunction was issued because the ship-owning company and one Greek-based management company had agreed to submit all future disputes with the P&I club to arbitration in London, by signing and accepting the P&I club’s charter. The critical issue in this judgment was whether the enforcement of the above anti-suit injunction in Greece would violate Greek public policy (in the traditional civil law wording, the Greek ordre public).9 The judgment was issued prior to the well-known and heavily commented10 ECJ decision C-159/02 Gregory Paul See inter alia, LAYTON A./MERCER H., European Civil Practice, Volume 1, 2nd ed., London 2004, para. 6.017; DICEY A.V./MORRIS J.H.C., The Conflict of Laws, 14th ed., London 2006, para. 12-057, and BERMANN G.A., ‘The Use of Anti-suit injunctions in International Litigation’ in: Columbia Journal of Transnational Law 1990, p. 589 et seq. 5 BERMANN G.A. (note 4) p. 621, particularly p. 623. 6 CHESHIRE G.C./NORTH P.M., Private International Law, 13th ed., London, Dublin, Edimburg 1999, p. 336. 7 BELL A.S., Forum Shopping and Venue in Transnational Litigation, Oxford, New York 2003, p. 171 and BERMANN G.A. (note 4), p. 589. 8 HARTLEY T.C., ‘Comity and the Use of Antisuit Injunctions in International Litigation’, in: Am. J. Comp. L. 1987, p. 506 who has actually characterised the opposite view as a sophistry. 9 For a discussion of the civil and common law approach on public policy and the so-called EU public policy in the field of private international law, see MEIDANIS H., ‘Public Policy and Ordre Public in the private international law of the EC/EU: Traditional positions of the Member States and modern trends’, in: European Law Review 2005, p. 95 et seq. 10 See inter alia, TAGARAS H./MEIDANIS H., comments to the case, with extensive reference to other comments, as part of the ‘Chronique de Jurisprudence de la Cour de Jus4

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Three Greek Cases on the Brussels Convention Turner v. Felix Fareed Ismail Grovit, Harada Ltd, Changepoint. This decision considered the anti-suit injunction to be in toto incompatible with the Brussels Convention/Regulation, arguably, because it did not respect either the equality of the member states courts or the principle of mutual trust among them, both of which are inherent in the system of the Brussels Regulation. In the past and until Turner, the English Courts had considered anti-suit injunctions compatible with the Brussels Convention.11 Of course, the question in this judgment did not relate to the general compatibility of anti-suit injunctions with the Brussels Regulation (which has, anyway, already been answered by the Court), but to the potential public policy violation by such an injunction. It is to this question that we shall now turn. As a starting point, it should be pointed out that the Court of Appeal held that the English anti-suit injunction violated Greek ordre public (under article 27 point 1 of the Brussels Convention of 1968, now article 34 point 1 of the Brussels Regulation) and, more particularly, the right of access to justice, protected both under the European Convention on Human Rights and the Greek Constitution. For this reason, it was held that this particular anti-suit injunction (and arguably every anti-suit injunction) would violate Greek ordre public. This point of argument is, however, highly debatable, since it examines the right of access to justice only in relation to the Greek legal order. In my mind, when placed within the context of the ‘common European judicial space,’ which both the Brussels I Regulation and current and forthcoming EU instruments promote,12 such test should encompass wider EU considerations. Therefore, because the injunction is issued primarily to protect English jurisdiction, it should be deemed as a violation of the right of access to justice only if it precludes the right of access to any EU member state court, which normally is does not. An exception to this rule would be if, for purely practical reasons (for example very limited financial means of a litigant party), the person to whom the anti-suit injunction was addressed would not be able to actually address to English courts. After all, such an injunction is issued in order to uphold an existing legal and binding undertaking of the contracting parties. By the same token, a freely undertaken arbitration agreement should also be regarded as an undertaking to enable access to justice (in another form) and not be disallowed. I believe that the issue that merits special consideration is whether the Greek ordre public was violated because the Greek court’s national sovereignty tice relative à la Convention de Bruxelles’ which is regularly written by TAGARAS H. in: Cahiers de droit Européen 2005, p. 561 et seq. 11 See for example: Continental Bank v. Aeakos Compania Naviera [1994] 1 Weekly Law Report, p. 588 et seq. 12 See in this respect the so-called ‘Tampere programme evaluation’, SEC (2004) 680 and SEC (2004) 693, and the launch of the Hague programme, COM (2005)184, both for the creation of an area of Freedom, Security and Justice, as well as an older discussion by REMIEN O., ‘European Private International Law, The European Community and its Emerging Area of Freedom, Security and Justice’, in: Common Market Law Review 2001, p. 53 et seq.

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Haris P. Meidanis rights could be considered infringed upon by the anti-suit injunction. In effect, jurisdiction rules are always binding on the courts and in this sense each court should be free to examine, on its own motion, how to apply them. This general principle seems to have been ignored by the Court of Appeal in this judgment. A German case from 1997 sheds more light on this point.13 The German Court found that an English anti-suit injunction should not even be served on a defendant who was domiciled in Germany, since it would be contrary to the German ordre public in the sense that it would violate the right of German Courts to freely decide whether they had international jurisdiction. It seems that this argumentation is much more persuasive and, indeed, in line with both the Turner judgment and a series of ECJ judgments (Owusu v. Jackson C-281/02, being the more recent one) which have held in favour of the compulsory nature of the Brussels Convention/ Regulation’s jurisdiction provisions. Unfortunately, the Court of Appeal did not take this approach into account. Β.

Areios Pagos, Judgment 1321/2004

The critical issue here was the conjunctive application of article 27 point 3 and article 34 of the Brussels Convention (34 point 3 and 45 of the Brussels I Regulation). So far, this is the very first Areios Pagos judgment on a point that, as is well known, has led to only a small number of ECJ cases.14 In this case, the Areios Pagos faced an application for the enforcement of a judgment issued by the Court of Manchester, U.K. The Manchester Court awarded 2,300,000 pounds to an English plaintiff under tort for damage he sustained after falling from the terrace of the hotel in Irakleion, Crete. The award was issued pursuant to a lawsuit filed before the Manchester Court by the injured person against the English travel agency that had arranged his travel to Crete. The travel agency, in turn, called the Greek owners of the hotel (which consisted of a company and a natural person) to join them in the English proceedings as a third party in an action on warranty. In the meantime, the English travel agency had already initiated proceedings in Irakleion against the Greek owners of the hotel, under both contract and tort, for the amount of 740.088.000 Greek drachmas, or alternatively for the amount of 194.387.626 Greek drachmas. This lawsuit was, however, dismissed by the Greek Court for formal reasons (i.e. as non admissible) without going into the merits of contract claim and for lacking legal basis for the tort claim. More particularly, the Areios Pagos drove home a well-known distinction in Greek procedural law (and other continental Oberlandsgericht Dusseldorf published in: International Litigation Procedure 1997, p. 320 et seq. as Re the Enforcement of an English Anti-suit Injunction, 3 VA 11/95 of 10th January 1996. 14 They are the cases Solo Kleinmotoren v. Boch, C-414/92, Hoffman v. Krieg, C-145/86, and Italian Leather SpA v. WECO Postermobel GmbH and Co., C-80/00. 13

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Three Greek Cases on the Brussels Convention procedural laws) between a non-admissible lawsuit and a lawsuit that lacked legal basis. Under Greek law, a non-admissible lawsuit does not lead to res judicata on the merits of the case (but only to procedural res judicata15), whereas a lawsuit that lacks legal basis does. The Greek Court’s finding was sufficient for the application of article 34 point 3, since there was res judicata on the merits on the same issue with the English judgment. Because the legal consequences of the two judgments were to exclude each other (the first awarded compensation and the other rejected the claim), they could be considered irreconcilable pursuant to article 34 point 3. It goes without saying that if the Greek Court had found the Greek claim as nonadmissible altogether, there would not have been a res judicata in place, in the sense required by article 34 point 3 of Brussels I Regulation. Another point to be considered is that the Greek and English proceedings and judgments did not involve the same parties, which is the second requirement of article 34 point 3. The same parties were in fact involved only in the Greek trial and the Greek enforcement procedure. The Areios Pagos did not reflect on this point, but the same parties requirement was also verified in the case. A final point of interest is that both the English and the Greek actions were initiated by the travel agency. Effectively, the same party in the dispute started proceedings that could potentially lead to irreconcilable judgments. The normal 34 point 3 scenario would anticipate parallel proceedings initiated by different litigants. This does not mean, of course, that it could not apply in a case as the one under discussion. However, a question mark does exist as to the travel agency’s decision to start two proceedings in two different member states, which can be a highly dangerous choice from a practical point of view, as it proved to be. A point that remains obscure is whether at the time of the Greek action the English proceedings were still pending, or whether a judgment had already been issued in England. This point has not been analysed by Areios Pagos, most probably because it was never raised by either the Greek parties (for good reason) or by the travel agency, who had started both proceedings.

III. Conclusion The three judgments show a varied degree of success in their application of the Brussels Regulation. To start with, it should be pointed out that in none of these cases, has there been considerable reference to the ECJ case law. This is an approach which is unsatisfactory and, unfortunately, is not an isolated incident in Greek case law. In fact, the effort to create a common judicial space calls for uniform application of the related provisions. This may be best attained by the interpretations of the ECJ and the further application of such interpretations by the For example MAKRIDOU K., The non-admissible lawsuit and the possibility of curing it (in Greek), 3rd ed., Thessaloniki 1998, p. 153-158. 15

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Haris P. Meidanis member state courts. In all three judgments that have been presented, one can detect an effort to ‘protect’ one way or another either the Greek legal order or the Greek courts jurisdiction (or even the Greek parties to the proceedings). Nevertheless, it may be said that in the enforcement cases, the judgments are persuasive in the sense that the related provisions of the Brussels Convention are applied successfully (but not equally persuasive as regards the public policy case reasoning). Unfortunately, the reasoning in the jurisdiction clause case is so inadequate that it does not even allow for consideration of the court’s finding in the substance of the case. This judgment also contains inadequate arguments to support the position of the court and has the disadvantage of not honouring a jurisdiction agreement, which is exactly the opposite to what article 23 of Brussels I Regulation calls for. The fact that the court chose not to uphold the jurisdiction agreement would require, at least, a much more detailed and persuasive argumentation.

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LATVIA TWO 2005 LATVIAN SUPREME COURT DECISIONS ON INTERNATIONAL JURISDICTION AND PROCEDURE Edgars STRAUTINS∗ I. II.

IV.

Introduction Grounds for Challenging an Arbitration Clause: Supreme Court of the Republic of Latvia, 17 June 2005 Service of Process Abroad: Supreme Court of the Republic of Latvia, 16 March 2005 Conclusion

I.

Introduction

III.

2006 might be a milestone year in the development of Private International Law in the Republic of Latvia. On 31 October 2006, the Latvian Cabinet of Ministers adopted a ‘Concept’1 on the Regulation of Private International Law in Latvia.2 The Concept proposes a number of relevant changes to Latvia’s private international law. The Cabinet of Ministers has charged the Ministry of Justice with the task of drafting all legislation necessary for the accomplishment of the Concept’s aims by 31 December 2008. As a result, for at least the next two years, Latvian courts and practicing lawyers will still have to cope with the existing private international law rules.

∗

Head of Legal Section, Department of legal affairs and international cooperation, Ministry of Health of the Republic of Latvia, Riga. The translation of the Latvian pieces of legislations quoted in the following footnotes is that made by the ‘Translation and Terminology Centre’ (<www.ttc.lv>). 1 According to Latvian Law, a ‘concept’ is a document of political planning. It is the main legal instrument upon which ministries and other governmental bodies in Latvia are drafting law. A ‘concept’ contains the statement of the issues to be addressed, advances various solutions to tackle them and suggests a preference for one of them. All laws drafted on the basis of a ‘concept’ cannot derogate from the framework which is set by it. If there is a need to depart from the solution chosen in the ‘concept’, latter should be amended accordingly. 2 Available (in Latvian) at . Yearbook of Private International Law, Volume 8 (2006), pp. 289-297 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

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Edgars Strautins One of the main features of current Latvian private international law is that the Latvian Law on Civil Procedure3 contains no explicit rules on international jurisdiction and civil proceedings in matters involving a foreign element. The purpose of this paper is to show how Latvian courts currently deal with issues on international jurisdiction and cross-border litigation at large. The two examples4 below are both drawn from the recent jurisprudence of the Supreme Court of the Republic of Latvia.

II.

Grounds for Challenging an Arbitration Clause: Supreme Court of the Republic of Latvia, 17 June 2005

A Latvian national brought an action before the Riga Regional Court against a company registered in Switzerland for damages arising from the breach of contract. Pursuant to the contract in question, the Swiss company was obliged to handle the shares of some Latvian company for the benefit of the plaintiff (the Swiss company was registered as the owner of the shares in the list of the shareholders of this Latvian company).5 The parties agreed that Swiss law would apply. Furthermore, the contract contained an arbitration clause, according to which all disputes arising from the contract would be settled according to the International Arbitration Rules of the Chamber of Commerce of Zurich, by a Swiss court of arbitration. The jurisdiction of ordinary national courts was expressly excluded. The plaintiff instigated arbitration proceedings according to the provisions of the contract, but the Swiss company failed to pay the deposit required by the court of arbitration. Accordingly, the plaintiff took the view that the arbitration clause was waived and no longer mandatory. As a result, he sued the Swiss company before the Riga Regional Court. He argued that, under the Latvian Law on Civil Procedure, the action could be brought before the Riga Regional Court because the damages occurred in Riga. Indeed, he alleged that the damages were caused by a registration of amendments in the Register of Enterprises of the Re-

3 The Civil Procedure Law of Latvia, adopted on October 14, 1998, entered into force on January 1, 1999. Official publication – ‘Latvijas Vestnesis’, November 3, 1998, No. 326-330. 4 Not published. 5 It would appear from the clauses of the contract that this results in the creation of a trust, the Swiss company being the trustee and the Latvian national the beneficiary. However, the Latvian legal system does not recognize such a legal relationship. As a result, the rights and obligations arising from the trust are not enforceable in Latvia in the same way as they are enforceable in other countries whose legal systems are familiar with this legal institution.

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Two Latvian Decisions on International Jurisdiction and Procedure public of Latvia, concerning the list of the shareholders of a Latvian company.6 Since shares are considered intangible assets, they are ‘attracted’ to the place of their registration (locus registrationis), namely, the Republic of Latvia, Riga. Accordingly, the plaintiff believed that pursuant to Articles 25(1) and (2) and 28(4) of the Law on Civil Procedure7 the action should be brought before the Riga Regional Court. The defendant argued for the dismissal of the case, because according to the contract the parties agreed to apply Swiss law to all legal issues deriving from the contract. In addition, he claimed that the question of whether or not the Latvian court had jurisdiction should be discussed according to the Swiss contract rules (even though the doctrine of private international law clearly separates applicable law and jurisdiction issues). The defendant supported his claim by referring to Article 2 of Switzerland’s Federal Act on Private International Law,8 which states that unless specific provisions otherwise provide, ‘[…] the Swiss judicial or administrative authorities at the defendant’s domicile shall have jurisdiction.’9 He argued that, should the arbitration clause be disregarded, the action against him should, according to the provision mentioned, be brought before the Swiss courts. He further claimed that, according to the terms of the contract, all the disputes should be heard before a court of arbitration based in Switzerland and according to the International Arbitration Rules of the Chamber of Commerce of Zurich. The Riga Regional Court held that the case should be dismissed. First, the Court took account of the fact that there was no dispute regarding the terms of the contract. The Court then considered the arbitration clause included in the contract. According to Article 55 of the International Arbitration Rules of the Chamber of Commerce of Zurich, when a party does not pay the required deposit, the other party may either pay all sums required in advance or waive the arbitration clause. Thus, the Riga Regional Court accepted plaintiffs’ argument concerning his right to disregard the arbitration clause and to bring an action before the ordinary courts. The Court next referred to Article 5 (1), (2) and (3) of the Latvian Law on Civil Procedure. According to these rules, courts shall adjudicate on civil matters in accordance with Latvian laws and other regulations, international agreements which are binding upon the Republic of Latvia, and the applicable EU law. If an international agreement which has been ratified by the Saeima – the Parliament of 6 Actually, the dispute in question arose when the Swiss company sold the shares of the Latvian company to another legal person despite the fact that it was obliged to handle them for the benefit of the Latvian national. 7 Article 25(1)2) of the Law on Civil Procedure of Latvia provides that a regional court shall examine, within its jurisdiction, matters arising from rights in regard to obligations if the amount of the claim exceeds 30 000 LVL. Article 28(4) the Law on Civil Procedure of Latvia states that an action regarding damage inflicted to the property of a natural or legal person may be brought in accordance with the location where such damage was inflicted. 8 . 9 See English translation of the Swiss PIL, reproduced in DUTOIT B., Droit international privé suisse, 4e éd., Bâle [etc.], 2005, p.6.

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Edgars Strautins the Republic of Latvia – contains different provisions than those set forth in Latvian laws, the provisions of the international agreement shall prevail. In specific cases provided for in laws or international agreements, the courts shall also apply the laws of other states or international legal rules. From these provisions the Riga Regional Court concluded that, in order to settle the dispute in question, it should take into account the relevant principles of private international law and combine them with the provisions of the Latvian Law on Civil Procedure as well as with the Swiss Federal Act on Private International Law. Switzerland is a member of the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters10 of 16 September 1988, but since the Republic of Latvia has not acceded to this convention, its provisions are not directly applicable to the dispute at issue. However, the Court held that the Lugano Convention and Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters,11 which, though in force in Latvia as part of the acquis communataire, was not applicable to the case at issue, contained internationally acknowledged principles regarding international jurisdiction rules. According to those principles, the jurisdiction of a court is based on the defendant’s domicile, except in certain specific cases where either the subject matter of the litigation or the party autonomy point to another connecting factor. The Court found that, in the circumstances of the case in question, there was neither the possibility nor any reason to derogate from the main principle – application of the rule actor sequitur forum rei, i.e. the defendant’s domicile. Nevertheless, the Riga Regional Court did not specify why there was neither possibility nor reason to derogate from this principle despite the fact that Article 5 of the Regulation (EC) No 44/2001 allows contractual disputes to be alternatively brought in the place where the obligation in dispute was to be performed and tort issues in the place where the damages occurred. In conclusion, the Riga Regional Court held that under Article 223 (1) of the Latvian Law on Civil Procedure,12 as well as the principles regarding international jurisdiction rules mentioned above, the action should be dismissed for want of jurisdiction. Therefore, the plaintiff could bring an action against the defendant before Swiss courts, pursuant to Articles 2 and 112 of Switzerland’s Federal Act on Private International Law. Plaintiff appealed the decision to the Supreme Court of the Republic of Latvia. The Supreme Court upheld the Riga Regional Court’s decision, though it completely altered its grounds. The Court took the view that it was apparent from the terms of the contract that the parties agreed to bring all the disputes arising from the contract before a Swiss court of arbitration. Since ‘the arbitration clause 10

. Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters: OJ L 12, 16.1.2001, p. 1–23. 12 Article 223 1) of the Law on Civil Procedure states that the court shall terminate court proceedings if the matter is not within the jurisdiction of the court. 11

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Two Latvian Decisions on International Jurisdiction and Procedure had not been challenged before the court’, it was still binding upon the parties. Although the Supreme Court did not specify which ‘court’ it meant, it is reasonable to infer from the context of its reasoning that it was referring to the arbitration court itself. In order to substantiate this, the Court found it more appropriate in these circumstances to refer, rather than to Article 55 of the International Arbitration Rules of the Chamber of Commerce of Zurich, to Article 223 (6) of the Latvian Law on Civil Procedure. The latter article states that the court shall waive jurisdiction if the parties have agreed, in accordance with procedures set out in law, to submit the dispute to an arbitration court [...]. In other words, the Supreme Court ruled that, since the Latvian Law on Civil Procedure contained no rules on international jurisdiction, the Riga Regional Court had to derive all the provisions necessary to deliver a proper decision from both the national territorial jurisdiction rules set forth in the Law on Civil Procedure and the relevant principles of private international law. The Riga Regional Court did it correctly, but it erred in the assumption that in order to settle the dispute in question, it should refer to the Swiss Federal Act on Private International Law. It is a well-known principle of private international law that in order to determine whether or not they should affirm jurisdiction upon the claim brought before them, national courts should not take into account the rules of other states on international jurisdiction.13 National courts should determine the issue on their own – separately, because the court’s right to adjudicate on certain claims originates directly from the sovereignty of a state, and there are no legal or rational grounds at all for referring to foreign international jurisdiction rules. The Supreme Court stated that the arbitration clause in question should be examined according to the Latvian law, as lex fori, and not according to the Swiss law, as lex arbitrationis. As a result, the Court stated that, based on the provisions of the Latvian Law on Civil Procedure and relevant principles of civil law, the arbitration clause was, in the case at issue, still binding upon the parties. Indeed, according to Latvian civil procedure, in the event that the parties cannot agree to revoke an arbitration clause nor is there any statutory ground for it being void, the parties can attack the arbitration clause only by challenging it as an ordinary contract before the ‘court’, i.e., it is reasonable to assume, before the arbitration court itself. So construed, this ruling is in line with the well-known principle KompetenzKompetenz and is, in my opinion, to be greeted favourably.

13

KEGEL G./SCHURIG K., Internationales Privatrecht, 8. Aufl., München 2000, p.

898.

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III. Service of Process Abroad: Supreme Court of the Republic of Latvia, 16 March 2005 In March 1970 at Nicosia, Cyprus, Alex and Heidi, both German nationals, solemnized their marriage. They then lived in Germany and Greece until 1992, when they moved to the Republic of Latvia. In 1996 they acquired a permanent residence in Latvia. In 2000, Alex became a Latvian national (though he also kept his German nationality). They had no children. In December 2003, Alex filed for divorce with the Riga Northern District Court. He explained that their marriage started to deteriorate in late 1999, and that Heidi left him. He stated that their last common domicile had been in Riga, Latvia, and that after meeting his wife one last time in Greece 2000, he had never seen her again. He also claimed that he had no idea where Heidi resided, and, accordingly, he could not indicate the address to which the Court should serve the summons. However, he claimed that he had informed Heidi by phone about his intention to obtain divorce. The request for divorce was based on Articles 69, 70, 71 and 72 of the Civil Code of Latvia.14 The Riga Northern District Court took into account Alex’s allegation that Heidi had not been residing in Riga since 1999 and, therefore, did not serve the summons on her last known place of residence, i.e. Alex’s domicile. Rather, the Riga Northern District Court ordered, based on the Article 54(2) of the Latvia Law on Civil Procedure,15 the summons publication in the Official Gazette of the Republic of Latvia (Latvijas Vestnesis). The summons was subsequently published on 27 January and 3 March 2004. Since Heidi did not respond to the published summons, the Riga Northern District Court declared Heidi in default, and consid-

14 The Civil Law of Latvia, adopted on 28 January, 1937, entered into force on 1 January 1938. It was never published officially. In summer 1940, as a result of the Soviet occupation, the Civil Law of Latvia was displaced by Soviet civil law system. After the Republic of Latvia came to the independence in 1991, the Civil Law of Latvia was restored (this process was completed by 1 September 1993). Article 69 of the Civil Law of Latvia states: ‘A court may dissolve a marriage only in the cases provided for in the following Sections (72-75). A marriage is dissolved as of the day when the court judgment concerning the marriage dissolution comes into legal effect.’ Article 70 states: ‘A court may dissolve a marriage based upon the application of one or both spouses.’ Article 71 states: ‘A marriage may be dissolved if the marriage is broken down. A marriage shall be deemed to have broken down if the spouses no longer cohabit and there is no longer any prospect that the spouses shall renew cohabitation.’ Article 72 states: ‘A marriage is presumed to have broken down if the spouses have lived apart for at least three years.’ 15 Article 54(2) of the Law on Civil Procedure of Latvia states: ‘Participants in a matter, if their place of residence is indicated in the application, shall be summoned to the court with a court summons. If the place of residence of a defendant is not known, they shall be summoned to the court by publication of a notice in the Latvijas Vēstnesis [the Official Gazette of the Republic of Latvia].’

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Two Latvian Decisions on International Jurisdiction and Procedure ered that under Article 236(4) of the Latvian Law on Civil Procedure,16 the proceedings could continue in her absence. On 6 April 2004 the Riga Northern District Court granted Alex the requested divorce from Heidi. On 29 April 2004, Alex and Maria, a Latvian national residing in Riga, Latvia, got married. On 4 November 2003, because Alex was suffering from a severe illness, he empowered Maria to act on his behalf in all legal matters concerning him. Alex died in Riga on 30 April 2004, one day after having celebrated his marriage. It appeared later that before the divorce, Alex made a testament whereby he left all his property to Maria. In May 2004, Heidi petitioned a court in Hamburg, Germany, claiming that the judgment of the Riga Northern District Court delivered on 6 April 2004 failed to qualify for recognition and enforcement in Germany. She based her claim on the fact she did not know about the divorce until she attended Alex’s burial in Riga. She further argued that, since she had not been informed of the proceedings before the Riga Northern District Court, she was not given the opportunity to be heard and that, had she been served the summons, she would have objected to the divorce. The German court accepted Heidi’s arguments and denied the recognition and the enforcement of the Riga Northern District Courts judgment. The Chief Justice of the Supreme Court of the Republic of Latvia17 sought reversal of the judgment of Riga Northern District Court of 6 April 2004. The Chief Justice considered that the judgment of Riga Northern District Court of 6 April 2004 was to be set aside because it violated the applicable procedural provisions. The Chief Justice took the view that the Riga Northern District Court had only formally complied with the rules regarding service on a defendant. In case the domicile of the respondent cannot be taken into account, Article 59(2) of the Latvian Law on Civil Procedure18 allows the claimant to have service of the summons done through publication in the newspapers in areas where the respondent was supposed to be residing. The Chief Justice also considered that the delivery of the judgment in question violated the rights of the respondent conferred upon her by Article 6 of the Convention on Protection of Human Rights and Fundamental Free16 Article 236(4) of the Law on Civil Procedure of Latvia states: ‘If the place of residence of the defendant is unknown or it is not located in Latvia, the matter may be adjudicated without the participation of the defendant if he or she has been summoned to court according to procedures specified by law.’ 17 According to Articles 483 and 484 of the Latvian Law on Civil Procedure, the Chief Justice of the Supreme Court has the power to submit a protest with respect to a court adjudication that has come into effect. One of the grounds for submitting a protest is the breach of substantive or procedural provisions as has been ascertained in matters which have only been adjudicated in a court of first instance, if the court adjudication has not been appealed pursuant to procedures prescribed by law due to reasons independent of the participants in the matter. More information can be found at . 18 Article 59(2) of the Civil Procedure Law of Latvia states: ‘Independently of the publication of a summoning notice in the newspaper Latvijas Vēstnesis, plaintiffs have the right to publish the text of the court summons in other newspapers at their own expense.’

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Edgars Strautins doms. The Chief Justice requested the Senate of the Supreme Court to reverse the judgment of April 2004 judgment and to refer the case to the court of first instance for a new adjudication. The Chief Justice’s protest was heard by the Senate of the Supreme Court19 on 16 March 2005. The Senate regarded the protest as unfounded. It stated that the Riga Northern District Court had complied with all the relevant rules of Latvian Civil Procedure; thus, service of process through publication in the Official Gazette is an appropriate measure, even when a person concerned does not reside in the Republic of Latvia. In addition, the Senate noticed that the claimant had no duty to have the summons published in those areas where the respondent was supposed to be residing. In addition, even if this were so, the violation of Article 59(2) of the Latvian Law on Civil Procedure would not lead to the delivery of an unlawful judgment. With all respect due to the Supreme Court of Latvia, I take the view that the doubts the Chief Justice raised regarding the legitimacy of the procedures followed by the Riga Northern District Court for the service of process are not unreasonable. Since the Latvian Law on Civil Procedure contains no rules regarding civil proceedings on matters involving a foreign element, the relevant rules of the Latvian Law on Civil Procedure, which have been laid down with regard to purely domestic proceedings, should be adjusted to the cross-border character of the case at issue by taking into account the relevant principles of private international law. Respectfully, it seems to me that the measures taken by the Riga Northern District Court to serve process on the respondent were not sufficient because it was clear that the respondent did not reside in Latvia; therefore, the publication in the Official Gazette represented a merely formal tribute to the law in force. Rather, the Riga Northern District Court should have taken all possible measures which could be deemed appropriate in those circumstances to inform the respondent about the action brought against her. For instance, it could have ordered the claimant to have the summons published in newspapers distributed in areas where the respondent was supposed to be residing (even if those areas are abroad, for example, in Germany).20 Under the principles of private international law, the respondent involved in cross-border litigation has a right to be notified, through proper service of process, about an action brought against him. The denial of this right, without reasonable justification, may lead to the impossibility of recognizing and enforcing the court’s decision in other concerned countries.21 Indeed, it was based on this 19 The Senate of the Supreme Court is the highest judicial body in the Republic of Latvia. The Senate acts as the court of cassation in cases decided by the Supreme Court Chambers, by regional courts, and by district (city) courts. More information can be found at . 20 Council Regulation (EC) No. 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters is applicable as of 1st May 2004, the day of Latvia’s accession to EU. However, Article 2 of the Regulation states that it shall not apply where the address of the person to be served with the document is not known. 21 NORTH P./FAWCETT J.J., Private International Law, 13th ed. London, 1999, p. 411.

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Two Latvian Decisions on International Jurisdiction and Procedure principle that the German court denied recognition and enforcement of the judgment of the Riga Northern District Court of 6 April 2004. Moreover, as a result of this, a ‘limping relationship’22 was created, because in Latvia Alex died as a husband of Maria, but in Germany he died as the husband of Heidi.

IV. Conclusion The absence of rules on international jurisdiction and civil proceedings in Latvian litigation involving a foreign element should trigger the application of principles of private international law, i.e., those developed by the doctrine in this particular field of law. Unfortunately, such doctrine is not sufficiently developed in Latvia and, as a result, has failed to provide sufficient assistance to the Latvian judges having to cope with international litigation. Accordingly, judges are left with no other possibility than to refer to the general doctrine of private international law developed by scholars from other countries. This means, however, that an all too heavy burden is placed upon them. As it is apparent from the examples given above, it is difficult to deal with private international law issues without both codified rules and a certain theoretical and doctrinal instrumentarium developed over the years. Moreover, the lack of rules and the emerging inconsistencies in court’s decisions create legal unpredictability that may prejudice to the whole Latvian legal system. The only way to prevent these deplorable situations is to adopt rules on international jurisdiction, on international litigation and other relevant subjects of Private International Law. However, since 1 May 2004 – the day of Latvia’s accession to EU – the situation has started to improve. On this date, many EU legislative acts entered into force in the territory of Latvia – Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, Council Regulation (EC) No 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000. The adopted Concept on the Regulation of Private International Law of Latvia, and the legislation drafts that will hopefully follow, together with the expanding EU legislation in this area, should improve the status of this increasingly important field of law. 22 Or ‘hinkende Rechtsverhältnisse’: cf. KROPHOLLER J., Internationales Privatrecht, 5th ed., Tübingen 2004.

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SPAIN PRIVATE INTERNATIONAL LAW PROBLEMS RELATING TO THE CELEBRATION OF SAME-SEX MARRIAGES: DGRN OF 29 JULY 2005 Patricia OREJUDO PRIETO DE LOS MOZOS∗

I.

III.

Introductory Remarks A. The Amendment of the Spanish Civil Code B. The Reaction of the DGRN to PIL Issues Concerning Same-Sex Marriages Celebration of Same-Sex Marriages in PIL Situations: A Critical Revision of the Doctrine of the DGRN A. The Qualification of Gender Requirement B. The Law Applicable to Content of Marriage Conclusion

I.

Introductory Remarks

A.

The Amendment of the Spanish Civil Code

II.

In light of the repercussions it may have in international situations, opening-up civil marriage to same-sex couples by amending the Spanish Civil Code (‘Cc’)1 is perhaps one of the most remarkable recent changes in the Spanish legal system. This reform has been justified as an adaptation to Spanish social reality2 and is based on the constitutional principles of free development of personality (arts. 9.2 and 10.1 of the Spanish Constitution, ‘CE’), preservation of freedom concerning ∗

PhD, Lecturer in Private International Law, University of Oviedo. Law N. 13/2005 of 1st July, amending the Spanish Civil Code concerning the right to celebrate a marriage, BOE n. 157, 2 July 2005. 2 Even though the reform has been contested by some social groups, lead by the Spanish Catholic Church, it does have the support of the majority of society: one must not ignore that it is the result of the implementation of an electoral promise. 1

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Patricia Orejudo Prieto de los Mozos the forms of cohabitation (art. 1.1 CE), and non-discrimination (art. 14 CE). Nevertheless, it has been confined to substantial – as opposed to conflicts – issues. However, the lack of an ad hoc treatment of Private International Law (‘PIL’) with respect to same-gender marriage should not be seen as oblivion or ‘idleness’ by the Spanish legislator.3 It should be seen as the logical consequence of the legislator’s intent to ignore any difference between same-sex and different-sex marriages under Spanish law.4 Therefore, in international situations, the problems that almost immediately arise concerning the authorization of same-sex marriages reveal a failure in the existing rules to give every situation a suitable solution. Thus, the real issue is whether the Spanish PIL rules concerning (any) marriage are in need of revision.5 The above-mentioned problems refer to the law(s) applicable to the authorization of same-sex marriages, where (at least) one of the intended spouses is a national of a State that does not recognize same-sex marriages. While many media outlets reported to the public that same-sex marriages were being celebrated, some registrars denied authorization, questioning the Constitutional Court about article 44 Cc’s constitutionality.6 In addition, other registrars have denied the authoriza3

See, in this sense, CALVO CARAVACA A.L./CARRASCOSA GONZÁLEZ J., ‘Matrimonio entre personas del mismo sexo y Derecho internacional privado español’, in: Diario La Ley n. 6319, 2 January 2006. 4 The impossibility of celebrating same-sex marriages in other countries is not, in my opinion, a valid reason for PIL rules to uphold the difference. On the one hand, the samegender couples’ right to marry can be considered an ‘emerging civil right’: MARTIN J., ‘English Polygamy Law and the Danish Registered Partnership Act: A Case for the Consistent Treatment of Foreign Polygamous Marriages and Danish Same-Sex Marriages in England’, in: Cornell Int.L.J. 1994, pp. 419-446, at 432-438. Actually, the recent openingup of same-sex marriages in South Africa (15 November 2006) could confirm a trend towards the generalization of these marriages worldwide. On the other hand, even if it is true that there is a risk of creation of limping relationships, first, this is not a reason to hinder the exercise of a right, and second, many foreign legal systems that do not regulate same-sex marriages do give legal effects to foreign same-sex marriages by the means of their ‘conversion’ into civil partnerships: see e.g. in England MCK NORRIE K., ‘Recognition of Foreign Relationships Under the Civil Partnership Act 2004’, in: Journal of Private International Law 2006, pp. 137-167, at 161-165. Thus, it is true that the uneven recognition of same-sex marriages within the European Union shows a lack of uniform values that threatens the possibility of unification of Private International Family Law and gives rise to many problems in relation to the application of institutional acts (SÁNCHEZ LORENZO S., ‘Direction générale des Registres et du Notariat du 24 janvier 2005’, in: Rev. crit. 2005, pp. 618-627, at 619 and 626-627); but the outcome of this situation is perhaps a matter of time. 5 QUIÑONES ESCÁMEZ A., ‘Límites a la celebración en España de matrimonios internacionales del mismo sexo’, in: Revista Jurídica de Catalunya 2005, pp. 1171-1187, at 1186; ÁLVAREZ GONZÁLEZ S., ‘Matrimonio entre personas del mismo sexo y doctrina de la DGRN: una lectura más (crítica)’, in: Diario La Ley, n. 6629, 15 January 2007, 1-3. 6 Article 44 Cc, as amended, provides that ‘marriage shall have the same requirements and effects regardless of whether the intended spouses are of a different or of the

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Celebration of Same Sex-Marriages in Spain tion through application of article 9.1 Cc, which refers ‘matters of capacity and civil state’ to personal (national) law.7

B.

The Reaction of the DGRN to PIL Issues Concerning Same-Sex Marriages

The DGRN (Dirección General de los Registros y del Notariado), the administrative body dependent on the Ministry of Justice and entrusted with ‘all the issues related to the Civil Registry,’8 was swift to react.9 In the very same month that the new regulation became effective, it made use of its advisory function by the means of a ‘Resolución-Circular’.10 This decision, which is a source of law,11 eliminates the difficulties by declaring that Spanish law is applicable to the authorization of same-sex marriages, regardless of the spouses-to-be’s nationality. The DGRN concluded that permission to marry should be given when there is a Spanish civil registrar competent to decide on the authorization of a marriage12 and the ceremony complies with the formal requirements established by the Spanish Civil Code.13 same sex’. Note that leave was not granted to the questions on the grounds that civil registrars are not entitled by the law to submit questions to the Constitutional Court: See Autos 505/2005 and 508/2005, both 13 December 2005, and Auto 59/2006 of 15 February 2006 (). The Constitutional Court has, however, granted leave to the question submitted by the PP (Partido Popular), main party in the opposition. 7 See QUIÑONES ESCAMEZ A., ‘Circulaire de la DGRN du 29 juillet 2005, sur les mariages civils entre personnes du même sexe’, in: Rev. crit. 2006, pp. 855-858. 8 Art. 9 Law of the Civil Registry, of 8 June 1957 (Ley del Registro civil), BOE n. 151, 10 June 1957. 9 The promptness of the response is, in fact, one of its most remarkable virtues: See ÁLVAREZ GONZÁLEZ S. (note 5), at 1, and ID., ‘Resolución-Circular de la DGRN 29 de julio de 2005, sobre matrimonios civiles entre personas del mismo sexo’, in: Revista Española de Derecho Internacional 2005, pp. 1007-1012, at 1008. 10 Issued to give a response to the consultation of the civil registrars that raised doubts about the possibility of authorising same-sex marriages. 11 For it is legally binding both for civil registrars and jurisdictional courts, as long as it is not contrary to any hierarchically superior – or equal, but subsequent – legal rule: see PERÉ RALUY J., Derecho del Registro Civil, t. I, Madrid 1962, at 52. 12 As the Resolución-Circular itself points out, municipal civil registrars may authorize a marriage when one of the spouses-to-be is domiciled in Spain. Consular civil registrars have competence if (1) one of the future spouses is Spanish; (2) neither of them is a national of the receiving country; and (3) at least one of them is domiciled within the consular district of the authority. 13 Once authorized by the civil registrar, the wedding ceremony can take place either before the same authorizing registrar or before any other competent authority (civil or religious) in Spain (municipal marriage) or in a foreign country (consular marriage). In this last case, the receiving country should not prohibit the celebration of foreign consular marriages within its territory. See OREJUDO PRIETO DE LOS MOZOS P., La celebración y el reco-

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Patricia Orejudo Prieto de los Mozos Such an outcome (application of Spanish law) could be, in my belief, the correct one, but it has been attained without a proper line of argument.14 Indeed, the solution of the problem depends upon the qualification of the gender requirement. If it is considered to be a matter of ‘capacity’ and if the law applicable to ‘capacity to marry’ is established by article 9.1 Cc – as asserted by the DGRN in the beginning of its decision15 – one ought to agree on the necessity to of answering the following two – rather than three16 – questions: (1) are foreign laws that prohibit same-sex marriages compatible with Spanish international public policy; and, (2) as long as the application of article 9.1 Cc may treat same-sex couples differently, is it in line with the Spanish Constitution. However, if the gender requirement is classified as a part of the content of marriage, then the only relevant issue is the law applicable to content of marriage. The DGRN ends its resolution by asserting that the gender requirement is a matter of the content of marriage, subject to Spanish substantive provisions. Nevertheless, in reaching this conclusion, it devotes many lines to defending both the availability of an exception under international public policy allowing to disregard foreign laws that do not grant same-sex partners the right to marry17 and the view that article 9.1 Cc is compatible with the Spanish Constitution. Objections could be made against the treatment given to both issues,18 as

nocimiento de la validez del matrimonio en el Derecho internacional privado español, Navarra 2002, at 166-171. 14 See also ÁLVAREZ GONZÁLEZ S. (note 5), SÁNCHEZ LORENZO S. (note 4), ARENAS GARCÍA R, ‘La doctrina reciente de la DGRN en materia de celebración del matrimonio en los supuestos internacionales’, in: Anuario Español de Derecho internacional privado 2005, 351-371at 368. 15 However, see infra, notes 29 and 30. 16 There is still a third question for the DGRN: ‘Is the requirement of gender to be considered an objective requirement, rather than a subjective one?’ This question, erroneously presented by the DGRN in the framework of the problems that arise concerning the application of article 9.1 Cc, should logically be the first one to be answered. 17 The DGRN draws an analogy between the application of the exception when the civil registrar authorizes a same-sex marriage and when the authorization is requested by a transsexual – male to female – foreigner to marry a Spanish man: see some extracts of the decision in Rev. crit. 2005, 614-618 and the comments by SÁNCHEZ LORENZO S. (note 4). 18 Especially to the second one: If article 9.1 Cc is the rule applicable to the capacity to marry, one may invoke the convincing arguments concerning the lack of harmony between the constitutional principle of equality and (Italian similar) PIL provisions relating to the celebration of marriage given by ROMANO G.P., in ‘Is Multilateral Conflict Rule on Capacity to Marry in Line With The Italian Constitution?’, in: this Yearbook 2005, pp. 205237.

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Celebration of Same Sex-Marriages in Spain well as against some other assertions that are found throughout the decision,19 but the space of this comment is limited. Therefore, I will confine my discussion to the proper qualification of the gender requirement (section II.A) and to the corresponding applicable law (section II.B), paying special attention to the arguments of the DGRN.

II.

Celebration of Same-Sex Marriages in PIL Situations: A Critical Revision of the Doctrine of the DGRN

A.

The Qualification of Gender Requirement

According to the traditional conception in Spanish PIL literature, there are two categorical requirements for a valid marriage, substance (i.e. capacity and consent) and form.20 Thus, under this view marriage is the only legal relationship that ‘lacks’ content.21 While the reason for such an anomalous treatment may be debated, the fact is that marriage can no longer be considered a ‘natural institution’.22 The celebration of a marriage entails the acceptance of certain rights and duties that are set by the law according to the particular view of the institution’s socio-political and economic function. Each national legal system regulates the content of marriage in a different way; therefore, a universal conception of marriage no longer exists. For a marriage to be valid, the potential spouses must fulfil the requirements of capacity to consent, follow the formalities and accept the specific rights and duties established by a certain legal order. As a result, it is necessary to renew the said traditional conception of marriage by considering that marriage is, as any other legal institution, subject to requirements of capacity, form, and content.23 If this is so, it is also crucial to rearrange the qualifications given to certain requirements under the traditional conception. For instance, among the subjective requirements set by the law, there are some that have traditionally been considered pertaining to the ‘capacity to marry’ because they are directly related to the indi19

See, for instance, the arguments against the interpretation of the DGRN upholding the ‘renvoi’ to a foreign law by ÁLVAREZ GONZÁLEZ S. (note 5), at 2; SÁNCHEZ LORENZO S. (note 4), at 622. 20 See e.g., in this same context, ABARCA JUNCO A.P./GÓMEZ JENE M., ‘Breves notas sobre la Resolución-Circular de 29 de julio de 2005, de la Dirección General de los Registros y del Notariado, sobre matrimonios civiles entre personas del mismo sexo’, in: Revista Electrónica de Estudios Internacionales 2006 (<www.reei.org>), at 1. 21 So ARENAS GARCÍA R. (note 14), at 354-357. 22 Ibidem at 354-355, where attention is drawn to the influence of Canon marriage. 23 Ibidem.

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Patricia Orejudo Prieto de los Mozos viduals. However, it is possible to distinguish between certain requirements that have previously been grouped together under capacity. Those that are linked to the capacity to consent, which are mainly directed at the protection of the spouses-tobe (e.g. age and full mental capacity), can be differentiated from those that are connected to the rights and duties of marriage (which try to protect the institution).24 Thus, the content of marriage is made up of both the rights and duties of the spouses and some subjective requirements that the couple must meet to get married. As the DGRN recognizes, the gender requirement is one of these subjective considerations.25 Certainly, the opening up of marriage to same-sex partners touches upon the very conception of marriage as a social and legal institution. The amendment to the Spanish Civil Code has entailed a legal adaptation of this notion, in harmony with the evolution of Spanish society’s idea of the function of marriage. In fact, there are very few detractors of the reform that do not refer to the ‘classical concept’ of the institution in order to justify both their rejection of samesex marriages and their preference for the regulation of same-sex couples under the institution of partnership.26

B.

The Law Applicable to Content of Marriage

To the extent that the possibility of celebrating a marriage between two people of the same sex can be considered a matter of content, a question of law issue arises when Spanish authorities celebrate these marriages in international situations. The Spanish PIL gives no express answer to the determination of applicable law (lex matrimonii). The DGRN declares Spanish law to be applicable by appealing to different arguments, none of which is sufficiently founded.27

24 Ibidem. The possibility of celebrating a polygamous marriage (or not) could also be considered a matter of content, as it depends on the conception of the institution too. See ARENAS GARCÍA R., Crisis matrimoniales internacionales. Nulidad matrimonial, separación y divorcio en el nuevo Derecho internacional privado español, Santiago de Compostela 2004, at 202. 25 ARENAS GARCÍA R. (note 24), at 202 had already pointed out at this qualification. SÁNCHEZ LORENZO S. (note 4), at 624-625 does agree; and QUIÑONES ESCÁMEZ A. (note 5), at 1179-1180 suggests that the law amending the Civil Code could be regarded as an imperative law, but as a result of the consideration of the auctor regit actum principle, which leads to the application of the lex auctoritatis, and not as an exception to the conflict of law rule. See also ID. (note 7), at 856-857. 26 See e.g. ABARCA JUNCO A.P./GÓMEZ JENE M. (note 20), at 4. It is the view held by the Spanish Consejo de Estado in its Opinion (Dictamen) of 15 December 2004. 27 The DGRN refers to the analogy with same-gender partnership, to the forum-ius correlation, to favor matrimonii and to some fundamental rights, without any further explanation.

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Celebration of Same Sex-Marriages in Spain In the absence of a specific conflict of law rule, one may be tempted to uphold the analogical application of article 9.1 Cc, for it aims at regulating the law applicable to ‘capacity and civil state.’ Certainly, the concept of ‘civil state’ covers all the fundamental facts that are related to the person, such as birth, death, name, sex,28 age, filiation, and marriage. Nevertheless, there are at least three good reasons to reject this solution. First, even if it is true that this provision sets a general rule in Spanish PIL, it is subject to many exceptions, one of which is precisely the solemnisation of marriage. In fact, if article 9.1 Cc were applied to the content of marriage, it would be the only requirement subject to this rule. The only conflict of law rule expressly set in Spanish PIL dealing with the celebration of a marriage before Spanish authorities is article 49 Cc, which regulates form. And even if the law applicable to capacity to marry could be subject to the general conflict of law rule on capacity,29 in practice the authorities generally apply Spanish law.30 Second, lex auctoritatis must be applied to the rights and duties of the spouses.31 Therefore, applying any other law to the subjective requirements of marriage which are directly linked to the spouses’ inherent rights and duties, would entail an utterly inconvenient division of the law applicable to content of marriage. Finally, and most importantly, if marriage lacks a universal configuration and each authority can apply but a single law to determine what marriage is being celebrated, the marriage authority can only apply the law of its state. There must be a single lex matrimonii regulating the content of marriage and that law is the lex auctoritatis. Whenever a marriage is celebrated before a Spanish authority, it is a 28

Therefore, sex is subject to personal law according to art. 9.1 Cc, but just as far as its determination concerns. Once the sex of the spouse-to-be is established by the means of the application of her or his national law – as far as this law does not violate Spanish international public policy: see Res. DGRN of 24 January 2005, and the commentary by SÁNCHEZ LORENZO S. (note 4) – the recognition of his or her right to marry another person of a different or the same sex is related to the content of marriage and, therefore, it is to be regulated by the law according to which the marriage is to be celebrated, i.e., the lex matrimonii. 29 Such is the view of the DGRN, which reflects the opinion of the great majority of Spanish authors. The DGRN asserts that ‘there is no room to doubt which law is applicable to the capacity to marry,’ but most of the arguments set to base this statement could easily be refuted. For instance, it is clear that when art. 9 of the Charter of Fundamental Rights of the European Union (OJ C 364, 18 December 2000) establishes that ‘The right to marry and the right to found a family shall be guaranteed in accordance with the national laws governing the exercise of these rights,’ it is performing a remission to State laws for the regulation of marriage, and not setting a conflict of law rule, as the DGRN suggests. 30 OREJUDO PRIETO DE LOS MOZOS P. (note 13), at 84-90; FERNÁNDEZ ROZAS J.C./SÁNCHEZ LORENZO S., Derecho internacional privado, 3rd ed., Madrid 2004, at 435. 31 See OREJUDO PRIETO DE LOS MOZOS P., ‘Tratamiento registral de los matrimonios de complacencia: lectura crítica de la Instrucción de la Dirección General de los Registros y del Notariado de 31 de enero de 2006’, in: Diario La Ley n. 6542, 5 September 2006, 1-8, passim.

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Patricia Orejudo Prieto de los Mozos matter of Spanish law to decide which are the rights and duties the spouses accept and, accordingly, whether or not marriage is open to same-sex couples.

III. Conclusion The problems that have arisen concerning the celebration of same-gender marriages before Spanish authorities reveal the convenience of revising the Spanish PIL marriage rules. The absence of an express conflict of law rule regulating either the capacity to marry or the content of marriage creates a legal uncertainty that the decisions of the DGRN – due to their poor argumentation – only partially resolve. In order to remedy this ambiguity, it is necessary to enact specific conflict of law rules which declare Spanish law applicable to both types of requirements. Therefore the law should cover the capacity to marry, as a matter of simplification,32 and the content of marriage, as a matter of necessity. Thus, as far as celebrating marriages before Spanish authorities is concerned, Spanish law would apply to every requirement. By doing so, the conflict of law rules would reflect the present widespread practice that entails the application of the lex fori to the constitution of legal relationships related to civil status, as a means of granting the individuals that have a certain link to the forum legal system the right to non-discriminatory access to the institutions made available by that system.33

32 Even if I have reconsidered the qualification that is to be given to each of the requirements set by the law to celebrate a marriage (I used to follow the classical distinction, and so I did not consider the lack of a proper distinction between capacity, form and content), I still think that capacity to marry is mainly regulated by rules that reflect a public interest, which hinders the application of more permissive foreign rules, and that foreign rules that regulate capacity to marry in a more restrictive way should not be applied, for they would impair the creation of a legal relationship where Spanish rules would grant the right to create it (bearing in mind that Spanish authorities are competent to participate in its creation). See OREJUDO PRIETO DE LOS MOZOS P. (note 13), at 57 et seq. 33 See ROMANO G., ‘La bilatéralité éclipsée par l’autorité. Développements récents en matière d’état des personnes’, in: Rev. crit. 2006, pp. 457-519.

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SWITZERLAND CHALLENGING AN ARBITRAL AWARD FOR INFRINGEMENT OF COMPETITION LAW: THE TERRA ARMATA DECISION OF THE SWISS FEDERAL TRIBUNAL OF 8 MARCH 2006 Bart VOLDERS∗ and Valentin RÉTORNAZ∗∗

I. II.

Introductory Remarks The Decision of the Federal Tribunal A. The Chameleon B. The Unruly Horse 1. Competition Law Does Not Amount to Public Policy a) The Impact of Eco Swiss China b) A Fundamental Principle 2. Exception for Particular Circumstances

III.

How to Cope with this Result?

I.

Introductory Remarks

The facts underlying the Swiss Supreme Court decision of 8 March 2006 are fairly straightforward. Two Italian companies specialising in the manufacturing of particular technologies related to the construction of bridges and other immovables, one of them being an Italian subsidiary of a French undertaking, were engaged in a dispute over the execution of a contract for the construction of a bridge for the high-speed railway between Milan and Naples. The party’s agreement contained a number of pertinent terms. Both undertakings had agreed to tender their public bids jointly and had equally agreed not to conclude any agreement with any third undertaking. The contractual arrangement furthermore detailed the price of the proposal of each undertaking. The applicable law to the contract was Italian law. *

Swiss Institute of Comparative Law. University of Neuchâtel. The authors hereby express their gratitude to Professor L.G. Radicati di Brozolo of the Catholic University of Milan for kindly sending over the decision of the Milan Court of Appeal of 5 July 2006, as well as his commentary thereon, which is to be published in one of the upcoming issues of the Rivista dell’arbitrato. **

Yearbook of Private International Law, Volume 8 (2006), pp. 307-320 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Bart Volders / Valentin Rétornaz The contract equally contained an arbitration clause for ICC arbitration with venue in Lausanne, Switzerland. In the end, one of the two undertakings was hired for the construction of the bridge. It therefore created a consortium with other undertakings. According to the other company, the plaintiff, such an agreement amounted to a breach of its contractual arrangement with the defendant. The defendant argued, however, that the exclusivity agreement was null and void due to it being anti-competitive under both Italian and European competition law. It accordingly requested the dismissal of the plaintiff’s claim. This argument amounts to a novelty in recorded case law. In previous decisions, the issue of the law of competition was merely invoked in the motion to set aside the arbitral award or even in the subsequent enforcement proceedings. The Arbitral Tribunal eventually rejected the defendant’s nullity claim and held that the exclusivity agreement conformed to the requirements of Italian and European competition law. The plaintiff was consequently accorded a full reimbursement of all the damages it had suffered. Claiming that the award infringed on public policy, however, the defendant subsequently challenged the arbitral award before the Federal Tribunal, the Supreme Court of the Helvetian Confederation exclusively competent to hear a motion to set aside an international arbitral award. The impact of competition law on international commercial arbitration has only recently been acknowledged in legal writings. The introduction of arguments drawn from competition law via the public policy exception has nevertheless already provoked a particularly fertile debate in both scholarly writings and arbitral case law. The decision of the Federal Tribunal of 8 March 2006,1 particularly rich in legal reasoning, adds to this debate the postulate that the law of competition could not be said to form part of the fundamental foundations of all legal orders so as to qualify as a matter of public policy. The Court accordingly held that an arbi1 ATF 132 III 389. See the observations and commentaries on the Terra Armata case by RADICATI DI BROZOLO L.G., case note under Federal Tribunal of 8 March 2006, in: Rev. arb. 2006, p. 763-785; RONEY D.P., ‘Switzerland: Swiss Federal Supreme Court holds competition law is not part of public policy’, in: Int. A.L.R. 2006, 49-53; MEINHARDT M./AHRENS J.-M. , ‘Wettbewerbsrecht und Schiedsgerichtsbarkeit in der Schweiz – Eine Würdiging des Entscheids des Bundesgerichts vom 8. Marz 2006’, in: SchiedsVZ 2006, p. 182-188; BOVET C., ‘Ordre Public, concurrence et arbitrage’, in: Concurrences 2006 (3), p. 10-11; IDOT L., ‘Ordre public, concurrence et arbitrage: Etat de la rencontre’, in: Concurrences 2006 (3), p. 12-15; KNOEPFLER F., ‘Droit de la concurrence et réserve de l’ordre public en arbitrage’, in: Concurrences 2006 (3), p. 16-20; MERKT B., ‘Ordre public et droit de la concurrence: Utopie ou réalité ?’, in: Concurrences 2006 (3), p. 21-25; PARTASIDES C./BURGER L., ‘The Swiss Federal Tribunal’s Decision of 8 March 2006: A deepening of the arbitrator’s public policy dilemma ?’, in: Concurrences 2006 (3), p. 26-28; RUIZ-JARABO COLOMER D., ‘L’inclusion du droit de la concurrence dans l’ordre public communautaire: En effeuillant la marguerite’, in: Concurrences 2006 (3), p. 29-31; DE LY F., ‘Internationale Arbitrage’, TvA 2007, II, p. 37-40; SCHERER M., ‘Jurisprudence – Introduction to the Case Law Section’, in: ASA Bull. 2006, vol. 2, 270-272; PONCET C., ‘Swiss Federal Tribunal renders ruling on the meaning of public policy in international commercial arbitration’, in: World Arbitration and Mediation Report 2006, p. 221-228.

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Challenging an Arbitral Award for Infringement of Competition Law tral award which infringes on the law of competition, albeit Swiss or foreign, is not to be set aside under Swiss law. In matters of international commercial arbitration, an arbitral award can only be challenged under Swiss law on the basis of Article 190 of the Swiss Private International Law Act (hereinafter SPILA).2 This provision enumerates an exhaustive list of the grounds for setting aside an arbitral award. For example, sections (a) through (d) allow a challenge to an arbitral award when certain procedural rights affecting the requirements of a fair trial are infringed. An arbitral award can equally be challenged in accordance with Art. 190, al. 2, litt. e SPILA when the award is contrary to public policy. It is solely through this public policy escape valve that the merits of the award can be examined by the state court. Arguments based on an erroneous or a mere misapplication of the law cannot result in an annulment of the award pursuant to Art. 190, al. 2 SPILA.3 Although Switzerland has a clear interest in upholding arbitral awards, its reluctance to allow for the setting aside of arbitral awards is not proper under Swiss law. On the contrary, such reluctance amounts to an international standard and is clearly propounded by Art. V of the 1958 New York Convention, and afterwards reproduced by Art. 34, al. 2 of the UNCITRAL Model Law.4 Both instruments affirm that a revision of the merits of the arbitral award, either when challenging the award (UNCITRAL Model Law) or during the enforcement proceedings (1958 New York Convention), cannot be tolerated. National arbitration laws, including the Austrian,5 German,6 French,7 Belgian,8 Dutch9 and Spanish10 further reiterate that, apart from an infringement of 2 In accordance with Art. 176(1) SPILA, the provisions of Chapter XII of SPILA dealing with International Arbitration shall apply to all arbitrations if the seat of the Arbitral Tribunal is in Switzerland and, if at the time of the conclusion of the arbitration agreement, at least one of the parties in the arbitral proceedings had neither his domicile nor his habitual residence in Switzerland. For an overview: CORBOZ B., ‘Le recours au Tribunal Fédéral en matière d’arbitrage international’, in: SJ 2002, II, p. 1-30. 3 ATF 116 II 634, rec. 4; decision of the Federal Tribunal of 24 March 1997, in: Bull. ASA 1997, p. 361 and in: RSDIE 1998, p. 574. Similarly: DUTOIT B., Droit international privé Suisse. Commentaire de la loi fédérale du 18 décembre 1987, 4th ed., Basel (etc.), 2005, p. 674 ad Art. 190. 4 LEW J./MISTELIS L./KRÖLL S., Comparative International Commercial Arbitration, The Hague (etc.) 2003, p. 673; RADICATI DI BROZOLO L.G. , ‘Arbitrage commercial international et lois de police’, Recueil des Cours 2006, vol. 315, p. 330, nr. 44. Similarly, although merely implicit, ZEILER G., Schiedsverfahren, Vienna/Graz 2006, p. 265. 5 § 611 ZPO. Similarly: ZEILER G. (note 4), p. 272, nr. 34 ad § 611 ZPO. 6 § 1059 ZPO. 7 Art. 1502 of the new French Code of Civil Procedure (NCPC) rephrases, except for certain minor textual details, Art. 190(2) SPILA. 8 Art. 1704 of the Belgian Code of Civil Procedure. Although this provision rephrases most of the text of Art. 190(2) SPILA, it nevertheless allows for the arbitral award to be annulled if it contains conflicting provisions (Art. 1704(2) 2, litt. j Code of Civil Procedure: ‘si elle contient des dispositions contradictoires’). It is nonetheless acknowledged in scholarly writings that only contradictions within the dispositive part of the award constitute

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Bart Volders / Valentin Rétornaz public policy, the state courts are not entitled to review the merits of an arbitral award. The possibilities to set aside an arbitral award lying within such narrow borders, a rebellion of the unsuccessful party through a misuse of the public policy escape valve of Art. 190, al. 2 litt. e SPILA, the contrariety of public policy thereby disguising a violation of the law, unfortunately proves a fairly common reaction.11 Swiss scholarly writings share in part a responsibility for such rebellious manoeuvres. A handful of authors indeed expressed the idea, when SPILA entered into force, that the concept of a clear violation of law or equity (‘violation évidente du droit ou de l’équité’)12 which can trigger under Swiss law the setting aside of a national arbitral award, might equally constitute in international arbitration proceedings a sufficient infringement of public policy allowing for the award to be annulled.13 The Federal Tribunal is nevertheless alert for the unsuccessful party a ground for setting the award aside. Refer to: STORME M./DEMEULENAERE B., International Commercial Arbitration in Belgium, Deventer/Boston 1989, p. 103, nrs. 64-65. 9 Art. 1065(1) litt. e of the Dutch Code of Civil Procedure (Wetboek Burgerlijke Rechtsvordering). The text of this provision is however not identical to the text of Art. 1502(2) NCPC or the text of Art. 190(2) SPILA, since it equally encompasses the concept of procedural public policy as a ground for challenging the arbitral award (‘Het vonnis, of de wijze waarop dit tot stand kwam,…’). For further details refer to: MEIJER G.J., in: Burgerlijke Rechtsvordering, Deventer 2002, p. 1213, nr. 1 ad Art. 1065 Rv. 10 Art. 41 of the Act nr. 60/2003 on Arbitration of 23 December 2003. See: YÁÑEZ VELASCO R., Comentários a la nueva ley de arbitraje, Valencia 2004, p. 882. 11 Another ground that is quite often misused to challenge an arbitral award because of an erroneous application of the law by the Arbitral Tribunal is Art. 190(2) litt. a SPILA. The section requires the Arbitral Tribunal to be impartial and independent. It has been argued on several occasions that a manifest misapplication of the law amounts to a clear indication of the lack of impartiality and independence of the Tribunal. For some examples: ATF 128 III 330 and the decision nr. 4P.235/2001 of the Federal Tribunal of 4 April 2002, in: RSDIE 2002, p. 591, KNOEPFLER F./SCHWEIZER P., Arbitrage international. Jurisprudence suisse commenté depuis l’entrée en vigueur de la LDIP, Zürich 2003, p. 673-674 (case note SCHWEIZER P.). 12 Art. 36 litt. f of the Inter-Cantonal Concordat on Arbitration (Concordat intercantonal sur l’arbitrage, SR 279)(hereinafter CIA). Art. 36 CIA lists the grounds for the setting aside of a national arbitral award. As opposed to the setting aside of an international arbitral award for which solely the Federal Tribunal is competent, the motion to set aside a national award is to be brought before a cantonal court. A national arbitral award can be set aside more easily than its international counterpart. Art. 36 CIA lists no less than nine different grounds allowing for the annulment of the arbitral award, one of them being a clear violation of law or equity. 13 MÜLLER Ch., International Arbitration. A Guide to the Complete Swiss Case Law (Unreported and Reported), Zürich 2004, p. 173; TREZZINI F., ‘The Challenge of Arbitral Awards for Breach of Public Policy according to Art. 190 para. 2 lit. e) of the Swiss Private International Law’, in: Three Essays on International Commercial Arbitration, Lugano 2003, p. 157; SCHWEIZER P., ‘L’ordre public de l’article 190(2) litt. e LDIP: le caméléon court toujours’, in: Mélanges en l’honneur de Bernard Dutoit, Genève 2002, p. 271.

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Challenging an Arbitral Award for Infringement of Competition Law misusing public policy in order to lure the court to review the merits of the case, as it has clearly expressed in several of its decisions.14 It seems furthermore fairly likely, as it is equally observed by Professor L.G. Radicati di Brozolo, that such tactics of misusing the public policy device have persuaded the Federal Tribunal to adopt in its Terra Armata case of 8 March 2006 a particular severe tone. This is an approach which, according to this author, may nevertheless result in an over-kill for upcoming cases.15

II.

The Decision of the Federal Tribunal

A.

The Chameleon

The Federal Tribunal made a valiant attempt to define the circumstances in which an arbitral award would infringe on public policy under Art. 190, al. 2 litt. e SPILA.16 The Supreme Court suggests an internationally oriented notion of public policy. In order to determine the content of the public policy escape clause, the Supreme Court argues that it is insufficient to only take into consideration the fundamental policies of Swiss law. According to the Tribunal, the fundamental foundations of all legal orders, although taken from a national Swiss perspective, must be taken into account when deciding on the content of public policy.17 This distinction, already commented in scholarly writings,18 is of a particular importance. Instead of solely referring to particular legal concepts of Swiss law to define the circumstances in which an arbitral award can be set aside, a more restrictive standard of public policy, enrooted in a comparative law analysis, decides on the annulment of the award for infringement of public policy. The identification of these commonly accepted principles is inherently flawed and ambivalent.19 The comparison Professor B. Dutoit suggested between the concept of public policy and the chameleon is therefore particularly well-chosen.20 This comparison is even more convincing as it can hardly be denied that both the legal concept of public 14 ATF 132 III 389, rec. 2.2.2; ATF 120 II 155, rec. 6a; ATF 117 II 604, rec. 3; ATF 115 II 102, rec. 3a. 15 RADICATI DI BROZOLO L.G. (note 1), p. 771. 16 This position is comforted by a subsequent decision of the Federal Tribunal; cf. decision of 11 May 2006, unreported, case-number 4P.54/2006, rec. 3.1. 17 ATF 132 III 389, rec. 2.2.3. 18 For a recent overview: RADICATI DI BROZOLO L.G. (note 4), p. 335-336, nr. 49; REDFERN A./HUNTER M. with BLACKABY N./PARTASIDES C., Law and Practice of International Commercial Arbitration, 4th ed., London 2004, p. 456-459, nrs. 10-51 – 10-54. 19 ATF 132 III 389, rec. 2.2.2. 20 DUTOIT B., ‘L’ordre public: caméléon du droit international privé ? Un survol de la jurisprudence suisse’, in: Mélanges Guy Flattet, Lausanne 1985, p. 455-472, rephrased in the context of international commercial arbitration by SCHWEIZER P. (note 13), p. 271-285.

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Bart Volders / Valentin Rétornaz policy and the said reptile, although variable in content or colour, nevertheless obey to an inherent logic. Their respective content and colour, although in abstracto undefined, can indeed more or less accurately be anticipated in each and every case. The attempt of the Federal Tribunal to define the parameters of the concept of public policy is clearly to be applauded. Far less convincing, however, is the manner in which the Supreme Court handled the issue of competition law and argued that the anti-competitive practices do not qualify as matters of public policy. It is on this point that the comparison with the chameleon, a fairly rational being in itself, is better to be substituted with the description an English judge once gave the concept of public policy, that being ‘a very unruly horse’. As was correctly observed by the same learned judge, ‘once you get astride it you never know where it will carry you. It may lead you from sound law’.21

B.

The Unruly Horse

The Terra Armata case of 8 March 2006 is not the first decision where the Federal Tribunal was required to decide on the impact of competition law in a procedure for the setting aside of an arbitral award.22 Already in 1992 the Federal Tribunal held that an Arbitral Tribunal could not deny jurisdiction if one of the parties in the proceedings claimed the contract to be anti-competitive under European competition rules. The applicable law to the dispute, as expressly pointed out by the Federal Tribunal, was the law of one of the Member States of the European Union.23 The Federal Tribunal did not, however, rule on the question of whether or not competition law qualifies as a matter of public policy under Swiss law. It was not until 1998 that the Federal Tribunal ruled on this issue. In a similar manner as the present case, the Court denied the public policy qualification of competition law.24 The Federal Tribunal reaffirmed its 1998 decision in 2002.25 One nevertheless cannot argue that the Terra Armata case simply rephrases the Supreme Court’s earlier decisions. In the 1998 Federal Tribunal decision, the defendant did not invoke the anti-competitive argument before the Arbitral Tribunal, as it did in Terra Armata.26 21

Richardson v. Mellish (1824) 2 Bing. 229, 252 per BURROUGH J. KNOEPFLER F. (note 1), p. 17-18. 23 ATF 118 II 193, Bull. ASA 1992, p. 368. For further details, refer to RIGOZZI A., ‘L’art. 85 du traité CE devant le juge civil Suisse’, in: Cahiers Suisses de l’intégration européenne, Berne 1996. 24 Decision of the Federal Tribunal of 13 November 1998, unreported, case number 4P.119/1998, rec. 1 b) bb), Bull. ASA 1999, p. 534: ‘Il apparaît, en effet, douteux que les dispositions du droit – national ou européen – de la concurrence fassent partie des principes juridiques ou moraux fondamentaux reconnus dans tous les Etats civilisés.’ 25 ATF 128 III 234, in: SJ 2002, I, p. 437, and in: Bull. ASA 2002, p. 337 (case note by KNOEPFLER F. ). See in particular recital 4c. 26 Decision of the Federal Tribunal of 13 November 1998, unreported, case number 4P.119/1998, rec. 1 b) bb), in: Bull. ASA 1999, p. 534. This situation, whereby arguments 22

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Challenging an Arbitral Award for Infringement of Competition Law In the 2002 case, the plaintiff argued the contract to be anti-competitive before the Arbitral Tribunal.27 However, the Arbitral Tribunal did not address this issue in its award. The plaintiff therefore requested that the Supreme Court set aside the arbitral award for lack of motivation. As a mere subsidiary argument, the plaintiff claimed the arbitral award infringed on public policy. The Supreme Court did not take a clear position on this latter argument in its 2002 decision, the public policy argument being labelled by the Supreme Court as insufficient.28 In between the 1998 and 2002 Federal Tribunal decisions, the European Court of Justice (ECJ) also addressed the matter of competition law in its 1999 landmark decision Eco Swiss China Ltd.29 In this decision, the ECJ clearly stated that European competition law does form part of public policy in international commercial arbitral proceedings. The ECJ, however, did not address the issue of whether the entire law of competition qualifies as public policy or merely particular important principles of antitrust law.30 In the 2006 Terra Armata case the Court had no choice but to address the interaction of competition law and public policy in a direct and clear manner. The plaintiff sought the annulment of the award based on the argument that it was inconsistent with and contrary to public policy based on its conflict with European and Italian competition laws. The bold refusal of the Federal Tribunal to confront its previous case law with the ECJ’s Eco Swiss China case is therefore particularly surprising.31 1.

Competition Law Does Not Amount to Public Policy

The argument proposed by the Federal Tribunal is based on two cumulative assertions. First, the Court argued that the case law of the ECJ is distinct to the law of the European Union and, thus, should not be transposed in Swiss law. Second, the Federal Tribunal considered competition law as not being part of the fundamental foundations of all legal orders, as seen from a Swiss perspective. This implies that competition law does not amount to the status of public policy. In the first assertion, the Supreme Court merely refused to consider the case law of the ECJ without thereby considering the issue of competition law being part of public policy. This drawn from the law of competition are merely proposed in the procedure to set aside and arbitral award or during the recognition or enforcement of the award, is equally encountered in other jurisdictions: RADICATI DI BROZOLO L.G. (note 1), p. 770. 27 ATF 128 III 234, rec. 4c. 28 Ibid. 29 ECJ 1 June 1999 (Eco Swiss China c./ Benetton International NV), C-126/97, Rec. 1997, p. I-3055. 30 IDOT L. (note 1), p. 12-13. 31 ATF 132 III 389, rec. 3.1 ‘Conditionnée par la nécessité de préserver l’intérêt public communautaire, semblable qualification se voit ainsi assigner un champ d’application limité dans l’espace de sorte que l’on ne saurait en tirer un principe plus général et indiscuté que tous les pays se réclamant de la même civilisation que la Suisse auraient en partage.’

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Bart Volders / Valentin Rétornaz examination forms the core of the Supreme Court’s second assertion, the outcome of which amounts to a clear refusal to qualify competition law as a matter of public policy. Both assertions will be considered in turn.

a.

The Impact of Eco Swiss China

The Federal Tribunal argued in its Terra Armata decision that European competition rules are merely binding within the European Union. The applicability of EC competition law within the different Member States is, according to the Federal Tribunal, a consequence of Art. 81 of the EC Treaty and the corresponding ECJ case law. Both consider the law of competition an important guarantee for the realisation of the EU internal market objectives and of the existence of the ECJ itself, which has a supervisory function on the application of EU law within the European Union. A reception of the Eco Swiss China ruling in Switzerland and an extension of the Swiss notion of public policy to matters of European antitrust are therefore not obligatory, as EC antitrust law is geographically defined to the territory of the different Member States. The refusal of the Federal Tribunal to consider the Eco Swiss China case seems to contradict the Court’s prior conception of public policy, which, as was indicated earlier, is internationally oriented, although taken from a Swiss perspective. It seems to us that such a definition urges the Federal Tribunal to take into consideration a decision of the ECJ in a similar matter, even if the decisions of the ECJ are merely persuasive authority for the Federal Tribunal. The fact that such decisions are not binding did not prevent the Federal Tribunal from refering on previous occasions to European law, and even to European antitrust law, when interpreting particular provisions of Swiss law.32 Because Swiss antitrust law is based on its EU counterpart, the result of a deliberate choice of the Swiss legislature,33 a fact which is of course not to be ignored by the Supreme Court. The Explanatory Memorandum to the Swiss Act on Competition Law expressly affirms the importance of European law in drafting the Swiss legislation and argues the central role of European law to be the outcome of the intense and privileged trade 32

For instance: ATF 129 II 18, rec. 10.1.3. The Federal Tribunal hereby adheres to the majority position in Swiss scholarly writings, arguing Swiss antitrust law to be interpreted in accordance with the relevant provisions of Community law: TERCIER P., in TERCIER P./BOVET C. (eds.), Droit suisse de la concurrence, Commentaire romand, Basel (etc.) 2002, nr. 14 ad Art. 3(2) LCart (Act on Competition Law); STOFFEL W.A./DEISS J., ‘La décartellisation en Suisse: influences européennes’, in STOFFEL W.A./DEISS J., La décartellisation en Suisse: influences européennes, Fribourg 1999, p. 5 et seq.; CHABLOZ I., ‘Influences du droit européen sur le droit suisse des ‘cartels’, in: ibid., p. 21 et seq.; BALDI M., Überblick und allgemeine Bestimmungen, in ZÄCH R. (ed.), Das neue schweizerische Kartellgesetz, Zürich 1996, p. 18: ‘Überdies ermöglichen es die zahlreichen konzeptionellen und begrifflichen Parrallelen zum EG-Recht, die zu diesem entwickelte reiche Praxis für die schweizerische Rechtsanwendung zu erschliessen’. The latter is even reinforced after the entering into force of the revised Act on Competition Law on 1 April 2004. 33 MERKT B. (note 1), p. 24.

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Challenging an Arbitral Award for Infringement of Competition Law and economic relations between the European Union and Switzerland.34 The Swiss Council of Ministers furthermore observed on this occasion a gradual harmonization of antitrust law, at least within the different Member States of the Organisation for Economic Co-operation and Development (OECD). European competition law clearly served as an important locomotive in this harmonization process.35 The prime importance of European competition law was equally reiterated by the legislature during the 2003 revision of the Swiss Act on Competition Law.36 The refusal of the Federal Tribunal to consider the Eco Swiss China case and its fairly bold – and unsupported – statement that Swiss and European competition law are too dissimilar, thus contradicting the existence of any common denominator between both set of rules,37 arguably bypasses some important information provided by the Swiss legislature itself.

b.

A Fundamental Principle

The Supreme Court excluded, rather cryptically, the public policy qualification of antitrust law. The Court observed that ‘il serait présomptueux de considérer que les conceptions occidentales, européennes ou suisses en matière de droit de la concurrence devraient s’imposer d’évidence à tous les Etats de la planète, telle une panacée, liées qu’elles sont à un certain type d’économie et de régime’.38 When the Supreme Court proposed its proper working definition of the concept of public policy, it certainly chose an internationally oriented definition, one in which the fundamental foundations of all legal orders mould the content of public policy.39 The Federal Tribunal did, nevertheless, preserve the Swiss perspective – or ‘trait helvétique’40 – as an ultimate escape clause when applying the notion of public policy. This Swiss perspective seems to be neglected by the Federal Tribunal in the case at hand. The observation that the Western, European or Swiss concepts of antitrust law are not always accepted in every region of the globe is indeed insufficient to contradict antitrust law being part of Swiss international public policy. Moreover, even in the absence of comprehensive antitrust legislation at the World

34 Message du 23 novembre 1994 concernant la loi fédérale sur les cartels et autres restrictions de la concurrence, FF 1995 I 472 et seq., in particular 532. 35 Message FF 1995 I 530-531. 36 Message relatif à la révision de la loi sur les cartels du 7 novembre 2001, FF 2002 1911: ‘Ainsi le droit de l’UE en matière de concurrence se rapproche-t-il de celui de la Suisse au niveau de la technique juridique et inversement, la Suisse reproduit le schéma ancré dans le droit européen en proposant, par le présent projet, la possibilité d’appliquer des sanctions directes.’ 37 ATF 132 III 389, rec. 3.1. 38 ATF 132 III 389, rec. 3.1. 39 ATF 132 III 389, rec. 2.2.3. 40 ATF 132 III 389, rec. 2.2.2.

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Bart Volders / Valentin Rétornaz Trade Organization (WTO) level, legal writings emphasize the emergence of particular common antitrust principles within the different WTO Member States.41 Returning to the Swiss perspective, the Swiss Constitution itself demands that the Swiss economic system be based on the principles of a liberal market economy.42 In other words, in order to preserve the said requirements of a liberal market economy, the Swiss legislature is under a mandatory constitutional duty to legislate ‘contre les conséquences sociales et économiques dommageables des cartels et autres formes de limitation de la concurrence’.43 The reasoning of the Federal Tribunal, excluding antitrust law from the sphere of public policy on the basis that competition laws, albeit European or Italian antitrust legislation, merely embody one possible model of an economic system among a multitude of systems available, seems to be in conflict with its own working definition. 2.

Exception for Particular Circumstances

But things do not end here. The Federal Tribunal certainly drove competition law outside the sphere of public policy. However, the Court did provide for an exception. It set forth, that in particular matters, agreements that qualify as anti-competitive ‘portent atteinte à l’un des principes que la jurisprudence a déduits de la notion d’ordre public matériel’.44 The Supreme Court thus acknowledged that an arbitral award that encompasses particular anti-competitive practices can be declared null and void for infringement of public policy if the said award equally violates other principles which themselves qualify as matters of public policy. A fairly similar reasoning can be found in the Swiss Constitution. The Constitution does not consider an agreement that qualifies as anti-competitive to be illegal per se, but only renders null such an agreement if it results in damaging consequences.45 Examples of such principles likely to be infringed by an anti-competitive agreement, as set forth by the Supreme Court in its Terra Armata case, include: the duty of contractual loyalty, the duty to prevent contractual breach, the duty of good faith, the prohibition against abuse of rights, the prohibition against discriminative and spoliatory measures and the protection of persons under legal guardianship. This list is specifically labelled by the Supreme Court as non-exhaustive, or illustrative.46

41

FOX E.M., ‘The WTO’s First Antitrust Case – Mexicom Telecom: A Sleeping Victory’, in: 9 J. Int’l Econ. L. 2006, p. 290. 42 Art. 94(4) of the Swiss Constitution; TERCIER P. (note 32), Introduction générale, nr. 32 and nr. 21 ad Art. 1 LCart. 43 Art. 96(1) of the Swiss Constitution. 44 ATF 132 III 389, rec. 3.2. 45 Art. 96(1) of the Swiss Constitution 46 See the referral by the Federal Tribunal in its decision to the adverb ‘notamment’; cf. ATF 132 III 389, rec. 2.2.1.

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Challenging an Arbitral Award for Infringement of Competition Law In a prior decision of the Federal Tribunal it held that an arbitral award affecting the economic prospects of one of the parties can qualify as an abuse of rights under the terms of Art. 27 of the Swiss Civil Code. According to that article, no person may renounce, by agreement or otherwise, his own personality rights. Such an action infringes upon the concept of public policy.47 Apart from the fact that such reasoning is proper under Swiss law – and therefore few compatible with the internationally oriented concept of public policy the Federal Tribunal proposed –, the possibility cannot be ruled out that a fairly similar reasoning will be used in upcoming decisions in order to reintroduce, through the back-door, anti-competitive practices under the umbrella of public policy. Such an argument clearly brings to mind prior decisions, before the Swiss legislature adopted the Act on Competition Law, when particular Swiss courts referred to the Art. 27 and 28 of the Civil Code in order to combat and to annul anti-competitive agreements.48 Interest in such ancient case law might very well be revived after the Terra Armata decision. Instead of rejecting competition law as being part of public policy, and then reintroducing the concept through the back-door, it would have been much more straightforward if the Federal Tribunal had simply acknowledged that the law of competition, or at least certain fundamental principles of it, do qualify as matters of public policy.

III. How to Cope with this Result? Finally, we consider the reasons set forth by of the Federal Tribunal in the Terra Armata case to be insufficient. The willingness of the Federal Tribunal to reject antitrust as being part of public policy is interpreted by particular scholars as an implicit promotion by the Swiss Supreme Court of international commercial arbitration in Switzerland.49 Although neither a misapplication of antitrust law, nor a failure of an Arbitral Tribunal to apply competition law to the issues raised by the parties, are grounds for the setting aside an award in Switzerland, the former does not prevent a party’s ability to challenge the recognition and enforcement of an arbitral award rendered in violation of mandatory EU law in any of the 27 EU

47

Decision of the Federal Tribunal of 14 June 2000, Bull. ASA 2000, p. 582 et seq., in particular p. 602: ‘On ne voit pas que l’engagement de la recourante de participer aux pertes, tel que prévu par l’art. 19.3 et 19.4 CBB, ait pour résultat de porter atteinte à son avenir économique, au point de la dépouiller entièrement de sa liberté…’. 48 E.g. ATF 62 II 97, in: JT 1936, I, 401; ATF 86 II 365; ATF 82 II 92. This approach has been defended in Swiss scholarly writings even after the entering into force of the 1962 Act on Competition Law. For an overview refer to BÄR R., Kartellrecht und internationales Privatrecht, Habil. Berne 1965, p. 278. 49 DE LY F. (note 1), p. 40.

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Bart Volders / Valentin Rétornaz Member States.50 This even includes challenges outside the European Union if the State in which recognition and enforcement is sought considers the law of antitrust, albeit European competition law or not, as being part of its national understanding of public policy.51 This in fact happened in the Terra Armata case, where the arbitral award was subject to a recognition and enforcement proceeding in Italy. The President of the Milan Court of Appeal initially refused to recognize and enforce the award. However, the award was later recognized by the Court of Appeal in its ruling of 5 July 2006, not due to competition law not being part of public policy under Italian law, but because of a correct examination by the Arbitral Tribunal of the relevant provisions of Italian and European antitrust law.52 Therefore, it seems fairly likely that in upcoming cases, the setting aside procedure before the Swiss Federal Tribunal will be systematically bypassed by the aggrieved party. Instead, it is foreseeable that such a party will present its arguments on matters of antitrust law before the courts of the State of recognition and enforcement. At least in cases where enforcement is sought in a European Member State, this might very well weaken the position of the winner of the arbitral proceedings, since it potentially deprives this party of the persuasive authority of an earlier Swiss decision rejecting the claim to set aside the arbitral award based on infringement of public policy. The former is all the more true since parties to an arbitration agreement with venue of the Arbitral Tribunal in Switzerland only seldom exclude the possibility of annulment proceedings before the Swiss Courts on the basis of Art. 192 SPILA. According to Professor J.-F. Poudret, this is to be explained because of the prudence of the parties in an international arbitration, the parties apparently being ‘davantage soucieuses de sécurité juridique que de rapidité et d’économie’.53 Moreover, by holding that antitrust law is outside the sphere of public policy, the courts of the State of enforcement, particularly if enforcement is sought in a European Member State, will arguably analyze in more detail whether the arbitral award complies with (European) antitrust legislation. Arguably, the attempt of the Federal Tribunal to reinforce international commercial arbitration in Switzerland might very well not succeed in many instances. 50

See VAN HOUTTE V./WILSKE S./YOUNG M., ‘What’s new in European Arbitration?’, in: 61-Jan Disp. Resol. J. 6, p. 3. 51 DE LY F. (note 1), p. 40. 52 Milan Court of Appeal of 5 July 2006, case number 4209/2005 r.g., forthcoming in Rivista dell’arbitrato, case note by RADICATI DI BROZOLO L.G. 53 POUDRET J.-F., ‘Les voies de recours en matière d’arbitrage international en Suisse selon le Concordat et la nouvelle Loi fédérale’, in: Rev. arb. 1988, p. 616. Similarly: VAN DEN BERG A.J., ‘Annulment of Awards in International Arbitration’, in: LILLICH R.B./BROWER C.N. (eds.), International Arbitration in the 21st Century: Towards ‘Judicalization’ and Uniformity?, Irvington (New York) 1994, p. 145. Equally in Belgium, where Art. 1717 of the Belgium Code of Civil Procedure excludes altogether the annulment of an arbitral award by a Belgian Court if all parties to the arbitration are either non-Belgian or established or resident outside Belgium, some scholars argue that parties seem rather reluctant to give up the right to challenge the arbitral award. This might even result in parties preferring arbitration outside the Belgian territory.

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Challenging an Arbitral Award for Infringement of Competition Law The remaining question is whether the entire law of competition qualifies as a matter of public policy, or merely certain imperative principles of it. This question was not dealt with by the ECJ in the Eco Swiss China case. The position of national case law on this issue is moreover particularly divergent. According to the Thalès decision of the Paris Court of Appeal of 18 November 2004,54 only flagrant infringements of (European) antitrust law (‘violations flagrantes, effectives et concrètes’) can result in an annulment of the arbitral award for it being contrary to the public order. In contrast, the Hague Court of Appeal considered in its decision of 24 March 2005 that every infringement of (European) competition law may result in the setting aside of the arbitral award.55 In our opinion, the French solution is to be preferred. Whereas it is generally acknowledged in legal writings that antitrust law qualifies as a loi de police, this in itself does not imply that the entire spectrum of antitrust law falls under the realm of public policy.56 This of course requires a court to select the different principles of antitrust law that qualify as matters of public policy. The flaw, obviously, is that the judicial selection of fundamental principles related to the concept of public policy, an amorphous idea itself, are to be defined on an ad hoc basis. Moreover, the fear propounded by particular scholars that such a widening of the scope of the concept of public policy might result in re-introducing in the matters of international arbitration the concept of a clear violation of law or equity (‘violation évidente du droit ou de l’équité’),57 which can trigger under Swiss law the setting aside of a national arbitral award,58 does not contradict the former solution. Whereas under Art. 36 CIA a mere arbitrary (national) arbitral award can be annulled,59 for there to be an infringement of public policy it is required that particular important principles of the law of competition were not observed by the Arbitral Tribunal. A comparison with the ‘manifest disregard of the law doctrine’, as applied in the recent decision of the United States Federal Court of Appeals of the 2nd Circuit in Halligan v. Piper Jaffray Inc.,60 further suggests that even a fundamental and egregious error of the law in itself does

54 CA Paris 18 November 2004 (Thalès Air Defense c. G.I.E Euromissiles), Clunet 2005, p. 357, case note by MOURRE A.; RADICATI DI BROZOLO L. G., ‘Antitrust: a paradigm of the relations between mandatory rules and arbitration – a fresh look at the second look’, in: Int. Arb. Law Rev. 2004, p. 23 et seq.; RADICATI DI BROZOLO L. G., ‘L’illicéité ‘qui crève les yeux’: critère de contrôle des sentences au regard de l’ordre public international (à propos de l’arrêt Thalès de la Cour d’appel de Paris)’, in: Rev. arb. 2005, p. 529 et seq. See on this issue equally RADICATI DI BROZOLO L.G. (note 4), p. 351-357, nrs. 62-65. 55 Gerechtshof’s-Gravenhage 24 March 2005, in: TvA 2006, p. 24. For a commentary: INGEN HOUSZ A.H.D., ‘Eco Swiss staat nog niet in het marmer’, in: TvA 2006, p. 28. 56 See, for the distinction and the interaction between loi de police and public policy, in general, RADICATI DI BROZOLO L.G. (note 4), p. 341-342, nr. 54. 57 Art. 36 litt. f CIA and supra, note 12. 58 KNOEPFLER F. (note 1), p. 20. 59 CORBOZ B. (note 2), p. 26. 60 148 F.3d 197.

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Bart Volders / Valentin Rétornaz not equal an infringement of public policy.61 In other words, it is not merely the manner in which the Arbitral Tribunal applied the law that can trigger the annulment of the award. The evaluation whether or not an (international) arbitral award can be annulled for being contrary with public policy requires an infringement of particular fundamental provisions of the law of competition.

61

See: M&C Corporation v. Erwin Behr GmbH & Co., K.G., 87 F.3d 844, 851 n.2 (6 Cir. 1996); Brandeis Intsel Ltd. v. Calabrian Chemicals Corp., 656 F.Supp. 160, 167 n.4 (S.D.N.Y. 1987); WILSKE S./MACKAY N., ‘The Myth of the ‘Manifest Disregard of the Law’ Doctrine: Is this Challenge to the Finality of Arbitral Awards Confined to U.S. Domestic Arbitrations or Should International Arbitration Practitioners by Concerned?’, in: ASA Bull. 2006, p. 225-226. This position is however not unanimously accepted in scholarly writings as it is clearly illustrated in the article of HWANG M./LAI A. ‘Do Egregious Errors Amount to a Breach of Public Policy?’, in: Arbitration 2005, p. 1-24, in particular p. 7. th

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UNITED KINGDOM AN AGE-OLD DILEMMA: IS IT TIME FOR A ‘REVOLUTIONARY APPROACH’?∗ A COMMENTARY ON HARDING v. WEALANDS Ian CURRY-SUMNER∗∗

I. II. III. IV. V. VI. VII. VIII.

Introduction The Facts of the Case Decision of the High Court, 27th May 2004 Decision of the Court of Appeal, 17th December 2004 Decision of the House of Lords, 5th July 2006 Comparative Perspective Future Rome II Regulation and the Implications of a UK Opt-Out Conclusions

I.

Introduction

Characterisation, the bane of the private international lawyer, has once again reared its ugly head. Is the assessment of damages in tort cases a matter of substantive law, to be determined by the lex causae, or a matter of procedural law, to be determined by the lex fori? On the 5th July 2006, the British House of Lords delivered a significant judgment; the ‘assessment’1 or ‘quantification’2 of damages, including the possible application of statutory limitations, in tort cases is a matter of procedural law, and must thus be determined according to the lex fori, namely English law.3 A fair and reasonable decision? It will be argued in this article that the House ∗

[2004] EWHC 1956, per Elias J. (§52). University lecturer and researcher at the Molengraaff Institute for Private Law, Utrecht University. The author would like to thank Dr. Esther Engelhaard for her assistance in the substantive law aspects/implications discussed in this article. 1 This term was used in Kohnke v. Karger [1951] 2 KB 670 at 676. 2 This term was used in D’Almeida Araujo Lda v. Frederick Becker & Co Ltd [1953] 2 QB 329 at 338; Coupland v. Arabian Gulf Oil Co. [1983] 1 WLR 1136 at 1149. 3 The terms ‘quantification’ and ‘assessment’ will be used as synonyms in this article. ∗∗

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Printed in Germany

Ian Curry-Sumner of Lords has rendered a disappointingly reticent judgment in what can only be described as a result-orientated decision. Moreover, it will be argued that taking recent developments at EU level into account, this decision is not only disappointing, but could lead to a vast increase in forum shopping within an EU context. Despite the heavy reliance on common law rules in the field of English private international law, the law of torts has been the subject of legislative scrutiny. A 1990 Joint Law Commission Report criticised the common law rules in the field of torts as being anomalous, unjust and uncertain.4 The report concluded that reform of the choice of law rules in tort cases was desirable. Their recommendations, which sought to strike a balance between the certainty involved in the creation of a general rule coupled with the flexibility of allowing this rule to be displaced in certain situations, formed the basis of the Private International Law (Miscellaneous Provisions) Act 1995 (hereinafter ‘the 1995 Act’).5

II.

The Facts of the Case

Ms. Wealands, an Australian citizen, and Mr. Harding, an Englishman, had formed a relationship when Mr. Harding had visited Australia in March 2001. On the 3rd February 2002, whilst driving on a dirt track in New South Wales, Ms. Wealands lost control of her Suzuki motorcar causing it to turn over. Mr. Harding, a passenger in the vehicle, suffered severe injuries, becoming a quadriplegic as a result of the accident. Ms. Wealands admitted that the accident was caused by reason of her negligence. The vehicle belonged to Ms. Wealands and she was insured with an Australian insurance company. Whilst in hospital in New South Wales, Ms. Wealands and Mr. Harding decided to get married. Ms. Wealands accompanied Mr. Harding back to the United Kingdom in March 2002, when he was repatriated for continued treatment and rehabilitation. Approximately one month after returning to the United Kingdom, their relationship fell apart. Ms. Wealands remained in England for a further six months before returning to Australia.

4

Private International Law: Choice of law in tort and delict, English Law Commission Report No. 193 (1990) and Scottish Law Commission Report No. 129 (1990). See specifically, §2.6-2.9. 5 Two special recommendations by the Law Commissions were, however, not followed. If adopted both of these provisions would have created a special UK proviso in cases were the torts were committed in the United Kingdom, as well as for defamation cases involving publication both inside and outside the United Kingdom.

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Commentary on Hardings v. Wealands

III. Decision of the High Court, 27th May 2004 Since the defendant admitted liability in relation to the negligence, the main issue at stake during the proceedings at first instance was which law was to be applied to relation to the quantification of damages. The matter was of considerable significance due to a crucial limitation in the law of New South Wales, the law of the place of the accident and thus the lex causae. According to the New South Wales Motor Accidents Compensation Act 1999 (hereinafter ‘the MACA 1999’), a number of restrictions were to be imposed in relation to the quantification of damages. Although seven such limitations were referred to, two of these limitations were of particular importance, namely an imposed ceiling on the amount that may be awarded for non-economic loss of AUS$309,000 (approximately €186,000, £125,000 or US$232,500)6 and a discount rate for calculating the present value of future economic loss was prescribed at 5%.7 It was submitted, on behalf of the claimant, that should New South Wales law be applied the claimant would receive approximately 30% less in damages than if English law was to be applied.8 In arguing that English law ought to apply, the claimant, Mr. Harding, made three principal submissions at first instance: (1)

English law ought to be applied to all aspects of the assessment of damages pursuant to section 12 of the 1995 Act;

(2)

Even if the application of the law of New South Wales law under section 11 of the 1995 Act were not displaced by English law in terms of section 12, English law should apply to the quantification of the damages as a matter of procedure; and

(3)

In any event, English law ought to be applied as application of the law of New South Wales would be contrary to English public policy.9

In finding for the claimant, Elias J. held that the assessment of damages was a matter of procedural law to be governed by English law, and that even if the assessment of damages was to be regarded as a matter of substantive law, section 11 should in casu be displaced by section 12 of the 1995 Act. In dealing with the procedural argument Elias J., referring to the British House of Lords decision Boys v. Chaplin,10 the English High Court decision in Hulse and others v. Chambers and

6

Section 134, MACA 1999. Section 127, MACA 1999. Five others limitation were relevant for the proceedings at hand, namely those contained in sections 124, 125, 128, 130 and 137. 8 [2004] EWHC 1957, §10. 9 [2004] EWHC 1957, §§11 and 12. 10 [2004] EWHC 1957, per Elias J. (§39-40) citing Boys v. Chaplin [1971] AC 356, per Lord Pearson. 7

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Ian Curry-Sumner another,11 the High Court of Australia decision in John Pfeiffer Pty Ltd v. Rogerson,12 the Ontario Court of Appeal decision in Somers v. Fournier,13 and the English Court of Appeal in Roerig v. Valiant Trawlers,14 noted that the precise distinction between substance and procedure is particularly elusive. Despite the defendant’s claims that the relevant passages of the decision in Roerig were obiter dicta, Elias J. deemed himself bound by the Court of Appeal decision in Roering. As a result he applied English law to the preliminary issue as to the quantification of damages.15

IV. Decision of the Court of Appeal, 17th December 2004 Two issues were raised by Ms. Wealands on appeal. Firstly, whether Elias J. was correct to allow section 11 to be displaced by section 12 of the 1995 Act, and secondly whether for the purposes of section 14 of the 1995 Act the quantification of damages was a matter for procedural law. On the first issue, the Court of Appeal was unanimous and held that, in determining the applicable law, Elias J. was incorrect to allow section 11 to be displaced by section 12 of the 1995 Act. However, in relation to the substance v. procedure issue, opinion in the Court of Appeal was divided. In agreeing with Elias J. and dissenting from the majority opinion, Waller L.J. endorsed the orthodox view that the assessment of the claimant’s damages was a matter of procedure to be determined by the lex fori. Following his own judgment in Roerig v. Valiant Trawlers Ltd16 and referring to the majority decision of the High Court of Australia in Stevens v. Head,17 Waller L.J. held that although the heads of damages are to be regarded as substantive; the actual quantification of those damages is a procedural matter. In delivering the majority decision, on the other hand, Arden L.J. and Sir William Aldous construed that English law should not apply to the quantification of damages since this was a matter of substance and not procedure. Arden L.J. focusing on the question how in any particular case the distinction between substance and procedure is to be ascertained held,

11

[2001] 1 WLR 2386. [2000] 203 CLR 503. 13 214 DLR (4th) 611. 14 [2002] EWCA Civ. 21. 15 [2004] EWHC 1957, per Elias J. (§63). 16 [2002] EWCA Civ. 21, per Waller L.J., Sedley L.J. and Simon Brown L.J. 17 (1992) 176 C.L.R. 433, per Mason C.J. and Deane J. 12

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Commentary on Hardings v. Wealands ‘The meaning of substance and procedure for the purposes of section 14 of the 1995 Act must be sought in the context of the 1995 Act [...] In the context of section 14, a principled approach requires the court to start from the position that it has already decided that the proper law of the tort is not the law of the forum, in that some other law applies to the tort.’ In searching within the context of section 14, Arden L.J. was prepared to follow the line adopted in the minority decision of Gaudron J. in the Australian case of Stevens v. Head, which was subsequently adhered to by a unanimous Australian High Court in John Pfeiffer Pty Ltd v. Rogerson.18 Although she noted that these arguments have thus far been limited to intrastate tortious claims, and have not yet been applied to transnational situations, she unwaveringly gave effect to the ‘guiding principle’ that ‘laws that bear on the existence, extent or enforceability of remedies, rights and obligations should be characterised as substantive and not as procedural’, and furthermore adhered to the decision of Mason C.J. that ‘rules which are directed at governing or regulating the mode or conduct of court proceedings are procedural and all other provisions or rules are to be classified as substantive.’19 Furthermore, according to the Law Commissions’ Report accompanying the relevant legislative provisions which eventually became the Private International Law (Miscellaneous Provisions) Act 1995, the point of view was adopted that no implementing legislation was required with respect to the quantification of damages since all were agreed ‘that a statutory ceiling on damages is a substantive issue for the applicable law in tort of delict rather than a procedural issue for the lex fori.’20 Agreeing with the arguments put forward in relation to the limitation of damages, Arden L.J. went on to discuss the problems that would be encountered in drawing distinctions between different sorts of quantification rules which would be substantive or procedural. She clearly regarded the provisions of the MACA 1999 as a package of measures which should be treated as such by the English court. Finally, having noted the tendency for forum shopping and the endemic developing compensation culture in society, Sir William Aldous concurred with Arden L.J. preferring to construe the word ‘procedure’ in its natural meaning, namely the ‘mode or rules used to govern and regulate the conduct of the court’s proceedings’.21

18

(2000) 203 C.L.R. 503, per Gleeson C.J, Gaudron J, McHugh J., Gummow J. and

Hayne J. 19 First held by Mason C.J. at first instance in John Pfeiffer Pty Ltd v. Rogerson and subsequently by Arden L.J. in [2004] EWCA Civ. 21 (§25). 20 §3.39, Joint Law Commission Report. This approach has also been supported in COLLINS L. (ed.), Dicey & Morris’ Conflict of Laws, London 2006, 14th ed., §7.038. 21 [2005] 1 All ER 415, per Sir William Aldous (§86).

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V.

Decision of the House of Lords, 5th July 2006

Although both of the issues that had been referred to the Court of Appeal were appealed to the House of Lords, only the substance v. procedure issue was dealt with extensively. As Lord Hoffmann stated ‘in the circumstances it is unnecessary to decide whether, if they [the rules of the MACA 1999] had been properly characterised as substantive, it was open to the Court of Appeal to reverse the judgment that it was substantially more appropriate to apply English law.’ The House of Lords, brushing the division of opinion in the Court of Appeal to one side, delivered a unanimous decision, reversing the decision of the Court of Appeal and restoring the order of Elias J. Lord Hoffmann and Lord Rodger of Earlsferry handed down the main judgments, supplemented with a few extra comments from Lords Bingham of Cornhill, Woolf and Carswell. Lord Hoffmann held that, although the judges in Boys v. Chaplin were divided on whether non-economic damage was to be governed by the lex causae or the lex fori, they were nonetheless unanimous in holding that the quantification of damages ‘was a question of remedy or procedure’.22 Upon this basis he subsequently turned his attention to whether the distinction between the heads of damage and the quantification of damage was affected by the implementation of Part III of the 1995 Act. He concluded, referring to the aims and scope of the 1995 Act, that this rule was left untouched by the enactment of the 1995 Act. In having seemingly clarified the distinction between heads of damage (to be governed by the lex causae) and the quantification of damages (to be governed by the lex fori), Lord Hoffmann went on to determine whether the provisions of the 1999 MACA were in fact to be regarded as falling under the heads of damage or the quantification of damages category. Referring to the High Court of Australia decision in Stevens v. Head and confining the decision in John Pfeiffer Pty Ltd v. Rogerson to torts committed in Australia (i.e. intrastate torts), Lord Hoffmann concluded that the limitation provisions of the 1999 MACA were indeed procedural in nature. In a revealing comment, Lord Hoffmann admitted that there may well be ‘more logic’ to the rule that a limitation imposed on the quantification of damages is to be determined according to the lex causae.23 Lord Rodger of Earlsferry support and furthering the arguments tendered by Lord Hoffmann also referred the fact that Part III of the 1995 Act was restricted to those areas covered by sec. 10 of the 1995 Act. Since the quantification of damages was never covered by the double actionability rule, this area of law was left unscathed by the enactment of Part III of the 1995 Act. Lord Rodger went on to discuss the decisions of the Australian and Canadian appellate courts and admitted that these decisions did appear to reshape the common law in this field. However,

22 23

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[2006] UKHL 32, per Lord Hoffmann (§30). [2006] UKHL 32, per Lord Hoffmann (§51).

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Commentary on Hardings v. Wealands in his view, there would appear to be no reason (in the absence of a federal constitution) to oblige the House of Lords to adopt such an approach.24

VI. Some Comparative Remarks In The Netherlands, the existence and the nature of damages which are eligible to be requested, as well as the extent and manner in which damages are calculated are governed the law applicable to the tort.25 Although no explicit mention has been made to the ‘quantification of damages’ as such, it can be presumed that a Dutch judge would regard such a question as falling within the broad scope of the applicable law, taking into account parliamentary intent.26 According to Article 103(6) of the new Belgian Code of Private International Law a similar solution has been adopted with the respect to the calculation of the damages to be awarded.27 In the explanatory notes accompanying the Code it is stated that these provisions have been adopted along similar lines to the current proposals for an EU Rome II Regulation, and as such should be interpreted broadly.28 Similarly, in Switzerland29 and

24

[2006] UKHL 32, per Lord Rodger of Earlsferry (§69). Article 7(d), Private International Law (Torts) Act. A similar solution had also been adopted in The Netherlands in relation to traffic accidents prior to the ratification of the 1971 Hague Convention: Rb. Amsterdam 22nd June 1931, in: Nederlandse Jurisprudentie 1932, 325; Rb. Middelburg, 1st March 1939, in: Nederlandse Jurisprudentie 1939, 1030; Rb. Arnhem, 28th December 1942, in: Nederlandse Jurisprudentie 1943, 815. See further, VONKEN A.P.M.J., Groene Serie. De onrechtmatige daad in het ipr. Deel IX.3, note 33.8, Supplement April 2002. 26 Kamerstukken II (Proceedings of the Second Chamber) 2000-2001, 26 608, nr. 3, p. 10 and Kammerstukken II (Proceedings of the Second Chamber) 2000-2001, 26 608, nr. 5, p. 15. 27 This approach is consistent with the pre-Code case law. See, for example, a 1955 Cour de Cassation case in which Dutch law, as the lex causae, was applied to the manner and measure of the damages as a result of an accident that had occurred in The Netherlands with Belgian passengers. The limitation imposed by Dutch law on the recoverable damages was held not to be contrary to Belgian public policy: Cass., 17th May 1957, in: Arr. Cass. 1957, I, 778; R.W. 1957-58, 1093; Pas. 1957, I, 1111; Rev. crit. dr. int. pr. 1959, 339; R.C.J.B. 1957, 192; R.G.A.R. 1957, 6325. 28 Belgian Senate, 2003-2004, nr. 3-27/7, p. 247. 29 Article 142, Swiss Code of Private International Law. Although this article does not explicitly mention the measures of damages, it has been argued in Swiss literature that this list is not exhaustive and that the measure of damages is to be determined according to the lex causae. See further BUCHER A./BONOMI A., Droit international privé, 2nd ed., Basel (etc.) 2004, p. 304, §1124-1125 and DUTOIT B., Droit international privé suisse. Commentaire de la loi fédérale du 18 décembre 1987, 4th ed., Basel (etc.) 2005, p. 503-505. 25

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Ian Curry-Sumner France30 the quantification of damages is also determined according to the lex causae. When crossing the Atlantic, the approach in the United States of America is much more diffuse. Although at the turn of the twentieth century, the vast majority of States referred all conflict of law matters in the field of torts to the lex loci delicti, the public policy exception was an ever-present escape mechanism. Nonetheless, it was generally understood in a traditional sense and applied sparingly.31 Yet the conversion of this restrictive exception into a broader policy analysis that permitted the court to ‘displace’ the lex causae with the lex fori,32 presaged the socalled conflicts revolution. Currently only 10 of the 50 states still adhere to the lex loci delicti principle,33 with the other states having opted for a variety of alternatives. In a law review article in 1992 in which P. Borchers surveyed more than 800 US conflicts decisions since the start of the conflicts revolution, he noted that although the 40 States not adhering to the lex loci delicti principle favoured a variety of alternative solutions, in terms of the result achieved they were almost indistinguishable from each other. In general these states tended to prefer the application of the lex fori when compared to the 10 states that still adhered to the lex loci delicti principle.34 This trend is no more evident than with respect to the measurement of damages in tort cases, were these forty states refer to the lex fori in determining quantum. Since the majority of case law in this field arises in relation to traffic accidents, it is also important to note that for seventeen European jurisdictions the Hague Convention of the 4th May 1971 on the Law Applicable to Traffic Accidents forms the relevant source of law.35 According to Article 8(4) of this Convention, 30

For example, LOUSSOUARN Y., BOUREL P. and DE VAREILLES-SOMMIERES P., Droit international privé, 8th ed., Paris 2004, p. 554, §409(e). 31 Loucks v. Standard Oil Co., 120 N.E. 198 (N.Y. 1918). 32 Kilberg v. Northeast Airlines Inc., 9 NY2d 34, 172 NE2d 526, per Desmond C.J and Babcock v. Jackson, 191 N.E.2d 279 (N.Y. 1963). SCOLES E.F., HAY P., BORCHERS P.J. and SYMEONIDES S.C., Conflict of Laws, 3rd ed., St. Paul 2000, p. 700, §17.9 and CURRIE D.P., KAY H.H. and KRAMER L., Conflict of Laws. Cases-Comments, 6th ed., St. Paul 1999, p. 54-55. 33 See, for example, Kansas Court of Appeals, Raskin v. Allison, Docket Number 88 409. 34 P.J. BORCHERS, ‘The choice-of-law revolution: An empirical study’, in: Washington & Lee Law Review 1992), p. 357. The main three approaches adopted by the remaining 40 states can be divided between those followed B. Currie’s governmental interest analysis approach, those following R. Leflar’s choice-influencing approach, and those adopting the approach taken by the Second Conflicts Restatement. 35 Austria (3rd June 1975), Belarus (15th June 1999), Belgium (3rd June 1975), Bosnia and Herzegovina (16th December 1975), Croatia (16th December 1975), Czech Republic (11th July 1976), France (3rd June 1975), Latvia (15th October 2000), Lithuania (24th March 2002), Luxembourg (13th December 1980), The Netherlands (20th December 1978), Poland (28th May 2002), Serbia (16th December 1975), Slovakia (11th July 1976), Slovenia (16th

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Commentary on Hardings v. Wealands the ‘applicable law shall determine in particular [...] the kinds and extent of damages’.36 The United Kingdom has, however, not ratified this Convention. In noting the current patchwork of solutions across the United States of America and the ongoing discussion in Australia, the approach taken by the House of Lords is not necessarily attributable to a civil-common law dichotomy. Moreover, it would appear that the decision of the House of Lords tends to favour the more modern American approach, than the modern European and international approach. It must be regarded as a reiteration of an orthodox principle and is, at best, attributable to a continued desire to see the application of the lex fori and an accompanied unwillingness to broaden the scope of the subject matters covered by the applicable law.

VII. The Future Rome II Regulation and the Implications of a UK Opt-Out At EU level, work has already commenced on the preparation of a Regulation on the law applicable to non-contractual obligations.37 According to the European Parliament and Council proposal, the ‘assessment of the damages in so far as this is prescribed by law’ is to be governed by the rules laid down in Articles 4 to 11 of the Regulation.38 This means that, ‘Where no choice has been made under Article 4, the law applicable to a non-contractual obligation shall be the law of the country in which the damages arises or is likely to arise, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event arise.’39 December 1975), Spain (21st November 1987), Switzerland (2nd January 1987), FYR Macedonia (16th December 1975). Following the declaration of independence of Montenegro, and under Article 60 of the constitutional charter of the state union of Serbia and Montenegro, the Republic of Serbia is currently continuing international personality of the state union of Serbia and Montenegro. 36 VONKEN A.P.M.J., Praktijkreeks IPR, Deel 17: Verkeersongevallen, Deventer 1996, p. 58-59, §128. For relevant literature on this convention see the bibliography on the website of the Hague Conference for Private International Law, <www.hcch.net>. 37 For the latest version of the regulation, see COM (2006) 83 final. 38 Proposed Article 12(e), COM (2006) 83 final. 39 Proposed Article 12(e), COM (2006) 83 final. There are also two further subsections dedicated to the choice of law ladder in the field of torts, however these have no real role in the question at hand. They state that Article 4(2): ‘However, where the person claimed to be liable and the person sustaining the damage both have their habitual residence

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Ian Curry-Sumner The similarity between the wording of Article 12(e), Rome II Regulation and that of Article 10(1)(c) of the 1980 Rome Convention is striking. According to Article 10(1)(c), Rome Convention the ‘assessment of damages is governed in so far as it is governed by rules of law’ according to the lex loci contractus. Article 10(1)(c), Rome Convention thus draws a distinction between those circumstances when the assessment of damages raises a question of fact and those when it raises a question of law;40 only those questions of fact remain to be determined by the lex fori. North and Fawcett, for example, refer in this context to those cases where the calculation of damages is made by a jury.41 It is thus clear that where a limitation is imposed by statute, the quantification of damages is to be determined according to the lex loci contractus. Although the diversity of solutions in the European Union is highlighted in the explanatory notes,42 the proposed Regulation adopts a single solution granting the applicable law a wide ambit. This wide ambit would mean that should the Rome II Regulation enter into force, and should the United Kingdom utilise its optin, the decision in Harding v. Wealands would be destined for the scrap heap. Should the United Kingdom instead decide to opt-out of the Rome II Regulation (despite the fact that it has unequivocally opted into the negotiations), the problems associated with reconciling Rome II, Harding v. Wealands and Brussels I would be serious. Bearing in mind the absence of a forum non conveniens provision in the Brussels I Regulation, the decision in Harding v. Wealands43 coupled with a future Rome II Regulation (as currently proposed) not applicable in the United Kingdom would lead to an enormous discrepancy in the applicable law with respect to the quantification of damages in tort cases across the European Union. In those torts cases where both a British court and the court of another Member State (other than Denmark) were competent, claimants would be advised to first calculate the possible damages award according to English law and the lex loci delicti before comin the same country when the damages occurs, the non-contractual obligation shall be governed by the law of that country’ and Article 4(3): ‘notwithstanding paragraphs 1 and 2, where it is clear from all the circumstances of the case that the non-contractual obligation is manifestly more closely connected with another country, the law of that other country may apply. A manifestly closer connection with another country may be based in particular on a pre-existing relationship between the parties, such as a contract that is closely connected with the non-contractual obligation in question. For the purpose of assessing the existence of a manifestly close connection with another country, account shall be take inter alia, of the expectations of the parties regarding the applicable law.’ 40 The same distinction is also evident in the proposed Article 11(1)(c), Rome I Regulation. See further COM (2005) 650 final. 41 NORTH P.M. and FAWCETT J.J., Cheshire and north’s Private International Law, th 13 ed., London 1999, p. 598. 42 COM (2003) 427 final, p. 23. 43 In this sense, it is assumed that the House of Lords will not make a distinction between the private international law rules applicable in cases within the European Union and those cases were the torts was committed outside the European Union.

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Commentary on Hardings v. Wealands mencing proceedings. In doing so a claimant could maximise the possibility of receiving a higher damages award.

VIII. Conclusions The justification for a substance v. procedure distinction lies, as J. Carruthers has so powerfully stated, in the search for convenience and justice.44 As Lord Pearson stated in Boys v. Chaplin, ‘the lex fori must regulate procedure because the court can only use its own procedure, having no power to adopt alien procedures. To some extent, at any rate, the lex fori must regulate remedies because the court can only give its own remedies, having no power to give alien remedies.’45 With this in mind it is perplexing to argue that having already concluded that some foreign law is applicable in determining the existence of and subsequent liability for a tort, to then argue that a limitation in the award of damages is so alien to the court as to necessitate the application of the court’s own procedural law. Procedural law is, after all, directed to governing or regulating the mode or conduct of court proceedings and to argue that the existence of a limitation in the measurement of damages is so inherent to the conduct of the court proceedings as to necessitate the application of the lex fori, is in this author’s opinion far-fetched. Although the decision of the House of Lords is securely founded on theoretical bases, the correct application of the doctrine of precedent and a keen eye for the practical applications of the decision, it is disappointing that it did not take this opportunity to make new-headway in this field. Although the House of Lords claims to base its decision on the substance v. procedure distinction, closer examination of the case illustrates that this is merely a smokescreen. Even though the Court of Appeal could be criticised for not strictly adhering to the doctrine of precedent,46 such a criticism could not be levied at the House of Lords had they chosen to uphold the Court of Appeal’s decision. It is thus disappointing that the House of Lords has failed to take any of the abovementioned future implications of this decision into account when unanimously rejecting the forceful majority of the Court of Appeal. In allowing the quantification of damages in tort cases, including the limitation of such damages awards, to be governed by the lex fori, the House of Lords has paved the way for an increase in forum shopping by claimants in transnational cases connected to the United Kingdom. One could argue that this is surely only in the victim’s best inter44

CARRUTHERS J.M., ‘The substance and procedure in the conflict of laws: a continuing debate in relation to damages’, in: International Comparative Law Quarterly 2004, p. 691-711. 45 [1971] AC 356. 46 ROGERSON P., ‘Conflict of laws – tort – quantification of damages – substance or procedure?’, in: Cambridge Law Journal 2005, p. 305-307.

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Ian Curry-Sumner ests, but is this really the case? Any increase in forum shopping will ultimately be borne by insurance companies, which in turn will no doubt pass on this cost by raising insurance premiums. As a result, any increase in damages awards for individual victims will ultimately be borne by all premium payers. Furthermore, the adherence by the English courts to the lex loci delicti in determining the substantive law issues in relation to the tort, will allow an English court to follow the imposition of strict liability for certain acts,47 as is the case in many continental European jurisdictions, and subsequently apply English law with respect to the quantification of damages, which will often avoid the imposition of ceilings in damages awards. The inherent correlation between the limitation of damages and the level of liability will thus be lost. In short, the House of Lords has failed to take this opportunity to breathe new life into this area of law.

47 For example in The Netherlands (Art. 185, Wegenverkeerswet / Road Traffic Act), Belgium (Article 29bis, Wet van 21 november 1989 betreffende de verplichte aansprakelijkheidsverzekering inzake motorrijtuigen of de W.A.M.-Wet / Act of 21st November 1989 concerning the compulsory strict liability concerning motor vehicles), France (Articles 1-8, Loi du 5 juillet 1985 sur les accidents de la circulation ou la loi badinter / Act of 5th July 1985 on traffic accidents) and Germany (Articles 7 and 8, Straßen- und Wegegesetz / Act on Streets and Roads).

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FORUM* ________________

THE SCOPE OF SECONDARY COMMUNITY LAW IN THE LIGHT OF THE METHODS OF PRIVATE INTERNATIONAL LAW – OR THE OTHER WAY AROUND? Stéphanie FRANCQ∗∗ I.

II.

III.

The Use of the Unilateralist Method A. Community Acts Determine Their Own Scope of Application 1. Implicit Criteria 2. Explicit Criteria 3. Unilateralist Method B. Some Consequences of Using the Unilateralist Method 1. Substance v. Applicability 2. Autonomous Determination of the Scope of Application v. General Conflict Rules 3. Mandatory Nature v. Applicability The Validity of the Unilateralist Theory A. Its Validity 1. Lois de police 2. Limited Powers 3. Unilateralism B. Its Implications and Limits 1. Unilateralist System v/Unilateralist Postulate 2. Unilateralism as a Premise 3. What Place for Multilateralism? Conclusion

* This section contains summaries of books recently published by young authors in languages other than English. ∗∗ Professor of Law, Chaire de droit européen, Université catholique de Louvain. This article summarizes some of the ideas expounded in the author’s work L’applicabilité du droit communautaire dérivé au regard des méthodes du droit international privé, Bruxelles, Paris 2005.

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Printed in Germany

Stéphanie Francq Since the beginning of the nineties, doctrine has devoted a great deal of attention to the links existing between private international law and community law. Though it might appear astonishing that such an interest emerged so late in the historical development of Community law,1 the different points of junction have been, by now, quite clearly identified.2 Firstly, there is the harmonization of conflict and jurisdiction rules. Originally concluded between the Member States, the Brussels Convention has already been converted into a European instrument3 while the Rome Convention is undergoing the same process. These changes are due to the – controversial – extension of the Community’s powers under Title IV of the EC Treaty. New regulations in the field of private international law have already seen the light of day and others will probably follow.4 Even before the introduction of Article 65 EC by the Treaty of Amsterdam, some Community acts favoured the adoption of new conflict rules rather than substantive harmonization.5 Secondly, 1

Symbolically, the European Group for Private International Law was founded in 1991 (). See, however, a few forerunners: DROBNIG U., ‘Verstößt das Staatsangehörigkeitsprinzip gegen das Diskriminierungsverbot des EWGVertrages ?’, in: RabelsZ 1970, pp. 636-662; SAVATIER R., ‘Le Marché commun au regard du droit international privé’, in: Rev. crit. dr. int. pr. 1959, pp. 237-258; WENGLER W., ‘Les conflits de lois et le principe d’égalité’, in: Rev. crit. dr. int. pr. 1963, pp. 203-231. 2 For an overview of the meeting points of PIL and Community law: FALLON M./FRANCQ S., ‘La coopération judiciaire civile et le droit international privé. Vers un droit proprement communautaire des conflits de lois ou de juridictions’, in: DE SCHUTTER O./NIHOUL P. (dir.), Une Constitution pour l’Europe. Réflexions sur les transformations du droit de l’Union européenne, Bruxelles 2004, pp. 239-301; FUCHS A./MUIR WATT H./PATAUT E. (dir.), Les conflits de lois et le système juridique communautaire, Paris 2004; JOBARD-BACHELIER M.-N./BERGE J.-S., ‘La réception du droit communautaire en droit des conflits de lois’, in: BERGE J.-S./NIBOYET M.-L. (dir.), La réception du droit communautaire en droit privé des États membres, Bruxelles 2003, p. 182 et seq. 3 Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ 2001, L 12/1. 4 For instance: Regulation 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation 1347/2000, OJ 2003, L 338/1; Regulation 1346/2000 of 29 May 2000 on insolvency proceedings, OJ 2000, L 160/1; COM(2005) 650 Final, Proposal for a regulation on the law applicable to contractual obligations (‘Rome I’), COM(2006) 83 final, Amended proposal for a regulation on the law applicable to non-contractual obligations (‘Rome II’). 5 For instance: Regulation 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG), OJ 1985, L 199/1 (where conflict rules supplement substantial rules); Second Council Directive 88/357 of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239, OJ 1988 L 172/1 (where conflict rules replace substantive rules). For commentaries on the use of conflict rules in secondary community acts see: BASEDOW J., ‘Materielle Rechtsangleichung und Kollisionsrecht’, in: SCHNYDER A./HEISS

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Community Law and Methods of Private International Law the influence the EC Treaty has had on national conflict rules.6 The question has been raised whether the Treaty contains conflict rules designating the law of the Member State of origin of a person or product,7 or whether it would forbid the use of some connecting factors, especially that of nationality.8 The Treaty might as well influence the application of international mandatory rules as well as the exception of public policy.9 In contrast, the scope of Community law has raised little attention. The question was touched upon twice: upon the release of the Ingmar decision10 and by the discussion surrounding a set of directives on consumer protection, which opposed the choice of a law (often a third State law) that would be incompatible with the level of protection set forth by the directive.11 Nevertheless, even this debate H./RUDISCH B. (dir.), Internationales Verbraucherschutzrecht, Kolloquium zu Ehren von F. Reichert-Facilides, Tübingen 1995, pp. 11-34. 6 For a general presentation see: WILDERSPIN M./LEWIS X., ‘Les relations entre le droit communautaire et les règles de conflit de lois des États membres’, in: Rev. crit. dr. int. pr. 2002, pp. 1-38 and pp. 289-314. 7 See among the first contributions: BASEDOW J., ‘Der Kollisionsrechtliche Gehalt der Produktenfreiheit im europäischen Binnenmarkt: favor offerentis’, in: RabelsZ. 1995, pp. 1-54; FALLON M., ‘Variations sur le principe d’origine, entre droit communautaire et droit international privé’, in: Nouveaux itinéraires en droit – Hommage à François Rigaux, Bruxelles 1993, pp. 187-221. More recently: FALLON M./MEEUSEN J., ‘Private International Law in the European Union and the Exception of Mutual Recognition’, in: this Yearbook 2002, pp. 435-490; FRANCQ S./DE SCHUTTER O., ‘La proposition de directive relative aux services dans le marché intérieur, reconnaissance mutuelle, harmonisation et conflit de lois dans l’Europe élargie’, in: Cahiers de droit européen, 2005, pp. 604-659; HELLNER M., ‘The Country of Origin Principle in the E-commerce Directive: A Conflict with Conflict of Laws ?’, in: FUCHS A./MUIR WATT H./PATAUT E. (dir.) (note 2), p. 205 et seq.; HEUZE V., ‘De la compétence de la loi du pays d’origine en matière contractuelle ou l’anti-droit européen’, in: Le droit international privé: esprit et méthodes, Mélanges en l’honneur de Paul Lagarde, Paris 2005, p. 393 et seq. 8 See note 1. 9 PATAUT E., ‘Lois de police et ordre juridique communautaire’ in: FUCHS A./MUIR WATT H./PATAUT E. (dir.), Les conflits de lois et le système juridique communautaire, Paris 2004, pp. 117-143; VON WILMOWSKY P., ‘EG-Vertrag und kollisionsrechtliche Rechtswahlfreiheit’, in: RabelsZ. 1998, pp. 1-31; ECJ, 23.11.1999, C-369/96 and C-376/96, Arblade, in: ECR 1999, I-8453; ECJ, 15.03.2001, C-165/98, in: ECR 2001, I-2189; ECJ, 1.06.1999, C126/97, Eco Swiss China, in: ECR 1999, I-3055 (and the numerous commentaries on these decisions). 10 ECJ, 9.11.2000, C-381/98, Ingmar, in: ECR 2000, I-9305 (the ECJ ruled that the directive on self-employed agents must be applied to a contract concluded between an agent carrying out his activity in the United Kingdom and a principal established in the United States despite the choice of law clause designating the law of the State of California). 11 Directive 94/47 of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties

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Stéphanie Francq focused more on the nature of those directives (are they to be treated as ‘lois de police’?)12 than on their scope of application. The lack of interest is even more surprising in view of the fact that the science of conflict of laws developed on the basis of this very problem: the selection of the law applicable to international situations. To put it in very general terms, this problem has been solved with the application of two theories, multilateralism and unilateralism, each of them having developed its own methods. Currently, the most common method, (supposedly?) inherited from Savigny, is the multilateral choiceof-law rule (or ‘conflict rule’, ‘règle de conflit de lois’ or ‘règle de rattachement’, ‘Kollisionsregel’ or ‘Anknüpfungsregel’).13 Its goal is to ascertain the ‘seat’ of a legal relationship. Each legal relationship is supposed to possess a ‘natural seat’ in one State, materialized in the connecting factor of the choice-of-law rule. Each case is allocated to the law of State A or State B by a so-called ‘neutral’ connecting factor. In contrast to multilateralism which focuses on the legal relationship, the competing theory of unilateralism focuses on the laws themselves which may be colliding. According to this theory, each law determines its own scope of application, its addressees, and its objects. The law of State A prescribes whether a given situation falls within its scope of application. The method of unilateralism is, in essence, statutory interpretation. The two theories, and therefore their correspondon a timeshare basis, OJ 1994, L 280/83 (Art. 9); Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts, OJ 1993, L 95/29 (Art. 6, §2); Directive 97/7 of 20 May 1997 on the protection of consumers in respect of distance contracts, OJ 1997, L 144/19 (Art. 12, §2); Directive 1999/44 of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, OJ 1999, L 171/12 (7, §2); Directive 2002/65 of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC, OJ 2002, L 271/16 (Art. 12, §2). 12 The choice of an exact wording in respect of the phenomenon of ‘lois de police’ and the translation of the term in English is a complicated task. We will stick to the terms ‘lois de police’ or ‘mandatory rules’, though the wording of internationally mandatory rules would be necessary in order to avoid confusion (such as those which arose concerning the understanding of Art. 3.3 and 7 of the Rome Convention), and though the term ‘lois d’application immédiate’ describes at best the original functioning of the mechanism (FRANCESCAKIS PH., ‘Quelques précisions sur les lois d’application immédiate et leurs rapports avec les règles de conflit de lois’, in: Rev. crit. dr. int. pr. 1966, pp. 1-18; for another vision of the functioning of lois de police: BONOMI A., Le norme imperative nel diritto internazionale privato, Zürich 1998, p. 219 et seq.; ID., in: this Yearbook 1999, pp. 215-247, spec. p. 233 et seq., proposing the intervention of the mandatory laws of the forum only when the law designated by the conflict of law rule does not reach an equivalent level of protection. 13 VON SAVIGNY C.F., System des heutigen römischen Rechts, t. VIII, Berlin, 1849. See already: VON WÄCHTER C.G., ‘Über die Collision der Privatrechtsgesetze verschiedener Staaten’, in: Archiv für die civilistische Praxis 1841, t. 24, pp. 230-311 and 1842, t. 25, pp. 1-60, pp. 161-200.

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Community Law and Methods of Private International Law ing methods, diverge on their very conception of the law (even if they agree on the fact that a system of PIL should be based on this conception). For the exponents of multilateralism, private laws have a potentially universal reach.14 Being abstract and neutral, the rule of private law represents a rational command which can potentially apply to any situation in the world, i.e. it has a universal scope of application.15 This explains as well why judges are allowed to consider the application of foreign private laws: contrary to social, criminal, or public laws, they are supposedly free of any state’s interests. Sovereignty is not at stake. For the exponents of unilateralism, in its modern version at least,16 laws determine their own scope of application, because they command human behaviour.17 As such, they have to identify their addressees, else they would be pointless. The intervention of an entirely new body of law renders the basic conflictof-laws question even more interesting. Under which conditions is Community law to be applied to factual situations? Should the question be left to national conflict rules to be solved? Are conflict rules developed at the European level, or do the acts of secondary Community law themselves provide for the conditions of their own applicability? If the answer to this question is yes, how do they interact with national or European conflict rules? What does the answer to these questions teach us about the theory of PIL? The principles of supremacy and territoriality seem to offer, at first glance, an easy answer: community law applies within the territory of the Community,18 and its relationship with Member States’ law is solved by the principle of supremacy. This assertion, however, falls short of a full explanation. Of course, commu-

14

BATIFFOL H., Aspects philosophiques du droit international privé, Paris 1956, reprint: Paris 2002, with a Foreword by LEQUETTE Y.), p. 110 et seq., n° 50-54; AUDIT B., Droit international privé, Paris 2006 (4th ed.), p. 95, n° 116; the conception of private law by modern unilateralists has been best developed by P. MAYER: La distinction entre les règles et les décisions, Paris 1973 (see in particular n° 113, pp. 80-82). 15 MAYER P./HEUZE V., Droit international privé, 8th Paris 2004, n° 118, p. 86. 16 Before being rooted in the conception of laws, the determination of their scope of application was derived from common (Roman) law and later from international law (and analyzed in terms of sovereignty). See: GUTZWILLER M., ‘Le développement historique du droit international privé’, in: Recueil des Cours 1929, t. 29, pp. 291-394 (in particular, p. 302 et seq., p. 320 et seq.); MUIR WATT H., La fonction de la règle de conflit de lois, thèse dactylographiée Paris II, 1985, p. 19 et seq. 17 GOTHOT P., ‘Le renouveau de la tendance unilatéraliste en droit international privé’, in: Rev. crit. dr. int. pr. 1971, pp. 1-36, 209-243, 415-450, p. 19. 18 The so-called ‘territorial scope’ of the Treaty (and thus of secondary community law) is described in its Article 299. See for instance: LENAERTS K./VAN NUFFEL P., Constitutional Law of the European Union, London 2005, p. 351 et seq.

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Stéphanie Francq nity law ‘applies’ to the territory of the Community,19 but it does not apply to just any situation which presents some kind of link with the European territory, nor does a situation need to be entirely localized in the EU for Community law to apply. To tell the truth, it may even apply to situations which are entirely localized outside the European Union.20 It follows that the territory of the Community does not provide much information about the applicability of Community law. More precisely, the territory of the Community represents only the geographical space in which Community law is binding and where it will be implemented by authorities such as judges or administrations. In this sense, it applies, indeed, on the territory of the Community because this is where authorities are required to apply it. To put it short, the territory of the Community corresponds to the limits of the binding force of Community law but does not determine the limits of its applicability, i.e. the delineation of the situations to which it is applicable. Thus, saying that Community law ‘applies’ to the territory of the Community overlooks the essential distinction between the scope of its binding force and the scope of its application.21 The principle of supremacy is not any more helpful. Of course, Community law takes precedence over national law, but this occurs only in case of conflict, i.e. when both apply to the same situation. Therefore the hypothesis of application of Community law (and of national law) needs to be clarified before the principle of supremacy comes into play. In both cases, the stage for identifying the conditions necessary for applying Community law is missing. It is only when these conditions are fulfilled that judges are obliged to apply Community law and, as the case may be, to rely on the principle of supremacy so as to leave national law aside. The question thus remains of how and where these conditions are to be found: in conflict rules, as premised by the contemporary dominant conception of PIL, or in the acts themselves, as postulated by the historical method of PIL? Surprisingly enough, it can be shown that the conditions required for the application of Community law can be found in the acts themselves (I). Each act of Community law determines its own scope of application, explicitly or implicitly, in accordance with the unilateralist method (I.A.). This requires us to reconsider some fundamental notions of PIL (I.B), but does not per se ensure the validity of the unilateralist theory. Before we can reach the conclusion that the unilateralist theory should be given a closer look, we must search for the reasons why the unilateralist method commands massive use in Community law (II.A). Indeed, if those reasons 19 On the difference between the territory of the Community and the territory of its Member States: RIGAUX A., ‘Territoire communautaire’, in: Répertoire communautaire, Paris. 20 CJCE, 27.09.1988, joined cases 89, 104, 114, 116, 125-129/85, Ahlström, in: ECR 1988, 5193 (all the undertakings concerned where established outside the Community). 21 The French expressions are maybe clearer: ‘domaine de force obligatoire’ v. ‘domaine d’applicabilité’.

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Community Law and Methods of Private International Law were to derive from the specificities of the Community legal order, there would be no need to consider a fundamental change of paradigm for the PIL theory: the phenomenon would be limited to one specific legal order but could not be generalized. But if, however, this theory deserves more attention, as suggested by our findings, a new balance must be struck between the two theories (II.B)

I.

The Use of the Unilateralist Method

There is no place here for a voluminous series of examples of Community acts determining their own scope of application. Thorough research covering about ten fields of law and focusing in much more detail on five of them (competition, transport, consumer protection, worker protection, and agency) demonstrates that Community acts fix their own scope of application. In the following, I will concentrate on a few examples that are representative of the variety of the phenomenon. A.

Community Acts Determine Their Own Scope of Application

The affirmation might seem bold. How could all acts of secondary Community law fix their own scope of application without anybody having noticed? The weight of tradition might have played a role: the current conception of PIL does not prepare us to look closely at substantive law to find answers to conflict of law questions. But it is more likely to be the nature of the criteria for applicability which prevented their direct identification. Most of them are implicit (1) and, even if some of them are explicit (2), statutory interpretation is nevertheless almost always necessary. This intimate relationship between the criteria of applicability and the substance of the law shows that we are indeed facing a return of the unilateralist method (3). 1.

Implicit Criteria

The Gran Canaria case offers a good example of the problem at stake.22 German 22

BGH, 19.03.1997, in: IPRax 1998, 285-290; Rev. crit. dr. int. pr. 1998, p. 610 note Lagarde; MANKOWSKI P., in: Entscheidungen zum Wirtschaftsrecht 1997, pp. 547-548; MANKOWSKI P., in: Recht der Internationalen Wirtschaft 1998, pp. 287-291; MICHAELS R., in: Juristenzeitung 1997, pp. 601-609. See also: LAGARDE P., ‘Le consommateur en droit international privé’, in: REICHELT G. (dir.), Ludwig Boltzmann Institut für Europarecht: Vorlesungen und Vorträge, Wien 1999, Heft 4. There were two sets of cases, one about consumers who had acquired blankets and other wool materials during a boat tour, and one about consumers who had bought a time-sharing right after a presentation to which they were invited, but only the latter reached the BGH. It was unclear whether this contract could qualify as ‘a supply of service’ as stated in Article 5.1. The BGH found that it could not,

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Stéphanie Francq tourists had entered into contractual relationship with professionals during their vacation in Spain. The specific circumstances surrounding the contracts conclusion deprived them from being protected by Article 5 of the Rome Convention. The parties contractually agreed to be governed by the law of the Isle of Man, where the professional had its central administration. Upon their return to Germany, the tourists refused to pay the balance they owed to the company established in the Isle of Man. They claimed that Germany’s implementation of the European Directive 85/577, which protects consumers with respect to contracts negotiated away from business premises, granted them the right to withdraw from the contract.23 As mentioned above, Article 5 of the Rome Convention could not render German law applicable and under Article 3 of the same Convention, the parties had validly chosen the law of the Isle of Man. Therefore, the tourists could only rely on Article 7 of the Rome Convention, which provides for the unconditional application of the forum’s mandatory rules. Therefore the German Supreme Court (‘BGH’) had to address the relationship between Articles 5 and 7 of the Rome Convention (i.e. 29 and 34 of the EGBGB).24 Could Article 7 designate the law of the forum protecting the consumer when the conditions of Article 5 were not fulfilled? Would that not deprive Article 5 of its effet utile? According to the BGH, Article 7 could only lead to the application of the forum’s mandatory rules when the conditions for applying Article 5 §2 were matched. As a result, the German implementation law could not apply and the German tourists could not benefit from the Directive’s protection. Whoever comes across this finding feels uneasy. Of course, the arguments surrounding the respective scope of Articles 5 and 7 of the Rome Convention were to be taken seriously, but wasn’t the directive’s primary aim the protection of a consumer from a Member State who enters into a contract with a professional from another Member State, especially in the circumstances of this case? The intensity of the debate launched by this case on the necessity of Article 5’s reform shows that many authors doubted the fairness of the practical result reached by the BGH (the default of application of the Directive). Why? Because the Directive was tailored for cases just like this one. This means that Directive 85/577 certainly covers contracts concluded between a consumer established in a Member State and a professional established in another Member State, at least when the contract is concluded in the territory of a Member State. And, surely enough, we can state that the even when the contract contains some elements of services (management and maintenance of the property). The conditions of 5.2. were not fulfilled either case. 23 Directive 85/577/EEC of 20 December 1985 to protect the consumer with respect to contracts negotiated away from business premises, OJ 1985, L 372/31 (the so-called ‘Doorstep Selling’ Directive). The German implementation law was the Haustürwiderrufsgesetz (16.1.1986, BGBl I p. 122) which was incorporated in the BGB (§§ 312 et seq. and 355 et seq.) with the Reform of the law of obligations in 2002. 24 The case also raised the question whether the implementation law could be considered as an international mandatory rule as stated in Article 7 of the Rome Convention, but the BGH did not address this issue since it ruled that Article 7 could not apply anyway.

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Community Law and Methods of Private International Law Directive does not aim at protecting a Chinese tourist entering a contract with an American professional in Mexico. We thus notice that some situations are clearly covered by the directives, while others are clearly excluded. The existence of this limit between covered and excluded situations simply means that the directive delineates its own scope of application. Further elaboration would be necessary in order to find out what the exact scope of the Directive is. For instance, are contracts concluded in a third State between two parties established in EC Member States covered? But more interesting is the question of how we would proceed in order to achieve this goal. Naturally, the provisions and the recitals would come into consideration first; not only their wording, but also the general architecture of the text. The preparatory works would be used in order to understand both the circumstances of the text’s adoption and the goals pursued at the time of adoption. We would obviously undertake classical canons of interpretation: literal, systematic, historical, and teleological. The Directive on product liability shows another aspect of the interpretation necessary for determining the Community acts’ scope of application.25 On the one hand, it has generally been stated that the Directive does not provide for the conditions of its own applicability.26 On the other hand, who would doubt that the Directive applies to a product liability case involving a consumer living in France and a producer established in Germany? The legal base of the Directive (Art. 100 EEC, nowadays Art. 94 EC) and its first recital explain that the Directive aims at promoting the free movement of goods within the Community. This means that it certainly applies to the basic situations where the Treaty’s first freedom is at stake, i.e. when a product ‘originating from one Member State’ circulates ‘between Member States.’27 Exactly as in the preceding example, where there is no doubt that the Directive applies to a determined situation, the idea must be accepted that it is not ‘neutral’ as far as its scope of application is concerned. The Directive itself, and its legal background, provide more information on the exact definition of its scope of application with respect to products originating from third States. If a 25 Directive of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products, OJ 1985, L 210/29. 26 FAWCETT J.J., ‘Product Liability in Private International Law: a European Perspective’, in: Recueil des Cours 1993, t. 238, pp. 9-246 (the contribution is entirely based on the assumption that the directive does not determine its own scope of application and even proposes the introduction a specific rule on the scope of application, p. 229); contra: STAUDINGER A., ‘Die ungeschriebenen kollisionsrechtlichen Regelungsgebote der Handelsvertreter- Haustürwiderrufs- und Produkthatungsrichtlinie’, in: NJW 2001, pp. 1974-1978 (after the ECJ had rendered the Ingmar decision – ECJ, 9.11.200, C-381/98, Ingmar, in: ECR 2000, I-9305 –, the author sustained that the directive on products liability and the ‘Doorstep Selling’ Directive should be applied a similar reasoning as followed in this ECJ decision). 27 See Art. 23, §1 and §2, 28 and 29 EC.

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Stéphanie Francq French consumer buys a product originating from the United States in Germany, the Directive also applies. Article 3 §2 of the Directive on product liability states, indeed, that the person who imports products into the Community in the course of its business shall be responsible as a producer. Thus, in the case of the American products, the consumer must benefit from the right to sue the importer under the conditions for the producer’s liability set forth by the Directive. Consequently, the Directive applies to products originating from third States and imported in the Community, i.e the products which are ‘in free circulation in Member States.’28 The Directive on product liability should also be read in light of its ‘sister directive’ on products safety.29 Both resulted from the intention to promote free movement of goods and to prevent individuals from its side effects. Together, they form a coherent scheme of protection for individuals with respect to products; the latter imposing a priori obligations on the producer and the former, a posteriori. The Directive on products safety applies not only to products originating from Member States, but also to products which are in free circulation in Member States.30 It adopts the same scope as the Treaty provisions on the free movement of goods and explains the reason why Article 3 §2 was introduced in the Directive on product liability. The importer will indeed be bringing the products originating from third States into free circulation in a Member State. He is thus the one responsible for introducing the product into the European market and for meeting the formalities which will allow this product to circulate between Member States. The two Directives adopt the same scope of application and this scope is perfectly coherent with the Treaty’s provisions. All this leads us far away from the assertion that the Directive on product liability does not determine its own scope of application. This is also the interpretation process actually followed by the ECJ. The Ingmar decision offers one example where the ECJ used a classical interpretation process in order to assert a Directive’s scope of application and, in this case, its internationally mandatory nature. Directive 86/653 on commercial agents does also not provide for any explicit applicability criteria.31 Again, this act of secondary Community law might seem ‘neutral’ in terms of PIL. But in a situation involving a commercial agent established in the UK and a principal established in California, the ECJ ruled that Articles 17 and 18 of Directive 86/653 applied, although the parties had chosen Californian law. In the first part of its reasoning, the Court scrutinizes the provisions of the Directive (points 21 and 22). In the second part, the ECJ turns to the purposes of the Directive as they are to be found in the recitals. The Directive was expected ‘to eliminate restrictions on the carrying-on of the 28 29

Art. 23, §2 EC. Directive 2001/55 of 3 December 2001 on general product safety, OJ 2002, L

11/4. 30

Art. 1 of the directive 2001/55 on general product safety (note 29). Directive 86/653 of 18 December 1986, on the coordination of the laws of the Member States relating to self-employed commercial agents, OJ 1986, L 382/17. 31

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Community Law and Methods of Private International Law activities of commercial agents, to make the conditions of competition within the Community uniform and to increase the security of commercial transactions’ (point 23). Theses purposes are then placed in the framework of the Treaty (point 23), before the Court concludes that the ‘purpose served by the provisions in question requires that they be applied where the situation is closely connected with the Community, in particular where the commercial agent carries on his activity in the territory of a Member State, irrespective of the law by which the parties intended the contract to be governed.’ The decision has been widely commented on and mostly criticized for two reasons.32 First, it does not explain why either competition would be disturbed or the freedom of establishment impaired in the Community if the Directive was not applied.33 Second, the arguments which the Court relies on in this decision could just as well apply to almost any directive. Thus, many feared that as a result of this decision, all Community acts should be treated as international mandatory rules or lois de police.34 We will come back to the latter issue;35 but for now, concentration will be on the Directive’s scope of application. The ECJ states that the Directive should apply whenever the situation is closely connected with the Community, a condition which is apparently satisfied when the agent carries out his activities in a Member State. Doing that, the ECJ actually puts forward two important points with regard to the conflict of laws question surrounding secondary Community law: (1) the lack of explicit applicability criteria in a regulation or directive does not automatically imply that the act does not fix its own scope of application; and (2) this scope of application can be determined by using the classical interpretation methods. Nevertheless, as a result of the common confusion between the applicability and the mandatory nature of a piece of legislation, the debate following the decision concentrated on the mandatory nature of the directive.36 Again, a secondary Community law’s determination of its own scope of application remained in the shadows. What is striking though is that the phenomenon is systematic and extends through all areas of Community law.37

32

Among others see: IDOT L., in: Rev. crit. dr. int. pr. 2001, pp. 112-120; JACQUET J.-M., in: Clunet 2001, pp. 513-523, MICHAELS R./KAMANN H.-G., ‘Grundlagen eines allgemeinen gemeinschaftlichen Richtlinienkollisionsrechts – „Amerikanisierung“ des Gemeinschafts-IPR?’, in: Europäisches Wirtschafts- und Steuerrecht 2001, pp. 301-311. 33 The only convincing ground for applying the directive in the case at hand is the purpose of protection. 34 Though the Court does not use this wording, it poses the problem at this level. See point 16: ‘the submissions differ as to the conditions which a legal rule must satisfy in order to be classified as a mandatory rule for the purposes of private international law’. 35 See infra, Para. B.3. 36 See infra, Para. B.3. 37

For other evidence, we refer to our book mentioned supra (note ∗).

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Stéphanie Francq 2.

Explicit Criteria

Explicit criteria for applicability are found in numerous provisions of secondary Community law. The field of transport is especially exemplary. Every piece of secondary law in this field contains explicit applicability criteria. For instance, Regulation 2027/97 on air carrier liability (as amended by Regulation 889/2002)38 applies to all Community air carriers, i.e. those who possess a valid operating licence delivered by a Member State in accordance with the provisions of Regulation 2407/92.39 The localization of departing and arrival points are not taken into consideration, so that the Regulation applies to Community carriers even when they operate a flight between two non EU countries or between two points within a Member State, be it the Member State where they are registered or a different Member State (cabotage).40 The Regulations liability rules do not apply to third State’s air carriers even when they operate flights within or towards the European Union. But this does not mean that the Regulation does not involve third State’s air carriers at all. Indeed, Article 6 imposes an obligation of information with regard to the basic provisions governing their liability to all air carriers, when offering air carriage in the Community.41 Thus, both the provisions on liability and those relating to the information required from the purchaser have a different scope of application – which can only be understood when the PIL implications of material provisions are taken into consideration. Even when the criteria are explicit, they are rarely found in a provision entitled ‘scope of application.’ Rather, they are spread in either the material provisions or in the definitions of the act’s important terms and can often not be understood without taking into consideration the act’s recitals purpose. The scope of the Directive on cross-border credit transfer derives from Article 2(f), where the definition of a cross-border credit transfer is to be found.42 The scope of the Directive’s 38

Regulation 2027/97 of 9 October 1997 on air carrier liability in the event of accidents, OJ 1997, L 285/1; Regulation 889/2002 of 13 May 2002 amending Council Regulation (EC) 2027/97 on air carrier liability in the event of accidents, OJ 2002, L 140/2 39 Art. 3 and 2, §1, b of the revised version of Regulation 2027/97; Art. 1 of the former version of the same regulation. 40 Art. 1 in fine of the revised version of Regulation 2027/97. 41 Art. 6 of the revised version of Regulation 2027/97; Art. 6, §3 of the former version of the regulation was especially dedicated to air ‘carriers established outside the Community operating to, from or within the Community’. The place of the sale thus replaced the criteria based on the characteristics of the services generally offered by the air carrier. Of course, both are linked as an air carrier which does not operate flight to, from or within the Community will probably not sell carriage in the Community. 42 Directive 97/5/EC of 27 January 1997 on cross-border credit transfers, OJ 1997, L 43/25, Art. 2, f: ‘cross-border credit transfer means a transaction carried out on the initiative of an originator via an institution or its branch in one Member State, with a view to making

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Community Law and Methods of Private International Law application on package travel derives from its first provision, which describes the Directive’s purpose as the approximation of the law of Member States ‘relating to packages sold or offered for sale in the territory of the Community.’43 Recitals 7 and 8 of the Directive’s preamble show that it aims not only at providing incentives for European consumers to buy packages in other Member States, but also at attracting tourists from outside the Community. If the goal is also to enhance the confidence of foreign tourists in the guaranteed standards of packages sold in the EU, an American consumer buying a package tour from a company established in a Member States who does advertisement in the EU, should be protected by the Directive. In contrast, a tourist established in the EU who enters into a contractual relationship with a company established in a third State is not covered by the Directive’s target public. However, if the package was sold or offered to sale within the EU (for instance through a subsidiary established in the EU), the foreign company will, nevertheless, be subject to the Directive. The Directive on time-sharing also emphasizes the importance of reading all substantive provisions in order to understand a secondary Community law’s scope of application.44 At first sight, the scope of the Directive refers to the localization of the immovable. According to Article 9, Member States should take all necessary measures to ensure that ‘whatever the law applicable may be, the purchaser is not deprived of the protection afforded by this Directive, if the immovable property concerned is situated within the territory of a Member State.’ This rather complex formula implies, at a minimum, that the level of protection set by the Directive must apply whenever the immovable is located within the European Community. If the applicable law, without regard to the way it has been designated (general conflict rule, party autonomy, reference to the ‘will’ of application of the foreign law), does not reach the same level of protection as provided for by the Directive, it is the latter that will apply. Thus, Article 9 expresses the Directive’s scope of application (it applies whenever the immovable is located within the EU), which is conditioned on a comparison with the level of protection reached by the otherwise applicable law. At first sight, the territorial criterion referring to the immovable’s localization seems to delineate the Directive’s scope of application. Another provision, however, seems to add a second criteria for applicability. Paragraph 2 of Article 4 implies that the consumer protected by the Directive needs to be resident available an amount of money to a beneficiary at an institution or its branch in another Member State; the originator and the beneficiary may be one and the same person’. Thus only transfers operated between two Member States are covered. 43 Directive 90/314/EEC of 13 June 1990 on package travel, package holidays, and package tours, OJ 1990, L 158/59. The terms ‘sold or offered for sale’ raise questions of interpretation well-known in PIL. The localization of the conclusion of a contract or of the offer are particularly difficult for distant contracts. 44 Directive 94/47 of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis, OJ 1994, L 280/83.

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Stéphanie Francq of a Member State.45 Indeed, the contract should be drawn up in the language of the Member State where he resides or of the Member State of which he is a national. But, in any case, the Member State in which the consumer is resident may require the contract to be drawn up in its official language (or one of its official languages if there are more than one). Thus, this provision means that, in any case, the consumer needs be a resident of a Member State. Should this second criterion be understood as a criterion necessary for the entire Directive’s applicability, or only as a criteria of applicability for the provision relating to the language of the contract? Different parts of a legislative act may follow different conditions of application.46 But in the case of the Directive on time-sharing, different from the Directive on package travel, nothing in the recitals refers to the protection of consumers from third states. Whatever the answer might be, the combination of Articles 9 and 4 of the Directive on timesharing show how a comprehensive analysis of the act is necessary for understanding its scope of application. Some criteria, though explicit, raise quite difficult questions of interpretation. In particular, this is the case in of the ‘close connection’ with the European Community referred to in various directives on consumer protection.47 The vague formula is, of course, difficult to apply. When is the ‘close connection’ test fulfilled? Should the place of the contract’s conclusion, the localization of the parties, or the place of performance come into consideration? Should the connecting points be localized in different Member States in order to ensure a close connection with the European Community as a whole, or is it sufficient when they are gathered within one Member State? Can each Member State decide for itself what constitutes a close connection? For sure, each Member State is free to construe the terms as long as the interpretation remains coherent with the purpose of the directive. 45 ‘(…) the contract and the document referred to in Article 3 (1) are drawn up in the language or one of the languages of the Member State in which the purchaser is resident, or in the language or one of the languages of the Member State in which he is national, which shall be an official language or official languages of the Community, at the purchaser’s option. The Member State in which the purchaser is resident may, however, require that the contract be drawn up in all cases in at least its language or languages which must be an official language or official languages of the Community, and – the vendor provides the purchaser with a certified translation of the contract in the language or one of the languages of the Member State in which the immovable property is situated, which shall be an official language or official languages of the Community.’ 46 See the Directive on air carrier liability (note 38) and the British American Tobacco cases (note 104). 47 A close connection is sometimes required with the territory of one Member State (Directive 97/7 of 20 May 1997 on the protection of consumers in respect of distance contracts, OJ 1997 L 144/19, Art. 6 §2: close connection with the territory of one or more Member States) or with the territory of the Member States (Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts, OJ 1993, L 95/29, Art. 6 §2; Directive 1999/44 of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees, OJ 1999, L 171/12, Art. 7 §2).

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Community Law and Methods of Private International Law And this will, by nature, lead to divergences of interpretation. The ECJ does not provide any specific content to the criterion, but only highlights the importance of the role of interpretation. First, the Court has accepted that the Member States give specific effect to such criterion through presumptions. A margin of appreciation should always be left to the judge ‘to take account of various ties depending on the circumstances of the case.’ A list of predetermined criteria which would automatically command or prohibit the implementation law’s application (thus circumscribing the conditions of application of the directive) does not meet the intended vagueness of this criterion.48 Second, the ECJ refers to the close connection test even when it is not explicitly stated in the act. It appears to be a general standard which could govern the applicability of any piece of legislation, but which always requires interpretation. In the Ingmar decision, although the criterion was not written in the Directive on commercial agents, the ECJ used it to delineate this Directive’s scope of application. The court considered the criterion fulfilled when the commercial agent carried on its activities in the Community.49 In other decisions as well, the ECJ referred to the close connection test for interpreting Treaty provisions. Situations which were entirely localized outside the EC were considered closely connected to the European legal order, sometimes without regard to the place where the professional activities were exercised or where the protected person was established.50 Thus, at this point the close connection test appears to be a deliberately vague standard which could apply to any piece of legislation;51 furthermore, it calls for an interpretative process which takes into account the purpose of the act and the circumstances of the case. Therefore, the process of inter48 ECJ, 9.09.2004, C-70/03, Commission v. Spain, in: ECR 2004, I-7999, point 33 (the Court condemned the Spanish implementation law of directive 93/13 on unfair terms in consumer contracts, where the ‘close connection’ criteria was given concrete effect through a reference to Article 5 of the Rome Convention). 49 In doing so, it focuses on the localization of the protected person, an approach which could be followed in the field of consumer protection with the reference to the consumers’ place of habitual residence (IDOT L., in: Rev. crit. dr. int. pr. 2001, 119, point 26). 50 The most striking example is the Boukhalfa decision (ECJ, 30.04.1996, C-214/94, in: ECR 1996, I-2253) where Article 39, §2 CE was applied to a Belgian employee of the German embassy in Algeria, because the situation was considered as retaining a ‘sufficiently close link with the Community,’ although the employee was a permanent resident in Algeria and the contract was entered into and permanently performed there. In this case, the ECJ was satisfied that there was ‘a sufficiently close link between the employment relationship, on the one hand, and the law of a Member State and thus the relevant rules of Community law, on the other’ (point 15). Mrs Boukahlfa was affiliated with the German social security system and in her case a German rule designated Algerian law as applicable to the conditions of employment. 51 Of course, the close connection test is always suitable: do many legislators command the application of their law to situations which have only a tenuous connection with their legal order? Comp. LAGARDE P., ‘Le principe de proximité en droit international privé contemporain’, in: Recueil des Cours 1986, t. 196, pp. 9-238.

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Stéphanie Francq pretation is identical to the process followed when the act contains no explicit applicability criteria.

3.

Unilateralist Method

The few examples presented above underline some characteristics of the method used by secondary Community law to solve the question of its own applicability. Criteria of applicability are contained in the act itself, but are rarely presented as such. They are to be found in or result from the act’s substantive provisions. They sometimes derive from a provision limiting the effect of party autonomy, or often from the definitions. All provisions should be taken into consideration because several of them may be relevant for defining the act’s scope of application. Also, different provisions can even have different scopes of application. The recitals and preparatory works of the act are important for understanding its purpose which, in the end, is the only certain guideline for solving the border line cases (for instance, the situation of consumers from third States). This interpretation process, even when the criteria are explicit, cannot be avoided and is, therefore, essential to the exact delineation of the scope of the act. Inclusion of applicability criteria in the legislative act itself,52 which determine its own conditions of application, is characteristic of the unilateralist method. The legislator only addresses the conditions for application of its own legislation and does not decide when foreign law is applicable to specific situations. Even more interesting is the link between the substance of the act and its applicability, to which we will turn in the next paragraph. For now, we should simply note that the scope of application derives from the specific purpose of each piece of legislation through interpretation. This process is adopted naturally by the ECJ. In the Ingmar decision, even though the Court was aware of the Rome Convention’s conflict rules,53 it did not take them into consideration. However, it deliberately chose to focus on Directive 86/653 to determine whether the commercial agent established in the UK could rely on it in its relationship with a principal established in California. The typical unilateralist approach of the ECJ54 is not only due to the limitation of its powers in the preliminary ruling procedure. To provide a useful answer, the Court needs to take into consideration all relevant elements of the case, including, among others,

52

Some authors accept the idea of gathering the applicability criteria in an external rule. For instance: SPERDUTI G., ‘Théorie générale du droit international privé’, Recueil des Cours 1967, t. 122, pp. 173-336, p. 226 (and the references cited). 53 Opinion of Mr Advocate General Léger, 11.05.2000, C-381/98, Ingmar v. Eaton, in: ECR 2000, I-9305, points 72 and 88. 54 JACQUET J.-M. (note 32), p. 522.

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Community Law and Methods of Private International Law the legal context in which it takes place.55 And in Ingmar, it had to choose whether the applicability of secondary Community law provisions, which had become part of the national law, could depend on national conflict rules, or whether it should be solved in reference to only the Community act itself.56 It should be underlined that if the ECJ adopts this approach, it is only because it has to. It is not for the Court to attribute applicability criteria to secondary Community law; it is only there to construe the criteria. In other words, because the Court is an interpretive body, it is only because these criteria are in the legislative acts that the Court may highlight them. The choice between unilateralism and multilateralism does not belong to the judiciary, but to the European legislator.

B.

Some Consequences of Using the Unilateralist Method

The massive use of unilateralism in secondary Community law raises, of course, many questions. Besides the question of this theory’s place in the current conception of PIL (II), a directly relevant question concerns the role of existing conflict rules (2). The observed phenomenon also leads to the reconsideration of some of the well-established ideas of our current system of PIL (1, 3).

1.

Substance v. Applicability

Our system of PIL is originally built on the idea of a radical distinction between substantive law and conflict of laws.57 On the one hand, as stated above, private laws are seen as neutral in terms of conflict of laws: they do not address the question of their conditions for application because they form an abstract rational command. On the other hand, the conflict rules themselves pursue objectives entirely distinct from those of substantive law. Originally, conflict rules were expected to 55

Of course, the ECJ has only the power to interpret the provisions of Community law, not those of national law (EHRICKE U., ‘Art. 234’, in: STREINZ R. (dir), EUV/EGV, pp. 2064-2986, n° 12). But for this purpose, the ECJ must be informed of the factual and legal setting of the situation, else the question cannot be taken into consideration by the Court (ibid., n° 50; ECJ, 26.01.1993, C-320-3222/90, Telemarsicabruzzo v. Circostel, in: ECR 1993, I-393, points 5 and 7). Indeed, it must provide the national judge with an answer complete enough to solve its case: ‘although it is not for the Court, in proceedings under Article 177 of the Treaty, to rule on the compatibility of rules of domestic law with Community law, it is none the less competent to give the national court full guidance on the interpretation of Community law in order to enable it to determine whether those rules are so compatible’ (ECJ, 15.12.1993, C-292/92, Hünermund, in: ECR 1993, I-6787, point 8). 56 JACQUET J.-M. (note 32), p. 521. 57 See for instance: VON BAR CH., MANKOWSKI P., Internationales Privatrecht, 2. Aufl., München 2003, pp. 197-206 (keeping the distinction as a necessary paradigm in the current conception of PIL).

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Stéphanie Francq identify the ‘seat’ of a legal relationship. Today, they serve to designate the legal order with which they are closely connected to. In principle, this process occurs without regard to either the content of the potentially applicable laws or to the result of the dispute.58 The idea of conflict rules – such as Article 5 of the Rome Convention or conflict rules whose connecting factors operate alternatively – which are tailored to complete some substantive aims, have been progressively accepted mainly because of the sometimes arbitrary result of other conflict rules.59 Nevertheless, the core idea remains that conflict justice and substantive justice are different things.60 The distinction between the substance of rule and the conditions for its applicability, i.e. the conflict of law question, is perfectly coherent in the current system, which is built on the concept that private norms are purely neutral as to the conflict of law problem.61 This distinction is so dominant that some rules which are supplied with applicability factors are nevertheless considered neutral with regards to the conflict of laws process. First, self-limited rules are rules which delineate their own scope of application, but this determination is not considered relevant to the designation of the applicable law.62 This limitation is only taken into consideration after the intervention of the conflict rule.63 The conflict rule designates the applicable law, or the 58 Therefore, the conflict rule is considered abstract (without consideration of the content of the conflicting substantive rules) and neutral (it does not attempt to favour one or another result for the dispute): MAYER P./HEUZÉ V. (note 15), n° 114, p. 83. 59 PATOCCHI P.M., Règles de rattachement localisatrices et règles de rattachement à caractère substantiel, Genève 1985; GONZALEZ CAMPOS J.D., ‘Diversification, spécialisation, flexibilisation et matérialisation des règles de droit international privé’, in: Recueil des Cours 2000, t. 287, pp. 9-426. 60 KEGEL G., ‘Fundamental Approaches’, in: International Encyclopedia of Comparative Law, vol. III: Private International Law, Chapter 3, p. 13. In a similar manner, BATIFFOL H. (note 14), passim, underlines the specific objectives of PIL. On the comparison between the positions of G. Kegel and H. Batiffol: BATTIFOL H., ‘Les intérêts en droit international privé’, in: LÜDERITZ A., SCHRÖDER J. (dir.), Internationales Privatrecht und Rechtsvergleichung im Ausgang des 20. Jahrhunderts, Festschrift für G. Kegel, Frankfurt a.M. 1977, pp. 11-21; PATAUT E., Principe de souveraineté et conflit de juridictions, Paris 1999, pp. 10-15. See also: ZWEIGERT K., ‘Zur Armut des internationales Privatrechts an sozialen Werten’, in: RabelsZ. 1973, pp. 345-452. For a clear summary of the current situation see: BUCHER A./BONOMI A., Droit international privé, 2nd ed., Bâle-Genève-Munich 2004, n° 376-377. 61 See supra, Introduction. 62 See, among others: LIPSTEIN K., ‘Inherent Limitations in Statutes and the Conflict of Laws’, in: ICLQ 1977, pp. 884-902; KINSCH P., ‘L’autolimitation implicite des normes de droit privé matériel’, in: Rev. crit. dr. int. pr. 2003, pp. 403-435. 63 This is why they are different from ‘lois de police’ whose application intervenes independently from the conflict rules.

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Community Law and Methods of Private International Law competent legal order, and within this legal order the relevant rules still need to be identified. If one rule which could be relevant for the case limited in its scope of application in geographical terms, the other rules of the same legal order remain applicable.64 Self-limited rules are simply seen as a leges speciales, as opposed to leges generales. The latter remain applicable even when the former are not.65 Second, ‘substantive rules of private international law’ are those substantive norms whose content is only relevant to international situations.66 Like self-limited rules, they contain criteria delimiting their applicability and these criteria are not seen as relevant for the conflict of laws process. Indeed, most specify that they apply to international situations. They even describe what an international situation is (for instance, seller and buyer reside in different States) but they do not localize the connecting factors in their legal order in a way that indicates that their application is required (for instance, they do not state: when seller and buyer reside in different States and either of the parties resides in the forum State). Like self-limited rules, they are only taken into consideration if the relevant conflict rules designate the

64 This test of ‘alternatives’ is proposed by SCHURIG K., Kollisionsrecht und Sachrecht, Berlin 1981, p. 61. But the existence of a remaining general body of law which can solve the question when the self-limited rule does not apply is true for ‘lois de police’ as well. When a ‘loi de police’ of the designated legal order does not apply, the other provisions of this legal order remain applicable. The only difference between ‘lois de police’ and self limited rules has thus been pointed out in the preceding footnote. 65 The notion of self-limited rules can be better understood with regard to the distinction between the competence/jurisdiction of a legal order and the applicability of its rules (for this distinction, see: DE NOVA R., ‘Conflits de lois de normes fixant leur propre domaine d’application’, in: Mélanges offerts à Jacques Maury, Paris 1960, t. 1, pp. 377-401, p. 381; MAYER P., ‘Les lois de police étrangères’, in: Clunet 1981, pp. 277-345, p. 282 et seq.). To put it short – and perhaps simplistically – a designated legal order remains competent even if one of its rules does not ‘want’ to apply. Each legal order containing the solution to every legal problem – MAYER P. (note 14), p. 69 et seq., n° 102 et seq. – the impossibility of applying one of its rules, does not prevent the application of all other general rules. 66 RIGAUX F, Droit international privé, tome 1, Bruxelles 1993, p. 176 et seq. This conception is narrower than the conception retained by many authors. Many call substantive norms of PIL those rules which are typically applicable to international situations (for instance, uniform rules drawn up for international sales). But their only specificity is then to contain, like self-limited rules, applicability factors delimiting their scope of application. In essence, they could just as well apply to internal situations. F. Rigaux proposed to name substantive rules of PIL only those rules whose content does not make sense for internal situations (for instance, a Belgian provision on currency which should be used for the salaries of expatriates, Art. 4 of the law of 12 April 1965 on the protection of salaries, Moniteur belge 30.04.1965). For a general presentation of the notion: SIMON-DEPITRE M., ‘Les règles matérielles dans le conflit de lois’, in: Rev. crit. dr. int. pr. 1974, pp. 591-606.

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Stéphanie Francq legal order they belong to.67 Thus, their only real speciality is that they cannot apply to internal situations. Could secondary Community law be considered to belong to any of these two categories of laws? If it were, what we called the autonomous determination of the scope of application of secondary Community law would not be a new phenomenon and could just as well be explained with the usual tools of the current conception of PIL. A partial answer has already been given to this question by saying that the unilateralist method is used in secondary Community law. Unilateralism implies that the criteria contained in substantive norms govern the question of their international applicability and, thus, participate in the conflict of law process. Assimilating secondary legislation to self-limited rules would suppose that its applicability criteria do not command its application for international situations. In other words, criteria used in directives on consumer protection (such as the ‘close connection’ test or the sale or offer of a package in the Community), for instance, should not be considered as having an impact on the identification of the applicable law. What would then be their ‘effet utile?’ Actually, nobody argues the neutrality for the conflict of law process for the applicability criteria of secondary Community law. When they have been identified, their compatibility with the Rome Convention is questioned and this implies that they solve the same kind of problem. The ECJ itself has considered the criteria of secondary Community law as relevant for its application to international situations: this is the approach adopted in the Ingmar decision for instance. Furthermore, secondary Community law cannot be assimilated to ‘substantive rules of private international law.’ These norms can be ‘isolated’ only because their content does not make sense in purely internal situations. This is certainly not the case for secondary Community law. Even if the application of Community law is disputed for reasons linked to the limited powers of the EC,68 nothing in the content of most directives and regulations makes them 67 This is true for substantive norms of PIL which have a national origin. Those contained in international conventions are applicable when the convention itself is applicable, i.e. through its own applicability criteria or via a conflict rule. 68 On this problem, see recently: DE BEYS J., ‘Le droit européen est-il applicable aux situations purement internes? A propos des discriminations à rebours dans le marché unique’, in: Journal des tribunaux de droit européen 2001, pp. 137-144; IDOT L., ‘Variations sur le domaine spatial du droit communautaire’, in: Le droit international privé: esprit et méthode, Mélanges en l’honneur de Paul Lagarde, Paris 2005, pp. 431-453, p. 435 et seq. It should be noted that secondary Community law is often applied to purely internal situations (for instance: ECJ, 17 September 1997, C-117/96, Danmarks Aktive Handelsrejsende v Lønmodtagernes Garantifond, in: ECR 1997, I-5017 points 16 to 18 (taking for granted that the directive on the protection of employee in case of insolvency applies to purely internal situations, and concluding from the absence of restriction of its scope of application that the directive applies as well to cases where both parties are localized in different Member States).

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Community Law and Methods of Private International Law unsuitable for internal situations. The content and nature of many provisions are similar to those of any national civil code. Thus, secondary Community law cannot be assimilated into either self-limited rules or to substantive rules of private international law. On the contrary, it even leads to the questioning of these categories as such, or at least their interest for the Community legal order. Indeed, they rely on the distinction between substance and applicability, a distinction which secondary Community law does not seem to endorse. The intensity of the link between the norm’s and applicability is striking in Community law. The conditions of application derive directly from both the content of the rules and their purpose. Even when the directive or regulation contains an explicit criterion for applicability, all substantive provisions must be taken into consideration to delineate the act’s scope of application; even so, an interpretation process is still necessary. Rather, what Community law teaches us is that those criteria are so intimately linked to the substance of the norm that it is difficult to distinguish them,69 and that by removing a single criterion, one modifies the substance of the norm itself.70 The distinction between substance and applicability is actually based on a conception of norms which does not seem to suit Community law. The examples cited above refer to rules which determine their own scope of application with regard to their content. They are not neutral in the sense that they could be considered universally valid, because they are deprived of States interest and represent a purely rational and hypothetical command; therefore, they are also not neutral with respect to PIL.

69 For instance, the effect on trade between Member States is usually presented as one of the applicability criteria of Article 81. In the guidelines on the effect on the trade concept contained in Articles 81 and 82 of the Treaty (OJ 2004, C 101/81), the Commission presents this concept as independent from an analysis of the grounds of the case, thus from a substantive analysis (points 16, 22, 34-35, 48). Being independent from the ground of the case, its application would not require the identification of the relevant market, a concept only used in Article 81 for assessing the agreement. But at the same time, when the Commission explains how to use the criteria on the effect on trade and provides practical examples, it becomes obvious that this procedure forces the Commission to enter into a review of the merits of the case and often requires the identification of the relevant market (see points 32, 55, 64, 103 and 107). 70 For instance, in the field of competition law, it is not the distortion of competition as such that is forbidden, but rather the distortion of competition within the common market. If the part of the sentence relating to the localization of the distortion is removed, the substance of the rule itself is modified. We then create another rule.

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Autonomous Determination of the Scope of Application v. General Conflict Rules

Since the applicability criteria affect the conflict of laws process, their interaction with already existing conflict rules needs to be addressed. This was actually the underlying problem in the Gran Canaria case. The conditions set by Article 5 of the Rome Convention denied the consumer the benefit of being protected by the ‘Doorstep Selling’ Directive.71 The BGH decided that Article 7 of the Rome Convention could not apply when the conditions of Article 5 were not fulfilled. In the end, the result was that the conflict rules of the Rome Convention denied the Directive’s application (or more precisely, of its German implementation) in a case that obviously fell within its scope. There is direct opposition between the applicability criteria and the designation made by the Rome Convention’s conflict rule. Indeed general conflict rules and applicability criteria serve exactly the same purpose: identifying the applicable law and, thus, deciding when secondary Community law applies. By addressing the same problem but reaching different solutions, they are in direct conflict. This conflict is solved by the Rome Convention itself. Article 20 gives priority to the choice of law rules ‘which are or will be contained in acts of the institutions of the European Communities or in national laws harmonized in implementation of such acts.’ Therefore, the implicit criteria contained in the ‘Doorstep Selling’ Directive should have been given precedence over Articles 5 and 7 of the Rome Convention. The whole debate concerning the relationship between these two provisions was, in this case, not necessary. Had Article 20 not been enacted, the solution would remain the same. Article 20 of the Rome Convention embodies a general principle of law, which gives precedence to the lex specialis over the lex generalis.72 The applicability criteria of secondary Community law, being contained in a specific piece of legislation, form special rules with respect to general conflict rules, such as those of the Rome Convention. This solution has also been implicitly adopted by the ECJ in the Ingmar decision. As it was shown earlier, the Court was aware of the rules of the Rome Convention, but deliberately chose to set them aside and to put forward the applicability criteria of the directive on commercial agents.73 Thus, giving the applicability criteria of secondary Community law precedence over general conflict rules appears as a general principle, guiding the relationship between these two legal sources. The conflict rule’s origin does not affect the application of this principle. Both national conflict rules and, as in the case of the Rome Convention, 71

See supra, Point I.A.1. PARTSCH P.E., Le droit international privé européen, de Rome à Nice, Bruxelles 2003, p. 93. It may be subject to discussion whether Article 20 embodies the classical lex specialis principle, or a specific rule on the hierarchy of norms. 73 See supra, Point I.A.3. 72

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Community Law and Methods of Private International Law conflict rules within conventions between Member States, are superseded by the applicability criteria of secondary Community law. They are superseded because of both the lex specialis principle and the principle of supremacy of Community law. In accordance with the lex specialis, a general conflict rule in either European directives or Regulations (like the Rome I and II proposals) would be treated the same way.

3.

Mandatory Nature v. Applicability

If choices of law rules are superseded by secondary Community law’s criteria of applicability, the same solution should apply to party autonomy, which is just another conflict rule. Also, if the criteria of applicability impose their application without regard to the conflict rules, whatever their nature may be, they apparently function just as ‘lois de police’ or ‘internationally mandatory norms.’ The question whether regulations and directives should be assimilated to ‘lois de police’ has attracted a great deal of attention. As mentioned above, this debate was partially fostered by the ECJ’s reasoning in the Ingmar decision. The parties’ choice of law was set aside by the Court in order to make sure that the directive applied to a situation, which it claimed, fell within its scope of application. There are various consumer protection directives which could also be seen as ‘lois de police’ because they prevent a third State’s choice of law from being given effect when it does not reach the same level of protection as the directive.’74 Creating a category of internationally mandatory rules is actually our sole way of handling norms that delimit their own scope of application in a way that is relevant to PIL. Besides this category, self-limited rules and substantive norms of PIL are analyzed as norms delineating their scope of application in a way that does not affect the choice of law process. As a result, all rules that fix their own scope of application and also contain the conditions necessary for their own application are treated as ‘lois de police.’ The question then rises: if every act of secondary Com-

74 See among others: KOHLER CH./JAYME E., ‘Das Internationale Privat- und Verfahrensrecht der EG auf dem Wege zum Binnenmarkt’, in: IPRax 1990, pp. 353-361, esp. 361 (raising the question whether the directives containing explicit applicability criteria should be treated as internationally imperative and fall under the scope of Article 7 of the Rome Convention); FALLON M./FRANCQ S., ‘Towards Internationally Mandatory Directives for Consumer Contracts?’, in: BASEDOW J./MEIER I./SCHYNDER A.K./EINHORN T./GIRSBERGER D. (dir.), Private Law in the International Arena, Liber Amicorum Kurt Siehr, La Haye 2000, pp. 155-178; VERHAGEN H.L.E., ‘Het spanningsveld tussen de vrijheid van rechtskeuze en het communautaire hamonisatie-proces’, in: Nederlands internationaal privaatrecht 2001, pp. 27-33. Besides the comments of the Ingmar decision (cited supra note 32), see: STAUDINGER A. (note 26), p. 1977-1978; REICH N., ‘EUGH: Handelsvertreterrichtlinie unabdingbar gegenüber Drittlandprinzipial’, in: Europäische Zeitschrift für Wirtschaftsrecht 2001, pp. 50-52.

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Stéphanie Francq munity law fixes its own scope of application, are each of them automatically treated as internationally mandatory? If general conflicts of law are set aside by the applicability criteria, it is because they address the exact same problem: conflict rules and applicability criteria identify the hypothesis of secondary Community law’s application; they define its scope. Conflict rules and applicability conditions, especially when they originate from the same lawmaker, cannot set the conditions for application of the same law, because this would create, in the legal order, an unacceptable contradiction. Another question is the intensity with which a rule commands its application. With regard to situations which fall within its scope of application, a rule can require its own application pursuant to a grading scale of intensity. In other words, the determination of a legislative rule’s scope of application and the intensity with which it is imposed on individuals are two different things. As a consequence, when a rule of law sets its own scope of application, it does not necessarily exclude party autonomy: it is for the lawmaker to decide whether those who are normally submitted to its command remain free to designate another law. This question (of whether or not people bound by a law are allowed to escape its application by choosing another law) concerns the degree to which a law is mandatory. As a result, by allowing the addressees of its rule to designate another law, even though their situation falls within its scope, the lawmaker avoids a contradiction within its legal order. This explains why all Community acts do not need to be treated as international mandatory rules, even though they all determine their own scope of application. Even when a rule intends to cover a situation, this command may be imposed with varying degrees of intensity. In a unilateralist system, the distinction between applicability and mandatory nature also explains why even when a rule of the forum could come into consideration, priority could be given to a foreign law which also commands its own application. The lawmaker can adapt the intensity of its command to the content, or the interest, of foreign legislation or even to the expectations of the parties.75

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Community law provides examples of rules that delineate their own scope of application, but leave room for party autonomy (see infra, Point II.A.1). Community law also provides examples of international mandatory rules which submit their application to the content of foreign rules: see for instance Art. 9 of the Time Share directive, cited supra Point I.A.2.

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II.

The Validity of the Unilateralist Theory

It has never been positively shown that every piece of a legal order’s legislation determines its own scope of application.76 Thus the European legal order offers a first chance to observe an entire body of law which adopts the unilateralist method. But does this phenomenon, as such, confirm the validity of the unilateralist theory? Not necessarily. The use of the unilateralist method could be characterized as a mere expansion of a phenomenon already known under the traditional multilateralist theory. Or it could derive from the specificities of the Community legal order. In either case, there would be no need for changing anything in the currently dominant theory of private international law. Therefore, we need to find an explanation to the phenomenon observed: the nature of the explanation will tell us whether the findings made in the Community legal order must be confined to that legal order or whether they can be held as generally valid and, thus, impose a change in the conflict of law theory. At first sight, the answer could lie in the nature of the Community acts. Regulations are directly applicable, even between individuals.77 As such, they should clearly state the limits of their application.78 But isn’t this true for any piece of legislation? National laws, though they do not face the same integration problems typical for international law, present some similarities with regulations. They should, at least, be clear and precise enough to be applied by national judges. In any event, the nature of the Community act does not offer a reliable explanation. Directives, which do not always have direct effect, do delineate their own scope of application just as regulations do. Three explanations need to be scrutinized, inspired by the theory of conflict of laws and by the specificities of the European legal order.

76

RIGAUX F., ‘Les situations juridiques individuelles dans un système de relativité générale’, in: Recueil des Cours 1989, t. 213, pp. 13-406, p. 133. 77 Art. 249, §2 EC. 78 In order to have direct effect, a rule of Community law must be clear, precise and unconditional (ECJ, 5.02.1963, C-22/62, Van Gend & Loos, in: ECR 1963, 3). As such, it must identify its addressees (ECJ, 19.11.1991, C-6/90 and 9/90, in: ECR 1991, I-5357, point 26: refusing the direct effect of some provisions of a directive because they failed to identify the debtor of the obligation). Of course, for those who distinguish the substance and the applicability of a rule, the identification of the addressees, required by the conditions of direct effect, does not have an impact on the international applicability of the act. On this question, see supra, Point I.B.1.

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Its Validity

1.

Lois de police

We have seen above that all Community acts do not need to be treated as international mandatory rules just because they set their own scope of application. Nevertheless, if they do not have to be assimilated to ‘lois de police’, regulations and directives could actually be internationally mandatory if the European legislator decides so.79 We may be witnessing a tremendous increase in the number of international mandatory rules. And if this explanation were to be considered valid, secondary Community law would just constitute an additional example of an already well-known and explained phenomenon. This explanation is tempting, for two reasons. First, since the law’s mandatory nature results from a free choice of the lawmaker, the European institutions may have decided that secondary law is always mandatory at a maximal level. This hypothesis is consolidated on the one hand, by the Ingmar decision, where the ECJ asserted the mandatory nature of a directive at the end of a reasoning that could just as well apply to any Community act. On the other hand, the set of directives cited above on consumer protection also seem to indicate that community acts are internationally mandatory because they establish a direct link between the determination of their scope of application and the exclusion of party autonomy. Second, the conditions required for enactment of Community law (and thus the limited powers of the EC80) seem to offer another ground for this explanation. Basically, secondary Community law is designed to abolish things which the EC Treaty did not manage to eradicate, such as obstacles to trade or free circulation of persons.81 Obstacles to trade or circulation typically occur when the law of the host State imposes requirements on persons or products, which make it harder for that 79

For authors analyzing secondary Community law as a vast system of mandatory rules (for different reasons), see: MUIR WATT H., ‘Choice of Law in Integrated and Interconnected Markets: a Matter of Political Economy’, in: Jus Commune Lectures in European Private Law, n° 7 2003, p. 12-13, 16-17; RIESENHUBER K., System und Prinzipen des Europäischen Vertragsrechts, Berlin 2003, p. 520-522; SONNENBERGER H.J., ‘Europarecht und Internationales Privatrecht’, in: Zeitschrift für Vergleichende Rechtswissenschaft 1996, pp. 3-47, esp. at 6. 80 For more detail on the limited powers, see infra, Point 2 in this Paragraph. 81 The enactment of secondary Community law is subject to the conditions set by Article 5 EC: it may only occur within the limits of the powers conferred upon the Community by the Treaty and it may not go beyond what is necessary to achieve the objectives of the Treaty. Article 95 EC is the usual legal basis for harmonization and can only serve the ‘establishment and functioning of the internal market.’ Harmonization can, thus, not occur if it is not necessary for establishing the European market and may only occur as long as (or where) the Treaty itself reaches this goal in a satisfying way. See: LEIBLE S., ‘Art. 95’, in: STREINZ R. (note 55), pp. 1232-1266, p. 1240, n° 15.

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Community Law and Methods of Private International Law person or product to enter the market of the host State.82 For an obstacle to occur, the host State’s legislation must require its application without regard to either the law which has previously or customarily been applied to the situation. The typical context of a trade or circulation obstacle is best highlighted by the following element of the proportionality test: the measure must be necessary.83 This implies, among other things, that the law normally applicable does not already complete the host State law’s purpose, else the host State would be bound by the mutual recognition duty. From the typical factual context of obstacle to trade and from the conditions set by the proportionality test, it results, thus, that two laws are competing when an obstacle to trade occurs: (1) the law of the host State; and (2) the law which has already been or is normally applied to the situation. More precisely, the law of the host State seems to command its application in a mandatory way, i.e. without regard to the designation normally made by the common conflict rules or to the fact that another law was already applied to the situation in its home State: the law of the host State requires its unconditional application.84 Furthermore, those obstacles, which are considered legitimate and call for harmonization, occur in the fields typically covered by internationally mandatory rules. Articles 30, 46 and 39 §3 EC allow some national measures which impose obstacles on trade or circulation to remain in force. In making this allowance, they all refer to public policy, public health, public security, and so on (matters typically covered by ‘lois de police’ at the national level). As a consequence, the harmonization of matters covered by ‘lois de police’ at the national level will lead to the adoption of ‘lois de police’ at the European level. Thus, this explanation is partially linked to the limited powers of the European Institutions. The explanation, however, is too short. It would be valid only if every Community act was mandatory at a maximal degree. This would imply that they all forbid party autonomy; such is not the case. Numerous acts of secondary Community law determine their own scope of application, but do not exclude party autonomy. For instance, most provisions of the Directive on the protection of computer programs are apparently at the parties’ free 82

See the broad formula of the Dassonville decision: ‘all trading rules enacted by Member States which are capable of hindering, directly of indirectly, actually or potentially, intra-community trade’ (CJCE,11.07.1974, C-8/74, Dassonville, in: ECR 1974, 837, point 5). 83 For a general presentation of the test applied by the ECJ for ruling on obstacles to trade, see: FALLON M., Droit matériel général de l’Union européenne, Louvain-la-Neuve 2002, p. 149 et seq. 84 One author explains in clear terms how an obstacle to trade or circulation occurs in the field of private law: ‘Restricting provisions of private law of the country of destination may not be applied, in addition to those of the foreign lex contractus, if the lex contractus already affords the protection for which the former had been designed, even by different means’: STEINDORFF E., EG-Vertrag und Privatrecht, Baden-Baden 1996, p. 89 (the translation is ours).

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Stéphanie Francq disposal. Also, Directive 2002/47 on financial collateral arrangements constantly refers to contractual clauses, leaving the parties free to derogate from its provisions. In addition, the E-commerce Directive contains several provisions specifying that parties are free to derogate from the regime of the Directive and in its annex, allows the parties to choose the applicable law.85 When describing the most relevant Community acts regarding contract law, the Commission itself identifies only a very limited number of mandatory provisions.86 In the end, could it even be sustained that every act of secondary law forbids party autonomy, when the European project is aimed at stimulating international trade? This explanation not only overlooks the reality of secondary Community law, but also relies on an erroneous approach for both the identification of the ‘lois de police’ and for the role of the European lawmaker. The second argument in favor of the assimilation of directives and regulations to internationally mandatory rules can be summarized as follows: the harmonization of national ‘lois de police’ produces, automatically, ‘lois de police’ at the European level. This is wrong for two reasons. First, the argument relies on the idea that it is possible to identify fields of law, or specific objectives, which are naturally covered by such laws. The identification of these fields or objectives was attempted by Ph. Francescakis himself. Of course, the definition he gave the notion was actually based on the specificity of the objectives of those norms: ‘lois de police’ are those norms ‘the observance thereof is necessary for the safeguard of the political, social or economic organization’ of the State.87 He further elaborated on the notion of ‘organization of the State,’ by focusing on how important a legal institution is for the State.88 But what 85

Directive 91/250 of 14 May 1991 on the legal protection of computer programs, OJ 1991 L 122/42 (for instance Art. 2, §2; for the scope of application, see Art. 3); Directive 2002/47 of 6 June 2002 on financial collateral arrangements, OJ 2002 L 168/43 (for instance Art. 4, §2 and §5, Art. 5, §1, Art. 6, §1, Art. 7, §1; for the scope of application see Art. 1, §2); Directive 2000/31 of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), OJ 2002, L 178/1 (Art. 10, §2; Art. 11, §2, Art. 13 and 14; see annex 1, 5 indent; for the scope of application see: Art. 3, §1). 86 Communication from the Commission to the Council and the European Parliament on European contract law, OJ 2001, C 255/1, see annex III, point 5 citing only the consumer protection directives according to which the consumer is not allowed to waive its rights. The Commission thus considers as mandatory only 9 acts among all those cited in the Communication as participating to the ‘acquis’ in the field of contracts (see annex I). 87 FRANCESCAKIS PH., ‘V° Conflit de lois’, in: Répertoire de droit international, Paris 1968, n° 124 (the translation is ours). For further precisions, see also by the same author: ‘Quelques précisions sur les “lois d’application immédiate” et leurs rapports avec les règles de conflit de lois’, in: Rev. crit. dr. int. pr. 1966, pp. 1-18, p. 13 (where the author insists on the nature of the aims of lois de police: ‘political, cultural, social, economic purpose which the State implements by the means of structures organized by itself’). 88 FRANCESCAKIS PH. (note 87), in: Répertoire de droit international, n° 126-127.

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Community Law and Methods of Private International Law exactly is important for the organization of the State? Or more precisely, what is not important for the organization of the State? Francescakis himself thought that it could only be discovered a posteriori, when witnessing the intervention of a new internationally mandatory rule.89 The rules on filiation, for instance, are certainly representative of the state stance on the organization of society. Should they be qualified as ‘lois de police?’ The difficulty of identifying those fields or objectives which call for the adoption of internationally mandatory rules, and also distinguishing them from others, is such that it questions the method itself.90 Actually, all attempts at identifying ‘lois de police’ according to the matters covered failed, and for a good reason. ‘There is no difference of nature between lois de police and other laws. In modern States, it can be sustained that every law tends to protect economic or social rights. Actually the only difference between lois de police and other laws is a matter of degree.’91 The only characteristic, and therefore the only reliable way of identifying ‘lois de police,’ is the degree to which they are mandatory. And this is the result of a pure political choice.92 Second, the argument implies that because harmonized laws would supposedly all be internationally mandatory, the harmonization would produce a European ‘loi de police.’ In other words, the nature of harmonized laws would be automatically transferred to the directive or regulation. But it is wrong to say that the enactment of secondary Community law is always subject to the existence of national ‘lois de police.’ Secondary Community law sometimes proposes entirely new institutions, such as the European Economic Interest grouping,93 aimed at satisfying the needs of undertakings in a globalized market. Such legislation is enacted independently from the existence of a proven obstacle to trade or of national ‘lois de police’ (or of the existence of national laws at all). It should also not be forgotten that secondary Community laws could harmonize national laws that 89

FRANCESCAKIS PH. (note 87), in: Rev. crit. dr. int. pr., p. 1-2 (stating that the term ‘lois d’application immediate’ is purely descriptive). 90 It sometimes led to complicated constructions such as that of P. Mayer who distinguishes the ‘natural’ or ‘legitimate’ internationally mandatory norms, from those of which the mandatory nature is arbitrarily imposed by the lawmaker: MAYER P./HEUZÉ V. (note 15), p. 88, n° 120. 91 LOUSSOUARN Y., ‘Cours général de droit international privé’, in: Recueil des Cours 1973, t. 139, p. 328. 92 This explains as well why the laws which are to be considered as lois de police differ from State to State. There is no agreement in Europe on what interests should be protected by lois de police. For instance, the Directive on sales agents was implemented by a ‘loi de police’ in Belgium (‘loi du 13 avril 1995 sur le contrat d’agence commerciale’, Moniteur belge 2.06.1995, Art. 27) but not in France (Cass. comm. fr., 28.11.2000, in: Clunet 2001, p. 511, obs. JACQUET J.-M.). 93 Regulation 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG), OJ 1985, L 199/1. See also: Council Regulation 40/94 of 20 December 1993 on the Community trade mark, OJ 1994 L 11/1. The legal basis is Art. 308 EC (former 235).

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Stéphanie Francq remain at the parties’ disposal. Community law also aims at offering a proper legal framework for international contracts, which the parties could rely on, without necessarily being submitted to it.94 More deeply, the argument overlooks the necessary margin of appreciation left to the European lawmaker. Even if it enacts a directive or regulation in a field covered by some national ‘lois de police,’ nothing compels it to adopt a European ‘lois de police.’ If it does take responsibility for matters which used to be dealt with at the national level, it decides how they should be treated. The degree to which a rule is mandatory is the result of a purely political choice, and this choice is made freely, at the European level, by the European lawmaker. The interests of European law in not accepting the intervention of foreign laws are not necessarily identical to the national interests protected by national ‘lois de police.’ It could even be that the effect of harmonization is to reduce the need for the existence of international mandatory rules… Fundamentally, the argument ignores the nature of the legislative activity.

2.

Limited Powers

Legislative activity at the European level is affected by some peculiarities. The powers of the European lawmaker are limited. A hypothetical explanation, partially based on the EC’s limited powers, has already been analyzed and rejected in the preceding section. However, it could be sustained that the limitation of powers might have other consequences besides the adoption of European ‘lois de police.’ It could impose applicability criteria in secondary Community law and command their nature. Indeed, if the powers conferred upon the Community are themselves geographically or spatially limited, secondary legislation must logically adopt the same limitation. The argument then proceeds in this fashion: the primary law’s scope of applicability is automatically transferred to secondary law. And indeed, many provisions of the Treaty contain applicability criteria. Provisions on the free movement of goods, for instance, apply to products imported in another Member State when they originate in a Member States, or when they come from a third State and are in free circulation between the Member States.95 Provisions on the free movement of persons are aimed at Member State nationals when they travel to another Member State.96 Accordingly, the limited powers of the Community could explain the occurrence of applicability criteria in secondary Community law. 94 BASEDOW J., ‘A Common Contract Law for the Common Market’, in: Common Market Law Review 1996, pp. 1169-1195, p. 1181. It could be discussed whether the proper legal basis would be Art. 95 or Art. 308 EC. 95 Art. 23, §2, 25, 28, 29 EC. 96 Art. 39 EC. The condition relating to the nationality is not written in Article 39 EC. The condition is, however, imposed by the ECJ (CJCE, 5.07.1984, C-238/83, Meade, in: ECR 1984, 2631, point 7, interpreting Regulation 1408/71 and former Art. 48 of the Treaty) and recognized by most authors (see for instance: BARNARD C., EC Employment

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Community Law and Methods of Private International Law This explanation may be necessary, but is not sufficient. First, it does not explain the entire phenomenon. It gives no explanation why a number of secondary Community law’s applicability criteria either go beyond or stay behind those found in the Treaty itself. For instance, Directive 2001/23 on the protection of employees in case of transfer of undertakings applies ‘where and in so far as the undertaking, business or part of the business to be transferred is situated within the territorial scope of the Treaty.’97 As a result, the directive applies to all employees in case of transfer of an undertaking localized on the territory of a Member State to any new employer. As such, the directive covers situations which are partially localized or linked with third States. First, employees who are nationals from third States are covered. Second, the directive covers the transfer of an undertaking to a new employer localized in a third State. The directive was adopted on the basis of Article 100 EEC, now 94 EC, which is a provision designed to enhance the establishment or functioning of the European market. Thus, Article 94 EC provides the means for implementing the four freedoms characterizing the internal market and, in particular, the free movement of persons.98 In regard to the free movement of persons, Article 39 EC is not aimed at third States’ employees, and Articles 43 and 49 EC are not aimed at third States’ undertakings;99 nevertheless, both third States employees and undertakings are covered by the Directive. In this respect, the Directive goes beyond the Treaty’s applicability criteria. But it also remains behind them. Indeed, the directive does not cover the employees of an undertaking localized in a Member State when it acquires another undertaking localized in a third State. The directive applies only when the transferee is situated in a Member State. Therefore, the above mentioned situation, where the transferee is localized in a third State and the transferor is localized in a Member State, does not fall into its scope of application.100 This is surprising for Law, Oxford 2000, p. 111; SHAW J., The Law of the European Union, Hampshire 2000, p. 375; DAVIES G., European Union Internal Market Law, London, Sydney 2002, pp. 193; FRANZEN M., ‘Art. 39’, in: STREINZ R. (note 55), p. 580. This is imposed by a necessity of consistency, since provisions on citizenship of the Union, the preamble of the Treaty, and other provisions on the circulation of persons cover only nationals of Member States. 97 Directive 2001/23 of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses, or parts of businesses, OJ 2001 L 82/16, Art. 1 §2. The territorial scope of the Treaty (actually the territory on which the Treaty has binding force) is to be understood in regard of Art. 299 EC which describes the territory of the Community. 98 Art. 95 EC, under which decisions can be reached by a qualified majority, cannot be used in this field (Art. 95, §2 EC). Art. 94 EC requires unanimity. 99 Provisions on the right of establishment and on the freedom to provide services cover only companies or firms which possess the ‘nationality’ of a Member State within the meaning of Article 48 EC (see also Art. 55). 100 See however, Art. 7 of the Directive imposing on the transferor a duty of information in favour of the representatives of its employees.

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Stéphanie Francq two reasons. First, such a situation can be covered by an act adopted on the basis of Article 94 EC. Second, such a situation could very well lead to a modification of the social conditions of the transferor’s employees. The major purpose of the directive was to protect undertakings situated in Member States, when they are in the weaker position, being transferred to another undertaking, without regard to the fact that the transferor is localized in either a Member State or a third State. Admittedly, those criteria going beyond the limits of primary law could cause the act to be invalid and, thus, are only partially relevant. But their mere existence expresses both the specific objectives of the lawmaker and their implication for the international scope of EU legislation, regardless of the limits imposed by the Treaty. The applicability criteria result from the purposes pursued by the act more than from the Treaty. The criteria remaining behind those of the Treaty are even more interesting, because they derive from a clear and valid political choice. The lawmaker could regulate such situations – nothing imposes any restriction – but decides not to do so. This shows, just like in the example of Directive 2001/23, that the source of applicability criteria is simply grounded in a political choice.101 The explanation linked to the limited powers of the Community has a second flaw: it neglects the partial autonomy of the EU lawmaker, which is given by the Treaty. The enactment of secondary Community law is often based on either Article 95 EC or Article 308 EC. Both provisions refer to the functioning of the internal (or common) market and to the implementation of the European Community’s objectives.102 Basically, the European institutions are in charge of a project (the establishment and functioning of a common market and maybe more) and, to complete this project, they are allowed to make all the necessary political decisions. In other words, the needs of the European market determine the limit of the power of the Community. But it is for the EU institutions to assert what those needs are.103 This goes along with a certain flexibility, concerning the scope of 101 For another example, ‘cabotage’ was simply excluded from the basic regulation on the liberalization of services in the field of maritime transport (Regulation 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries OJ 1986, L 378/1), even though ‘cabotage’ was covered by the equivalent regulation in the field of air transport (Regulation 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes, OJ 1992, L 240/8), as authorized by Art.71 §1, b) EC, which enables the Council to lay down ‘conditions under which non-resident carriers may operate transport services within a Member State.’ The topic was too politically sensitive for a long time. The comparison between the application scope of these two regulations shows the impact of political choices on the scope of application of provisions enacted in a field where the Council has a broad margin of appreciation (see Art. 80 §2 EC). 102 Article 308 EC refers to the general objectives set out in Article 2 EC and Article 95 to those specified in Article 14 EC, i.e. the establishment of the common market. 103 ECJ, 5.10.2000, C-376/98, Federal Republic of Germany v. European Parliament and Council of the European Union (‘Tobacco I’), in: ECR 2000, I-8419, point 84: a measure enacted on the basis of Article 95 ‘must genuinely have as its object the improvement of

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Community Law and Methods of Private International Law secondary legislation’s application. The partial autonomy of secondary community law with respect to primary law has been recognized by the ECJ in various decisions. In the British American Tobacco case, for instance, the ECJ confirmed the validity of a directive, when some of its provisions were applicable to products due to be exported to third States.104 The directive was adopted on the basis of Article 95 EC. When enacting a measure within the framework of the free movement of goods, the EU institutions should, at first glance only, have the power to regulate trade between Member States, in accordance with Article 28 or 29 EC. According to the Court, the lawmaker had, nevertheless, demonstrated that the regulation of products which were to be exported to third States was necessary in order to protect the European market from the dangers of unlawful re-imports. Thus, it complied with the conditions of Article 95 EC. This example shows why the Treaty’s applicability criteria cannot entirely predetermine the scope of secondary Community law: the necessities of the European market are subject to a political assessment made with respect to the current state of affairs. Finally, if the Treaty’s applicability criteria were the cause of those of secondary law, and if the latter were to be identical to the first because they derive from them, why would applicability criteria occur at all in regulations and directives? Their presence would be simply superfluous, if not misleading.

3.

Unilateralism

The major flaws of the preceding explanations are twofold. On the one hand, the impact of applicability criteria is exaggerated: their occurrence does not necessarily transform the entire set of secondary laws into internationally mandatory rules, the conditions for the establishment and functioning of the internal market.’ But if ‘the measure adopted on that basis must actually be intended to improve the conditions for the establishment and functioning of the internal market,’ ‘recourse to Article 100a (95 CE) of the Treaty as legal basis does not presuppose the existence of an actual link with free movement between Member States in every situation referred to by the measure founded on that basis’ (ECJ, 20.05.2003, joined cases C-465/00, C-138/01 and C-139/01, Rechnungshof v. Österreichischer Rundfunk, in: ECR 2003, I-4989, point 41). The emphasis is added. 104 ECJ, 10.12.2002, C-491/01, British American Tobacco, in: ECR 2002, I-11453, point 85: ‘it is apparent from the observations submitted during the procedure that in the circumstances the Community legislature intended to prevent the undermining of the internal market provisions in the tobacco products sector which might be caused by unlawful re[]imports into the Community or by deflections of trade within the Community affecting products which do not comply with the requirements of Article 3(1) of the Directive in respect of maximum yields of certain substances applicable to cigarettes’. See also point 95: ‘it follows that it was possible for the Directive, including the provision prohibiting the manufacture in the Community for export to non-member countries of cigarettes which do not comply with the requirements of Article 3(1) of the Directive, to be adopted on the basis of Article 95 EC.’

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Stéphanie Francq even if those criteria cannot be considered as neutral from a PIL point of view. On the other hand, they overlook the nature of legislative activity: the limitation of EC powers alone cannot explain the occurrence and the nature of the applicability criteria of secondary Community law, nor does it necessarily lead to the systematic adoption of ‘lois de police’ at the European level. Legislating implies the exercise of a certain freedom and the making of political choices. Thus, the valid explanation should be able to take into account both the impact of the criteria on the process of identifying the applicable law and the nature of the legislative activity. The last explanation is, therefore, quite obvious. Community acts delineate their own scope of application simply because they are laws. We should probably ‘endorse the idea that each sovereign freely determines the scope of application of its laws considering that it always does so, implicitly or explicitly.’105 This sentence summarizes the postulate of modern unilateralism, which appears to be the only explanation which is based on the very nature of the legislative process and is also able to highlight the importance of secondary Community law’s applicability criteria when dealing with conflict of laws. Indeed, if pursuant to the unilateralist theory laws are deemed as determining their own scope of application, it is a result of a specific view on legislative activity, which itself has radical consequences for the theoretical background of PIL. For the Italian scholar R. Quadri, who, in the sixties, gave a new and solid theoretical background to unilateralism,106 the determination of the scope of applicability is inevitably part of the norm. This determination is a component part without which the norm cannot exist in the same fashion. As mentioned before, because each law commands the activities and actions of individuals, it must identify its addressees. Rules of law result from a collection of specific social experiences or events, and for this reason, always contain, at least implicitly, the limits of their own efficiency.107 This vision of law relies on a sociological as well as a philosophical approach. From the sociological point of view, it relies on the observation of the legislative process (how are laws created?): law appears as an answer to a corpus of problematic situations. From a philosophical point of view (what is 105

GOTHOT P. (note 17), p. 20. This article offers an outstanding reflection on unilateralism and presents the entire theory as well as its main practical illustrations. Due to the limited size of this contribution, we can only present the points which are especially relevant for Community law. On the history of unilateralism, see: WIETHÖLTER R., Einseitige Kollisionsnormen als Grundlage des Internationales Privatrechts, Berlin 1956. 106 QUADRI R., Lezioni di diritto internazionale privato, Napoli 1969 (this was the 5th edition). A similar position was defended earlier by A. Pilenko, in a book apparently published in 1911 in Russia; nevertheless it remained unnoticed because of the revolution. This author later synthesized his ideas in two publications: PILENKO A., ‘Droit spatial et droit international privé’, in: Jus Gentium 1954, t. V; ‘Le droit spatial et le droit international privé dans le projet du nouveau Code civil français’, in: Revue hellénique de droit international 1953, pp. 319-355. 107 QUADRI R. (note 106), p. 199.

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Community Law and Methods of Private International Law law?), a rule of law is understood after its purpose: it is considered as a tool for regulating social and economic life.108 Thus, it cannot be considered as the expression of a universally valid behavioral norm because it serves either specific political or economic aims, or is drafted in response to specific experiences in a given society. This conception of law is at the absolute opposite of both the view that holds law as an abstract and neutral command which could be universally valid, and the corresponding views on the notion of legal order.109 These views on law, the nature of the legislative activity and, in the end, the notion of legal order, seem to correspond perfectly to secondary Community law and to the European legal order. In the European legal order, law is a tool which serves specific social and economical purposes, set in Article 2 EC: ‘The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing common policies or activities referred to in Article 3 and 4, to promote through the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic growth.’ This provision certainly does not present the European project as a general search for ‘good’ or ‘justice.’ The objectives pointed out by the Treaty have to do with achieving optimal economic development while still respecting specific values. As a result, Community law could hardly be presented as neutral, in the sense that it is devoid of public interests: those interests are stated in the Treaty itself, in addition to the intention to complete changes and influence the development of a society. Thus the unilateralism-based explanation is linked to the explanation based on the limitation of powers. Of course, because of the nature of the powers given to the Community, it is predisposed to aim at specific behaviours in a given market. But as we have seen, the very wording of the limitation on the Community’s power implies that the legislator must make the important choices on how to achieve the Treaty’s goals. The applicability criteria have come about as a direct result of these legislative choices. As we have seen already, the ECJ has endorsed unilateralist reasoning.110 In order to delineate secondary Community law’s scope of application, the court tends to interpret the material provisions in light of the act’s objectives.111 The link be-

108

BUCHER A./BONOMI A. (note 60), p. 97, n° 368. Comp. BATIFFOL H. (note 14), n° 52. On the rejection of the Kelsenian understanding of a legal order as being virtually universal, and of the corresponding conception of norms as possessing a universal scope of application, as long as the legal order does not set the limits of their efficiency: GOTHOT P. (note 105), p. 19. 110 See supra about the Ingmar (I.A.1 and 3) and the British American Tobacco cases (II.A.2). 111 PESCATORE P., ‘Les objectifs de la Communauté européenne comme principes d’interprétation de la Cour de justice; contribution à la doctrine de l’interprétation téléolo109

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Stéphanie Francq tween the interpretation of the material provisions and the act’s objectives is perfectly clear in the ‘effet utile’ principle, which is the major interpretation principle followed by the ECJ.112 According to this principle, a provision’s scope of application should be given the full reach necessary for ensuring that the provision will complete its objectives.113 Therefore, the principle of ‘effet utile’ is directly relevant to the determination of a legislative provision’s scope of application. It calls for the establishment of a direct link between the objectives of the act and its scope of application. In other words, it is based on the idea that the scope of application can be derived from the objectives of a rule of law. Thus, this principle of interpretation relies on the idea defended by Quadri, according to which each law determines its own scope of application and must do so in order to attain its purpose. The explanation based on the unilateralist postulate is the only one which explains the entire observed phenomenon. Not only is the existence of applicability criteria best explained by this postulate, but also their main characteristics: (1) their localization in definitions, and material provisions, (2) the fact that they are often implicit, and (3) that the existence of explicit criteria does not exclude an interpretation of the act so as to discover criteria which are hidden in other provision or included in the purpose. The intimate link between substance and applicability is obvious in a unilateralist conception of the law: substance and applicability appear as the two faces of a coin and do not exist without one another. It also explains why the criteria of secondary Community law sometimes go beyond or remains behind those of the Treaty: as it has been highlighted by the ECJ, they adopt the exact reach needed for completing the aims identified by the legislator. Unilateralism also explains more efficiently why secondary Community law, even if it systematically delineates its scope of application, does not automatically exclude party autonomy. The difference between applicability and imperativity is difficult to introduce in a multilateralist system. This is so because in the multilateralist system, rules delineate their own scope of application in a way that is relevant for the process of identification of the applicable law and are automatically assimilated to ‘lois de police.’ As seen above, the nature of European legislative

gique des traités internationaux’, in: Miscellanea W.J. van der Meersch, Bruxelles 1972, t. II, pp. 325-363. 112 STREINZ, R., ‘Der „effet utile“ in der Rechtsprechung des Gerichtshofs der Europäischen Gemeinschaften’, in: DUE O./LUTTER M./SCHWARZE J. (dir.), Festschrift für U. Everling, Baden-Baden 1995, t. II, p. 1491-1510 (on the link between ‘effet utile’ and teleological interpretation, see p. 1493 and 1495). 113 This is why this principle commanded the assessment of primacy of Community law (ECJ, 15.07.1964, C-6/64, Costa v. Enel, in: ECR 1964, p. 585) or the direct effect of some Treaty provisions (for instance: ECJ, 5.02.1963, C-22/62, Van Gend & Loos – see note 78 above; ECJ, 21.06.1974, C-2/74, Reyners v. Belgian State, in: ECR 1974, p. 631) or even the vertical direct effect of some directives (for instance: ECJ, 4.12.1974, C-41/74, van Duyn v. Home Office, in: ECR 1974, p. 1337).

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Community Law and Methods of Private International Law activity also exactly corresponds to the conception of the law on which unilateralism is based.

B.

Its Implications and Limits

Unilateralism, thus, appears as the sole satisfactory explanation for the autonomous determination of secondary Community law’s scope of application. This finding raises numerous issues: first, for the construction of a conflict of laws system in the European legal order, but also, more generally, for the need of a balance between the competing theories of PIL. Multilateralism offers the theoretical background on which our current conception of PIL theory is based. When unilateralism is taken into consideration, it is because of some specific manifestation of this theory, such as ‘lois de police,’ which is then considered as an exception. The European legal order offers a completely different image of PIL. This is certainly not the place for addressing all of the questions raised by unilateralism’s place in the Community legal order. Rather, a few concluding remarks will provide the first guidelines for the new conception of PIL, which is imposed by Community law.

1.

Unilateralist System v. Unilateralist Postulate

As P. Gothot underlined, a unilateralist system of PIL is mainly characterized by the way foreign law is treated.114 A unilateralist system encompasses two sets of rules. The first set unilaterally determines the scope of application of forum law. For the cases where forum law does not apply, the second set of rules command the application of foreign law according to a criteria referring to the ‘will’ of application of foreign law: foreign law will be applied when it wants to apply.115 In light of this definition, the European legal order cannot be considered as having adopted a unilateralist system. Rather, when rules on the designation of foreign law are found in the European legal order, they take the form of classic multilateralist conflict rules. Rules on the application of foreign law are, up to now, exceptional in secondary Community law.116 As mentioned in the introduction, 114

GOTHOT, P. (note 17), p. 4. Ibid, p. 3. 116 The sole example found is Art. 9 of the Directive 2002/47 on financial collateral arrangements (note 85), which designates the law of the situation of the bank account for a few questions not harmonized by the directive. Nowhere does the directive require the bank account to be localized in the European Union, and the rule could thus potentially designate the law of a third State. But the definitions imply that the collateral taker and the collateral provider should be established in the EU (Art. 1, §2), and this probably implies that the bank account will also be localized in the EU. 115

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Stéphanie Francq conflict rules adopted in regulations or directives usually cover non-harmonized matters and designate the law of a Member State. This situation is likely to change soon, since the European institutions plan to enact two regulations on the law applicable to contractual and non contractual obligations, which will also allow the designation of the law of third States. These proposed instruments do not refer to the foreign law’s ‘will of application.’ If unilateralism has found its place in the European legal order, it is only in the sense that it commands the application of Community law. Even when a reference is made to the foreign law’s ‘will of application,’ it intervenes as a condition to which the application of Community law (and not foreign law) is submitted. For instance, Regulation 261/2004, on compensation and assistance to passengers in the event of denied boarding, cancellation, or long delay of flights, does not apply only to flights departing from Member States. It also applies to the passengers of flights operated by Community air carriers, which depart from third countries and are headed towards the community, ‘unless they received benefits or compensation and were given assistance in that third country.’117 In this case, the application of Community law is submitted to the application of a similar compensation scheme when it has already occurred in the third State. The place attributed to unilateralism in the European legal order is both large and limited. It is large, because unilateralism explains the functioning of the entire body of substantive Community law. It is limited because it cannot be sustained that the European legal order has adopted a unilateralist system.

2.

Unilateralism as a Premise

The European legal order tends to show that the endorsement of the unilateralist postulate does not necessarily imply the adoption of a unilateralist system. Still, the European legal order is on its way to adopt some kind of PIL system. If it does, this system must be coherent. As such, it must be built on the basic finding highlighted above: Community acts do delineate their own scope of application because of their legislative nature. Indeed, if provisions of secondary Community law determine their own scope of application, it is because they are rules of law. The consequences of such for the construction of a PIL system in the EU are far-reaching. Two points in particular should be made in regard of the Rome I and Rome II proposals. First, the criteria of applicability contained in secondary Community law supersede the general conflict rules which could be enacted in regulations such as Rome I and II.118 The entire body of secondary Community law is beyond the scope 117

Art. 3 §1, b of Regulation 261/2004 of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding, cancellation, or long delay of flights, and repealing Regulation 295/91, OJ 2004, L 46/1. 118 See supra, Points I.B.2.

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Community Law and Methods of Private International Law of the Rome I and Rome II proposals. As a consequence, the general conflict rules enacted in those acts will de facto only cover questions that have not been harmonized. This leads to a drastic curtailment of the scope and importance of those proposals: they could lead to the designation of the law of Member States or of third States, but only on matters placed outside the reach of secondary Community law. Second, if provisions of Community law determine their own scope of application merely because they are rules of law, it seems difficult to sustain that foreign laws do not determine their own scope of application as well. This would amount to a denial of their legislative nature. In other words, because it is based on the conception of the notion of ‘rule of law’, the explanation for Community law’s autonomous determination of its scope of application leads to a review of the way we treat foreign law. It would be contradictory to hold that Community law’s application depends on its own criteria and to build our system for designating foreign law on the assumptions that it does not determine its own scope of application. Such an attitude would even contradict one of the very principles sustaining our current construction of PIL: the equal treatment between forum and foreign law. As mentioned above, nothing compels the adoption of a pure unilateralist system. However, it is necessary to consider the idea that foreign laws, because they are laws, might determine their own scope of application as well. In other words, the unilateralist postulate imposes itself as a premise for the construction of a PIL system in the European legal order.

3.

What Place for Multilateralism?

The unilateralist postulate imposes itself as the cornerstone on which the PIL system of the European legal order will be built. Does that mean that multilateralism should be confined to the role of an exception, which used to be played by unilateralism? Probably not; however, the exact place multilateralism will take remains to be identified. But on the basis of the previous findings, we can already single out two areas, or issues, in which a collaboration between the two theories is needed. Unilateralism is often accused of being affected by irremediable flaws. The major criticisms of unilateralism are well-known. This theory is supposedly forumoriented and unable to solve the problem of the lacuna (when no law wants to apply) or of true conflict (when more than one law wants to apply).119 From all the

119

For a recent contribution on the default and advantages of unilateralism: SYMEONIDES S., ‘Accommodative Unilateralism as a Starting Premise in Choice of Law’, in: RASMUSSEN-BONNE H./FREER R./LÜKE W./WEINTRAUB W. (dir.), Balancing of Interests: Liber Amicorum Peter Hay, Frankfurt a.M. 2005, pp. 417-434. For a solid and original critic of unilateralism: MUIR WATT H (note 16).

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Stéphanie Francq ‘defaults’ of unilateralism, only one is really problematic: the true conflict.120 When more than one law require its own application, the unilateralist postulate and the corresponding idea that laws should be applied only according to their own ‘will’ do not offer any solution for selecting among the conflicting legislations. The authors who favour the unilateralist system have proposed various solutions, such as relying on the parties’ expectations and choosing the law which is most likely to effectively influence the parties’ situation,121 or selecting the law that presents applicability criteria similar to those of forum law.122 By doing so, they actually come very close to drawing up a multilateral conflict rule, i.e., selecting a ‘neutral’ criterion which will command the application of foreign law. Unilateralism, as such, is indeed unable to solve that situation: it requires some kind of criterion on the basis of which the conflict between foreign laws can be settled. This shows that any system of PIL that respects laws determination of their own scope of application will, at some point, need criteria of reference for solving true conflicts.123 The second point where unilateralism and multilateralism could meet has already been highlighted by F.C. von Savigny. Savigny considered that unilateralism and multilateralism are equivalent and should reach identical solutions.124 Savigny actually developed his entire theory on the basis of the specific context of the jus commune formed, at the time, by Roman law. For him, even if laws and subjective rights apparently varied, they were only the visible expressions of legal institutions (‘Rechtsinstitutionen’), which were common to all societies sharing a Christian and Roman background.125 This is the reason why a multilateral rule was possible at all. Despite the apparent divergence of the progressively achieved national laws, they had similar scopes of application, due to their common roots, and an external rule could correctly represent the scope of the different manifestation of a common ‘Rechtsinstitution’. In other words, jus commune is the key to Savigny’s views on PIL. It was the reason why a multilateral conflict rule would also be common to all 120 For a discussion of all other critics addressed to unilateralism see FRANCQ S. (note ∗), pp. 600-621. 121 QUADRI R. (note 106), p. 221. 122 PILENKO A. (note 106), ‘Droit spatial’, p. 21 (on Pilenko’s ideas on true conflicts, see also: WIETHÖLTER R. (note 105), p. 34); NIBOYET, J.-P., Traité de droit international privé français, Paris 1944, 1st ed., t. 3, p. 257-259; SPERDUTI G. (note 52), p. 256. 123 This is not in contradiction with the postulate of unilateralism, since the first step is always the identification of the scope of application of the potentially applicable laws. 124 VON SAVIGNY C.F., System des heutigen römischen Rechts, t. VIII, Berlin 1849, §344, p. 3; p. 14 (the solution brought by one or the other theory should not differ; they only differ on the way to formulate the question). 125 These ‘Institutionen’ were at the origin of the legal relationships and were notions which had both a legal and a social aspect. They were themselves the expression of the ‘Volksgeist’. VON SAVIGNY C.F., System des heutigen römischen Rechts, t.I, Berlin 1840, §7, p. 16-17.

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Community Law and Methods of Private International Law nations – actually those sharing a common Christian and Roman background – and ensure the uniformity of solutions given to the conflict of law question in each nation. But the specific context on which Savigny based his theory soon vanished under the growing importance of Nation-States. Therefore, the universalism dreamt of by Savigny never materialized. Community law probably offers a legal context corresponding to Savigny’s views. In particular, laws implementing directives constitute varying forms of a common legal principle. They should, supposedly, all complete the same objectives but may take different ways to do so. The freedom left to national legislator leads to classical conflict of laws between the different implementations which call for a common solution. This solution could take the form of a multilateralist conflict rule. Also, the main constraint imposed on national legislators is to find the proper translation of an act’s scope of application, which is conceived in the European legal order, into a law conceived in a national legal order. For instance, how should the national legislator implement the reference to a ‘close link with the territory of the Member States’ found in various directives on consumer protection? Should it require a close link to its own territory or to the territory of at least two Member States in order to command the unilateral application of its implementation law? Should it rather formulate a multilateral conflict rule? All these difficulties inevitably lead to divergent implementations of the directive’s scope. This is contrary to the aim of harmonization, and, potentially, to the default of application of the principles proposed by a directive, even when it commands its application, like it is shown in an example provided for by a question raised in the European parliament.126 For all these reasons, it may be legitimate to introduce a conflict rule in a directive, in order to delineate the scope of application of its future implementations. This rule could possibly express the scope of application commanded by the directive, just like the conflict rules imagined by Savigny were to express the ideal scope of application of the ‘Rechtsinstitutionen’.

126 Written question No. 1562/97 by Ben Fayot and Viviane Reding to the Commission, OJ 1997, C 391/98. The question highlighted a possible case of lacunae. The Belgian implementation of Directive 87/102 on consumer credits (OJ 1987, L 42/48) states that it applies to consumers habitually residing in Belgium (Art. 2, Law of 12.06.1991 on consumer credits, Moniteur belge 9.07.1991). As a consequence, the consumer who is a resident in Luxembourg is not protected by the implementation law, when entering into a contract with a Belgian bank. In the case where the implementation of the Grand Duchy of Luxembourg applies to banks established in the Grand Duchy, the consumer from Luxemburg concluding a contract with a Belgian bank would fall outside the scope of application of the two implementations, and would thus be deprived of the protection drawn up in the directive (unlike in the Belgian implementation, the scope of the actual implementation in the Grand Duchy is not expressly stated: law of 9.08.1993 on consumer credits, Mémorial A n° 66, 24.08.1993).

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III. Conclusion Community law casts a new light on the rules of private law and, therefore, calls for a specific PIL system. This system would be based on the application of European law to situations falling within its scope and would reserve some place to the ‘will’ of application of foreign law. In general, the European legal order invites scholars to reconsider the places traditionally attributed to unilateralism and to multilateralism for the future European PIL system. The remarks formulated in this contribution could be understood as being limited to Community law. At first sight, this is the only legal order where such a massive use of the unilateralist method has been observed. Also, the sole explanation for EC secondary law’s autonomous determination of its own scope of application, which can explain the entire phenomenon, is based on the legislative nature of those acts: they determine their own scope of application because they constitute norms which pursue social and economical policies and command human behaviour. This explanation is partially based on the specificities of European law. Article 2 of the EC Treaty presents Community law as a tool for implementing specific social and economic policies. As such, Community law is a perfect example of legislation as considered by Quadri. But this raises another question: how far exactly is Community law different from any other law applied at the national level? Could any modern legislation possibly pretend that it does not aim at implementing policies that are equivalent to those stated in Article 2 of the EC Treaty? If one where to accept that all legal norms necessarily aim at regulating certain situations and bringing about a specific result, the European experience might oblige one to rethink the fundamental theory of PIL as such. In particular, it may be necessary to rethink the marginal role of exception accorded to the unilateral method beyond Community law. In any case, this article shows that the methods of Private International Law shine differently in the new light thrown on them by the scope of application of secondary Community law.

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THE COURT OF JUSTICE, EUROPEAN INTEGRATION AND PRIVATE INTERNATIONAL LAW Paolo BERTOLI∗

I. II.

III.

IV.

Introduction Assessing the Conformity of Private International Law Rules to EC Law A. International Civil Procedure Rules 1. Discriminatory Provisions 2. Non-Discriminatory Provisions B. Conflict Rules 1. Parameters and Features of the Court’s Scrutiny 2. The Effects of the Court’s Control: problèmes choisis a) Legal Entities b) Natural Persons C. Exceptions to the Operation of Private International Law Rules 1. Internationally Mandatory Rules a) Impact of the Freedoms b) Impact of the Principle of Non-Discrimination 2. Ordre Public The Development of General Principles of Private International Law A. Interpretation 1. General Interpretative Criteria 2. Characterization B. Internationally Mandatory Rules of Community Origin C. EC Public Policy Concluding Remarks

∗ Researcher and substitute professor of EC Law at the University of Insubria (Como). This paper sets out and develops some of the ideas expressed in the author’s work Corte di giustizia, integrazione comunitaria e diritto internazionale privato e processuale, Milano 2005. Abbreviations: CMLR: Common Market Law Review; Dir. Comm. Int.: Diritto del commercio internazionale; Dir. Un. Eur.: Il diritto dell’Unione europea; Enc. Dir.: Enciclopedia del diritto, Milano; ICLQ: The International and Comparative Law Quarterly; RabelsZ: Rabels Zeitschrift fur auslandisches und internationales Privatrecht; RDUE: Revue de droit de l’Union européenne (until 1999: Revue du marché unique européen); Recueil des Cours: Recueil des Cours de l’Académie de Droit International de La Haye – Collected Courses of the Hague Academy of International Law.

Yearbook of Private International Law, Volume 8 (2006), pp. 375-412 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Paolo Bertoli

I.

Introduction

Pursuant to a traditional approach, the grant of jurisdiction to an international court or tribunal for the interpretation of a set of uniform rules governing private relationships1 is in primis, and mostly, aimed at promoting the uniform interpretation of such rules. It is submitted that a similar approach is insufficient to properly understand the role of the European Court of Justice (the ‘ECJ’ or the ‘Court’) in the interpretation of private international law rules applicable in the EC Member States. In order to properly understand the above role, one should indeed take into account a number of factors, including: (i) the interplay of rules of private international law of different origin, and (ii) the peculiar features of the institutional and legal framework in which the Court explicates its functions. As for the sources of private international law, as is well known, in a first phase private international law rules have been unified among the Member States by means of international conventions, some of which were based on Article 293 EC and, subsequently, on Article K(3) TEU.2 EC institutions have been empowered by the Treaty of Amsterdam to adopt measures in the field of judicial cooperation in civil matters as provided for in Article 65 EC and therefore, arguably,3 in virtually any field relevant to the said discipline.4 As is well known, an intensive policy of harmonization of private international law is currently being pursued at the EC level.5 The EC rules adopted in implementation of that policy are coupled 1 I.e., uniform substantive rules or private international law rules. For the purposes of the present paper, the expression ‘private international law’ designates both conflict of laws and international civil procedure (including judicial cooperation). 2 Such conventions include the Brussels Convention of 27 September 1968, the Rome Convention of 19 June 1980 (which does not have a legal basis in the EC Treaty), the convention on the service of acts of 26 May 1997 (OJ C 261 of 27 August 1997), the convention on matrimonial matters of 28 May 1998 (OJ C 221 of 16 July 1998) and the convention on insolvency proceedings of 23 November 1995 (in: Riv. dir. int. priv. proc. 1996, p. 661 et seq.). The last three conventions never entered into force and were replaced by EC regulations (as the Brussels Convention of 1968, see note 5 below). 3 For further details see POCAR F., ‘La comunitarizzazione del diritto internazionale privato: una «european conflict of laws revolution»?’, in: Riv. dir. int. priv. proc. 2000, p. 873 et seq., at p. 875; ROSSI L. S., Le convenzioni fra gli Stati membri dell’Unione europea, Milano 2000, at p. 242. 4 Provisions on private international law can also be found in other Community legislation, notably in the area of consumer protection, insurance, financial services and intellectual property. A list of such acts, updated as of 30 June 2006, is available at . 5 The European Community has made use of its competence by adopting a number of instruments, including: Regulation No 1346/2000 of 29 May 2000 on insolvency proceedings; Regulation No 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters; Regulation No 44/2001 of 22 December 2000 on jurisdiction, recognition and enforcement in civil and commercial matters (the ‘Brussels I Regulation’); Regulation No 1206/2001 of 28 May 2001 on coop-

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The Court of Justice and Private International Law with private international law rules that originate in domestic statutes or case law, or in international conventions (different from those among all Member States). The Court was granted competence to give preliminary rulings on the interpretation of conventions among Member States unifying private international law rules either by means of protocols, or of specific provisions inserted into the conventions’ texts. Under Article 68 EC, (only)6 courts or tribunals of a Member State against whose decisions there is no judicial remedy under national law are under

eration between the courts of the Member States in the taking of evidence in civil or commercial matters; Directive 2003/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes; Regulation No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgements in matrimonial matters and the matters of parental responsibility, repealing Regulation No 1347/2000 (the ‘Brussels II-bis Regulation’); and Regulation No 805/2004 of 21 April 2004 creating a European Enforcement Order for uncontested claims. Various programmatic documents have been submitted: see, also for an overview of current projects, the so-called ‘Hague Programme’ (OJ C 53 of 3 March 2005), and the scoreboard available at . 6 Article 68(3) EC, moreover, sets forth the competence of the Court to give rulings on a question of interpretation of title IV or of acts based on it in the absence of contentious proceedings. The new regime, although (i) finally granting automatic competence to the Court with respect to all Community acts unifying private international law and (ii) broadening the scope of the Court’s jurisdiction to questions of validity, is highly unsatisfactory as it ‘heavily restricts the jurisdiction of the Court’ by precluding appeal courts and allowing only courts of final instance to apply for preliminary rulings (quotation from COM (2006) 346 final of 28 June 2006, at ). The second indent of Article 67(2) EC requires the Council, at the end of the transitional period of five years following the entry into force of the Treaty of Amsterdam, to take a decision ‘with a view to adapting the provisions concerning the jurisdiction of the Court of Justice’ (i.e., Article 68 EC). In the mentioned communication, the Commission was highly critical of the fact that the Council ‘has not launched work to fulfil this legal obligation’, and a draft Council decision to that end is attached to the Commission’s communication. In the Commission’s view, ‘the best way of adapting the provisions of Title IV relating to the Court is to bring them into line with the standard rules on judicial protection of the Treaty, in all fields covered by Title IV. The specific provisions of Article 68 of the EC Treaty should therefore cease to apply’. By decision of 22 December 2004 (OJ L 396 of 31 December 2004), the Council implemented other parts of Article 67(2) EC. Also on that occasion, the Commission was highly critical on the omission of action concerning the Court’s competences: see the doc. 16081/04 of 16 December 2004, at . Following that Communication, the Court released a ‘Discussion Paper on the treatment of questions referred for a preliminary ruling concerning the area of freedom, security and justice’, submitting a proposal for the creation of a new type of ‘emergency preliminary ruling procedure’, to be used in cases concerning the area of freedom, security and justice, ‘where the urgent need to give a ruling does not, practically speaking, allow the time-limits under the normal procedure or the accelerated procedure to be observed’. The document is available at <www.curia.eu.int>.

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Paolo Bertoli the obligation to request preliminary rulings concerning the interpretation or validity of, inter alia, Community legislation based on Article 65 EC.7 The features of the Community legal order are the object of numerous thorough studies and it would not be possible to summarize them efficiently in a few lines. For the purposes of the present paper suffice it to recall that the ECJ: (i) played a central and active role in defining the actual features of that legal order, setting forth legal principles and using a result-oriented interpretation technique that had the effect of strengthening the process of European integration, and (ii) defined a hierarchical structure between primary and secondary EC legislation, and between both of the latter and domestic statutes and international conventions, accordingly stressing the possibility, and the opportunity, for the above purposes, of a ‘hierarchical’ or ‘constitutional’ control of the rules placed at lower level visà-vis those at a higher level (which are rules or principles, directly or indirectly, functional to the process of European integration). The paper investigates the ‘hierarchical’ or ‘constitutional’ control of private international law rules and of exceptions to the operation of such rules (Section II), as well as the development of principles relevant for private international law and functional to the process of European integration (Section III).8

7 The Court, moreover, is entrusted to distribute internally (Article 230 EC) and externally the competences in the field. For the latter task, suffice it to recall the recent advisory opinion of 7 February 2006, 1/06, Rep. 2006, I-1145. As for the review of the respect, by Member States, of legitimately pursued EC policies, see the decision of 9 September 2004, case C-70/03, Commission v Spain, Rep. 2004, I-7999, at paras. 30-36, on which see the document of the European Group for Private International Law ‘Quatorzième réunion Tenerife, 17-19 septembre 2004. Compte rendu des séances de travail’, point IV.1, at . Also cf. the decisions of 25 April 2002, case C-52/00, Commission v France, Rep. 2002, I-3827, at paras. 36-41; 25 April 2002, case C-154/00, Commission v Greece, Rep. 2002, I-3879. 8 The present paper does not deal with a specific sector of the influence of the Court’s case law on private international law, i.e. the private international law rules ‘evolved by and for the Community itself’ in the sectors of staff cases, Community contractual and non-contractual liability and the arbitral competence pursuant to Article 238 EC (quotation from FLETCHER I., Conflict of Laws and European Community Law, Amsterdam-New YorkOxford 1982, p. 65).

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The Court of Justice and Private International Law

II.

Assessing the Conformity of Private International Law Rules to EC Law

A.

International Civil Procedure Rules

1.

Discriminatory Provisions

In Boussac, the Court took the view that ‘there is no doubt’ that procedural rules of the Member States are subject to the EC principle of non-discrimination.9 The assessment of the compatibility of international civil procedure rules of the Member States with that principle, both as a stand-alone principle as set forth in Article 12 EC and as enshrined in the freedoms, was performed by the Court on a number of occasions. As is well known, in the Court’s view the rules regarding equality of treatment forbid not only overt discrimination by reason of nationality, ‘but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead to the same result’.10 A first group of decisions concerns the (in)compatibility of cautio iudicatum solvi with such a requirement. In Data Delecta, the Court was called on to assess the conformity with the principle of non-discrimination of a provision of Swedish law, which required legal persons established in another Member State to furnish security for costs where they wished to bring legal proceedings against one of its nationals or a company established in that Member State, when legal persons from Sweden were not subject to such a requirement. The Court took the view that such a rule was precluded by the said principle, inter alia because‘a national procedural rule, such as the one described above, is liable to affect the economic activity of traders from other Member States on the market of the State in question. Although it is, as such, not intended to regulate an activity of a commercial nature, it has the effect of placing such traders in a less advantageous position than nationals of that State as regards access to its courts. Since Community law guarantees such traders free movement of goods and services in the common market, it is a corollary of those freedoms that they must be able, in order to resolve any disputes arising from their economic activities, to bring actions in the courts of a Member State in the same way as nationals of that State’.11 Similar conclusions were reached with respect to analogous provisions in a number of other cases, including Hubbard,12 Hayes,13 and Saldanha.14

9

Decision of 29 October 1980, case 22/80, Boussac, Rep. 1980, 3427, para 10. E.g., decision of 8 May 1990, case 175/88, Biehl, Rep. 1990, I-1779, para. 13. 11 Decision of 26 September 1996, case C-43/95, Data Delecta, Rep. 1996, I-4661, para. 13. 12 Decision of 1 July 1993, case C-20/92, Hubbard, Rep. 1993, I-3777. 13 Decision of 20 March 1997, case C-323/95, Hayes, Rep. 1997, I-1711. 14 Decision of 2 October 1997, case C-122/96, Saldanha, Rep. 1996, I-5325. 10

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Paolo Bertoli Other discriminatory procedural rules of the Member States have been the object of the Court’s scrutiny.15 In Mund & Fester, the Court dealt with § 917 ZPO, which laid down the conditions for the grant of an order of seizure of assets. According to § 917(1) ZPO, seizure was to be authorized where it was reasonable to fear, in light of the circumstances of the case, that enforcement of the subsequent judgment would otherwise have been made impossible or substantially more difficult. By virtue of § 917(2) ZPO, such difficulties were presumed from the mere fact that enforcement was to take place in a State other than Germany. While § 917(2) ZPO revealed no overt discrimination based on nationality, since it applied in all cases where a judgment was to be enforced abroad, the Court took the view that it entailed a covert form of discrimination on grounds of nationality, provided that ‘the great majority of enforcements abroad [are] against persons who are not of German nationality or against legal persons not established in the Federal Republic of Germany’.16 The Court went on to verify whether the provision in question should be justified by objective circumstances, i.e. the fact that a seizure order guarantees the creditor the opportunity of enforcing a subsequent judgment against the debtor effectively and within the prescribed time. While admitting that such a presumption is justified where the subsequent judgment is to be enforced in the territory of a non-member country, the Court stated that it is not justified where enforcement is to take place in the territory of a Member State. Indeed, ‘all those States are Contracting Parties to the Brussels Convention whose territories may be regarded as forming a single entity’.17 In sum, it can be taken as granted that, with 15

Also see the decisions of 24 November 1998, case C-274/96, Bickel and Franz, Rep. 1998, I-7637 and of 22 June 1999, case C-412/97, ED Srl, Rep. 1999, I-3845. In the latter decision, the Court surprisingly excluded the contrast between EC law and Art. 633 of the Italian Code of Civil Procedure, which precluded the recourse to the special procedure for a summary payment order (decreto ingiuntivo) where the debtor resided abroad (the rule was later repealed in implementation of EC Directive No. 2000/35). The contrast between that provision and EC law was instead affirmed by the Tribunal of Milan, decision of 11 September 2000, in: Riv. dir. int. priv. proc. 2001, p. 666 et seq.; also see RADICATI DI BROZOLO L., ‘Diritto comunitario e regole processuali interne: inapplicabilità dell’art. 633 c.p.c.’, in: Riv. dir. int. priv. proc. 1993, p. 607 et seq.; SALERNO F., ‘Nuove vicende concernenti la notifica all’estero del decreto ingiuntivo’, in: Riv. dir. int. 1998, p. 781 et seq.; SCARSELLI G., in: Foro it. 2000, IV, 290. 16 Decision of 10 February 1994, case C-398/92, Mund & Fester, Rep. 1994, I-467, at para 16. 17 Decision of 10 February 1994 (note 16), para 19. As Professor Kohler put it, this Court’s judgment confirms the Court’s view, according to which ‘le territoire communautaire doit être considéré comme un espace unique où des différences de traitements ne peuvent être tolérées que lorsqu’elles se justifient d’après des critères objectifs et qu’elles respectent le principe de proportionnalité’: KOHLER Ch., ‘La Cour de Justice des Communautés Européennes et le droit international privé’, in: Travaux du comité français de droit international privé. Années 1993-1994 1994-1995, Paris 1996, p. 71 et seq., at p. 73. Also see FALLON M., ‘Les conflits de lois et de juridictions dans un espace économique intégré. L’expérience de la Communauté européenne’, in: Recueil des Cours, t. 253, 1995, p. 125; MARMISSE A., La libre circulation des décisions de justice en Europe, Limoges 2000, p. 269

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The Court of Justice and Private International Law respect to claims ‘arising out of the exercise of a right conferred upon him by the Treaty, the exercise of the civil action is inseparably linked with the very freedom enshrined in the Community legal order. The procedural law of the Member States governing the bringing of such actions falls within the ambit of the Community precisely because it becomes an instrument for achieving the objectives laid down by the Treaty’.18 2.

Non-Discriminatory Provisions

The effects on international civil procedure of the Member States of EC rules other than the principle of non-discrimination, and in particular of the freedoms, are not the object of clear-cut decisions. Certain tendencies may however be traced through the Court’s case-law. The impact of the freedoms on the free circulation of judgments is a question practically tempered by the unified regime of circulation of decisions set forth in EC secondary legislation. As a matter of principle, however, as long as it is possible to demonstrate that the denial of the enforcement of a decision poses an unjustified restriction on the freedoms (or on other rights conferred upon individuals by the Community legal system), EC primary law might be able to impose such enforcement. The Court may arguably be held to have taken this position in certain decisions relating to the mutual recognition of certificates delivered by public authorities and of decisions on their rectification.19 At any rate, a similar conclusion can be drawn only on a case-by-case basis: nothing demonstrates that the freedoms, or other principles of primary EC legislation, impose a general right to enforcement of judicial decisions, nor the abolition of intermediary procedures.20 et seq.; PULJAK M., Le droit international privé à l’épreuve du principe communautaire de non-discrimination en raison de la nationalité, Aix-en-Provence 2003, p. 59 et seq. 18 Opinion of Advocate General La Pergola delivered on 28 January 1997, case C323/95, Hayes, Rep. 1997, I-1711, para 8. The same view is taken by the Commission: ‘it is a corollary of the freedoms guaranteed by the EC Treaty that a citizen must be able, in order to resolve disputes arising from his activities while exercising any of those freedoms, to bring or defend actions in the courts of a Member State in the same way as nationals of that Member State’: Green Paper from the Commission - Legal aid in civil matters: the problems confronting the cross - border litigant, COM (2000)51 final of 9 February 2000, at . 19 See the decisions of 2 December 1997, case C-336/94, Dafeki, Rep. 1997, I-6761 and of 10 February 2000, case C-202/97, Fitzwilliam, Rep. 2000, I-883. 20 See MARMISSE A. (note 17), pp. 338-341; FALLON M., Droit matériel général de l’Union européenne, 2nd ed., Brussels 2002, p. 72 et seq.; BARIATTI S., ‘Prime considerazioni sugli effetti dei principi generali e delle norme materiali del trattato CE sul diritto internazionale privato comunitario’, in: Riv. dir. int. priv. proc. 2003, p. 671 et seq., at p. 699. The right to enforcement is considered inherent to the right to a fair trial by the ECHR, but this does not seem to imply that such a right is absolute and capable of imposing abolition of intermediate procedures: see ECHR, decisions of 13 March 1997, case No. 18357/91, Hornsby v. Greece; 11 January 2001, case No. 21463/93, Lunari and

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Paolo Bertoli Being the object of a Community policy, the latter is accordingly legitimate, but not imposed by the Treaty. The freedoms and other principles of EC legislation are also capable of influencing the rules concerning civil jurisdiction. Two recent judgments show that the control of the Court extends also to non-discriminatory procedural rules of the Member States. In Turner, the Court held that anti-suit injunctions conflicted with the Brussels Convention and in particular with the ‘principle of mutual trust which… underpins the Convention and prohibits a court… from reviewing the jurisdiction of the court of another Member State’.21 In Owusu, the Court precluded the application of the forum non conveniens doctrine, which by giving ‘the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention… and consequently to undermine the principle of legal certainty, which is the basis of the Convention’.22 The parameters invoked by the Courts in these circumstances were the system set forth by the Brussels Convention and certain principles embodied in it (and recognized by the Court as general principles of EC law). The fact that ‘the consolidation as such of the rules on conflict of jurisdiction and on the recognition and enforcement of judgments, effected by the Brussels Convention in respect of cases with an international element, is without doubt intended to eliminate obstacles to the functioning of the internal market which may derive from disparities between national legislations on the subject’ demonstrates however that the freedoms are an indirect parameter of the Court’s control in these cases.23 From a broader perspective, the issue arises whether Community legislation requires that the exercise of jurisdiction of the Member States be justified by significant connections between the court seized and the dispute. A similar view has been taken by certain authors arguing on the basis of fundamental rights: given the undisputed disadvantages of litigating abroad, a trial before the judge of a State presenting no significant links with the dispute has been submitted not to be ‘fair’ for both litigants.24 Although no Court precedents are helpful in this regard, a simiTangelli; 6 March 2003, Jasiunien v. Lithuania, case No. 41510/98; 17 June 2003, case No. 34647/97, Ruianu c. Roumanie, (at www.echr.coe.int); in literature see MARMISSE A., (note 17), p. 341 et seq.; FRICERO N., ‘Le droit européen à l’exécution des jugements’, in: Droit et procédures 2001, p. 6 et seq.; BOSCHIERO N., ‘The Forthcoming European Enforcement Order. Towards a European Law-Enforcement Area’, in: Riv. dir. int. 2003, p. 394 et seq., at p. 396 et seq. 21 Decision of 27 April 2004, case C-59/02, Turner, Rep. 2004, I-3565, at para. 28. 22 Decision of 1 March 2005, case C-281/02, Owusu, Rep. 2005, I-1383, at para. 41. 23 Decision of 1 March 2005 (note 22), at para 34. 24 See SCHLOSSER P., ‘Jurisdiction in International Litigation – The Issue of Human Rights in Relation to National Law and to the Brussels Convention’, in: Riv. dir. int. 1991, p. 5 et seq. Adde FERNÁNDEZ ARROYO D., ‘Exorbitant and Exclusive Jurisdiction in European Private International Law: Will They Ever Survive?’, in: Festchrift E. Jayme, München 2004, p. 169 et seq., at pp. 185-186; POLITI M., ‘«Foro della reciprocità» e principi costituzionali in tema di giurisdizione’, in: Riv. dir. int. 1969, p. 258 et seq.; HAY P./LANDO

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The Court of Justice and Private International Law lar point might be made, at least in limited hypotheses, on the basis of the freedoms: the possibility of being summoned to an exorbitant forum for disputes arising in connection with the exercise of a Community freedom may be argued to constitute an obstacle to the exercise of such a freedom.

B.

Conflict Rules

1.

Parameters and Features of the Court’s Scrutiny

The choice of law process is also subject to the Court’s scrutiny based on primary EC law.25 Such scrutiny, in the author’s view, concerns both the applicable law and the conflict rules themselves, and is based on all primary and secondary EC legislation, including the principle of non-discrimination and the freedoms. The European Group of Private International Law recently submitted a proposal aimed at the codification of such a principle.26 O./ROTUNDA R. ‘Conflict of Laws as a Technique for Legal Integration’, in: CAPPELLETTI M./SECCOMBE M./WEILER J. (eds), Integration Through Law. Europe and the American Federal Experience, 1, V, Berlin-New York 1986, p. 161 et seq, p. 190 et seq.; VON MEHREN A., ‘Theory and Practice of Adjudicatory Authority in Private International Law’ in: Recueil des Cours, t. 295, 2002, p. 9 et seq., at p. 117 et seq. 25 From a general perspective, one of the most relevant issues is whether EC rules on free movement and principles developed by the Court in their interpretation, such as the country of origin principle and the related duty of mutual recognition of Member States’ jurisdictions, hide a conflict rule. The view has been taken by a number of authors that EC freedom of movement rules hide either a hard-and-fast conflict rule in favour of the country of origin, or a conflict rule with an alternative connecting factor pointing at the one, between the law of the country of origin and that of the country of destination, which is better suited to favour the freedom at stake. It is submitted that such arguments are unconvincing, as EC rules on freedom of movement, as interpreted by the Court, seem to influence the choice of law and jurisdiction process only externally. In particular, such principles impose an assessment of whether the applicable law or private international law rules comply with them. This implies, in particular, that such rules are subject to the rule of reason test like all nondiscriminatory obstacles to freedom of movement, and, if restrictive on the freedoms, will accordingly be applicable only to the extent to which they pursue a legitimate interest in conformity with the double proportionality test (i.e. that the measure is proportional to the desired aims and less restrictive measures would not be effective). A similar conclusion would obviously affect secondary Community legislation; and similar issues raised (and may raise in the future) with respect to certain acts of secondary Community legislation: for further developments see BERTOLI P. (note 25), p. 285 et seq. 26 See the document ‘Troisième version consolidée des propositions de modification des articles 1er, 3, 4, 5, 6, 7, 9, 10bis, 12 et 13 de la Convention de Rome du 19 juin 1980 sur la loi applicable aux obligations contractuelles, et de l'article 15 du Règlement 44/2001/CE (Règlement Brussels I) – Vienne 2003’, at www.drt.ucl.ac.be/gedip. For a slightly different proposal see FALLON M., ‘Libertés communautaires et règles de conflit de lois’, in: FUCHS A./MUIR WATT H./PATAUT E. (eds), Les conflits de lois et le système juridique communautaire, Paris 2004, pp. 77-78. Correctly in the sense that similar clauses should

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Paolo Bertoli The functioning of the Court’s control based on the principle of nondiscrimination is relatively easy to trace with respect to the control exercised on the applicable law, which will be condemned when ‘nationals of other Member States in a situation governed by Community law are [not] placed on a completely equal footing with its own nationals’.27 Whether a similar control is also exercised on conflict rules is disputed in academic writing. A first point that can be made is that the use of nationality as a connecting factor does not per se contradict EC law. Indeed, the recurrent statement that the principle of non-discrimination ‘is not concerned with any disparities in treatment or the distortions which may result, for the persons and undertakings subject to the jurisdiction of the Community, from divergences existing between the laws of the various Member States, so long as those laws affect all the persons subject to them, in accordance with objective criteria and without direct or indirect regard to nationality’ seems to refer to the effects descending from the applicable law rather than to the criteria that render it applicable.28 However, the foregoing does not demonstrate that conflict rules are not subject to the Court’s control. In Boukhalfa, the Court dealt with German rules that determined the law applicable to the legal status of local staff of diplomatic representations, distinguishing between local staff having German nationality and those not having such nationality. German collective agreements and other provisions of German law were applicable to the former, the law of the host country and local custom to the latter. The Court limited itself to stating that ‘Community law and thus the prohibition of discrimination based on nationality contained in the abovementioned Community provisions are applicable to all aspects of the employment relationship which are governed by the law of a Member State’.29 This accordingly implied a deviation from the conflict rules by non-application of the foreign law or its unfavourable provisions. It is not certain whether the conclusion of the Court was only drawn by the fact that the conflicting laws had a different content or if the Court condemned the conflict rule at stake. It can however be submitted that the very fact for a Member State to choose different connecting factors for nationals and for non nationals is inconsistent with the principle of non-discrimination. The

have a wide scope, in particular not only addressing internationally mandatory rules as potentially contrasting rules, and/or the freedoms as parameter to assess such contrast, see BONOMI A., ‘Conversion of the Rome Convention on Contracts into an EC Instrument: Some Remarks on the Green Paper of the EC Commission’, in: this Yearbook 2003, p. 53 et seq., at p. 89. 27 Decision 6 February 2002, case C-360/00, Ricordi, Rep. 2002, I-5089, para 31. Interesting in this respect is the decision of 28 April 1994, case C-305/92, Hoorn, Rep. 1994, I-1525. 28 E.g., Decision 6 February 2002 (note 27), at para. 31. 29 Decision of 30 April 1996, case C-214/94, Boukhalfa, Rep. 1996, I-2253, at para. 17.

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The Court of Justice and Private International Law Supreme courts of certain Member States, including Italy and Germany, as is well known, have taken a similar position.30 As for the impact of the freedoms on conflict rules, a test of the same nature as the one applied to any burden on infra-Community movements is applicable.31 Based on certain dicta of the Court,32 certain authors submitted that no scrutiny of conflict rules should occur in circumstances where the parties are free to choose the applicable law, even if no choice has actually been made.33 The argument should be restricted to cases where parties have actually exercised the optio legis, as ‘it seems logical to deny parties who have reached such agreement the right to later reject the law they have freely chosen as obstructing their right to free movement’.34 In all other circumstances, on the contrary, the burden test should apply, as it seems illogical to allow the application of restrictive provisions due to the mere failure to reach an agreement on the applicable law.35 30 See the decisions of 5 March 1987 No. 71, in: Riv. dir. int. priv. proc. 1987, p. 297 et seq.; 10 December 1987 No. 477, in: Riv. dir. int. priv. proc. 1988, p. 67 et seq.; 4 July 2006 No. 254, in: Riv. dir. int. priv. proc. 2006, p. 1043 et seq.; Bundesverfassungsgericht, 4 May 1971, in: RabelsZ 1972, p. 145 et seq.; 22 February 1983, in: Neue juristische Wochenschrift 1983, p. 1968 et seq.; 8 January 1985, in: Neue juristische Wochenschrift 1985, p. 1282 et seq. 31 For this intuition with respect to the U.S. legal order see HOROWITZ H., ‘The Commerce Clause as a Limitation on State Choice-of-Law Doctrine’, in: Harvard Law Review 1971, p. 806 et seq., at p. 813 et seq. 32 See the decisions of 29 October 1980 (note 9), at paras. 10 and 13; 24 January 1991, case C-339/89, Alsthom, Rep. 1991, I-107, at para. 15. 33 ROTH W., ‘Der Einfluss des Europäischen Gemeinschaftsrechts auf das internationale Privatrecht’, in: RabelsZ 1991, p. 623 et seq., at p. 652; BASEDOW J., ‘Der kollisionsrechtliche Gehalt der Produktfreiheiten im europäischen Binnenmarkt: favor offerentis’, in: RabelsZ 1995, p. 1 et seq., at p. 28; GRUNDMANN S., ‘The Structure of European Contract Law’, in: European Review of Private Law 2001, p. 505 et seq., at p. 513 et seq. (‘according to the Court, no [scrutiny on the basis of fundamental freedoms] is to be made of national contract law rules for which the parties are free to choose which law applies’); and, it seems, JOBARD-BACHELLIER M., ‘La portée du test de compatibilité communautaire en droit international privé contractuel’, in: Mélanges P. Lagarde, Paris 2005, p. 477 et seq., at p. 484. 34 FALLON M./MEEUSEN J., ‘Private International Law in the European Union and the Exception of Mutual Recognition’, in: this Yearbook 2002, p. 37 et seq., at p. 56 (emphasis added). 35 On the other hand, it has been submitted that legislative restrictions to party autonomy may constitute an undue burden as such, and accordingly be allowed only when meeting the burden test: see RADICATI DI BROZOLO L., ‘L’influence sur les conflits de lois des principes de droit communautaire en matière de liberté de circulation’, in: Rev. crit. dr. int. pr. 1993, p. 401 et seq., at pp. 412-413; ID., ‘Libre circulation dans la CE et règles de conflit’, in: LAGARDE P./VON HOFFMANN B. (eds), L’européanisation du droit international privé, Köln 1996, p. 87 et seq., at pp. 94-95. Such a view has been criticized by certain authors, who submit that party autonomy is functional to the freedoms, but not imposed as a general solution: see FALLON M./MEEUSEN J. (note 34), p. 57; BARIATTI S. (note 20), p. 694.

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Paolo Bertoli 2.

The Effects of the Court’s Control: Problèmes Choisis

a)

Legal Entities

One of the most significant examples of the Court’s scrutiny took place with respect to company law. The relevant case law is extensively commented and a few pages are obviously insufficient to discuss it in detail; the present paper accordingly limits itself to some general remarks necessary for the purposes hereof.36 To understand the Court’s case law, it is critical to recall the fundamental distinction adopted by the Member States between two categories of connecting factors to determine the lex societatis, i.e. real seat (Sitztheorie) and statutory seat or incorporation (Gründungstheorie). One of the main differences between the two connecting factors is the role they confer on party autonomy. The real seat doctrine, by providing for the application of the law of the State where activities are actually carried on in lieu of the place where parties decided to incorporate the entity, limits the role of party autonomy in determining the applicable law.37 In Centros, the Court dealt with the refusal of Danish authorities to register a branch of a company formed in accordance with U.K. law, on the grounds that the branch was intended to enable the company to carry on all its economic activity in the host State, with the effect of escaping national rules on the provision for, and the paying-in of, a minimum capital. The Court precluded the application of Danish law arguing, inter alia, that ‘the fact that a national of a Member State who wishes to set up a company chooses to form it in the Member State whose rules of company law seem to him the least restrictive and to set up branches in other Member States cannot, in itself, constitute an abuse of the right of establishment. The right to form a company in accordance with the law of a Member State and to set up branches in other Member States is inherent in the exercise, in a single market, of the freedom of establishment guaranteed by the Treaty’.38 In Überseering, the Court was faced with the refusal by the German courts, pursuant to the Sitztheorie, to recognize the legal capacity, and capacity to be a party to legal proceedings, of a company validly incorporated under Ducth law. Sitztheorie and accordingly German law had been held applicable following the acquisition of the entire share capital of the company by German nationals, and implied, in the German court’s view, the need to reincorporate in Germany in order to recognize the mentioned capacities. The Court found that this effect of the Sitztheorie con-

36

For further details and references see BERTOLI P. (note 25), p. 302 et seq. See e.g. ROTH W., ‘From Centros to Überseering: Free Movement of Companies, Private International Law, and Community Law’, in: ICLQ 2003, p. 177 et seq., at p. 180 et seq.; WYMEERSCH E., ‘The Transfer of the Company’s Seat in European Company Law’, in: CMLR 2003, p. 661 et seq., at p. 662. 38 Decision of 9 March 1999, case C-212/97, Centros, Rep. 1999, I-1459, at para. 27. This decision partly supersedes certain conclusions reached by the Court in the decision of 27 September 1988, case 81/87, Daily Mail, Rep. 1988, 5483. 37

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The Court of Justice and Private International Law stituted a restriction on freedom of establishment39 not justified by requirements relating to general interest.40 In Inspire Art, the question referred to the Court related to the application, by the Amsterdam Chamber of Commerce and Industry, of certain mandatory provisions of Dutch law relating to minimum capital and directors’ liability to a company formed under U.K. law and carrying on its activities entirely or almost entirely in the Netherlands. Taking for granted that it was dealing with a ‘brass-plate compan[y], that classification being in the circumstances of the case inferred from the lack of any real connection with the State of formation’, the Court found that the application of the said provisions constituted an unjustified obstacle on the exercise of freedom of secondary establishment.41 One of the main consequences of the Court’s rulings is the grant to individuals of the right to choose the lex societatis and the subsequent rise of a ‘market for company law’ among Member States. Whether this implies a ‘race to the bottom’ or ‘Delaware effect’ among such laws is widely debated and cannot be discussed in detail in the present paper. It can however be noted that the Court placed certain limits on parties’ freedom of choice, i.e.: (i) the possibility to invoke requirements relating to general interest to justify the application of (specific provision of) a different law and (ii) that of ‘combating improper recourse to freedom of establishment’ by taking measures designed to prevent attempts aimed at improperly circumventing national legislation. Those limits, at least until now, have however been constructed very restrictively by the Court.42 39 ‘Where a company formed in accordance with the law of a Member State (A) in which it has its registered office exercises its freedom of establishment in another Member State (B), Articles 43 EC and 48 EC require Member State B to recognize the legal capacity and, consequently, the capacity to be a party to legal proceedings which the company enjoys under the law of its State of incorporation’: decision of 5 November 2002, case C-208/00, Überseering, Rep. 2002, I-9919, at para. 95. 40 ‘It is not inconceivable that overriding requirements relating to the general interest, such as the protection of the interests of creditors, minority shareholders, employees and even the taxation authorities, may, in certain circumstances and subject to certain conditions, justify restrictions on freedom of establishment. Such objectives cannot, however, justify denying the legal capacity and, consequently, the capacity to be a party to legal proceedings of a company properly incorporated in another Member State in which it has its registered office. Such a measure is tantamount to an outright negation of the freedom of establishment conferred on companies by Articles 43 EC and 48 EC’: decision of 5 November 2002 (note 39), at paras. 92 and 93. 41 Decision of 30 September 2003, case C-167/01, Inspire Art, Rep. 2003, I-10155, at para. 102. 42 In particular, the fact that ‘a company does not conduct any business in the Member State in which it has its registered office and pursues its activities only or principally in the Member State where its branch is established is not sufficient to prove the existence of abuse or fraudulent conduct which would entitle the latter Member State to deny that company the benefit of the provisions of Community law relating to the right of establishment’: decision of 30 September 2003 (note 41), at para. 139; also see the decision of 10 July 1986, case 79/85, Segers, Rep. 1986, 2375, at para. 16; 9 March 1999 (note 38), at para. 29. In literature see KJELLGREN A., ‘On the Border of Abuse. The Jurisprudence of the European

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Paolo Bertoli For the purposes of the adoption of conflict rules on companies,43 the Court’s case law partly limits, although it does not exclude in toto, the possibility of recourse to the Sitztheorie. In particular, the duty to recognize the parties’ choice of company law as valid implies the impossibility of applying national law to companies established in another Member State, save the just mentioned limits. On the other hand, it has to be taken into account that the chosen law is competent to discipline all aspects of the life of the entity, including continuity of the legal personality in case of transfer of the seat abroad. The ‘introvert’ application of the Sitztheorie is accordingly not limited by the Court’s case law, as Member States remain free to establish conditions and limits for the grant and maintenance of legal personality. States can accordingly offer private parties a company law that links such grant and maintenance to the permanence of the real seat on their territory. In cases where privates parties deem inappropriate a rule which ‘frappe de mort à la frontière’44 the entity they intend to constitute, they remain free to establish such an entity in a different State.45 As for the purposes of the Italian legal system, the above case law implies, in particular, the non-application with respect to companies established in EC Member States of art. 25(1), second indent, of Law 215/95 of reform of the private international law system.46 That provision provides for the application of Italian Court of Justice on Circumvention, Fraud and Abuses of Community Law’, in: ANDENAS M./ROTH W. (eds), Services and free movement in EU Law, Oxford 2002, p. 245 et seq.; GESTRI M., Abuso del diritto e frode alla legge nell’ordinamento comunitario, Milano 2003, p. 1 et seq. 43 On the possible extension of the Court’s case law to entities which do not carry out business activities see BERTOLI P., ‘The Legal Status of Non-governmental Organisations in Private International Law’, in: Riv. dir. int. priv. proc. 2004, p. 103 et seq., at p. 130 et seq. 44 Quotation from LAGARDE P., in: Rev. crit. dr. int. pr. 2003, p. 524 et seq., at p. 530. In the same sense BENEDETTELLI M., ‘Libertà comunitarie di circolazione e diritto internazionale privato delle società’, in: Riv. dir. int. priv. proc. 2001, p. 569 et seq., at p. 605; MENJUCQ M., in: Clunet 2004, p. 923 et seq., at pp. 927-928. 45 Secondary Community legislation offers other instruments on the constitution of legal entities, including Regulation No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) (OJ L 294, 10 November 2001) and Regulation No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE) (OJ L 207 of 18 August 2003). 46 See BENEDETTELLI M., ‘La legge regolatrice delle persone giuridiche dopo la riforma del diritto internazionale privato’, in: Rivista delle società 1997, p. 39 et seq., at p. 112; ID. (note 44), p. 619; BALLARINO T., Diritto internazionale privato, 3rd ed., Padova 1999, p. 363; MECHELLI S., ‘Libertà di stabilimento per le società comunitarie e diritto societario dell’Unione europea’, in: Rivista di diritto commerciale 2000, p. 83 et seq., at p. 108; GESTRI M., ‘Mutuo riconoscimento delle società comunitarie, norme di conflitto nazionali e frode alla legge: il caso ‘Centros’, in: Riv. dir. int. 2000, p. 71 et seq., p. 110; MUNARI F., ‘Riforma del diritto societario italiano, diritto internazionale privato e diritto comunitario: prime riflessioni’, in: Riv. dir. int. priv. proc. 2003, p. 29 et seq., at p. 39; PORTALE G., ‘Riforma delle società di capitali e limiti di effettività del diritto nazionale’, in:

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The Court of Justice and Private International Law law when the head office or the principal activity of an entity is in Italy, as an exception to the general rule according to which the law applicable to legal entities is that of the State where formation was completed.47 b)

Natural Persons

The Court’s case law also influences the assessment of the law applicable to the legal status of natural or physical persons. In Micheletti, the Court dealt with the Spanish administration’s refusal to grant a permanent residence card as a Community national to a subject who had dual Argentine and Italian nationality. The Spanish authorities’ decision was based on a provision of Spanish law, according to which, in cases of dual nationality where neither nationality is Spanish, the nationality corresponding to the habitual residence of the person concerned before his arrival in Spain is to take precedence, that being Argentine nationality in the case of the plaintiff in the main proceedings. Such refusal did not escape the Court’s condemnation, which was based, in particular, on the argument that ‘it is not permissible for the legislation of a Member State to restrict the effects of the grant of the nationality of another Member State by imposing an additional condition for recognition of that nationality with a view to the exercise of the fundamental freedoms provided for in the Treaty’.48 This principle was further developed in Garcia Avello. On that occasion, the Court was called on to pronounce on the Belgian authorities’ refusal regarding the request of two parents that their dual Belgian and Spanish nationality children’s patronymic surname be changed with the first surname of the father followed by that of the mother, in accordance with well-established usage in Spanish law. The refusal was based on the fact that under Belgian private international law (i) nationality was the applicable connecting factor, and (ii) where a Belgian national has at the same time one or more other nationalities, the Belgian authorities will give precedence to Belgian nationality. The Court ruled against such refusal, extending to the conflict between EC-nationalities the principle set forth in Micheletti concerning the conflict between EC and non-EC nationalities. The Court’s case law has been argued, and already showed,49 to influence the Italian conflict system. Pursuant to Article 19(2) Law 215/95, if a person has more than one nationality, the law of the State with which he or she has the closest Corriere Giuridico, 2003, p. 145 et seq., at p. 148; CARBONE S., ‘La riforma societaria fra conflitti di leggi e principi di diritto comunitario’, in: Dir. Comm. Int. 2003, p. 89 et seq., at p. 94. 47 For further details and possible consequences on the Italian legal system see BERTOLI P. (note 25), p. 317 et seq. 48 Decision of 7 July 1992, case C-369/90, Micheletti, Rep. 1992, I-4239, at para. 10. The Court recalls that ‘under international law, it is for each Member State, having due regard to Community law, to lay down the conditions for the acquisition and loss of nationality’. 49 See Tribunal of Bologna, decision of 9 June 2004, in: Riv. dir. int. priv. proc. 2005, p. 759 et seq.; Tribunal of Rome, decision of 15 October 2004, ib., p. 760 et seq.

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Paolo Bertoli connection shall apply; but Italian law applies if he or she is an Italian citizen. For conflicts between EC and non EC- nationalities, the Court’s case law imposes non application of the closest connection test and giving priority to the EC nationality, if the contrary solution may actually or potentially restrict rights that EC law grants to EC nationals. The same approach may be argued to extend to conflicts between EC nationalities other than Italian. Moreover, the Court’s approach restricts the possibility of giving priority to the Italian nationality to those cases where this does not imply a restriction on rights granted by the Community legal order. Demonstration that at least a potential restriction on individual rights conferred by EC legislation may result from the solution to the conflicts between nationalities, and accordingly that the situation falls within the scope of EC legislation, is in any event a prerequisite for application of the Court’s case law. By taking the view that the right to a name may hinder freedom of movement, the Court in Garcia Avello showed flexibility regarding this concern. From a more general perspective, certain authors submitted that the Court’s approach demonstrates the existence of a principle of mutual recognition of personal and family status among the Member States,50 such status being formed and entirely disciplined by a ‘competent legal order’ pursuant to the well known methodological approach elaborated by Professor Picone.51

C.

Exceptions to the Operation of Private International Law Rules

1.

Internationally Mandatory Rules

a)

Impact of the Freedoms

It is well-established in the Court’s case law and has been applied on a number of occasions the principle according to which ‘the fact that national rules are categorised as public-order legislation does not mean that they are exempt from compliance with the provisions of the Treaty… the considerations underlying such national legislation can be taken into account by Community law only in terms of the exceptions to Community freedoms expressly provided for by the Treaty and,

50 BARATTA R., Scioglimento e invalidità del matrimonio nel diritto internazionale privato, Milano 2004, at pp. 213 et seq., 221 et seq.; ID., ‘Il regolamento comunitario sul diritto internazionale privato della famiglia’, in: PICONE P. Diritto internazionale privato e diritto comunitario, Padova 2004, p. 163 et seq., at pp. 201-202; ID., ‘Verso la «comunitarizzazione» dei principi fondamentali del diritto di famiglia’, in: Riv. dir. int. priv. proc. 2005, p. 573 et seq., at p. 591 et seq. Also see CAFARI PANICO R., ‘Divorzi stranieri tra riconoscimento e trascrizione’, in: Riv. dir. int. priv. proc. 2002, p. 5 et seq., at 16-18. 51 PICONE P., Ordinamento competente e diritto internazionale privato, Padova 1982, p. 85 et seq.; also see LUZZATTO R., Stati giuridici e diritti assoluti nel diritto internazionale privato, Milano 1965, p. 146 et seq.

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The Court of Justice and Private International Law where appropriate, on the ground that they constitute overriding reasons relating to the public interest’.52 Some enlightening cases concerned the application, by the host State, of internationally mandatory labour law rules to workers temporary deployed on their territory by companies that claimed to be in compliance with the law of their State of establishment (and, accordingly, that application of the host state rules would have turned into a double burden on their Community freedom).53 The Court dealt with such rules as non discriminatory measures ‘liable to prohibit, impede or render less advantageous the activities of a provider of services established in another Member State where he lawfully provides similar services’.54 The Court went on with the so-called ‘rule of reason test’ and, admitted in abstracto that the protection of workers constituted valid overriding reasons relating to the public interest, applied the proportionality test in order to verify whether ‘that interest is already protected by the rules of the Member State in which the service provider is established and whether the same result can be achieved by less restrictive rules’.55 The application of the rule of reason test to internationally mandatory rules explains significant elements on their functioning.56 Such a test, indeed, (i) imposes a comparison between the content, and effects of the application or non application, of the applicable law and the internationally mandatory rule at stake and (ii) allows application of the latter only if the aim of the latter is not adequately provided by the former. This conclusion is consistent with the views expressed by certain authors on the way internationally mandatory rules operate.57 According to 52 Decision of 23 November 1999, joined cases C-369/96 and C-376/96, Arblade, Rep. 1999, I-8453, at para. 31. At para. 30, the Court defines internationally mandatory rules as ‘national provisions compliance with which has been deemed to be so crucial for the protection of the political, social or economic order in the Member State concerned as to require compliance therewith by all persons present on the national territory of that Member State and all legal relationships within that State’. The definition, which restates a formula traditionally advocated by Ph. Francescakis, appeared too strict (excluding, at least on a literal reading, the protection of private interests), and at any rate useless (as it is not for the Court or EC law to define the interests to be protected by domestic internationally mandatory rules). Also see note 91 below. 53 Such cases were discussed before the entry into force of EC Directive No. 96/71 on the posting of workers. 54 E.g., Decisions of 23 November 1999 (note 52), at para. 33; 15 March 2001, case C-165/98, Mazzoleni, Rep. 2001, I-2189, at para. 22. 55 Decision of 23 November 1999 (note 52), at para 39. 56 According to its general features, the burden test should not be applicable with respect to sectors that are the object of ‘maximum’ or ‘complete’ harmonization. 57 See in particular TREVES T., Il controllo dei cambi nel diritto internazionale privato, Padova 1967, pp. 53-59; ID., ‘Norme imperative e di applicazione necessaria nella Convenzione di Roma del 19 giugno 1980’, in: ID. (ed), Verso una disciplina comunitaria della legge applicabile ai contratti, Padova 1983, p. 25 et seq.; ID., ‘Art. 17’, in: POCAR F. and o. (eds), Commentario del nuovo diritto internazionale privato, Padova 1996, p. 87; BOSCHIERO N., ‘Art. 17’, in: BARIATTI S. (ed), ‘Legge 31 maggio 1995, n. 218. Commentario’ in: Le nuove leggi civili commentate 1996, p. 877 et seq., at pp. 1064-1065;

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Paolo Bertoli such views, internationally mandatory rules do not operate, as traditionally advocated, before the conflict rules by imposing their application. On the contrary, such rules are given effect after the assessment of the applicable law and on the basis of a fungibility test, i.e. when the result they aim to reach is not achieved by such law. This way of functioning of internationally mandatory rules is imposed by the Court only in situations falling within the reach of EC legislation.58 However, as it has been submitted convincingly, the rule of reason ‘elaborated by the European Court of Justice can be taken as a model for the internationally mandatory application of domestic rules’ on a general plan.59 ID., Appunti sulla riforma del sistema italiano di diritto internazionale privato, Torino 1996 pp. 233; 242 et seq.; BONOMI A., Le norme imperative nel diritto internazionale privato, Zürich 1998, p. 138 et seq., passim. 58 Certain authors, particularly on the basis of Ingmar (where, as will be discussed below, the Court affirmed the internationally mandatory character of certain EC law provision vis-à-vis the law of a non-Member State, see below Section III.B) argued that the Court elaborated so-called ‘lois de police à géométrie variable’, i.e., internationally mandatory rules would operate pursuant to the fungibility test with respect to the laws of the Member States and to the traditional pre-emptive way with respect to the laws of third countries: see IDOT L., ‘L’incidence de l’ordre communautaire sur le droit international privé’ in: Petites affiches 2002, p. 27 et seq., at p. 37; ID., in: Rev. crit. dr. int. pr. 2001, p. 115; PATAUT E., ‘Lois de police et ordre juridique communautaire’, in: FUCHS A./MUIR WATT H./PATAUT E. (note 26), p. 117 et seq., at p. 130; ID., in: Rev. crit. dr. int. pr. 2001, p. 511 (‘à supposer même que la loi [d’un pays tiers] évincée pose des règles substantiellement équivalentes à la loi de police, c’est néanmoins cette dernière qu’appliquera le juge’); JOBARD-BACHELLIER M., ‘L’acquis communautaire du droit international privé des conflits de lois’, in: BERGÉ J./NIBOYET M.L., La réception du droit communautaire en droit privé des Etats membres, Bruxelles 2003, p. 185 et seq., at p. 201 et seq. This view seems wholly unconvincing. Indeed, as will be discussed, the position the Court took in Ingmar was based on the content of the applicable law rather than on the fact that it was dealing with the law of a third State. Moreover, pursuant to a general principle, the Court only deals with the restrictive effects on intra-Community movement and not on their source. 59 See BONOMI A., ‘Internationally Mandatory Rules in Private International Law. The Quest of International Harmony of Decisions in a Global World’, in: this Yearbook 1999, p. 215 et seq., at p. 234; ID., (note 57), p. 219; ID., (note 26), p. 90, who proposes the following wording to restate the principle in the future Rome I regulation destined to replace the 1980 Rome convention: ‘nothing in this Regulation shall restrict the application of the rules of the law of the forum or of EC law, if they are the expression of a fundamental policy, provided that their application is necessary and represents the most effective way of promoting the underlying policy. When considering whether to apply these rules, regard shall be given to the content of the law that would govern the contract according to the other rules of the Regulation’. In the same sense, and for further developments on the implication of the principle on the future Rome I regulation, see BOSCHIERO N., ‘Verso il rinnovamento e la trasformazione della convenzione di Roma: problemi generali’ in: PICONE P. (note 50), p. 319 et seq., at p. 392. Also see PATAUT E., in Rev. crit. dr. int. pr. 2001, p. 511; FALLON M., in: Rev. crit. dr. int. pr. 2000, p. 735. The proposal for a Rome I regulation on the law applicable to contractual obligations (COM (2005) 650 final of 15 December 2005 is available at .

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The Court of Justice and Private International Law b)

Impact of the Principle of Non-Discrimination

Although the Court did not specifically deal with the issue, certain of its dicta, and more generally the principles it adheres to, seem to show that the principle of nondiscrimination is also capable of explaining specific effects of internationally mandatory rules, and in particular of self-limited ones. As is well known, selflimitation consists in the definition, by a substantive rule, of its spatial reach. Such a definition does not automatically turn the substantive rule into an internationally mandatory one, but usually indicates that it has such a character.60 The principle of non-discrimination seems to influence both the self-limitation of internationally mandatory rules of the lex fori and those of the lex causae. As far as the first are concerned, the Court pointed out in Alsthom that a rule of liability for defective products, as interpreted by the French Cour de Cassation, was not discriminatory because it ‘s’applique indistinctement à toutes les relations commerciales régies par le droit français’.61 Thus, ‘une règle contractuelle qui ne s’appliquerait pas de la même manière à toutes les relations commerciales soumises au système juridique auquel elle appartient serait discriminatoire’.62 It seems accordingly that self-limitation based on nationality, residence or place of establishment could fall within the condemnation of the Court.63 The effects of self-limitation of internationally mandatory rules of the lex causae are debated. From a theoretical point of view, the most convincing opinion seems to be that the self-limitation of such rules should be respected, as ‘il est injustifiable de poser en principe que l’on fera abstraction de telle ou telle partie de la règle étrangère. Or, le domaine d’application spatial d’une règle fait partie de son présupposé: ne pas en tenir compte, c’est donc modifier la règle’.64 That said, should self-limitation of internationally mandatory rules of the lex causae be based on discriminatory criteria, it seems correct to conclude that the EC principle of non-discrimination would (as obviously, within the scope of EC law) have to ignore it, and ‘force’ the application of such rules contrary to their will.65

60

See TREVES T., Art. 17 (note 57), p. 85; BOSCHIERO N., Art. 17 (note 57), p. 1063. On this subject see, recently, KINSCH P., ‘L’autolimitation implicite des normes de droit privé matériel’, in: Rev. crit. dr. int. pr. 2003, p. 403 et seq. 61 Decision of 24 January 1991 (note 32), at para. 15. 62 NUYTS A., ‘L’application des lois de police dans l’espace’ in: Rev. crit. dr. int. pr. 1999, p. 31 et seq., at p. 252. 63 See VON HOFFMANN B., ‘The Relevance of European Community Law’, in: ID., European private international law, Nijmegen 1998, p. 19 et seq., at pp. 24-25; PULJAK M., (note 17), p. 378; NUYTS A. (note 62), p. 38 et seq. 64 MAYER P., ‘Les lois de police étrangères’, in: Clunet 1981, p. 277 et seq., at p. 336. 65 PULJAK M. (note 17), p. 356 et seq.; NUYTS A. (note 62) p. 67 et seq.

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Paolo Bertoli 2.

Ordre Public

In interpreting ordre public as a limit on enforcement of foreign judgments under the Brussels Convention, the Court made it clear that Member States ‘in principle remain free… to determine, according to their own conceptions, what public policy requires’. However, the Court considers itself ‘required to review the limits within which the courts of a Contracting State may have recourse to that concept for the purpose of refusing recognition to a judgment emanating from a court in another Contracting State’.66 A particularly interesting case at this concern is Renault. There the Court was asked whether public policy could be invoked against the enforcement of a decision that, in the view of the requested Court, erred in applying certain rules of Community law by failing to declare the contrast between certain provisions of the lex fori and the principles of free movement of goods and freedom of competition. The Court precluded the refusal of enforcement arguing that public policy cannot be raised solely on the ground that there is a discrepancy between the legal rule applied by the court of the State of origin and that which would have been applied by the court of the State in which enforcement is sought and that, moreover, ‘the system of legal remedies in each Contracting State, together with the preliminary ruling procedure provided for in Article 177 [now 234] of the Treaty, affords a sufficient guarantee to individuals’.67 Prima facie, the Court’s ruling might seem to impose an internal hierarchy between the principles on which its scrutiny is based. By precluding the possibility of invoking public policy in order to protect the freedoms and other principles of EC law, the Court might indeed be argued to consider free circulation of decisions as having a priority over such principles. This would be incorrect, as free circulation of decision, as mentioned, constitutes an intermediate principle that is functional to the freedoms and other aims of the Community legal order. A closer reading of the decision, however, allows for a different argument, as the Court seems to have focused on the alleged error in the application of Community legislation, rather than on the contrast between the effects of recognition and EC legislation. The Court argued that ‘in order for the prohibition of any review of the foreign judgment as to its substance to be observed’ public policy may be opposed in presence of ‘a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or of a right recognised as being fundamental within that legal order’.68 Certain authors argued accordingly that public policy could be invoked in the face of a manifest breach of EC law.69 The argument is substantially correct, although it does not seem neces66 Decision of 28 March 2000, case C-7/98, Krombach, Rec. 2000, I-1935, respectively at paras. 22 and 23, emphasis added. For an analysis of the scrutiny exercised by the Court on that occasion see BERTOLI P. (note 25), p. 381 et seq. 67 Judgment of 11 May 2000, case C-38/98, Renault, Rec. 2000, I-2973, at para. 33. 68 Judgment of 11 May 2000 (note 67), at para. 30. 69 GAUDEMET-TALLON H., in: Rev. crit. dr. int. pr. 2000, p. 504 et seq., at pp. 512513; PULJAK M., (note 17), p. 280; BASEDOW J., ‘Recherches sur la formation de l’ordre

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The Court of Justice and Private International Law sary (or possible) to base it on the prohibition of review of the foreign judgment. The latter is indeed an autonomous and different principle, which merely imposes a limit on an ‘external’ review of the foreign judgment. Rather, such a conclusion seems to be self-standing, and can be grounded on the contrast between the effects of enforcement and a fundamental principle or rules of EC legislation. As in the case of internationally mandatory rules, moreover, and although the issue was not specifically dealt with by the Court, the principle of non-discrimination seems to explain specific effects of the functioning of the public policy exception. Such effects include a limitation on the operation of the theory of Inlandsbeziehung or Binnenbeziehung. According to that doctrine, public policy would operate with an intensity proportional to the connection between the activity or facts at stake and the jurisdiction. If and to the extent that the doctrine were to be held applicable, the EC principle of non-discrimination could impose a restriction on the criteria used to determine the existence of a close connection with the forum. In particular, all criteria of ‘personal’ nature, such as nationality or residence, could imply discriminations between EC nationals in the recourse to public policy, and accordingly violate the principle.70

III. The Development of General Principles of Private International Law A.

Interpretation

1.

General Interpretative Criteria

The interpretative criteria adopted and developed by the Court with respect to the interpretation of primary and secondary EC substantive law, and extended to the Brussels Convention of 1968, have already been shown to be applicable in the interpretation of EC private international law as well.71 The same criteria, not per

public européen dans la jurisprudence’, in: Mélanges Lagarde (note 33), p. 55 et seq., at p. 70. 70 Cf. PULJAK M., (note 17), p. 330 et seq. In the context of discussions on the impact of fundamental rights on private international law, the European Group for Private International Law recently affirmed that ‘non-discrimination may play a role in the selection of connecting factors, but also in the use of the public policy exception, specially in family law’: see the document ‘Working Sessions Of The Fourteenth Annual Meeting Tenerife 17/19th September 2004’, at . 71 E.g., decisions of 8 November 2005, case C-443/03, Leffler, Rep. 2005, I-9611, at paras. 45-48; 17 January 2006, case C-1/04, Staubitz-Schreiber, Rep. 2006, I-701, at paras. 24-27; 9 February 2006, case C-473/04, Plumex, Rep. 2006, I-1417, at paras. 20-21, 29. On the extension of such principles to the future Rome I Regulation see BERTOLI P., ‘Il ruolo

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Paolo Bertoli se applicable to rules of private international law of domestic or conventional source,72 may however, at least in some circumstances, be able to influence the interpretation of the latter. Among those criteria, which include recourse to travaux préparatoires73 and conciliation of multilingual authentic texts,74 a prominent role is played by the general principle of systemic and teleological interpretation. Accordingly, EC rules of private international law shall be interpreted in light of their scheme and aims, as well as those of the system and objectives of the act which lays them down, and in the way better suited to guarantee their effet utile and full effectiveness.75 Added to this concern, and as the scheme and aims of the Brussels Convention must be assessed with due regard to ‘its relationship with the Treaty’,76 the scheme and aims of such acts shall be assessed with due regard to the necessity to maintain and develop, to the extent possible, parallelism and consistency between the various acts unifying private international law at the EC level (or unifying, or harmonizing, della Corte di giustizia e l’interpretazione del futuro regolamento «Roma I»’, in: Riv. dir. int. priv. proc. 2006, p. 999 et seq. 72 Except where domestic rules are formatted on, or refer to, Community legislation for the regulation of domestic matters: see the decisions of 18 October 1990, joined cases 297/88 and C-197/89, Dzodzi, Rep. 1990, I-3763; 24 January 1991, case C-384/89, Fulchiron, Rep. 1991, I-127; 17 July 1997, case C-28/95, Leur-Bloem, Rep. 1997, I-4161; 17 July 1997, case C-130/95, Giloy, Rep. 1997, I-4291; 3 December 1998, case C-247/97, Schoonbroodt, Rep. 1998, I-8095; 17 December 1998, case C-2/97, IP, Rep. 1998, I-8597; 11 January 2001, case C-1/99, Kofisa, Rep. 2001, I-207; 11 October 2001, case C-267/99, Adam, Rep. 2001, I-7467; 15 January 2002, case C-43/00, Andersen, Rep. 2002, I-379; 7 January 2003, case C-306/99, BIAO, Rep. 2003, I-1; 28 March 1995, case C-346/93, Kleinwort Benson, Rep. 1995, I-615; 25 June 1992, case C-88/91, Federconsorzi, Rep. 1992, I-4035; 12 November 1992, case C-73/89, Fournier, Rep. 1992, I-5621. For further details and references see BERTOLI P. (note 25), p. 90 et seq. 73 See e.g. the decisions of 12 May 2005, case C-112/03, Peloux, Rep. 2005, I-3707, at para. 30; 26 May 2005, case C-77/04, GIE Réunion européenne et al., Rep. 2005, I-4509, at paras. 17, 28; 13 October 2005, case C-73/04, Klein, Rep. 2005, I-8667, at para. 16. A recent case law confirms that travaux préparatoires ‘are useful’ but ‘cannot be relied upon to contest an autonomous interpretation of the Regulation which seeks to give practical effect to the provisions it contains, with a view to its uniform application in the Community, in compliance with its objective’: decision of 8 November 2005 (note 71), at paras. 47-48. 74 The principle being the comparison of the authentic texts in view of finding a common meaning and, in its absence, interpretation on the basis of both the real intention of the author of the text and the aim he seeks to achieve: see, e.g., the decisions of 19 February 2002, case C-256/00, Besix, Rep. 2002, I-1699, at para. 44; 5 October 1999, case C-420/97, Leathertex, Rep. 1999, I-6747, at para. 32; 27 April 1999, case C-99/96, Mietz, Rep. 1999, I2277, at para. 31; 9 October 1997, case C-163/95, von Horn, Rep. 1997, I-5451, at paras. 1217; 6 December 1994, case C-406/92, Tatry c. Maciej Rataj, Rep. 1994, I-5439, at para. 38. 75 E.g., see the decisions of 16 February 2006, case C-3/05, Verdoliva, Rep. 2006, I1579, at para. 25; 9 February 2006 (note 71), at para. 21; 20 January 2005, case C-464/01, Gruber, Rep. 2006, I-439, at para. 31. 76 Recently, decisions of 12 May 2005 (note 73), at para. 28; 13 October 2005 (note 73), at para. 22.

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The Court of Justice and Private International Law relevant sectors of substantive law), as well as the aims of economic and legal integration proper to the Community legal order.77 Particular relevance shall be given, in this context, to the specific method of coordination between legal systems pursued by the rule to be interpreted.78 It should be noted that such consistency may be guaranteed, inter alia, either by using principles set forth by certain acts for the purposes of interpreting different acts, or by giving a similar, or identical, meaning to the concepts used.79 2.

Characterization

A particularly relevant issue in the interpretation of private international law rules that is also likely to be influenced by the Court’s case law is characterization. If the assumption is correct that characterization is a question pertaining to the interpretation of the rules, one can assume that characterization can be influenced by the interpretative criteria developed by the Court, and that certain principles may at times influence characterization and interpretative issues that, stricto sensu, could be deemed not to pertain to such specific issue, and that are briefly discussed below. The Court notoriously developed the principle pursuant to which the meaning of concepts and terms used in Community legislation may either be established

77 See CARBONE S., ‘Base giuridica e criteri interpretativi delle norme comunitarie sullo spazio giudiziario europeo’, in: Contratto e Impresa/Europa 2003, p. 183 et seq., at p. 195; SALERNO F., Giurisdizione ed efficacia delle decisioni straniere nel regolamento (CE) n. 44/2001, 2nd ed., Padova 2003, pp. 28, 31-32; BERTOLI P. (note 25), p. 405; BALLARINO T./MARI L., ‘Uniformità e riconoscimento. Vecchi problemi e nuove tendenze della cooperazione giudiziaria nella Comunità europea’, in: Riv. dir. int. 2006, p. 7 et seq., at pp. 11, 22 et seq. 78 On the various techniques of coordination between legal systems see PICONE P., ‘Les méthodes de coordination entre ordres juridiques en droit international privé’ in: Recueil des Cours, t. 276, 1999, p. 9 et seq., and for the demonstration that the same techniques are used in EC private international law see PICONE P., ‘Diritto internazionale privato comunitario e pluralità dei metodi di coordinamento tra ordinamenti’, in ID. (note 50), p. 485 et seq. 79 The second hypothesis is further developed in the text below. An example of the interpretative criteria mentioned is provided by a recent decision on Regulation No. 1348/2000 on the service of judicial acts. In the decision, the Court stated that when the addressee of a document has refused it on the ground that it is not in an official language of the Member State addressed or in a language of the Member State of transmission which the addressee understands, it is possible for the sender to remedy that by sending the translation requested. From the above principle, the Court deducted that ‘judgment is not to be given until it is established that the document in question has been regularised’. According to the Court, ‘such an obligation also results from the principle laid down in Article 26(2) of Regulation No 44/2001 and compliance therewith is to be checked before a judgment is recognised, in accordance with Article 34(2) of that regulation’: see the decision of 8 November 2005 (note 71), at para. 68.

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Paolo Bertoli by developing autonomous notions or by reference to domestic law.80 Such reference may either be direct81 or point to the conflict rules of the Members States.82 The choice between such options is, mostly, made by the Court in a functional perspective aimed at ensuring the effet utile of the relevant piece of Community legislation. Unsurprisingly, the Court took the position that autonomous definition should be preferred to the extent possible, as it represents in general terms the better suited option to guarantee such results.83 In a recent judgment, the Court pointed out that ‘the objective pursued by the Treaty of Amsterdam of creating an area of freedom, security and justice, thereby giving the Community a new dimension, and the transfer from the EU Treaty to the EC Treaty of the body of rules enabling measures in the field of judicial cooperation in civil matters having crossborder implications to be adopted testify to the will of the Member States to establish such measures firmly in the Community legal order and thus to lay down the principle that they are to be interpreted autonomously’.84 A literal reading of the Court’s dictum may indicate that the partial communitarization of the Third Pillar has, by itself, overcome the Court’s previous case law and precluded the possibility of recourse to domestic law. It is submitted that a similar interpretation of the Court’s dictum would be incorrect. The choice between reference to domestic law and autonomous definition is indeed made in a functional perspective and it seems illogical to state a priori that one option, rather than just preferable as a matter of principle, is precluded by a mere transfer of competences to the Community institutions. The same principle, moreover, was never stated with respect to the competences the EC institutions possessed previously. The comparativist or lege commune85 approach to questions of characterization or interpretation is abandoned in certain circumstances. For instance, such a 80

Decision of 6 October 1976, case 12/76, Tessili, Rep. 1976, 1473, at para. 10. Decisions of 15 May 1990, case 365/88, Hagentur, Rep. 1990, I-1845, at para. 17; 7 June 1984, case 129/83, Zelger v Salinitri, Rep. 1984, 2397; 2 July 1985, case 148/84, Brasserie du Pêcheur, Rep. 1985, 1981; 14 March 1996, case C-275/94, van der Linden, Rep. 1996, I-1393, at para. 17. 82 Decisions of 22 November 1978, case 33/78, Somafer, Rep. 1978, 2183, at para. 5; 6 October 1976 (note), at para. 10. Reference to domestic law is generally limited (and the latter can accordingly be ‘adapted’ or non applied) by the exigency that the effectiveness of Community legislation is not thereby impaired: see, e.g., the decisions of 7 March 1995, case C-68/93, Shevill c. Presse Alliance Sa, Rep. 1995, I-415, at para. 41; 15 May 1990 (note 81), at paras. 19 and 20. The mentioned impact on domestic legislation, however, does not require a national court to disapply its internal rules of procedure in order to review and set aside a final judicial decision if that decision should be contrary to Community law: see the decision of 16 March 2006, case C-234/04, Kapferer, Rep. 2006, I-2585. 83 E.g., decision of 20 January 2005, case C-27/02, Engler, Rep. 2005, I-481, at para. 33. For the ‘modulation’ of the reach of an autonomous definition within the same act see the decision of 23 March 2004, case C-138/02, Collins, Rep. 2004, I-2703, at para. 32. 84 Decision of 8 November 2005 (note 71), at para. 45. 85 AUDIT M., ‘L’interprétation autonome du droit international privé communautaire’, in: Clunet 2004, p. 789 et seq. 81

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The Court of Justice and Private International Law principle needs to be co-ordinated with the principle of intertextual interpretation of Community legislation, i.e. the attribution to concepts and terms of the same meaning that similar notions receive in other pieces of primary or secondary EC legislation.86 Also the latter principle is not absolute: as it has been exactly pointed out, a term used in a Community act may have different meanings in the light of the context, the object and the aim of the act.87 On the other hand, the criteria of applicability of Community legislation88 do not seem to allow but an autonomous definition. It seems indeed illogical that Community legislation leaves the definition of its scope of application to the Member States.89 As a final remark, it should be noted that the options mentioned, i.e. autonomous interpretation or reference to domestic legislation, do not apply if and to the extent the question is already resolved by the act to be interpreted.90 In a similar hypothesis, the option of the legislator will only be subject to an exegetic activity aimed at its clarification or integration.91 86 See the decisions of 14 November 2002, case C-271/00, Baten, Rep. 2002, I10489; 1 October 2002, case C-167/00, Henkel, Rep. 2002, I-8111, at para. 43; 8 March 1988, case 9/87, Arcado, Rep. 1988, 1539, at para. 14. 87 BARIATTI S., ‘Interpretazione e qualificazione nel diritto internazionale privato comunitario. Prime riflessioni’, in: Riv. dir. int. priv. proc. 2006, p. 361 et seq., at p. 369 et seq. This principle, in particular, should apply with limitations to the definitions of concepts and terms. Inversely, an intertextual characterization and interpretation may be appropriate for non defined concepts having the function of delimiting the scope of Community legislation (e.g., the notion of ‘civil and commercial matters’ in the regulations Brussels I, No. 1348/2000 on the service of acts and No. 1206/2001 on the taking of evidence). 88 On such notion see FALLON M., ‘Les règles d’applicabilité en droit international privé’, in: Mélanges R. Vander Elst, I, Brussels 1986, p. 285 et seq.; BENEDETTELLI M., ‘Connecting factors, principles of coordination between conflict systems, criteria of applicability: three different notions for a ‘European Community private international law’, in: Dir. Un. Eur. 2005, p. 421 et seq. 89 BARIATTI S. (note 87), p. 372; BOSCHIERO N., ‘Obbligazioni contrattuali (diritto internazionale privato)’, in: Enc. Dir., IV agg., 2001, p. 801 et seq., at p. 818. This obviously does not apply when such choice is explicit, e.g. EC nationality is determined in accordance with the laws of the ember States. 90 E.g., decision of 19 September 2000, case C-287/98, Linster, Rep. 2000, I-6917, at para. 43. 91 By way of example, the proposal for a Rome I regulation (note 59) excludes a contractual qualification of precontractual liability for the purposes of defining its scope. Given the fact that such qualification stems from a well-known decision of the Court (17 September 2002, case C-334/00, Tacconi, Rep. 2002, I-7357), it seems possible to resort to such case law to assess limits and scope of the autonomous definition set forth by the Community act. The same is true for the reference to domestic legislation: by way of example, art. 8(1) of the proposal derives from the mentioned Arblade decision (note 52) an autonomous definition of internationally mandatory rules and of the interests pursuable by the latter. Such an autonomous definition does not seem able to overcome the general principle pursuant to which it is for the Member States to define the interests protected by such rules (without prejudice to the principle pursuant to which they can be given effect only when a contrast with EC legislation is not established).

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Internationally Mandatory Rules of Community Origin

In Ingmar, the Court was asked whether Articles 17 and 18 of EC Directive 653/86, which guarantee certain rights to commercial agents after termination of agency contracts, must be applied where the commercial agent carried on his activity in a Member State although the principal is established in a non-member country and a clause of the contract stipulates that the contract is to be governed by the law of that country. The Court affirmed that such rules were internationally mandatory and accordingly could not be avoided by the choice of the law of a third State. Such rules, indeed, are aimed to ‘protect, for all commercial agents, freedom of establishment and the operation of undistorted competition in the internal market. Those provisions must therefore be observed throughout the Community if those Treaty objectives are to be attained’.92 It is interesting to remark that the French Cour de Cassation reached the opposite conclusion a few days after the Court’s judgment.93 The fact that the Court considers itself empowered to erect certain EC rules into internationally mandatory ones is consistent with the Court’s role and general approach and, in our view, should not be subject to criticism as a matter of principle. However, the Court’s approach is somewhat vague, as it cannot be accepted that all rules somehow functional to ‘freedom of establishment’, ‘undistorted competition in the internal market’, or to other Community policies or interests are transformed into internationally mandatory ones.94 At this point, it should be borne in mind that Community legislation has recourse to different methods to ensure that rules ‘essential for the Community legal order’ are not avoided ‘by the simple expedient of a choice-of-law clause’.95 From a technical point of view, this objective is reached by means of different types of rules, which include ‘traditional’ internationally mandatory rules and the combination of a cogent rule and a criterion of applicability. Although different technically, these methods share the same aim and it is quite logical that the Community legal order may freely delimit the scope of certain rules that are characterized by an ‘evaluative intensity’. In particular,96 secondary legislation at times makes it explicit that the objectives of certain rules must be guaranteed regardless of the contents of the applicable law,97 whereas at other times, as in Ingmar, this conclusion 92

Decision of 9 November 2000, case C-381/98, Ingmar GB, Rep. 2000, I-9305,

para 24. 93 Cour de Cassation, decision of 28 November 2000, in: La Semaine Juridique 2001, II, p. 10527 et seq. 94 V. IDOT L., in: Rev. crit. dr. int. pr. 2001, p. 117; PATAUT E. (note 58), p. 121; LAGARDE P., ‘Les lois de police devant la Cour de justice des communautés européennes’, in: SCHULZE R./SEIF U. (eds), Richterrecht und Rechtsfortbildung in der Europäischen Rechtsgemeinschaft, Tübingen 2003, p. 89 et seq.; BOSCHIERO N. (note 59), p. 380. 95 Decision of 9 November 2000 (note 92), at para. 25. 96 Also cf. BONOMI A. (note 57), p. 123 et seq. 97 See EC directives 93/13 of 5 April 1993 (OJ L 95 of 21 April 1993), Art. 6(2); 94/47 of 26 October 1994 (OJ L 280 of 29 October 1994), Art. 9; 97/7 of 20 May 1997 (OJ

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The Court of Justice and Private International Law may only be reached by means of interpretation.98 Moreover, the acts of the first category limit the application of such provisions in various ways, e.g. to cases where a choice of law has been made,99 and usually set forth criteria of applicability for the same rules.100 A criterion of applicability was developed by the Curt also in Ingmar, it being that the situation was ‘closely connected with the Community’. Internationally mandatory rules are set forth both by EC primary and secondary legislation. Unlike in secondary EC legislation, internationally mandatory rules set forth in primary legislation are silent in this regard and can accordingly be argued to operate regardless of the assessment of the applicable law, i.e. not only in the presence of a choice of law by the parties. Moreover, such rules operate directly, and, as will be discussed, pursuant to the previously described fungibility criteria,101 only with respect to the laws of third States. When the applicable law is that of a Member State, indeed, (and although the question is discussed)102 the relevant principle may be imposed simply by means of the priority of EC law over domestic legislation non-respondent to EC law requirements. That said, it is generally agreed that internationally mandatory rules of primary EC law include Articles 81 (undertakings) and 82 EC (abuse of a dominant position), which expressly (Art. 81) or implicitly (Art. 82), declare as void agreements or decisions that are prohibited. The same conclusion can be drawn with respect to other rules of the Treaty with horizontal direct effect, such as Article 141 EC, which lays down the principle L 144 of 4 June 1997), Art. 12(2); 1999/44 of 25 May 1999 (OJ L 171 of 7 July 1999), Art. 7(2); 2002/65 of 23 September 2002 (OJ L 271 of 9 October 2002), Art. 12(2). 98 For further developments and examples see BERTOLI P. (note 25), p. 460 et seq. 99 E.g., the protection afforded by Directive 94/47 of 26 October 1994 cannot be denied ‘whatever the law applicable may be’, whereas all other directives cited at note 97 set forth rules which operate in the presence of optio legis. 100 E.g., such criteria are that the contract presents ‘a close link with the territory of one or more Member States’ (or similar provisions) pursuant to Artt. 12(2) of Directive 2002/65; 7(2) of Directive 99/44; 6(2) of Directive 93/13; 12(2) of Directive 97/7; or the fact that ‘the immovable property concerned is situated within the territory of a Member State’ pursuant to Art. 9 Directive 94/47. For further developments see JOBARD-BACHELLIER M. (note 58), p. 203 et seq.; BASEDOW J. (note 69), p. 59; FALLON M. (note 17), pp. 195 et seq., 217 et seq.; FALLON M./FRANCQ S., ‘Towards internationally mandatory directives for consumer contracts?’, in: Liber amicorum Kurt Siehr, The Hague 2000, p. 155 et seq.; KREUZER K., ‘La communitarisation du droit international privé: les acquis et les perspectives’, in VOGEL L. (ed), Unifier le droit: le rêve impossible?, Paris 2001, p. 97 et seq., at p. 117 et seq. According to FALLON M., ‘Le principe de proximité dans le droit de l’Union européenne’, in Mélanges Lagarde (note 33), p. 241 et seq., at p. 253 et seq., such criteria constitute the expression under EC law of the well known ‘principe de proximité’ as developed by Professor Lagarde (LAGARDE P., ‘Le principe de proximité dans le droit international privé contemporain’ in: Recueil des cours, t. 196, 1986-I, p. 9 et seq.). The same was submitted with respect to Ingmar: see IDOT L., in: Rev. crit. dr. int. pr. 2001, p. 119; FALLON M., just cited, p. 259 et seq. 101 See above, II.C.1.a) and below in this paragraph. 102 Cf., in different sense, FALLON M. (note 17), p. 264; PATAUT E. (note 59), at pp. 133-136.

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Paolo Bertoli of equal pay for male and female workers.103 The thesis that certain pieces of primary EC legislation may be internationally mandatory rules with ‘permissive’ effects is also convincing. This may happen when such rules consider certain acts or facts to be legitimate, contrary to domestic legislation. Such acts or facts should accordingly be considered legitimate (and, e.g., a contract which disciplines them valid) regardless of the fact that the applicable law would lead to a different conclusion, which makes such rules of primary EC law internationally mandatory.104 Only a few remarks of a general nature can be made with respect to the wide subject of internationally mandatory rules in secondary EC legislation.105 As a preliminary remark, it should be noted that, according to the Court’s case law, the internationally mandatory application of EC rules is exclusively determined (in its an and quantum) at the Community level, regardless of the State policy or interest at stake.106 The practical application of this postulate does not 103 On the horizontal effect of the freedoms see BEYLEVELD D./PATTINSON S., ‘Horizontal Applicability and Horizontal Effect’, in: Law Quarterly Review 2002, p. 623 et seq.; VAN DEN BOGAERT S., ‘Horizontality’, in: BARNARD S./SCOTT J. (eds), The Law of the Single European Market, Oxford-Portland Oregon 2002, p. 123 et seq.; SNELL J., ‘Private Parties and the Free Movement of Goods and Services’, in: ANDENAS M./ROTH W. (note 42), p. 211 et seq.; OLIVER P./ROTH W., ‘The Internal Market and the Four Freedoms’, in: CMLR 2004, p. 407 et seq., at p. 421 et seq.; SCHEPEL H., ‘The Enforcement of EC Law in Contractual Relations: Case Studies in How not to ‘Constitutionalize’ Private Law’, in: European Review of Private Law 2004, p. 661 et seq.; WOODS L., Free movement of goods and services within the European community, Aldershot 2004, p. 185 et seq. 104 BONOMI A. (note 57), p. 122, with further references at note 382. 105 For further developments see FUMAGALLI L., ‘Le clausole abusive nei contratti con i consumatori tra diritto comunitario e diritto internazionale privato’, in: Riv. dir. int. priv. proc. 1994, p. 15 et seq.; CANNADA BARTOLI L., ‘Questioni di diritto internazionale privato relative alla direttiva sulle clausole abusive nei contratto stipulati da consumatori’, in: Riv. dir. int. 1995, p. 324 et seq.; JAYME E./KOHLER C., ‘L’interaction des règles de conflit contenues dans le droit dérivé de la Communauté européenne et des conventions de Brussels et de Rome’, in: Rev. crit. dr. int. pr. 1995, p. 1 et seq.; SAGGIO A., ‘Diritto internazionale privato e diritto uniforme nel sistema comunitario’, in: La riforma del diritto internazionale privato. Convegno, Roma 11-12 Aprile 1996, Napoli 1997, p. 205 et seq.; TREVES T., ‘Un nuovo labirinto normativo in tema di legge applicabile alla vendita: la vendita ai consumatori’, in: Studi Broggini, Milano 1997, p. 561 et seq.; KNÖFEL S., ‘EC legislation on conflict of laws: interactions and incompatibilities between conflict rules’, in: ICLQ 1998, p. 439 et seq.; REICH N., ‘EG-Richtlinien und internationales Privatrecht’, in: LAGARDE P./VON HOFFMANN B. (note 35), p. 109 et seq.; KOHLER C. ‘Interrogations sur les sources du droit international privé européen après le Traité d’Amsterdam’, in: Rev. crit. dr. int. pr. 1999, p. 3 et seq.; WILDERSPIN M./LEWIS X., ‘Les relations entre le droit communautaire et les règles de conflit de lois des Etats membres’, in: Rev. crit. dr. int. pr. 2002, pp. 1 et seq., 289 et seq., at p. 289 et seq.; DUINTJER TEBBENS H., ‘Les règles de conflit contenues dans les instruments de droit dérivé’, in: FUCHS A./MUIR WATT H./PATAUT E. (note 26), p. 101 et seq. For further references on the issues raised by EC Directive 2000/31 on electronic commerce see BERTOLI P. (note 25), p. 460 at note 177. 106 Cf. POILLOT PERUZZETTO S., ‘Ordre public et loi de police dans l’ordre juridique communautaire’, in: Trav. com. fr. DIP. 2002-2004.

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The Court of Justice and Private International Law give rise to specific issues (unlike those relating to the correct assessment of the character of internationally mandatory rules) with respect to rules of this kind set forth in primary Community legislation or in regulations, the content and application of the latter being entirely and self-sufficiently determined by the EC legal order. This is not true with respect to directives: the necessity of domestic implementation and the absence of horizontal direct effects, indeed, implies that internationally mandatory rules that they set forth can have a direct relevance and application only with respect to implemented directives.107 This should not give rise to material issues except to the extent that the implementing legislation perfectly reflects the degree of internationally mandatory application pursued by the EC legislator. This result is usually guaranteed by maximum harmonization directives, which do not allow Member States to do more, or less, than they set forth, and accordingly allow the argument that the internationally mandatory rules they set forth can be enforced via the implementing legislation applicable, or however relevant, in the case at stake. The same is not always true with respect to minimum harmonization directives. If the implementing legislation is limited to the minimum level required, the same solution is applicable; in the event the implementing legislation overcomes the minimum level required by the directive, the internationally mandatory application of the quid pluris is not imposed, or pursued, by the Community legislator. Accordingly, the Member States remain free to impose the internationally mandatory application of such quid pluris, but only if and to the extent that this is consistent with the already discussed burden test and other EC law requirements.108 If the assessment is negative, this level of internationally mandatory application shall be reduced to the quantum imposed by the Community legislator. Second, it is submitted that all internationally mandatory rules of EC origin should be enforced pursuant to a principle of comparison or fungibility, like domestic rules subject to the burden test. This flows from several arguments, relating both to the persuasiveness of such an approach on a general and theoretic level, and to the specific approach the Court followed in Ingmar. The Court, indeed, focused on the necessity that the objectives of the EC internationally mandatory rules would not be impaired by the application of the foreign law, rather than formalistically imposing their application regardless of the content of the latter.109 The actual application of the above principles will vary according to the wording and scope of the relevant act and does not preclude the necessity of coordinating the relevant provisions of substantive EC secondary legislation with the applicable private international law discipline, in primis the Rome Convention of 1980. By way of example, article 6(2) of EC directive 93/13 on unfair terms in consumer contracts provides that ‘Member States shall take the necessary measures 107

BONOMI A. (note 57), p. 122. See POILLOT PERUZZETTO S. (note 106); JOBARD-BACHELLIER M. (note 33), pp. 488-489. 109 In the same sense see ROTH W., in: CMLR 2002, pp. 375-376; BOSCHIERO N. (note 59), p. 392; WILDERSPIN M./LEWIS X. (note 105), pp. 293-294; DUINTJER TEBBENS H. (note 105), p. 107; contra PATAUT E., in: Rev. crit. dr. int. pr. 2001, p. 511. 108

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Paolo Bertoli to ensure that the consumer does not lose the protection granted by this Directive by virtue of the choice of the law of a non-Member country as the law applicable to the contract if the latter has a close connection with the territory of the Member States’. The directive sets forth a minimum clause, according to which Member States may adopt or retain the most stringent provisions ‘compatible with the Treaty’ to ensure a maximum degree of protection for the consumer. Consider the hypothesis of a consumer habitually resident in Member State A who executes a contract falling within the scope of the directive, subject to the law of non-Member State B as per the choice of the parties. If the contract also falls within the scope of Article 5 of the Rome convention, a comparison between (i) the law of habitual residence (A), (ii) the nonMember State’s law (B) and (iii) the minimum level set forth by the directive would stricto sensu be imposed.110 If implementation in Member State A is correct, the minimum level will be assured by the application of its law. 111 If that Member State overcame the minimum level, the quid pluris would have to be reduced, unless it was shown that its application corresponded to EC law. If the contract is not concluded in circumstances set forth by Article 5 of the Rome Convention, the provisions of law B should be compared with the minimum level. In practice, it would still be necessary to determine which implementing legislation to invoke in order to guarantee that result. The outcome will be different based on the implementation of the criteria of applicability of the close connection with the territory of a Member State. Certain Member States specified in this regard specific localization factors (e.g., that the consumer is resident in the State where the offer was made); others only provided for the application of their law of implementation, others did not specify the contents of such close connection.112 According to a common interpretation, in the latter case the close connection would be established when, in the absence of optio legis, the contract would have been governed by the law of a Member State.113 To the extent that such implementing methods are correct,114 the alternative would be between the lex fori, and, for the first and third hypothesis respectively, the law of the place of habitual residence

110

In the same sense see WILDERSPIN M., LEWIS X. (note 105), p. 293 et seq. Cf. TREVES T. (note 105), p. 570; BOSCHIERO N. (note 89), p. 838. 112 For an in-depth analysis see FALLON M., ‘Le droit applicable aux clauses abusives après la transposition de la directive n° 93/13 du 5 avril 1993’, in: Revue européenne de droit de la consommation 1996, p. 3 et seq.; FALLON M./FRANCQ S. (note 100) p. 167 et seq.; MOURA RAMOS R., ‘La transposition des directives communautaires en matière de protection du consommateur en droit international privé portugais’, in: Festschrift Jayme (note 24), p. 615 et seq. Also see the document COM (2000) 248 of 27 April 2000, at . 113 FUMAGALLI L. (note 105), p. 30 et seq.; JAYME E./KOHLER C. (note 105), p. 21 et seq.; CANNADA BARTOLI L. (note 105), p. 339; TREVES T. (note 105), p. 573; VILLANI U., La convenzione di Roma sulla legge applicabile ai contratti, 2nd ed., Bari 2000, p. 149; BOSCHIERO N. (note 89), p. 838. 114 On this issue see FALLON M. (note 112), p. 20 et seq. 111

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The Court of Justice and Private International Law and the one that would have been applicable in the absence of choice.115 In any event, it would be incorrect to argue that the Community legislator turned any implementing legislation into internationally mandatory rules, regardless of their content.116 Moreover, based on the above assumption that the rules being discussed should be implemented pursuant to a fungibility principle, it would be quite indifferent to establish whether the ‘non evasion’ of the rules of the directive is based on Article 7 of the Rome Convention,117 or rather (alternatively or cumulatively) on the priority of EC law.118 It is at any rate correct to observe that internationally mandatory rules of EC origin find in the EC legal order a (self-)sufficient title of application,119 both when the Rome Convention applies and when it does not. Accordingly, in the latter case, the internationally mandatory application of EC rules will be granted exclusively by means of the priority of EC law. As a final remark, it should be noted that EC law may in certain cases also impose the internationally mandatory application of domestic legislation,120 as is the case with EC directive 96/71 on the posting of workers.121 In other cases, EC law will legitimate, though not impose, such internationally mandatory application.122 115

BASEDOW J. (note 69), p. 61 considers the choice even more ample and basically limited to the assessment of the correct implementation of the Community act: ‘bien sur la loi du for s’offre toujours pour remplacer la loi désignée par la règle de conflit. Mais il est également concevable que le juge parmi les diverses transpositions… porte son choix sur la variante la plus proche de celle prévue par le statut du contrat’. 116 Cf. ROTH W. in: CMLR 2002, p. 376; VERHAGEN, ‘The Tension Between Party Autonomy and European Union Law: Some Observations on Ingmar GB Ltd. v Eaton Leonard Technologies Inc’, in: Int. Comp. Law Quart. 2002, p. 135 et seq., at p. 152. 117 FUMAGALLI L. (note 105), p. 30 et seq.; JAYME E./KOHLER C. (note 105), p. 21 et seq.; contra TREVES T. (note 105), p. 569 et seq., note 19; CANNADA BARTOLI L. (note 105), p. 338. 118 BOSCHIERO N. (note 89), p. 839. 119 BOSCHIERO N. (note 89), p. 839. For a different opinion according to which Art. 20 of the Rome Convention would be the base for the priority of EC internationally mandatory rules see WILDERSPIN M./LEWIS X., p. 310 et seq.; POILLOT PERUZZETTO S. (note 106), p. 22). 120 Cf. BONOMI A. (note 57), pp. 127-129; BOSCHIERO N. (note 89), p. 836. 121 See Art. 3(1): ‘Member States shall ensure that, whatever the law applicable to the employment relationship, the undertakings [which, in the framework of the transnational provision of services, post workers to the territory of a Member State] guarantee workers posted to their territory the terms and conditions of employment covering the following matters which, in the Member State where the work is carried out, are laid down by law, regulation or administrative provision, and/or by collective agreements or arbitration awards which have been declared universally applicable […]’. 122 See BONOMI A. (note 57), pp. 129-130, who convincingly argues that when Community legislation allows Member States to invoke a mandatory requirement to avoid a rule or principle set forth by EC Law, they would also be allowed to escape the ‘ordinary’ functioning of conflict rules.

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EC Public Policy

Confirming the correctness of a widespread opinion,123 the Court affirmed both directly and indirectly ‘le principe de l’existence d’un ordre public international de source communautaire’,124 that the national judges ‘must’125 observe and apply. The direct affirmation of that principle took place in Eco Swiss, where the Court was asked whether a national court to which application is made for annulment of an arbitration award must grant such an application where, in its view, that award is in fact contrary to Article 81 EC although, under domestic procedural rules, it may grant such an application only on a limited number of grounds, one of them being inconsistency with public policy, which, according to the applicable national law, is not generally to be invoked on the sole ground that, because of the terms or the enforcement of an arbitration award, effect will not be given to a prohibition laid down by domestic competition law. The Court firmly stated that Article 81 ‘constitutes a fundamental provision which is essential for the accomplish123 E.g., WESER M., Convention communautaire sur la compétence judiciaire et l’exécution des décisions, Brussels-Paris 1975, p. 330 et seq.; GIULIANO M./LAGARDE P., in: TREVES T. (ed), Verso una disciplina (note 57), p. 414; LUZZATTO R., ‘La libera prestazione dei servizi bancari nella CEE ed il principio del mutuo riconoscimento degli enti creditizi’, in: Foro it. 1990, IV, 443, 454 in note 29; MOSCONI F., ‘Il limite dell’ordine pubblico nella convenzione di Brussels del 1968 sulla competenza giurisdizionale e l’esecuzione delle decisioni in materia civile e commerciale’, in: Jus 1990, p. 45 et seq., at p. 52 et seq.; STRUYCKEN A., ‘Les conséquences de l’intégration européenne sur le développement du droit international privé’, in: Recueil des Cours, t. 232, 1992-I, p. 257 et seq., at pp. 274278; FALLON M. (note 17), p. 255; STROZZI G., ‘La tutela dei diritti fondamentali tra diritto comunitario e ordinamenti degli Stati membri’, in: Scritti Barile, Padova 1995, p. 677 et seq.; RODRÍGUEZ PINEAU E., ‘European Union International Ordre Public’, in: Spanish Yearbook of International Law 1993-94, p. 43 et seq.; BAUMERT A., Europäischer ordre public und Sonderanknüpfung zur Durchsetzung von EG-Recht, Frankfurt am Main 1994, p. 1 et seq.; FÖHLISCH J., Der gemeineuropäische ‘ordre public’, Frankfurt am Main 1997, p. 27 et seq.; SCHLOSSER P., ‘Arbitration and the European Public Policy’, in: L’arbitrage et le droit européen. Actes du colloque International du CEPANI du 25 Avril 1997, Brussels 1997, p. 81 et seq.; VAN HOUTTE H., ‘From a National to a European Public Policy’, in Essays A.T. von Mehren, New York 2002, p. 841 et seq. Also see the conclusions of Advocate General Alber of 22 June 1999, case C-38/98, Renault, Rep. 2000, I-2973, at para. 58 and those of Advocate General Saggio of 23 September 1999, case C-7/98, Krombach, Rep. 2000, I-1935, at para. 24. 124 POILLOT PERUZZETTO S., ‘L’ordre public international en droit communautaire. A propos de l’arrêt de la Cour de justice des Communautés du 1er juin 1999 (affaire Eco Swiss China Time Ltd)’, in: Clunet 2000, p. 299 et seq., at p. 301. Also see IDOT L., ‘L’arbitre et l’ordre public communautaire: prise de position de la Cour de justice, note sous CJCE, 1er juin 1999’, in: Rev. arbitrage 1999, p. 639 et seq.; RADICATI DI BROZOLO L., ‘Arbitrato, diritto della concorrenza, diritto comunitario e regole di procedura nazionali’ in: Rivista dell’arbitrato 1999, p. 665 et seq.; PHILIP A., ‘The Eco Swiss Judgment and International Arbitration’, in: Essays von Mehren (note 123), p. 526 et seq. 125 Decision of 1 June 1999, case C-126/97, Eco Swiss, Rep. 1999, I-3055, at para. 37.

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The Court of Justice and Private International Law ment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market... It follows that where its domestic rules of procedure require a national court to grant an application for annulment of an arbitration award where such an application is founded on failure to observe national rules of public policy, it must also grant such an application where it is founded on failure to comply with the prohibition laid down in Article 8[1](1)’.126 The Community public policy is an open and evolutive notion and it would not be possible to list its contents exhaustively. By stating that, in establishing that character, regard shall be given to whether a principle is ‘essential for the accomplishment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market’ the Court seems to do nothing more than reaffirm the necessity of recourse to the usual functional and teleological interpretative criteria. This should however be sufficient to consider as part of EC public policy the freedoms,127 as well as certain substantive general principles of EC law, including the principle of non-discrimination and fundamental rights.128 In particular, the relevance of the latter, including the right to a fair trail, as part of the EC public policy was indirectly stated by the Court in Krombach. On this occasion, the Court affirmed that the court of a State requested to enforce a foreign judgment pursuant to the Brussels Convention of 1968 could, with respect to a defendant domiciled in that State and prosecuted for an intentional offence, take account, in relation to the public-policy clause of the Convention, of the fact that the court of the State of origin refused to allow that person to have his defence presented unless he appeared in person. Although stricto sensu it only affirmed that the latter court was entitled to oppose public policy for breach of the rules on fair trial, it is submitted that the Court actually imposed recourse to the public policy exception in such circumstances and affirmed that EC public policy includes fundamental (and procedural)129 rights.130 This conclusion stems from the generally 126

Decision of 1 June 1999 (note 125), at paras. 36-37. The Court underlines that such a conclusion is not affected ‘by the fact that the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, which has been ratified by all the Member States, provides that recognition and enforcement of an arbitration award may be refused only on certain specific grounds, namely where the award does not fall within the terms of the submission to arbitration or goes beyond its scope, where the award is not binding on the parties or where recognition or enforcement of the award would be contrary to the public policy of the country where such recognition and enforcement are sought’. 127 In the same sense STROZZI G. (note 123), p. 792; BIAGIONI G., ‘L’art. 6 della convenzione europea dei diritti dell’uomo e l’ordine pubblico processuale nel sistema della convenzione di Brussels’, in: Riv. dir. int., 2001, p. 723 et seq., at p. 730; contra H(UET) P., in: Clunet 2001, p. 700. 128 Cf. FALLON M. (note 17), p. 256. 129 The 1968 Brussels Convention and the Brussels I Regulation set forth a specific ground for refusal of enforcement that is part of the procedural public policy (see Articles 27(2) and 34(2) respectively). Certain authors argued accordingly that the general public policy exception of Arts. 27(1) and 34(1) cannot include further aspects of procedural public policy: see CARRASCOSA GONZÁLEZ J., Art. 27, in: CALVO CARAVACA A.L. (ed.), Comentá-

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Paolo Bertoli stated preceptivity of the respect of fundamental rights in the Community legal order (widely recalled in the Court’s judgment).131 From the Court’s judgment it also seems possible to affirm the existence of, and necessity of maintaining and developing, a parallelism and reciprocal compenetration between the degree of protection of fundamental rights granted at the EC level and by the ECHR, the latter also defined ‘constitutional instrument of European public order’.132, 133 rio al Convenio de Bruselas relativo a la competencia judicial y a la execución de resoluciones judiciales en matéria civil y mercantil, Madrid 1994, p. 478 et seq., at p. 483; KESSEDJIAN C., in: Rev. crit. dr. int. pr. 1992, p. 516 et seq., at p. 524. The Krombach decision seems to have overcome such opinions. In the sense that procedural public policy falls within the scope of Arts. 27(1) and 34(1) see CARBONE S., Il nuovo spazio giudiziario europeo dalla Convenzione di Bruxelles al Regolamento CE 44/2001, 4th ed., Torino 2002, p. 233 et seq.; SALERNO F. (note 77) p. 250. Also see MUIR WATT H., ‘Evidence of an Emergent European Legal Culture: Public Policy Requirements of a Procedural Fairness Under the Brussels and Lugano Conventions’, in: Texas International Law Journal 2001, p. 539 et seq.; BASEDOW J. (note 69), pp. 68, 72. 130 In this sense see CARBONE S. (note 129), p. 256; SALERNO F. (note 77), pp. 247249; BIAGIONI G. (note 127), pp. 731-734; H(UET) P., in: Clunet 2001, p. 696 (‘lorsque la Cour de justice en appelle aux principes généraux de droit communautaire et à la CEDH, le juge de l’État requis, non seulement ‘peut’, mais doit recourir à la clause d’ordre public’); SEATZU F., ‘Diritto alla difesa, ordine pubblico dello Stato richiesto dell’exequatur e convenzione di Bruxelles del 1968’, in: Nuova giurisprudenza civile commentata 2001, 2, p. 87 et seq.; BARATTA R., Scioglimento (note 50), p. 198; NASCIMBENE B., ‘Riconoscimento di sentenza straniera e «ordine pubblico europeo»’, in: Riv. dir. int. priv. proc. 2002, p. 659 et seq., at p. 664. 131 See at paras. 25-26. MENGOZZI P., ‘La nozione di ordine pubblico nel diritto comunitario e nel sistema della Convenzione di Roma’, in: CASADIO F./BELLANDO A. (eds), Europa e diritti umani, Torino 1981, p. 132 et seq., argued that in this hypothesis public policy should not be interpreted restrictively. This opinion is shared by FUMAGALLI L., ‘L’ordine pubblico nel sistema del diritto internazionale privato comunitario’, in: Dir. comm. int. 2004, p. 635 et seq., at p. 647, who adds that in all other hypotheses an extensive interpretation of the public policy clause would violate Art. 10 EC. 132 ECHR, decision on the preliminary objections of 23 March 1995, case No. 15318/89, Loizidou v. Turkey, in A310, par. 75. In literature see e.g. SUDRE F., ‘Existe-t-il un ordre public européen?’, in: TAVERNIER P. (ed.), Quelle Europe pour les droits de l’homme?, Brussels 1996, p. 39 et seq.; ID., ‘L’ordre public européen’, in REDOR M. (ed), L'ordre public: Ordre public ou ordres publics - Ordre public et droits fondamentaux, Brussels 2001, p. 109 et seq.; ANDRIANTSIMBAZOVINA J., ‘Splendeurs et misères de l’ordre public européen’, in: Cahiers dr. eur. 2000, p. 657 et seq.; POILLOT PERUZZETTO S. (note 124), p. 303; DEBET A., L’influence de la Convention européenne des droits de l’homme sur le droit civil, Paris 2002, pp. 20, 284; NASCIMBENE B. (note 130), p. 664; FERRAND F., ‘L’harmonisation de la procédure civile dans le monde: Quels défis et quels espoirs pour le XXIème siècle?’, in: Festschrift Sonnenberger, München 2004, p. 791 et seq. 133 On the impact of fundamental rights on private international law see COHEN G., ‘La convention européenne des droits de l'homme et le droit international privé français’, in: Rev. crit. dr. int. pr. 1989, p. 451 et seq.; MAYER P., ‘La Convention européenne des droits de l’homme et l’application des normes étrangères’, in: Rev. crit. dr. int. pr. 1991, p. 651 et seq.; MATSCHER, ‘Le droit international privé face à la Convention européenne des droits de

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The Court of Justice and Private International Law The affirmation of the existence of an EC public policy does not imply that public policy is entirely communitarised, but obviously only that the Community legal order steps besides the Member States and public international law in determining the content of public policy,134 that will be enforced by the Courts of the Member States. According to a general principle, such enforcement will take place via the domestic procedural rules,135 that are however limited in their effect in order not to impair the effectiveness of Community law.136 In a wider perspective, it is submitted that a distinction proposed in literature between principles and rules may be useful to describe the functioning of the EC public policy and its interaction with EC internationally mandatory rules.137 At the basis of that distinction lays the idea that internationally mandatory rules and the public policy exception are different techniques used to guarantee the same result, i.e. the respect of certain (potentially, although not necessarily, coincident) legal values defined by a legal order.138 In short, principles are values expressed by l’homme’, in: Trav. com. fr. DIP 1996-97, p. 211 et seq.; BIAGIONI G. (note 127), p. 735 et seq.; FOCARELLI C., ‘Equo processo e riconoscimento di sentenze straniere: il caso Pellegrini’, in: Riv. dir. int. 2001, p. 955 et seq.; SUDRE F. (note 132), p. 127 et seq.; NASCIMBENE B. (note 130); BASEDOW J. (note 69), p. 67 et seq.; KINSCH P., ‘The Impact of Human Rights on the Application of Foreign Law and on the Recognition of Foreign Judgments’, in: Essays P. Nygh, The Hague 2004, p. 197 et seq.; PICCHIO FORLATI L., ‘Critères de rattachement et règles d’applicabilité, à l'heure de la protection des droits de l’homme en Europe’ in: Riv. dir. int. priv. proc. 2005, p. 907 et seq. 134 It is worth mentioning that a limitation or integration of the contents of domestic public policy may be traced also at the legislative level: see, e.g., Article 10 of the Convention of 29 February 1968 on the mutual recognition of companies and legal persons; Articles 35(3) and 36 of the Brussels I regulation; Articles 24 and 26 of the Brussels II-bis Regulation; Article 23 of the Brussels II-bis Regulation (which lays down that public policy may be opposed to the enforcement of decisions relating to parental responsibility ‘taking into account the best interests of the child’); Article 26 of EC regulation No. 1346/2000 on insolvency proceedings. 135 Including respect for the ambit of the dispute as defined by the parties: see the decision of 14 December 1995, joined cases C-430 and 431/93, van Schijndel, Rep. 1995, I4705, at para. 22. 136 See the decisions of 19 June 1990, case C-213/89, Factortame, Rep. 1990, I2433, at paras. 20-21; 14 December 1995, case C-312/93, Peterbroeck, Rep. 1995, I-4599, at para. 12; 10 July 1997, case C-261/95, Palmisani, Rep. 1997, I-4025; 17 July 1997, case C242/95, GT-Link, Rep. 1997, I-4449, at para. 24; 2 December 1997, case C-188/95, Fantask A/S, Rep. 1997, I-6783, at para. 48; 27 February 2003, case C-327/00, Santex SpA, Rep. 2003, I-1877, at para. 56. 137 See SPERDUTI G., ‘Norme di applicazione necessaria e ordine pubblico’, in: Riv. dir. int. priv. proc. 1976, p. 469 et seq., at p. 473; ID., ‘L’ordine pubblico in diritto internazionale privato’, in: Riv. dir. int. 1976, p. 669 et seq., at p. 675; ID., ‘Les lois d’application nécessaire en tant que lois d’ordre public’, in: Rev. crit. dr. int. pr., 1977, p. 257 et seq.; BUCHER A., ‘L’ordre public et le but social des lois en droit international privé’, in: Recueil des Cours, t. 239, 1993-II, p. 9 et seq., at p. 26 et seq.; BONOMI A. (note 57), p. 201 et seq. 138 BONOMI A. (note 57), p. 214.

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Paolo Bertoli the legal order in its complex, either not explicitly codified in a positive rule of conduct or extracted by single rules by means of a process of generalization. They are protected by means of the public policy exception, given that no need arises to verify whether a specific rule is fungible with a foreign one, but only that application of foreign law, or enforcement of a foreign decision, does not violate such principle. Rules, on the other hand, are positive legal precepts, and are enforced as internationally mandatory rules on the basis of their unfungibility with foreign law. As for the interaction between public policy and internationally mandatory rules, it has been exactly pointed out that when the application of foreign law is concerned it is perfectly conceivable on a logical plan that a principle of public policy may operate ex post in order to correct the results of the application of a foreign law in matters where internationally mandatory rules operate.139 Usually, however, the circumstance that internationally mandatory rules express principles of public policy remains hidden, as after a legal order has imposed the application of a certain rule, a contrast with the principles underlying such rule is hardly conceivable.140 The incorporation of public policy in internationally mandatory rules, on the contrary, cannot take place with respect to enforcement of foreign judgments, where the concern is not a potential contrast between rules, but rather between the effects of enforcement and certain principles which, also if expressed by internationally mandatory rules, will accordingly be enforced via the public policy exception. The above distinction seems applicable also with respect to EC public policy and internationally mandatory rules and their interactions. The category of EC internationally mandatory rules should accordingly be deemed composed of preceptive rules codified in primary or secondary EC legislation, also when having a negative content, and enforced on the basis of a comparison between them and the contents and effects of the applicable law. Such rules, at the same time, may express principles that, as in Eco Swiss, will be enforced via the public policy exception when enforcement is concerned. More generally, the latter category is composed of principles non (necessarily) codified in positive precepts and/or of a general nature. 139 Cf. BUCHER A. (note 137), p. 41 et seq. According to this conception, the fungibility between public policy and internationally mandatory rules is actual, although only partial. The Author, assuming that codified legislation poses a distinction between internationally mandatory rules and public policy, argues that the first category should be referred to with respect to rules that pursue a specific aim, proper to the forum (in abstracto unlikely to have correspondence in the foreign applicable law), whereas the second category should be referred to with respect to rules or principles of general interest (in abstracto capable of being protected by correspondent rules or principles of the foreign applicable law). 140 Cf. BONOMI A. (note 57), p. 215. According to this conception, the fungibility between public policy and internationally mandatory rules is only potential, as different instruments (i.e., respectively, public policy and internationally mandatory rules) are used for the protection of principles and rules. The Author considers this solution preferable, as this allows not to ‘contaminate’ the notion of public policy (which typically expresses the fundamental principles of a legal order) with technical provisions such as those that usually are the object of (internationally mandatory) rules.

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VI. Concluding Remarks Discussing the interactions between the Court and private international law, a commentator concluded that ‘le juge communautaire rappelle un peu un chimiste qui dans son laboratoire est occupé simultanément avec plusieurs expérimentations et qui, dans différents récipients, doit ajouter une même substance à d’autres, hétérogènes, en vue d’obtenir des réactions passablement homogènes. Tantôt ces expérimentations sont couronnées de succès, tantôt la réaction peut-être… surprenante. Or, dans ce dernier cas, le juge, à la différence du chimiste, ne doit au moins pas craindre une explosion’.141 The activity of the Court, indeed, leads to significant and heterogeneous effects on private international law rules, which not infrequently have been underestimated or ignored in legal literature on the basis of the (usually implicit) assumption that EC integration and private international law are antinomic, or at least reciprocally indifferent.142 Such indifference does not exist, either on an institutional plane or on a substantive plane. In the first case, besides certain highly dubious resistances to the grant of full interpretative powers to the Court in this area, a mere normative analysis of such powers confirms its constitutional role in the interpretation and development of private international law rules. On the substantive plan, the Court also demonstrated a willingness to play a constitutional role in questions relating to private international law, and resorted to an interpretative approach comparable to the one used with respect to other matters relevant to the process of EC integration. Its function is expressed with two instruments. The first of them is negative integration, i.e. a ‘vertical’ control of the conformity of private international law to the principles pertaining to EC legal and economic integration (including, e.g., in addition to the principle of non-discrimination, the freedoms, the effet utile, legal certainty and the fundamental rights). The second is positive integration, i.e. the ‘horizontal’ development of principles proper to European private international law systems (such as interpretative criteria, EC internationally mandatory rules and ordre public, protection of the weaker party, party autonomy) aimed at making them conform, or better respond, to the aims of the Community legal order. This approach, far from jeopardizing functions and techniques of private international law, seems to indicate that the Court points to the EC legal order as a centre of definition of interests that are generally, but not without some distortions, 141

KOHLER C., (note 17), p. 84. Cf. VAREILLES-SOMMIERES P., ‘Un droit international privé européen?’, in: ID., Le droit privé européen, Paris 1998, p. 136; IDOT L. (note 58), p. 29 et seq.; BOSCHIERO N. (note 59), p. 368 et seq. The literature on the subject is still quite ample; see references in BERTOLI P. (note 25), p. 137 et seq., at footnotes 6 and 7. Adde SALERNO F., ‘La cooperazione giudiziaria comunitaria in materia civile’ in: STROZZI G. (ed.), Diritto dell’Unione europea. Parte speciale, 2nd ed., Torino 2005, p. 463 et seq.; BOSCHIERO N., ‘La cooperazione giudiziaria in materia civile e commerciale nel sistema comunitario’, in: Enc. Dir. (forthcoming). 142

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Paolo Bertoli incorporated and enforced via classical techniques of private international law. According to one author, ‘la Cour de Justice donne l’impression de faire du droit international privé, comme M. Jourdain faisait de la prose, sans le savoir’.143 The effects of the Court’s case law, indeed, are not coordinated systematically and may at times imply some distortions in the techniques or usual functioning of private international law rules. Nonetheless, such case law demonstrates that private international law is not useless for Community integration and, on the contrary, can be communitarily ‘functionalized’ and play a useful role in the attainment of the general objectives of Community integration. Given that private international law presupposes differences between legal systems, it can be submitted that the Court chose to adhere to a dualistic conception when dealing with matters of private international law, contrary to the monistic approach adopted in affirming the priority of EC law over domestic law. Both private international law and Community integration can accordingly be considered to share the aim of efficiently coordinating the ‘original’ legal orders of the Member States. If pursuant to the traditional theory of private international law such coordination had to only be efficient in a private international law perspective, it cannot be denied that this coordination now needs to be, at times, efficient from the Community point of view. In this line of arguing, the overcoming of sovereignties is not the only option for the maintenance and development of the process of Community integration: an efficient coordination between sovereignties by means of private international law techniques constitutes, in abstracto, just as valid an option. The use of techniques lato sensu pertaining to private international law, by the rest, is not unknown to the Community legal order: suffice it to mention, by way of example, the reference to domestic laws to define the meaning of concepts set forth in Community legislation (e.g., citizenship), or the reference to the ECHR for the protection of fundamental rights.144 The most evident proof of the necessity to maintain and coordinate efficiently the Member States’ sovereignties are, probably, the subsidiarity and proportionality principles, which also are consistent with the Court’s approach showing that the process of EC integration is based on the dialogue among, rather than on the mere homologation of, legal orders.

143

IDOT L., in: Rev. crit. dr. int. pr. 2001, p. 113. Cf. RIGAUX F., ‘La méthode des conflits de lois en droit européen’, in: Mélanges B. Dutoit, Genève 2002, p. 243 et seq.; BERGE J., ‘L’avenir communautaire du droit international privé des conflits de lois’, in: BERGE J./NIBOYET M.L. (note 58) p. 206 et seq., at p. 214 et seq. 144

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TEXTS, MATERIALS AND RECENT DEVELOPMENTS ________________

SWEDEN NEW ARTICLES 1 AND 8a OF ACT NO 1904:26 (in force as of 1st May 2004) ‘If a man and a woman wish to marry before a Swedish authority, Swedish law shall apply when determining the existence of any impediments to the marriage. If neither the man nor the woman is a Swedish citizen and neither has his/her habitual residence in Sweden, the capacity of each of them to marry shall also be determined according to the law of the State chosen by each party individually, either the State of which each is a citizen or the State in which each has his/her habitual residence. Under certain circumstances and if both parties so request, the existence of possible impediments may be determined in accordance with Swedish law only even in such a case’. ‘A marriage that has been celebrated under foreign law is not recognised in Sweden 1. if at the time of the celebration of the marriage, any impediments to it according to Swedish law existed and at least one of the parties was Swedish citizen or was resident in Sweden, or 2. if there is a reasonable probability that the marriage has been celebrated under duress. What is stated in the first paragraph does not apply if certain circumstances occur which are in favour of recognising the marriage’.* (Art. 1 and 8a of Act 1904:26 as amended by Act 2004:144)

NEW CHOICE OF LAW RULES FOR CAPACITY TO MARRY AND THE RECOGNITION OF MARRIAGE IN SWEDEN – A NEW PRINCIPLE? Elisabeth MEURLING∗∗ I. II.

III.

IV.

Introduction The Law Applicable to ‘Mixed’ Marriages to be Celebrated in Sweden A. The New Article 1 of Act No 1904:26 B. Remarks The Law Applicable to Recognition of a Foreign Marriage A. The New Article 8a of Act No 1904:26 B. Remarks Final Remarks

*

Author’s translation. Legal Adviser, Swiss Institute of Comparative Law.

∗∗

Yearbook of Private International Law, Volume 8 (2006), pp. 413-420 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Elisabeth Meurling

I.

Introduction

A political debate on forced marriages and child marriages recently took place in Sweden.1 At issue is primarily the case of Swedish girls of foreign origin forced to marry abroad, notably at an early age.2 In response to this debate, the Swedish government took steps to protect these young women by amending the rules on marriages with a foreign element and reconsidering the nationality principle. As a result, a new law, which entered into force on 1 May 2004, amended the choice of law rules for capacity to marry and the recognition of a marriage celebrated abroad under a foreign law.

II. The Law Applicable to ‘Mixed’ Marriages to be Celebrated in Sweden A.

The New Article 1 of Act No 1904:26

According to the former Swedish choice of law rules for marriages with a foreign element – i.e. when one party is not a Swedish citizen and has not resided in Sweden for the last two years – the lex patriae was always applied3 together with Swedish substantive law.4 Dating back to the beginning of the 20th century, those rules were adopted at the time5 when the nationality principle was incorporated into

1 Also in the other Nordic countries, see the report by the NORWEGIAN MINISTRY OF CHILDREN AND FAMILY AFFAIRS, Action Plan Against Forced Marriages, Oslo 2001; the report by the DANISH GOVERNMENT, Handlingsplan mod tvangsægteskaber, tvangslignende ægteskaber og arrangerede ægteskaber, Copenhagen 2003; the report by the DANISH MINISTRY OF FAMILY (Familiestyrelsen) on Foreigners right to marry in Danmark, Copenhagen 2006, at chapter 3.3; NORDEN – NORDIC COUNCIL AND NORDIC COUNCIL OF MINISTERS, Arrangerte ekteskap og tvangsekteskap i Norden (No 1999:604), TemaNord, Copenhagen 1999. 2 Many countries have age limit of 18 years to marry: see, among others, Belgium, Denmark, Finland, France Germany, Italy, the Netherlands, Norway, Portugal, Spain and the United Kingdom. 3 Article 1.1 of Chapter 1 of former Act No 1904:26 on certain International Legal Conditions Regarding Marriage and Guardianship (Lag om vissa internationella rättsförhallanden rörande äktenskap och förmynderskap). 4 Article 3 of Act No 1904:26 (note 3). 5 See BOGDAN M., ‘Nationality as a Connecting Factor in Swedish Private International Law’, in: Liber Memorialis François Laurent 1810-1887, Brussels 1989, p. 679 at pp. 679-681, where the author shows that nationality was established as a general connecting factor in Sweden at the end of the 19th century.

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Capacity to Marry and Recognition of Marriage in Sweden – A New Principle? international instruments such as the Hague Conventions of 19026 and 1905.7 The nationality principle has been applied as the main rule in Sweden ever since.8 Influenced by the other Nordic states and perhaps by other European states which had abandoned the nationality principle as the main connecting factor designating the law applicable to marriage, the Swedish legislator – keeping the political debate in mind9 – decided to re-examine these rules and the nationality principle on which they are based. The new Act No 2004:144 modifying the said Act (No 1904:26) on certain International Legal Conditions regarding Marriage and Guardianship10 is in force since 1 May 2004. The main rule in Article 1 of the Act11 provides that a marriage celebrated between a man and a woman before a Swedish authority is subject to the marriage requirements under Swedish law.12 The second paragraph stipulates that, 6

The Convention of 12 June 1902 relating to the Settlement of the Conflict of the Laws concerning Marriage (cf. Article 1), the Convention of 12 June 1902 relating to the Settlement of the Conflict of Laws and Jurisdictions as regards to Divorce and Separation (cf. Article 1) and the Convention of 12 June 1902 relating to the Settlement of Guardianship of Minors (cf. Article 1). 7 The Convention of 17 July 1905 relating to Conflicts of Laws with regard to the Effects of Marriage on the Rights and Duties of the Spouses in their Personal Relationship and with regard to their Estates (Article 1). The Act No 1912:69 on certain International Legal Conditions regarding the Effects of Marriage (Lag om vissa internationella rättsförhållanden rörande äktenskapets rättsverkningar) was adopted on the basis of the Convention. 8 However, it was questioned in the late 1980s, see the travaux préparatoires Statens Offentliga Utredningar (SOU) 1987:18, p. 56, and the Ministry of Justice, Proposition (Prop.) 1989/90:87, p. 16. 9 Ministry of Justice, Proposition (Prop.) 2003/04:48, Measures against child marriages and forced marriages (Åtgärder mot barnäktenskap och tvångsäktenskap), p. 15. The government intended to ensure equal treatment between persons of Swedish nationality and foreigners marrying before Swedish authorities though it believed that this had been avoided under the previous regime by the possibility of applying Swedish law if one of the parties had resided more than two years in Sweden. For an analysis of the principle of equal treatment as justifying application of the law of the State of celebration to substantial requirements of marriage, see ROMANO G.P., ‘Is Multilateral Rule on Capacity to Marry and the Italian Constitution?’, in this Yearbook 2005, p. 205 et seq., esp. at 224 et seq. 10 Lag (No 2004:144) om ändring i lagen (No 1904:26 p. 1) om vissa internationella rättsförhållanden rörande äktenskap och förmynderskap. There have been 26 amendments to the Act but this is the first one to amend Article 1 of Chapter 1. 11 See the translation above, in the introduction. 12 The requirements to marry are laid down in Chapter 2 of the Marriage Act. A person who is under 18 years of age may not marry without permission from the County Administrative board (Article 1). Persons who are related as direct ascendants or descendants may not marry each other (Article 3(1)). Nor may siblings of whole blood enter into marriage. However, siblings of half blood may apply for permission from the Government to enter into marriage with each other (Article 3(2)). A person who is already married or a registered partner may not enter into a new marriage while such marriage or partnership

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Elisabeth Meurling if neither of the parties is a Swedish citizen nor has resided in Sweden for two years, one must also ascertain whether the marriage requirements under the foreign law are fulfilled. Accordingly, in such a case, but in such a case only, the foreign law will apply in addition to the Swedish law. Which foreign law? Either the lex domicilii or the lex patriae of each party, at his and her respective choice. However, as will be explained below, it is possible for the parties, even in such a situation, to request that only Swedish law applies.13

B.

Remarks

The new rules provide that, if a ‘mixed’ couple (i.e. a Swedish resident or citizen and an in Sweden non-resident foreign citizen) wants to be married by a Swedish authority,14 only Swedish law will apply. The government’s intention was that the right to be married by Swedish authorities should always be governed by Swedish law,15 thus following the Norwegian, Danish and Icelandic practice of lex loci celebrationis. It was believed that a couple’s choice of the place of marriage is usually a country with which the couple has a strong connection and where the future spouses are likely to settle. Thus it follows that it would be natural for the authority to apply the lex loci celebrationis.16 When reconsidering the nationality principle, it was argued that the principle of the domicile (or habitual residence) leads to the same inconveniences as the nationality principle and that it is an insufficient means of enabling the Swedish authorities to avoid contributing to a marriage that is undesirable from a general

exists (Article 4). As for public authorities in general, the procedure of a marriage celebrated before the national authority shall be governed by Swedish law. As of 1 January 2004, only one central authority (Skatteverket) – Instead of local authorities – shall conduct the inquiry into possible impediments (hindersprövning) (Act No 2003:644 modifying the Marriage Act No 1987:230, Article 3(1) of the Marriage Act). 13 Article 1(2). 14 When the marriage registrar (vigselförrättare) performs a marriage ceremony, she/he is exercising a public function and is therefore considered an authority pursuant to Article 6(3), Chapter 11 of the Regeringsformen. 15 As stated in the Prop. 2003/04:48 (note 9), p. 59, and repeats proposals by Family Law experts in their report on matters relating to International Family Law back in 1987 (SOU 1987:18). The travaux préparatoires, especially the Proposition which is the government’s final proposal (with comments), are consulted by the courts and authorities when taking decisions. See EEK H., GRÖNFORS K., HELLNER J., THORNSTEDT H., VAHLÉN L., WELAMSON L., Juridikens Källmaterial, Lund 1982, pp. 85-85, and HELLNER J., Rättsteori, Stockholm 1994, p. 74. 16 In the early travaux préparatoires it is stated that it would be just as natural to apply Swedish law in these cases as where it concerns two foreign citizens residing in Sweden who want to marry (Jusititiedepartementet, Departementsserien (Ds) 2002:54, Svenska och utländska äktenskap, p. 75).

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Capacity to Marry and Recognition of Marriage in Sweden – A New Principle? Swedish point of view.17 It was said that the domicile (or habitual residence) principle needed as many exceptions as the nationality principle and therefore the practical differences were marginal. Sometimes it could even be difficult to establish where a person resides and sometimes one or both spouses change their residence when marrying. The administration of all the documents required to establish a person’s (habitual) residence was not in proportion to routine tasks such as verifying whether certain marriage requirements were fulfilled.18 Since neither of the principles was preferable, the third solution – the lex loci celebrationis – was chosen as it always makes it possible to apply the familiar domestic law. The second paragraph of Article 1 aims at preventing so-called ‘marriage tourism’, i.e. where persons with no connection to Sweden choose Swedish law to determine their capacity to marry.19 Applying both Swedish and foreign law would prevent such practise. At the same time this rule allows the unconditional choice by the parties of either the foreign lex domicilii or the foreign lex patriae, which in itself is an attractive option. This might even encourage ius shopping, exactly what the rule intended to prevent. Although the choice (of the law applicable) is free, it is restricted to the laws of two countries only, to which the parties have a strong connection. Despite the fact that there is no explicit requirement to obtain the other party’s approval of the choice, the parties are well-advised to coordinate their choices as well as to take into account the conditions for recognition abroad of their marriage. The legislator opted for flexibility to the rule of paragraph 2, thus making it possible to apply Swedish law only if this appears reasonable under the particular circumstances of the case. Possible situations could be20: – where it is difficult or impossible to establish the content of the foreign law with regard to the capacity to marry; – where a rule of the foreign citizen’s lex patriae prevents his or her marriage before Swedish authorities and it might be difficult for the Swedish authority to take account of such prohibitive rule, although it is not expressly contrary to ordre public; – where, in cases of asylum-seekers, it would be difficult to impose the obtaining of a certificate permitting the marriage by the competent authority of the State of the applicable law. Other circumstances to be taken into account include pregnancy or a pressing social situation. Exceptions to the rule should nevertheless be applied restrictively.21 As a result, there is no guarantee that only Swedish law will apply if the couple has no connection to Sweden.

17

Ds 2002:54 (note 16), p. 75, and confirmed in Prop. 2003/04:48 (note 9), p. 16. Ds 2002:54 (note 16), p. 75. 19 Prop. 2003/04:48 (note 9), p. 19, states that there is no general interest in performing marriage ceremonies for foreign citizens and residents. The possibility for cousins to marry is cited as an attractive condition. 20 Prop. 2003/04:48 (note 9), p. 54. The need to have the possibility to make an exception to the rule was already stated in the travaux préparatoires of 1973 (Prop. 1973:158, p. 97 et seq). 21 Prop. 2003/04:48 (note 9), p. 54. 18

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III. The Law Applicable to Recognition of a Foreign Marriage A.

The New Article 8a22 of Act No 1904:26

Under the former rules, a marriage celebrated by another State was recognised in Sweden if the requirements of the foreign law were satisfied. In principle, only ordre public could hinder recognition. With the new rules of Article 8a (1), Chapter 1 of the Act No 1904:26,23 a marriage in which one or both parties have (at the time of celebration) a contact to Sweden by virtue of residence in the country or citizenship will be recognised only if it also fulfils the marriage requirements of Swedish law. These requirements were regarded as defending interests that were not protected by ordre public.24 The second paragraph of Article 8a makes exceptions possible by providing that a marriage that has probably been celebrated under duress shall not be recognised.

B.

Remarks

As mentioned above, the former rules on recognition only required verification that the formal requirements of the foreign law were satisfied and that no violation of ordre public existed.25 In addition to the former requirements, the new rules provide that the requirements to marry under Swedish law shall also apply as well as the rule protecting persons against marriages presumably celebrated under duress.26 Applying the Swedish marriage requirements to recognition (Article 8a(1)) raises time issues as it is possible that a Swedish (not foreign) requirement that was not met at the time of the marriage celebration might be fulfilled at the time of recognition (this relates especially to the age requirement). It was said in the travaux préparatoires27 that no exceptions could be made when the spouse was a minor at the time of the marriage ceremony although he or she had become of age 22

The rule also applies to the recognition of foreign partnerships, i.e. homosexual unions pursuant to Article 9 of the Partnership Act No 1994:1117 of 23 June 1994 (Lag om registrerat partnerskap), in force since 1 January 1995. 23 Amendments by Act No 2004:144, see p. 1. 24 Cf. the express rule in Article 11 of the Hague Convention of 1978 on the Celebration and Recognition of the Validity of Marriages. 25 See the discussion of possible limits in BOGDAN M., Svensk internationell privatoch processrätt, Stockholm 1999, pp. 173-174. 26 In Norway, the new Article 1a of the Marriage Act (in force since 1 June 2005) explicitly stipulates that a marriage must be celebrated voluntarily and approved by the parties themselves. This marriage requirement differs from the Swedish rules which require the absence of duress as a criterion for recognition. However, the effect intended by the legislators is the same. 27 Prop. 2003/04:48 (note 9), pp. 32 and 56.

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Capacity to Marry and Recognition of Marriage in Sweden – A New Principle? at the time of recognition. However, it was suggested that if the spouse in question had accepted the marriage, a long time had passed since its celebration and the couple had children, an exception28 might be allowed for. This important point will hopefully be clarified in the case law but creates uncertainty for couples moving or returning to Sweden a long time after having entered into marriage. Under Article 8a (2), a marriage that has probably been celebrated under duress is not recognised. The inquiry as to whether a marriage has been entered into under duress is not to be carried out ex officio29 but only upon request as it is presumed that a marriage has been entered into by the free will of the parties.. Generally, use of force or threats constitutes a criminal offence under Swedish law. Other situations may be covered, such as a marriage entered into though one of the spouses was absence at the celebration and therefore could not consent to it.30 Thus, it need not have been an explicit action (as opposed to an implicit threat). Nonetheless, it appears that threats of being excluded from the family or from financial support by the family31 are not sufficient to affirm duress. Hence, the degree and form of duress required to justify refusal of recognition is not clearly defined. Since the chances of proving that force or threat was effectively exerted are relatively low, Article 8a (2) states that there has to be a reasonable probability of its existence. The new rule raises questions such as who has the right to claim that a marriage was probably forced and when. The request can but need not be filed by the parties, as a result of which anyone can invoke duress – the couple, one of the spouses, family members, social welfare etc. Consequently, it makes no difference whether the issue is raised by the presumed victim of duress, by the other spouse or by a third party.32 Subsequently it can occur that situations not intended to be covered by the rule will be subjected to it. One can imagine a situation involving a family inheritance where the family would claim duress or where one of the spouses would claim duress in the event of separation. Since the rule does not specify a time limit for taking action, the risk of retroactivity could create a situation of legal uncertainty. Without any case law or rules of clarification yet, the predictability of the recognition of a foreign marriage is jeopardized. To protect their marriage in Sweden, a couple might feel forced to request that a court recognise the validity of their

28

Under Art. 8a, para. 2 of the Act. Prop. 2003/04:48 (note 9), p. 55. 30 Prop. 2003/04:48 (note 9), pp. 55-56. 31 Surprisingly this is a purely Swedish point of view as the State offers financial support, whereas this can be a family obligation in other states. 32 See JÄNTERÄ-JAREBORG M., ‘The Hague Convention in Scandinavia’ in Intercontinental Cooperation Through Private International Law – Essays in Memory of Peter F. Nygh (eds. EINHORN T. and SIEHR K.), The Hague 2004, p. 164, where the author writes in a note that ‘in practice, the issue [of force] is likely to arise only on demand of a spouse’. 29

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Elisabeth Meurling marriage in a judgment (possible under Articles 1 and 2 of Chapter 3 of the Marriage Act), which is (and was) normally not needed for its recognition.

IV. Final Remarks Desiring to retain the nationality principle as the main connecting factor for determining the law applicable to the capacity to marry as well as to take action to hinder child marriages and forced marriages, while keeping in line with international (and Nordic) contemporary choice of law rules for capacity to marry,33 Sweden has chosen to apply its domestic law in all cases except those where neither party is a Swedish citizen or resident. The adoption of the lex loci celebrationis rule results in the combination and cooperation of both the principle of nationality and the principle of habitual residence. The recognition of a foreign marriage with a Swedish contact is subject to Swedish substantive law, to the requirements of the law of the country where the marriage was celebrated and to ordre public. The effects of the new rules are still uncertain and thus the future case law will play an important role in this regard, especially concerning the notion of duress in Article 8a (2).

33 See ROMANO G.P., ‘La bilatéralité éclipsée par l’autorité’, in: Rev. crit. dr. int. pr. 2006, p. 457 et seq., at 468 et seq.

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TUNISIA ART. 54(1) OF THE TUNISIAN CODE OF PRIVATE INTERNATIONAL LAW ‘Succession is subject either to the internal law of the nationality of the deceased at the time of his death or to the law of the state of his last residence or else to the law of the state in which he left his assets’.

THE MYSTERIOUS ARTICLE 54(1) Anis BEN KHAMMASSI * I. II. III.

A Multiple Connecting Factor Rule The Difficult Identification of the Applicable Law Renvoi: A Selective Rejection in Successoral Matters?

I.

A Multiple Connecting Factor Rule

As regards succession matters, the Tunisian legislator of 1998 chose no less than three different connecting factors, which relate either to the deceased’s person or to his property: nationality, habitual residence and the place of situation of the property. The first limb of art. 54 of the Code of Private International Law (the ‘Code’) stipulates that ‘succession is governed by the internal law of the deceased’s nationality at the time of his death […]’. One observes the prominence given to the law of nationality, which also governs personal status.1 Nationality is still a widespread option in comparative conflicts law of succession.2 This is be* Researcher in Private International Law, University of Tunis-El manar and Swiss Institute of Comparative Law. The author wishes hereby to express his gratitude to Mr. Sami Bostanji, Professor of Law, University of Tunis-El manar, for supervising this article, as well as to Mr. Adam Samuel for his linguistic assistance. 1 Art. 39 of the Tunisian Code of Private International Law provides that: ‘personal status is governed by the national law of the person concerned.’ 2 Art. 46(1) of the Italian statute of May 31, 1995 provides that a ‘succession is governed by the national law of the deceased at the time of his death.’ See BONOMI A., ‘La loi applicable aux successions dans le nouveau droit international privé italien et ses implica-

Yearbook of Private International Law, Volume 8 (2006), pp. 421-426 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Anis Ben Khammassi cause nationality is a connecting factor equipped with a high degree of stability and certainty. It is easier to determine the nationality of an individual than to locate his residence. Also, experience reveals that most litigation relating to subject-matters governed by the law of an individual’s residence gives rise to arguments about residence’s location. It is worth noting that the use of nationality as a connecting factor with respect to succession was modified with the enactment of the Code. Thus, the nationality of the deceased at the time of death determines the applicable law. The deceased is now the only person whose nationality is relevant. The status of possible beneficiaries, which played a role under the previous regime, has no significance any longer.3 This makes sense in view of the fact that potential heirs can be numerous, of different nationalities, or reside in several territories, which would otherwise involve the application of a number of different laws. Nationality is, however, not the only connecting factor adopted by the Tunisian legislator.4 According to the second limb of Art. 54, ‘[the succession is subject either to the internal law of the nationality of the deceased at the time of his death or] (…) to the law of the State of the deceased’s last residence (…)’. Art. 54 of the Code shows that the Tunisian legislator does not favour nationality as the only criterion, but considers it alongside the traditionally competing connection, i.e. the deceased’s residence. It is a fact that residence corresponds more to where people have their property while remaining unitary: in general, individuals acquire their goods and bring their furniture to the country of their residence.5 Therefore, in comparative law this connecting factor is important in the area of succession.6 That is not all! Since the right of succession, like the area of marriage settlements, involves elements of both personal and property law, intestate succession is considered in Tunisian private international law as a diminished form of property

tions dans les relations italo-suisses’, in: Revue suisse de droit international et de droit européen 1996, p. 479-504. 3 The beylical decree of 1956 provided that the determination of the connecting factor in intestate successions varies according to whether the parties in disputing it are of the same or different nationality: If a claim involves two individual parties of different nationalities, the national law of the deceased applies (art. 4). If, on the contrary, these individuals are of the same nationality, their national law applies (art. 1). 4 MEZGHANI A., Commentaires du code de droit international privé, Tunis 1999, p. 35. 5 MAYER P. / HEUZE V., Droit international privé, 8e éd., Paris 2004, p. 540. 6 Art. 86(1) of the Swiss Private International Law Act of December 18, 1987 provides that ‘the Swiss judicial or administrative authorities of the domicile of the deceased have the authority to administer the distribution of estates and jurisdiction to decide disputes relating to succession.’ In addition, French case law regularly subjects successions of movable property to the law of the deceased’s domicile: see Cass. civ, 19 June 1939, in: Rev. crit. dr. int. pr. 1939, 480, note NIBOYET J.-P.; Cass. civ., 22 December 1970, in: JCPN 1971, 660, note DROZ G. In another approach, the Belgian legislature subjects the succession of movable property to the law of the state of the habitual residence of the deceased at the time of death (Article 78(1) of the Belgian Code of Private International Law).

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Commentary on Art. 54 of the Tunisian PIL Code status.7 Admittedly, this is reflected in the reading of the third limb of article 54 of the Code, which provides that ‘[succession is subjected (…)] to the law of the State in which the deceased left his property.’ The attachment of the location of the assets is so obvious that its importance in resolving conflicts could appear to be selfevident. In truth, the use of the lex situs with respect to immovables has been generally accepted for a long time. Everyone seems to approve of its use as a connecting factor.8 However, it is noticeable that the Tunisian legislator did not distinguish between movable and immovable property, as do virtually all private international law systems attaching weight to the lex situs. Indeed, Art. 54 does not mention the nature of the assets involved. This solution appears to be unfortunate as it implies the applicability of the laws of as many countries as the deceased has left his assets in, whether movable or immovable, which can lead to the application of the laws of several different legal systems.9

II.

The Difficult Identification of the Applicable Law

Article 54 of the Code offers a choice of three possible connecting factors. They represent virtually all connecting factors one may think of when it comes to succession. The legislature failed to provide guidance as to how the Tunisian Courts should make that choice. To be sure, it is clear that the applicable law must be either that of the nationality of the deceased, or that of his last residence, or else that of the location of his property, but what is the criterion by which the Courts should select, among these three connecting factors, the one which should ultima7 As is well-known, there is an international difference of views as to how to deal with succession problems. French and English-speaking legal systems draw a distinction between movable and immovable property, dealing with immovables in accordance with the general law for such property, while systems elsewhere opt to maintain the unity of the succession process in laying down the same rules for both movable and immovable property. The classification of succession under Tunisian law follows this second path and involves a combination of the position on personal and property status, using that applicable to formal legal documents. It follows the line taken on personal status in ensuring the transfer of the entire estate of the deceased to the beneficiaries. Equally, this approach extends to the property’s position because the object of the transfer is the property left behind by the deceased. This transmission can equally result in full or part from a voluntary act of the deceased while he was still alive. What reinforces this hybrid nature of the institution of succession under Tunisian law is its detailed regulation in Chapter IV of Book 5 of the Private International Law Code, which deals at the same time with both intestate succession and the right to give away property on death through wills or gifts. 8 Art. 78(2) of the Belgian Code of Private International Law provides that ‘the succession to immovable property is governed by the law of the state in which the immovable property is located.’ Art. 3(2) of the French Civil Code provides that ‘Immovable property even if owned by foreigners, is governed by French law.’ 9 MEZGHANI A. (note 4), p. 131.

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Anis Ben Khammassi tely designate the law applicable to the succession? Article 54 keeps silent on this crucial point. This disquieting, puzzling silence is what makes the provision under scrutiny so unique, including under a comparative perspective. The use of the conjunctions ‘either’ and ‘or’ to link these various connecting factors is bound to create problems with interpreting and applying this provision. A first possible construction is that the legislature intended to entrust the choice to the judge itself. According to this view, the judge is free to determine which of the three potentially applicable laws suits best to any particular situation. This, however, implies some criteria for making that choice10 which do not exist because the legislator declined to suggest any.11 There is nothing to support the idea or that could form the basis of the judge’s decision to favour one solution over another.12 The ‘closest connection’ principle, which – one might argue – is, after all, the underlying principle of most conflicts rules, has not been accepted by the Tunisian Code as an ‘escape clause’, which makes it hard to use it even in the limited context of Article 54. Practical drawbacks flowing from this interpretation are self-evident. The Tunisian judge may be tempted to apply Tunisian law when this legal system is one of the alternatives provided for under Article 54, which will often be the case. As a result, it may be feared that this failure gives the judge the power to choose the applicable law arbitrarily and creates the risk of opening the door to an extended ‘lex forism’. Above all, by giving the judge such a large amount of discretion, the legal certainty that is a fundamental objective of the codification of Tunisian private international law is inevitably jeopardized, the individuals having a connection with Tunisia being at a loss what is the law governing the distribution of their assets, that is, first and perhaps foremost, what is the freedom they may exercise in making provisions for their distribution. According to a second construction, the three connecting factors are placed in an order of priority, so that the judge shall resort to the second one and, as the case may be, to the third one, if, and only if, the first one and, as the case may be, the second one cannot operate.13 Succession is then, as a rule, subject to the law of nationality of the deceased at the time of his death. If the deceased had no nationality at the time of his death, the law of the state of his last residence is applicable. If the deceased had neither nationality nor a place of residence, the law of the State in which he left his property is applicable. So construed, Article 54 of the Code adopts a conflict rule which ‘cascades’ downward from the law of nationality, to law of residence, to the law of the location of the property, the applicable law being the highest in the sequence that can be applied to the case.14 It would seem that 10

MABRÜK Ben Müsä, Sarh al-magallah at-tünisiyyah lil-qänün ad-duwali al-häs, Tunis 2003, p. 469. 11 See art. 50, 51, 52 of the Tunisian Code of Private International Law. 12 MEZGHANI A., ‘Faut-il déjà réformer le code de droit international privé’, in: Le Code tunisien de droit international privé deux ans après’, Tunis 2003, p.165. 13 MABRÜK Ben Müsä (note 10), p. 470. 14 MEZGHANI A., ‘Les innovations du code tunisien de droit international privé’, in: RabelsZ. 2001, p. 87.

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Commentary on Art. 54 of the Tunisian PIL Code the Ministry of Justice lent support to this view in that it observed that ‘the general rules used to interpret statutes impose on the judge the duty to observe the rules laid down by the legislative text. He can only go from one legal rule to another in applying the same provision where it is impossible to apply the first legal rule. This is the practice of the Courts in Tunisia and all countries that observe the separation of powers between the executive, the legislature and the judiciary in order for the wishes of the legislature to be implemented.’15 If one regards it as sufficient evidence that the laying down of a ‘cascading’ conflict rule was effectively the legislative mind, the issue is settled. Nevertheless, one may wonder why, if this was really the intention of the drafters of Article 54, they resolved not to resort to a phraseology such as that of Article 47 of the Code, which undoubtedly adopts a ‘cascade’ approach to the selection of the applicable law to respective obligations of spouses.16 One may also wonder what is the purpose of adding the lex situs as a third connecting factor, any person being bound to have a habitual residence, however hard it may be for adjudicators to identify it. As a consequence, this second construction results in a kind of interpretatio (partially) abrogans in that it deprives the reference to the situs of its significance. For these reasons, we take the view that, if the Tunisian legislator wishes to submit successions to the decedent’s national law and to resort to residence only in the rare situations where the decedent has no nationality, it would be preferable to revise the drafting of the provision by eliminating the cause of the problem – the adverb ‘or’– and confirm the hierarchy of the first two connecting factors, while dispensing with the last one, the lex situs, which is, as we have seen, of no use. As long as the wording of Art. 54 remains unchanged, one may wonder how Tunisian adjudicators would react if, the Tunisian legislator having been unable to determine clearly what is the applicable law to succession, the prepositus would determine this by himself by choosing one of the three laws designated by Art. 54. Assume that a foreign national domiciled in Tunisia or owning immovables located there has expressly opted for Tunisian law. If the Tunisian judge resolves to apply Tunisian law thereby complying with the testators’ wishes – which is not unlikely, particularly if the national country would apply Tunisian law by virtue of domicile or situs17 – the Tunisian judge is attaching some weight to the decedent’ choice. To the extent that the Tunisian legislature wishes to avoid this consequence, it would be well advised to amend Art. 54 in the way we have suggested.

15

Deliberation n° 6 2/11/1998, citée par MABRÜK Ben Müsä (note 10), p. 474,

note 2. 16 Article 47 provides: ‘The respective obligations of spouses are governed by the law of their common nationality. If the two spouses do not have a common nationality, the law applicable is that of their final common domicile or in default of one that of the law of the forum.’ 17 This result is impossible to achieve via the renvoi-mechanism because renvoi is not admitted in Tunisian law: see Section III below.

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III. Renvoi: A Selective Rejection in Succession Cases? Article 54 of the Code of Private International Law provides that: ‘Succession is governed by the internal law of the nationality of the deceased (…)’ (emphasis added). This provision makes it clear that the applicable law is the internal law, without taking into consideration the conflicts of law rules of the applicable law. So, in the event of the applicability of a foreign law, the Tunisian judge must directly apply the domestic rules of the foreign law, regardless of the private international law rules of that country. This reading of the Article is surprising in the sense that the legislature chose to reject the application of renvoi generally (Article 35 of the Code).18 So, the fact of insisting on the direct application of domestic law allows one to take a broader view of the legislature’s general decision relating to renvoi in view of the specific rejection of the concept in the area of succession. This can be explained by the particular nature of succession law, where the Code of Personal Status almost incorporates the rules of Islamic law. This aspect of succession law justifies its incompatibility with the use of renvoi in this area. Having said that, this incompatibility is not absolute. The difference between Tunisian law and the laws of western states is not fundamental. An approach of limiting the effects of the particular features of Tunisian law in the area of succession, so as to make renvoi possible in this area, is explainable against the background of reforms in the area of succession law introduced to protect family members in certain situations. Also, one should point out that the technique of renvoi is not applicable only with regard to western legal systems; private international law can result in the application of legal systems more discriminatory than Tunisian to matters of succession. On the other hand, the more logical solution that the legislature could have adopted in the Code of Private International Law would have been to adopt renvoi as the general rule, except in certain areas where its particular features suggests that it should be rejected. For example, the area of succession law which remains, in spite of the reforms mentioned above, one of those fields where Tunisian law has certain exceptional features. A general rule in favour of renvoi, with the exception of succession law, would have been a more logical solution.19 It would have enabled the legislature to achieve its main objective in codifying Tunisian private international law, namely of assisting the co-ordination of different legal systems. Indeed, one can favour the use of renvoi when it helps to achieve that ‘coordination’ and reject it when it produces the opposite result.

18 Art. 35 CDIP provides that ‘except where the law provides otherwise, renvoi does not apply regardless of whether it leads to the application of Tunisian or foreign law.’ 19 CHEDLY L., ‘Le rejet inopiné du renvoi par le code de droit international privé’, in: Mélanges Sadok Belaîd, Tunis 2004, p. 314.

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TRANSLATION OF JAPAN’S PRIVATE INTERNATIONAL LAW: ACT ON THE GENERAL RULES OF APPLICATION OF LAWS (HÔ NO TEKIYÔ NI KANSURU TSÛSOKUHÔ), LAW NO. 10 OF 1898, AS NEWLY TITLED AND AMENDED 21 JUNE 2006*

CHAPTER 1 GENERAL RULES Article 1 Purpose This law shall provide the general rules for the application of laws.

CHAPTER 2 GENERAL RULES FOR STATUTES Article 2 Effective Date of Statutes A statute shall come into force from the twentieth day after its promulgation. However, where a different effective date is provided by the statute, that date shall apply. Article 3 Customs with the Same Effect as Law Customs not contrary to public policy (ordre public)1 shall have the same effect as law, to the extent that they are authorized by a statute or a statutory instrument, or

* English translation by: Kent ANDERSON, Professor, The Australian National University, ANU College of Law; and Yasuhiro OKUDA, Professor, Chuo University, Law School. This translation is reprinted with modification from Asian-Pacific Law and Policy Journal 2006, Vol. 8, p. 138, available at . The Japanese original text is available at . This Act is cited hereinafter as the Application of Laws Act. 1 This is the Japanese set phrase ‘ôyake no chitsujo mataha zenryô no fûzoku’ originating from the German öffentliche Ordnung und gute Sitten. Often translated literally

Yearbook of Private International Law, Volume 8 (2006), pp. 427-441 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

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Texts, Materials and Recent Developments that they concern matters not otherwise prescribed by a statute or a statutory instrument.

CHAPTER 3 GENERAL RULES ON APPLICABLE LAW

SECTION 1 PERSON Article 4 A Person’s Legal Capacity (1)

The legal capacity of a person shall be governed by his or her national law.

(2)

Notwithstanding the preceding paragraph, where a person who has performed a juristic act is of full capacity under the law of the place where the act was done (lex loci actus), that person shall be regarded as having full capacity to the extent that at the time of the juristic act, all the parties were situated in a place under the same law.

(3)

The preceding paragraph shall not apply either to a juristic act governed by family law or succession law, or to a juristic act regarding immovables situated in a place where the law differs from the lex loci actus. Article 5 Initiation of Guardianship or Similar Proceedings

The court may initiate proceedings for guardianship, curatorship, or assistance (hereinafter referred to as ‘initiation of guardianship or similar proceedings’) under Japanese law where the person to be subject to the guardianship, curatorship, or assistance has a domicile or residence in Japan or is a Japanese national. Article 6 Declaration of Disappearance (1)

The court may declare a person to have disappeared under Japanese law where the person was domiciled in Japan or was a Japanese national at the time when he or she was last recognized as alive.

(2)

Even where the preceding paragraph is not applicable, the court may declare a person to have disappeared under Japanese law with regards only to

in English as ‘public order and good morals’, it is regarded to have the same meaning as the French term ordre public.

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Japanese Act on the General Rules on the Application of Laws the property that the person had in Japan and only to the person’s legal relations governed by Japanese law or otherwise connected to Japan in light of their nature, the domicile or nationality of the persons concerned, or other circumstances. SECTION 2 JURISTIC ACTS Article 7 Choice of Applicable Law by the Parties The formation and effect of a juristic act shall be governed by the law of the place chosen by the parties at the time of the act. Article 8 In the Absence of a Choice of Applicable Law by the Parties (1)

Where there is no choice under the preceding Article, the formation and effect of a juristic act shall be governed by the law of the place with which the act is most closely connected at the time of the act.

(2)

For the purpose of the preceding paragraph, where only one party is to effect the characteristic performance of the juristic act, it shall be presumed that the juristic act is most closely connected with the law of his or her habitual residence (i.e., the law of his or her place of business where that place of business is related to the act, or the law of his or her principal place of business where he or she has two or more places of business related to the act and where those laws differ).

(3)

For the purpose of the first paragraph of this Article, where the subject matter of the juristic act is immovables, notwithstanding the preceding paragraph, it shall be presumed that the act is most closely connected with the law of the place where the immovables are situated. Article 9 Variation of Applicable Law by the Parties

The parties may vary the law otherwise applicable to the formation and effect of a juristic act. However, such variation shall not be asserted against third parties where it would be prejudicial to their rights. Article 10 Formalities of a Juristic Act (1)

The formalities of a juristic act shall be governed by the law applicable to the formation of the act (where under the preceding Article the law was

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Texts, Materials and Recent Developments varied after the juristic act, the law applicable before the variation shall govern). (2)

Notwithstanding the preceding paragraph, formalities that satisfy the requirements of the law of the place where the act was done (lex loci actus) shall be effective.

(3)

For the purpose of the preceding paragraph, where a declaration of intent is addressed to a person situated in a place under a different law, the place from where the notice was sent shall be deemed as the place of the act (locus actus).

(4)

The second and third paragraphs of this Article shall not apply to the formalities of a contract concluded between parties situated in places having different laws. In this case, notwithstanding the first paragraph of this Article, contract formalities that satisfy the requirements of either the law of the place from where the notice of offer was sent or the law of the place from where the notice of acceptance was sent shall be effective.

(5)

The second, third, and fourth paragraphs of this Article shall not apply to the formalities of a juristic act that establishes or disposes of a right in rem to movables or immovables, or of a right requiring registration. Article 11 Special Rules for Consumer Contracts

(1)

Regarding the formation and effect of a contract (excluding employment contracts; hereinafter referred to in this Article as ‘consumer contract’ ) between a consumer (i.e., an individual, excluding those cases where the party acts as a business or for a business) and a business operator (i.e., a juridical person or other corporate association, or an individual in those cases where the party acts as a business or for a business), even where by choice under Article 7 or variation under Article 9, the applicable law would be a law other than that of the consumer’s habitual residence, when the consumer indicates to the business operator his or her intention that a particular mandatory rule from within the law of the consumer’s habitual residence should apply, this mandatory rule shall also apply to the matters covered by the rule concerning the consumer contract’s formation and effect.

(2)

Notwithstanding Article 8, where no choice under Article 7 has been made, the formation and effect of a consumer contract shall be governed by the law of the consumer’s habitual residence.

(3)

In regards to the formation of a consumer contract, even where a law other than the law of a consumer’s habitual residence is chosen under Article 7,

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Japanese Act on the General Rules on the Application of Laws when the consumer indicates to the business operator his or her intention that a particular mandatory rule from within the law of the consumer’s habitual residence should apply to the formalities of the consumer contract, only the mandatory rule shall apply to the matters covered by the rule concerning the consumer contract’s formalities, irrespective of Article 10, paragraphs 1, 2, and 4. (4)

Where the law of a consumer’s habitual residence is chosen under Article 7 with regards to the formation of a consumer contract, and when the consumer indicates to the business operator his or her intention that the law of the consumer’s habitual residence should only apply to the formalities of a consumer contract, the formalities of the consumer contract shall be governed only by the law of the consumer’s habitual residence, irrespective of Article 10, paragraphs 2 and 4.

(5)

Notwithstanding Article 10, paragraphs 1, 2, and 4, where there is no choice under Article 7 with regards to the formation of the contract, the formalities of a consumer contract shall be governed by the law of the consumer’s habitual residence.

(6)

The preceding paragraphs shall not apply in any of the following cases: (i)

Where the business operator’s place of business that is associated with a consumer contract is in a place under a law that is different from the law of the consumer’s habitual residence, and where the consumer comes to a place that has the same law as that place of business to conclude the contract. However, excluding cases where the consumer, who is in the place of his or her habitual residence, is invited by the business operator to conclude the consumer contract in the place that has the same law as the place of business;

(ii)

Where the business operator’s place of business that is associated with a consumer contract is in a place under a law that is different from the law of the consumer’s habitual residence, and where the consumer has received or should receive the performance of all obligations under the consumer contract in a place that has the same law as that place of business. However, excluding cases where the consumer, who is in the place of his or her habitual residence, is invited by the business operator to have all obligations performed under the consumer contract in a place that has the same law as that place of business;

(iii) Where at the time of contracting the business operator did not know the consumer’s habitual residence and there were reasonable grounds for not knowing this; or

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Texts, Materials and Recent Developments

(iv) Where at the time of contracting the business operator mistook the other party of the contract for not being a consumer and there were reasonable grounds for this mistake. Article 12 Special Rules for Employment Contracts (1)

Even where by choice under Article 7 or variation under Article 9, the applicable law to the formation and effect of an employment contract is a law other than the law with which the contract is most closely connected, when the employee indicates to the employer his or her intention that a particular mandatory rule from within the law of the place with which the employee is most closely connected should apply, this mandatory rule shall also apply to the matters covered by the rule concerning the employment contract’s formation and effect.

(2)

For the purpose of the preceding paragraph, it shall be presumed that an employment contract is most closely connected with the law of the place where the work should be carried out under the contract (i.e., the law of the place of business through which the employee was engaged, where the work is not to be carried out in a particular place. The same applies for the next paragraph).

(3)

Notwithstanding Article 8, paragraph 2, where no choice under the provision of Article 7 has been made with regards to the formation and effect of a employment contract, it shall be presumed that regarding its formation and effect the contract is most closely connected with the law of the place where the work should be carried out under the contract.

SECTION 3 RIGHTS IN REM AND SO FORTH Article 13 Rights in Rem and Rights Requiring Registration (1)

Rights in rem to movables and immovables and any other rights requiring registration shall be governed by the law of the place where the property is situated (lex rei sitae).

(2)

Notwithstanding the preceding paragraph, the acquisition and loss of the rights mentioned in the preceding paragraph shall be governed by the place where the property is situated (lex rei sitae) at the time when the events causing the acquisition or loss were completed.

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Japanese Act on the General Rules on the Application of Laws

SECTION 4 CLAIMS Article 14 Agency by Necessity and Unjust Enrichment The formation and effect of claims arising from agency by necessity (negotiorum gestio)2 or unjust enrichment shall be governed by the law of the place where the events causing the claims occurred. Article 15 Exception for Cases with a Manifestly Closer Connection to Another Place Notwithstanding the preceding Article, the formation and effect of claims arising from agency by necessity (negotiorum gestio) or unjust enrichment shall be governed by the law of the place with which they are manifestly more closely connected in light of circumstances such as where at the time of the occurrence of events causing the claims both of the parties had their habitual residence in a place with the same law, or where the agency by necessity (negotiorum gestio) or unjust enrichment arose relating to a contract between the parties. Article 16 Variation of Applicable Law by the Parties After the events causing the claims occur, the parties to an agency by necessity (negotiorum gestio) or unjust enrichment may vary the law that would otherwise be applicable to the formation and effect of the claims. However, such variation shall not be asserted against third parties where it would be prejudicial to their rights. Article 17 Tort The formation and effect of claims arising from tort shall be governed by the law of the place where the results of the acts causing the damage arose. However, where the occurrence of the results in such place would usually be unforeseeable, the law of the place where the acts causing the damage occurred shall govern.

2 This refers to the Roman law concept of negotiorum gestio or jimu kanri in Japanese, also sometimes referred to as ‘management of affairs without mandate’ in English. That is, quasi-contractual obligations arising when one voluntarily undertakes liabilities on behalf of another who is either incapacitated or absent. See WALKER D.M., The Oxford Companion to Law, Oxford 1980, p. 874. There is no exact equivalent under the common law though in effect it is roughly similar to liability for agency by necessity. Id.

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Texts, Materials and Recent Developments Article 18 Special Rules for Product Liability Notwithstanding the preceding Article, where a claim against a producer (i.e., a person who produces, processes, imports, exports, distributes, or sells a product in the course of trade) or a person who makes a representation that leads others to believe he or she is a producer of a product (hereinafter referred to jointly in this Article as ‘producer or similar person’) arises from a tort injuring the life, body, or property of others caused by the defect of a delivered product (i.e., a produced or processed thing), the formation and effect of those claims shall be governed by the law of the place where the injured person has been delivered the product. However, where the delivery of the product to that place could not usually be foreseen, the law of the principal place of business of the producer or similar person (or the law of his or her habitual residence where he or she has no place of business) shall govern. Article 19 Special Rules for Defamation Notwithstanding Article 17, the formation and effect of claims arising from the tort of defamation 3 of another shall be governed by the law of the injured person’s habitual residence (i.e., the law of its principal place of business where the injured person is a juridical person or other corporate association). Article 20 Exception for Cases with a Manifestly Closer Connection to Another Place Notwithstanding Articles 17, 18, and 19, the formation and effect of claims arising from tort shall be governed by the law of the place with which they are manifestly more closely connected in light of the circumstances such as where at the time of the tort both of the parties had their habitual residence in a place under the same law, or where the tort occurred by breaching obligations in a contract between the parties. Article 21 Variation of Applicable Law by the Parties After a tort occurs, the parties to the tort may vary the law that would otherwise be applicable to the formation and effect of claims. However, such variation shall not be asserted against third parties where it would be prejudicial to their rights.

3

This is the Japanese set phrase meiyo mataha shinyô no kison, literally translated as ‘injury of honor or reputation.’ For details see OKUDA Y.’s Article in this Yearbook.

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Japanese Act on the General Rules on the Application of Laws Article 22 Public Policy Limits in Tort (1)

Where events that should otherwise be governed by the foreign law applicable in tort do not constitute a tort under Japanese law, recovery of damages or any other remedy under the foreign law may not be demanded.

(2)

Even where the events that should otherwise be governed by the foreign law applicable in tort constitute a tort both under the foreign law and under Japanese law, the injured person may not demand recovery of damages or any other remedy not recognized under Japanese law. Article 23 Assignment of Claims

The effect on a debtor or other third parties of an assignment of a claim shall be governed by the law that is applicable to the claim.

SECTION 5 FAMILY Article 24 Formation and Formalities of Marriage (1)

For each party, the formation of a marriage shall be governed by his or her national law.

(2)

The formalities of a marriage shall be governed by the law of the place of the ceremony (lex loci celebrationis).

(3)

Notwithstanding the preceding paragraph, formalities that satisfy the requirements of either of the parties’ national law shall be effective, unless the marriage is celebrated in Japan and one of the parties is a Japanese national. Article 25 Effect of Marriage

The effect of a marriage shall be governed by the spouses’ national law when it is the same, or where that is not the case, by the law of the spouses’ habitual residence when that is the same, or where neither of these is the case, by the law of the place with which the spouses are most closely connected.

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Texts, Materials and Recent Developments Article 26 Matrimonial Property Regime (1)

The preceding Article shall apply mutatis mutandis to the parties’ matrimonial property regime.

(2)

Notwithstanding the preceding paragraph, the parties’ matrimonial property regime shall be governed by the law that the spouses select from among the following laws where such selection is made in writing, signed, and dated by the spouses. In this case, the selection only has effect for future actions. (i)

The law of the country where either spouse has nationality;

(ii)

The law of either spouse’s habitual residence; or

(iii)

Regarding a matrimonial property regime for immovables, the law of the place where the immovables are situated.

(3)

A matrimonial property regime that according to the first and second paragraphs of this Article should be governed by a foreign law shall not be asserted against third parties acting in good faith (bona fides) insofar as it concerns juristic acts performed in Japan or property situated in Japan. In this case, regarding relations with such third parties the matrimonial property regime shall be governed by Japanese law.

(4)

Notwithstanding the preceding paragraph, an ante- or pre-nuptial agreement concerning matrimonial property made under a foreign applicable law pursuant to the first or second paragraph of this Article may apply against a third party when the agreement is registered in Japan. Article 27 Divorce

Article 25 shall apply mutatis mutandis to divorce. However, divorce shall be governed by Japanese law where one of the spouses is a Japanese national with habitual residence in Japan. Article 28 Establishing the Parent-Child Relationship where the Child is Legitimate (1)

A child shall be legitimate where at the time of the child’s birth the child was legitimate under the national law of one of the spouses.

(2)

Where the husband has died before the child’s birth, the husband’s national law at the time of his death shall be regarded as the law referred to in the preceding paragraph.

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Japanese Act on the General Rules on the Application of Laws

Article 29 Establishing the Parent-Child Relationship where the Child is Illegitimate (1)

Where a child is illegitimate, establishment of the parent-child relationship with regards to the father (paternity) shall be governed by the father’s national law at the time of the child’s birth, and with regards to the mother (maternity) by the mother’s national law at that time. In these cases, when establishing the parent-child relationship by acknowledgment,4 where the national law of the child at the time of acknowledgment requires the agreement or consent of the child or a third party as a condition of acknowledgment, this requirement must also be satisfied.

(2)

Acknowledgment of a child shall be governed by the national law of the child or of the acknowledging person at the time of the acknowledgment, or the law designated in the first sentence of the preceding paragraph. In the case where the national law of the acknowledging person shall be applied, the second sentence of the preceding paragraph shall also apply mutatis mutandis.

(3)

Where the father has died before the child’s birth, the father’s national law at the time of his death shall be regarded as the law designated by the first paragraph of this Article. Where the person provided for in the preceding paragraph has died before the acknowledgment, the national law of that person at the time of his or her death shall be regarded as the national law designated by that paragraph. Article 30 Legitimation

(1)

A child shall receive the status of legitimate where he or she is legitimated by the national law of the father, mother, or child at the time when the conditions required for legitimation are completed.

(2)

Where a person mentioned in the preceding paragraph has died before the completion of the conditions required for legitimation, the national law of that person at the time of his or her death shall be regarded as the national law designated by that paragraph.

4 ‘Acknowledgement’ as used herein refers to the practice in some countries of the establishment of parentage of an illegitimate child by the formal act of a parent filing in the family registry, a court decision, or so forth. CLARKSON C.M.V./HILL J., Jaffey on the Conflict of Laws, London 1997, p. 416.

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Texts, Materials and Recent Developments Article 31 Adoption (1)

Adoption shall be governed by the national law of the adoptive parents at the time of the adoption. Where the national law of the child to be adopted requires as a condition for establishing the adoption the agreement or consent of the child or a third party, or the approval or any other decision by a public authority, this requirement must also be satisfied.

(2)

Repudiation and termination of the familial relationship between an adopted child and his or her actual blood relatives (relatives by consanguinity) shall be governed by the law designated in the first sentence of the preceding paragraph. Article 32 The Legal Relationship Between Parents and Child

The legal relationship between parents and their child shall be governed by the child’s national law where that is the same as the national law of either the mother or father (or the national law of the other parent in the case where one parent has died or is unknown), or in all other cases by the law of the child’s habitual residence. Article 33 Other Family Relationships Family relations or rights and duties arising therefrom that are not covered by Articles 24 to 32 shall be governed by the national law of the party concerned. Article 34 Formalities of Juristic Acts Concerning Family Relations (1)

The formalities of juristic acts concerning family relations covered by Articles 24 to 33 shall be governed by the law applicable to the formation of such juristic acts.

(2)

Notwithstanding the preceding paragraph, formalities that conform with the law of the place where the act was done (lex loci actus) shall be effective. Article 35 Guardianship or Similar Proceedings

(1)

Guardianship, curatorship, or assistance (hereinafter ‘guardianship or similar proceedings’ ) shall be governed by the national law of the ward.

(2)

Notwithstanding the preceding paragraph, in the following cases where the ward is a foreign national, judicial declarations concerning guardianship or

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Japanese Act on the General Rules on the Application of Laws similar proceedings such as judicial appointment of a guardian, curator, or assistance manager shall be governed by Japanese law: (i)

In the case where according to the foreign national’s national law there is cause for initiating guardianship or similar proceedings, but there is no one in Japan to undertake the administration of the guardianship or similar proceedings; or

(ii)

Where there has been a judicial declaration to initiate guardianship or similar proceedings concerning a foreign national in Japan.

SECTION 6 SUCCESSION Article 36 Succession Succession shall be governed by the national law of the decedent. Article 37 Wills (1)

The formation and effect of a will shall be governed by the testator’s national law at the time of the will’s formation.

(2)

The revocation of a will shall be governed by the testator’s national law at the time of the revocation. SECTION 7 SUPPLEMENTARY RULES Article 38 National Law

(1)

Where a person has two or more nationalities, his or her national law shall be the law of the country in which the person has habitual residence from among those states of which he or she has nationality. Where there is no such country, the person’s national law shall be the law of the state with which he or she is most closely connected. However, where one of those nationalities is Japanese, Japanese law shall be that person’s national law.

(2)

In the case where a person’s national law shall govern but the person has no nationality, the law of that person’s habitual residence shall govern. However, this shall not apply to cases where Article 25 (including its application

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Texts, Materials and Recent Developments mutatis mutandis under Article 26, paragraph 1 and Article 27) or Article 32 is applicable. (3)

Where a person has nationality in a state where the law differs by region, that person’s national law shall be the law designated by the rules of that state (or the law of the region with which that person is most closely connected in the case where such rules do not exist). Article 39 Law of Habitual Residence

In the case where the law of a person’s habitual residence shall govern but where that habitual residence is unknown, the law of that person’s residence shall govern. However, this shall not apply to cases where Article 25 is applicable (including its application mutatis mutandis in Article 26, paragraph 1 and Article 27). Article 40 The Law of States or Places where such Law Differs According to One’s Personal Status (1)

In the case of a person who is a national of a state where the law differs according to a person’s status, that person’s national law shall be the law designated by the rules of that state (or the law with which that party is most closely connected where such rules do not exist).

(2)

The preceding paragraph shall apply mutatis mutandis to the law of that party’s habitual residence where that law differs according to a person’s status and where that law is applicable according to Article 25 (including its application mutatis mutandis under Article 26, paragraph 1 and Article 27), Article 26, paragraph 2, item ii, Article 32, or Article 38, paragraph 2, and to the law of the place with which both spouses are most closely connected where that law differs by a person’s status. Article 41 Renvoi

Where a case should be governed by a person’s national law and pursuant to the rules of that law the case should be governed by Japanese law, the case shall be governed by Japanese law. However, this shall not apply where the person’s national law should govern pursuant to Article 25 (including its application mutatis mutandis in Article 26, paragraph 1 and Article 27) or Article 32.

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Japanese Act on the General Rules on the Application of Laws Article 42 Public Policy (Ordre Public) Where a case should be governed by a foreign law but application of those provisions would contravene public policy (ordre public), those provisions shall not apply. Article 43 Exceptions to Application5 (1)

The provisions of this Chapter shall not apply to maintenance obligations arising from spousal, parentage, or any other family relationships. However, this shall not apply to the application of the main clause of Article 39.

(2)

The provisions of this Chapter shall not apply to the formalities of wills. However, this shall not apply to the application of the main clause of Article 38, paragraph 2, the main clause of Article 39, and Article 40.

5

Choice of law rules for maintenance obligations and formalities of wills are provided by special statutes that incorporate the Convention on the Law Applicable to Maintenance Obligations of 1973 and the Convention on the Conflict of Laws relating to the Form of Testamentary Dispositions of 1961. See Fuyô gimu no junkyohô ni kansuru hôritsu [Act Concerning the Law Applicable to Maintenance Obligations], Law No. 84 of 1986; Igon no hôshiki no junkyohô ni kansuru hôritsu [Act Concerning the Law Applicable to Form of Testamentary Dispositions], Law No. 100 of 1964.

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BOOKS RECEIVED ________________

AGUILAR BENÍTEZ DE LUGO Mariano, Intervención consular en derecho internacional privado, Sevilla (Universidad de Sevilla) 2005 AKSEN Gerald [et al.] (eds.), Global Reflections on International Law, Commerce and Dispute Resolution, Liber amicorum in Honour of Robert Briner, Paris (International Chamber of Commerce) 2005 ÁLVAREZ GONZÁLEZ [et. al.], Legislación de derecho internacional privado, 9a ed., Granada (Editorial Comares) 2006 AMBROSI Irene / SCARANO Luigi A., Diritto civile comunitario e cooperazione giudiziaria civile, Milano (Giuffrè) 2005 AMERICAN LAW INSTITUTE, Recognition and Enforcement of Foreign Judgments: Analysis and Proposed Federal Statute Adopted and Promulgated by the American Law Institute at Philadelphia, Pennsylvania, May 17, 2005, Philadelphia (American Law Institute) 2006 ANCEL Bertrand / Lequette Yves, Les grands arrêts de la jurisprudence française de droit international privé, 5e éd., Paris (Dalloz) 2006 ARIAS NUÑEZ Luis, Manual de derecho internacional privado, 4a ed., Santo Domingo República Dominicana (Editora Centenario) 2004 ATAMER Yeşim M., Uluslararası satım sozleşmelerine ilişkin birleşmiş milletler antlaşması (CISG) uyarınca: satıcının yukumlulukleri ve sozleşmeye aykırılığın sonuçları, Istanbul (Beta) 2005 ATTAL Michel, La reconnaissance des sûretés mobilières conventionnelles étrangères dans l’ordre juridique français, Paris (Defrénois) 2005 ATTESLANDER-DÜRRENMATT Agnes H., Der Prozessvergleich im internationalen Verhältnis: unter besonderer Berücksichtigung anerkennungs- und vollstreckungsrechtlicher Fragen im grenzüberschreitenden Rechtsverkehr der Schweiz, Tübingen (Mohr Siebeck) 2006 BACHAND Frédéric, L’intervention du juge canadien avant et durant un arbitrage commercial international, Paris (L.G.D.J.) 2005 BAGNASCO Emanuele G., La vendita interna ed internazionale, Padova (CEDAM) 2006 BALLARINO Tito / MILAN Davide, Corso di diritto internazionale privato, Padova (CEDAM) 2006 BASEDOW Jürgen / DREXL Josef / KUR Annette / METZGER Axel (Hrsg.), Intellectual Property in the Conflict of Laws, Tübingen (Mohr Siebeck) 2005 BASEDOW Jürgen [et al.] (eds.), An economic Analysis of Private International Law, Tübingen (Mohr Siebeck) 2006 BEGIC Taida, Applicable Law in International Investment Disputes, Utrecht (Eleven International Publishing) 2005 Yearbook of Private International Law, Volume 8 (2006), pp. 443-453 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Books Received BEN MŪSĀ Mabrūk, Šarḥ al-maǧallah at-tūnisiyyah lil-qānūn ad-duwalī al-ẖāṣ, Tūnis (Dār al-mīzān) 2003 BERGER Bernhard – KELLERHALS Franz, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz, Bern (Stämpfli) 2006 BERGER Klaus Peter, Private Dispute Resolution in International Business: Negotiation, Mediation, Arbitration, The Hague (Kluwer Law International) 2006 BINDER Peter, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 2nd ed., London (Sweet & Maxwell) 2005 BISHOP R. Doak, CRAWFORD James, REISMAN W. Michael, Foreign Investment Disputes: Cases, Materials and Commentary, The Hague (Kluwer Law International) 2005 BODENES-CONSTANTIN Armelle, La codification du droit international privé français, Paris (Defrénois) 2005 BOHNET François / WESSNER Pierre, Mélanges en l’honneur de François Knoepfler, Bâle [etc.] (Helbing & Lichtenhahn) 2005 BONOMI Andrea / CASHIN-RITAINE Eleanor / VOLDERS Bart, La loi applicable aux titres intermédiés: la Convention de La Haye du 5 juillet 2006, une opportunité pour la place financière suisse? Actes de la 18e Journée de droit international privé du 24 mars 2006 à Lausanne, Zurich (Schulthess) 2006 BONOMI Andrea / STEINER Marco (eds.), Les régimes matrimoniaux en droit comparé et en droit international privé: actes du colloque de Lausanne du 30 septembre 2005, Genève (Droz) 2006 BORN Gary B., International Arbitration and Forum Selection Agreements: Drafting and Enforcing, 2nd ed., Alphen and den Rijn (Kluwer Law International) 2006 BORRÁS RODRÍGUEZ Alegría [et al.], Legislación básica de derecho internacional privado, 16a ed. actualizada, Madrid (Tecnos) 2006 BRACONI Andréa, La collocation des créances en droit international suisse de la faillite: contribution à l’étude des art. 172-174 LDIP, Zürich (Schulthess) 2005 BRUHNS Eva, Das Verfahrensrecht der internationalen Konzernhaftung: Durchsetzung von Konzernhaftungsansprüchen bei grenzüberschreitenden Unternehmensverbindungen im Rahmen der EuGVVO unter besonderer Berücksichtigung des deutschen und französischen Konzernhaftungsrechts, Berlin (Duncker & Humblot) 2006 BÜHLER Michael / WEBSTER Thomas H., Handbook of ICC arbitration: commentary, precedents, materials, London (Sweet & Maxwell) 2005 BÜHRING-UHLE Christian / Kirchhoff Lars / SCHERER Gabriele, Arbitration and Mediation in International Business, 2nd ed., Alphen aan den Rijn (Kluwer Law International) 2006 BURCHILL Richard / WHITE Nigel D. / MORRIS Justin, International Conflict and Security Law: Essays in Memory of Hilaire McCoubrey, Cambridge [etc.] (Cambridge University Press) 2005 BUSTĀNĪ Saīd Yūsuf, Al-Qānūn ad-duwalī al-ẖaṣ, Bayrūt (Al-Ḥalabī) 2004 CADET Fabien, L’ordre public en droit international de la famille: étude comparée France/Espagne, Paris [etc.] (L’Harmattan) 2005

444

Yearbook of Private International Law, Volume 8 (2006)

Books Received CALVO CARAVACA Alfonso Luis / CARRASCOSA GONZÁLEZ Javier (dir.), Estudios sobre contratación internacional, Madrid (Editorial Colex) 2006 CALVO CARAVACA Alfonso Luis / CARRASCOSA GONZÁLEZ Javier, Derecho internacional privado, 7a ed., Granada (Editorial Comares) 2006 CAMPANALE Stelio, Diritto del commercio internazionale e normativa comunitaria, Milano (Giuffrè) 2005 CARLEVARIS Andrea, La tutela cautelare nell’arbitrato internazionale, Padova (CEDAM) 2006 CARLIER Jean-Yves / FALLON Marc / MARTIN-BOSLY Bernadette, Code de droit international privé 2006, 2e édition Bruxelles (Bruylant) 2006 CARON David D. / CAPLAN Lee M. / PELLONPÄÄ Matti, The UNCITRAL Arbitration Rules: A Commentary, Oxford (Oxford University Press) 2006 CARRUTHERS Janeen M., The Transfer of Property in the Conflict of Laws: Choice of Law Rules Concerning Inter Vivos Transfers of Property, Oxford (Oxford University Press) 2005 CHATILLON Stéphane, Droit des affaires internationales, 4e éd., Paris (Vuibert) 2005 CHUAH Jason Chin Tik, Law of International Trade, 3rd ed., London (Sweet and Maxwell) 2005 CLARKSON Christopher M.V. / HILL Jonathan, The Conflict of Laws, 3rd ed., Oxford (Oxford University Press) 2006 COMETTA Flavio / VOLKEN Paul [et al.], La Convenzione di Lugano nella pratica forense e nel suo divenire: atti delle giornate di studio del 3-4 giugno 2002, Lugano (CFPG) Basel [etc.] (Helbing & Lichtenhahn) 2004 Convención de derecho internacional privado: código Bustamante; declaraciones y reservas hechas por las delegaciones y espacios para anotaciones en cada artículo, 5a ed., San José Costa Rica (IJSA Investigaciones Jurídicas) 2005 CORNUT Etienne, Théorie critique de la fraude à la loi: étude de droit international privé de la famille, Paris (Defrénois) 2006 CUEVILLAS MATOZZI Ignacio de, La oferta contractual en el comercio internacional – un estudio a la luz del derecho uniforme y del derecho privado español, Valencia (Tirant lo Blanch) Cádiz (Universidad de Cádiz - Servicio de Publicaciones) 2005 D’AVOUT Louis, Sur les solutions du conflit de lois en droit des biens, Paris (Economica) 2006 DÁVALOS FERNÁNDEZ Rodolfo, Fronteras y contratos: derecho aplicable al contrato internacional, La Habana (Editorial de Ciencias Sociales) 2005 DAVIES Martin (ed.), Jurisdiction and Forum Selection in International Maritime Law: Essays in honor of Robert Force, The Hague (Kluwer Law international) 2005 DE

BETTENCOURT RODRIGUES SILVA MORAIS Daniel, Viabilidade de uma unificação jussucessória a nível europeu: unificação meramente conflitual ou unificação material?, Coimbra (Almedina) 2005

DE

CASTRO Amilcar, Direito internacional privado, 6a ed. atualizada, Rio de Janeiro (Forense) 2005

Yearbook of Private International Law, Volume 8 (2006)

445

Books Received DE

LIMA PINHEIRO Luís, Estudos de direito internacional privado: direito de conflitos, competência internacional e reconhecimento de decisões estrangeiras, Coimbra (Almedina) 2006.

DE

LIMA PINHEIRO Luís, Estudos de direito civil, direito comercial e direito comercial internacional, Coimbra (Almedina) 2006

DE

MAEKELT Tatiana B., VILLARROEL Ivette, ESIS RESENDE Carla (coord.), Ley de derecho internacional privado comentada, Caracas Venezuela (Universidad Central de Venezuela) 2005

DERAINS Yves / SCHWARTZ Eric A., A Guide to the ICC Rules of Arbitration, 2nd ed., The Hague [etc.] (Kluwer Law International) 2005 DOLINGER Jacob, Direito internacional privado: (parte geral) 8a ed. ampliada e atualizada, Rio de Janeiro (Renovar) 2005 DORENKAMP Sabine, Elektronischer Geschäftsverkehr und Kollisionsrecht, Tübingen (Medien Verl. Köhler) 2006 DUTTA Anatol, Die Durchsetzung öffentlichrechtlicher Forderungen ausländischer Staaten durch deutsche Gerichte, Tübingen (Mohr Siebeck) 2006 ELBASHAN Yuval, Zarîm ba-mišpaṭ : negîšûṯ le-ẕeḏeq be-Yiśrael (Strangers in the Realm of the Law: Access to Justice in Israel), Tel-Aviv (Ha-qibûz ha-meûḥad) 2005 ESPLUGUES Mota Carlos (dir.), Derecho del comercio internacional, 2e ed. Valencia (Tirant lo Blanch) 2006 ESPLUGUES MOTA Carlos / PALAO MORENO Guillermo / DE LORENZO SEGRELLES Manuel, Nacionalidad y extranjería, 3a ed., Valencia (Tirant lo Blanch) 2006 EZQUERRA UBERO José Javier, La jurisprudencia “Cassis-Keck” y la libre circulación de mercancías: estudio de derecho internacional privado y derecho comunitario, Madrid (Marcial Pons) 2006 FERRER-CORREIA Antonio, Lições de direito internacional, 3a reimpr. da ed. de outubro 2000, Coimbra (Almedina) 2005 FÖRSTER Susanne, Internationale Haftungsregeln für schädliche Folgewirkungen gentechnisch veränderter Organismen: europäische und internationale Entwicklungen und Eckwerte für ein Haftungsregime im internationalen Recht, Berlin (Springer) 2007 FOTINOPOULOU BASURKO Olga, La determinación de la ley aplicable al contrato de trabajo internacional: estudio del Convenio de 19 de junio de 1980, hecho en Roma, sobre ley aplicable a las obligaciones contractuales, Cizur Menor (Thomson Aranzadi) 2006. FREITAG Robert [et al.] (Hrsg.), Internationales Familienrecht für das 21. Jahrhundert: Symposium zum 65. Geburtstag von Ulrich Spellenberg, München (Sellier. European Law Publ.) 2006 FUEREA Augustin, Drept internaţional privat, ed. 2-a revăzută şi adăugită, Bucuresti (Universul juridic) 2005 FULCHIRON Hugues, Les enlèvements internationaux d’enfants, Paris (Presses universitaires de France) 2005 GAILLARD Emmanuel / BANIFATEMI Yas (ed.), Annulment of ICSID Awards: A Joint IAIASIL Conference, Washington D.C., April 1, 2003, New York (Juris Publ.) – Bern (Stämpfli) 2004

446

Yearbook of Private International Law, Volume 8 (2006)

Books Received GALGANO Francesco, La globalizzazione nello specchio del diritto, Bologna (Il Mulino) 2005 GARB Louis (ed.), International Kidnapping: the Hague Convention on the Civil Aspects of International Child Abduction, Leiden (M. Nijhoff Publishers) 2006 GARCIMARTÍN ALFÉREZ Francisco J., El título ejecutivo europeo, Cizur Menor (Civitas Aranzadi) 2006 GERLING Sarah, Die Gleichstellung ausländischer mit inländischen Vollstreckungstiteln durch die Verordnung zur Einführung eines Europäischen Vollstreckungstitels für unbestrittene Forderungen: im Vergleich zum bisherigen Recht und zur Rechtslage in den USA, Frankfurt am Main (P. Lang) 2006 GILAS Janusz, Prawo międzynarodowe prywatne, Warszawa (LexisNexis) 2002 GIRARDET Florens, Internationales Fusionskontrollrecht – Konflikt und Konvergenz: eine Untersuchung mit Schwerpunkt auf dem Europäischen und US-amerikanischen Fusionskontrollrecht anhand der Zusammenschlussvorhaben Boeing/MDD und GE/Honeywell, Frankfurt am Main (P. Lang) 2006 GMÜNDER Evelyne, Anerkennung und Vollstreckung von ausländischen Scheidungsurteilen unter besonderer Berücksichtigung von kindesrechtlichen Nebenfolgen, St. Gallen (D-DruckSpescha) 2006 GRIFFITHS Gwendoline, International Acquisition Finance: Law and Practice, Oxford [etc.] (Oxford University Press) 2006 GRISPO Jorge Daniel / SCIGLITANO Natalia Laura, Sociedades extranjeras: resoluciones de la I.G.J., jurisprudencia administrativa y judicial, Buenos Aires (La Ley) 2005 GUOJI SIFA Luncong, Lilun Qianyan, Lifa Tantao Yu Sifa Shijian = Collected theses of private international law Zhao Xianglin zhubian, Beijing (Gaodeng Jiaoyu Chubanshe) 2005. GUTMANN Daniel, Droit international privé, 5e éd, Paris (Dalloz) 2007 ḤADDAD AS-SAYYID Ḥafīẓah, Al-Naẓariyyah al-ˇammah fil-qānūn al-qaḍāī al-ẖāṣ adduwalī, Bayrūt (Al-Halabi) 2004 ḤADDAD AS-SAYYID Ḥafīẓah, Al-Uqūd al-mubarramah bayna ad-duwal, Bayrūt (Al-Halabi) 2003 HANOTIAU Bernard, Complex Arbitrations: Multiparty, Multicontract, Multi-issue and Class Actions, The Hague (Kluwer Law International) 2005 HASS Detlef [et al.], EU-Insolvenzverordnung: Kommentar zur Verordnung (EG) Nr. 1346/2000 über Insolvenzverfahren (EuInsVO), München (C.H. Beck) 2005 HAVERKAMP Lars, Die Erbfolge in Gesellschaftsanteile im internationalen Privatrecht : eine kollisionsrechtliche Untersuchung unter besonderer Berücksichtigung der « limited company » des englischen Rechts, Göttingen (V & R Unipress) 2007 HAYWARD Ruth, Conflict of Laws, 4th ed., Sydney (Cavendish) 2006 HEUZÉ Vincent, Al-Muṭawwal fil-uqūd: Bay as-sula ad-duwalī, Bayrūt (Al-muassasah algāmiiyyah lid-dirāsāt wan-našr wat-tawzī) 2005. HILL Jonathan, International Commercial Disputes in English Courts, 3rd ed. Oxford [etc.] (Hart Publishing) 2005

Yearbook of Private International Law, Volume 8 (2006)

447

Books Received HIRSE Thomas, Die Ausweichklausel im internationalen Privatrecht: methodentheoretische und kritische Gedanken zur Konkretisierung einer besonderen kollisionsrechtlichen Generalklausel, Tübingen (Mohr Siebeck) 2006 HOFFMANN Nadja, Die Koordination des Vertrags- und Deliktsrechts in Europa: eine rechtsvergleichende Untersuchung zum Kollisionsrecht, Sachrecht und zum UNKaufrecht, Tübingen (Mohr Siebeck) 2006 HOPT Klaus J. / KULMS Rainer / VON HEIN Jan, Rechtshilfe und Rechtsstaat: die Zustellung einer US-amerikanischen class action in Deutschland, Tübingen (Mohr Siebeck) 2006. HUANG Jin, Guoji Sifa = Private international law, Beijing (Falü Chubanshe) 2005 IEZZI María Verónica, El conflicto jurisdiccional en Internet: jurisdicción iusprivatista internacional aplicable al comercio en la Red, Buenos Aires (Editorial Ábaco de R. Depalma) 2005. ISRAEL Jona, European Cross-Border Insolvency Regulation: A Study of Regulation 1346/2000 on Insolvency Proceedings in the Light of a Paradigm of Co-operation and a “Comitas Europaea”, Antwerpen [etc.] (Intersentia) 2005 JENKINS Jane / STEBBINGS Simon, International Construction Arbitration Law, Alphen aan den Rijn (Kluwer Law International) 2006. KERN Konrad, Überseering – Rechtsangleichung und gegenseitige Anerkennung: eine Untersuchung zum Wettbewerb der Gesetzgeber im Europäischen Gesellschaftsrecht, Berlin (Duncker & Humblot) 2004. KEYES Mary, Jurisdiction in International Litigation, Leichhardt [etc.] (The Federation Press) 2005 KIENINGER Eva-Maria (hrsg.), Denationalisierung des Privatrechts? Symposium anlässlich des 70. Geburtstages von Karl Kreuzer, Tübingen (Mohr Siebeck) 2005 KOTTING Roelof / PONTIER Jannet A. / STRIKWERDA Luc (eds.), Voorkeur voor de lex fori : symposium gehouden op vrijdag 26 september 2003 ter gelegenheid van het afschied van prof. mr. Th. M. de Boer als hogleraar internationaal privaatrecht en privaatrechtlijke rechtsvergelijking aan de Universiteit van Amsterdam, Deventer (Kluwer) 2004 KRETSCHMANN Wibke, Versorgungsausgleich auf der Grundlage eines ausländischen Rechts: die völker- und kollisionsrechtliche Problematik des Art. 17 Abs. 3 EGBGB und ihre Bewältigung, dargestellt am Beispiel des Schweizer Rechts, Aachen (Shaker) 2005 KRONKE Herbert, MELIS Werner, SCHNYDER Anton K., Handbuch des internationalen Wirtschaftsrechts, Köln (O. Schmidt) 2005 LANDOLT Phillip, Modernised EC Competition Law in International Arbitration, The Hague (Kluwer Law International) 2006 LEJEUNE Yves, Le droit des relations transfrontalières entre autorités régionales ou locales relevant d’Etats distincts: les expériences franco-belge et franco-espagnole – Actes de la journée d’étude du 22 septembre 2003, Bruxelles (Bruylant) 2005 LIMA MARQUES Claudia / DE ARAUJO Nadia (org.), O novo direito internacional : estudos em homenagem a Erik Jayme, Rio de Janeiro (Renovar) 2005

448

Yearbook of Private International Law, Volume 8 (2006)

Books Received LIU Zuowei, Das chinesische internationale Erbrecht: gestern – heute – morgen, München (M. Meidenbauer) 2005 LÓPEZ-TARRUELLA MARTÍNEZ Aurelio, Contratos internacionales de software, Valencia (Tirant lo Blanch) 2006 LORENZ Stephan [et al.] (Hrsg.), Festschrift für Andreas Heldrich zum 70. Geburtstag, München (C.H. Beck) 2005 LOWE Nigel / EVERALL Mark / NICHOLLS Michael, The New Brussels II Regulation: a Supplement to International Movement of Children, Bristol (Family Law) 2005 MARINO Concetta, La delibazione delle sentenze ecclesiastiche di nullita matrimoniale nel sistema italiano di diritto internazionale privato e processuale, Milano (Giuffrè) 2005 MARQUIS Louis, International Uniform Commercial Law: Towards a Progressive Consciousness, Aldershot [etc.] (Ashgate) 2005 MARTÍNEZ Pedro J., The New Role of Comity in Private Procedural International Law, Madrid (Aranzadi) 2007 MAYR Peter G. / CZERNICH Dietmar, Europäisches Zivilprozessrecht: eine Einführung, Wien (WUV) 2006 MEER Michael A, Die Kollision von Immaterialgüterrechten: Überschneidungen von Urheberrecht, Markenrecht und Designrecht und deren Konsequenzen – eine Untersuchung am Beispiel des Schutzes fiktiver Figuren, Bern (Stämpfli) 2006. MEIER Isaak, Internationales Zivilprozessrecht und Zwangsvollstreckungsrecht: mit Gerichtsstandsgesetz, 2., überarb. und erw. Aufl., Zürich [etc.] (Schulthess) 2005 MEZIOU Kaltoum [et al.], Le Code tunisien de droit international privé deux ans après: première journée d'études en droit international privé, organisée par la Faculté des sciences juridiques politiques et sociales (Tunis), le 19 avril 2003, Tunis (Centre de publication universitaire) 2003 MORENO RODRÍGUEZ José Antonio, Temas de contratación internacional, inversiones y arbitraje, Asunción Paraguay (Ediciones Jurídicas) 2006 MORRIS John Humphrey Carlisle, The Conflict of Laws, 6th ed. (ed. by David MCCLEAN and Kisch BEEVERS), London (Sweet & Maxwell) 2005 MOSCONI Franco / CAMPIGLIO Cristina, Diritto internazionale privato e processuale. Parte speciale, 2a ed., Torino (UTET) 2006 MÜLLER Birgit, Das neue Fremdenrecht: AsylG 2005, FPG 2005, NAG und Übersicht über die wichtigsten Änderungen: Gesetzestext, parlamentarische Materialien, tabellarische Gegenüberstellung des AsylG 1997 und FrG 1997 mit der neuen Rechtslage, Wien (LexisNexis ARD Orac) 2005 NAVARRO Moreno Lenin, Compraventa internacional y conflictos de leyes: aspectos jurídicos de la contratación internacional, Quito Ecuador (Corporación de Estudios y Publicaciones) 2002 NEŠATAEVA Tatjana Nikolaevna, Meždunarodnoe častnoe pravo i meždunarodnyj graždanskij process : učebnyj kurs v trech častjach, Moskva (Gorodec) 2004

Yearbook of Private International Law, Volume 8 (2006)

449

Books Received NORUP WÜRTHNER Annette, Are the rules of the Posted Workers Directive 96/71/EC internationally mandatory? A study of the Posted Workers Directive 96/71/EC in the light of private international law, Stockholm (Institutet för Europeisk rätt vid Stockholms Universitet) 2003 OKOGWU Leonard Ezenweani / AKPURU Aja, Nigerian Diplomacy & the Conflict of Laws: an Insight into the Practice of Nigeria’s Foreign Policy, Nigeria (Willyrose & Appleseed Publishing) 2004 ORTEGA Ramiro Colindres, DUBOIS JAIR Octavio S. (editores), Código sobre derecho internacional privado: Código Bustamante, Tegucigalpa Honduras (Graficentro) 2002 OTERO GARCÍA-CASTRILLÓN Carmen, El comercio internacional de medicamentos, Madrid (Dykinson) 2006 OZSUNAY Ergun / ELVER Nazan Candaner / OZSUNAY Murat R., Uluslararası ticari uyuşmazlıklarda kurumsal tahkimin guncel sorunları, Istanbul (Prive) 2004. PAILLAS Enrique, La compraventa internacional de mercaderías: Convención de Viena; notas sobre arbitraje comercial internacional y Ley no 19.971, Santiago (Editorial Jurídica de Chile) 2006 PALOMARES LERMA Gustavo, Relaciones internacionales en el siglo XXI, 2a ed., revisada y ampliada, Madrid (Tecnos) 2006 PARROT Karine, L’interprétation des conventions de droit international privé, Paris (Dalloz) 2006 PAZDAN Maksymilian, Prawo prywatne międzynarodowe, Wyd. IX uaktualnione, Warszawa (LexisNexis) 2005 PERREAU-SAUSSINE L., L’immeuble en droit international privé – Etudes des méthodes, Paris (Defrénois) 2006 PERRIN Julien, Le “trust” à l’épreuve du droit successoral en Suisse, en France et au Luxembourg: étude de droit comparé et de droit international privé, Genève (Libr. Droz) 2006 PICAND ALBONICO Eduardo, Arbitraje comercial internacional, Santiago (Editorial Jurídica de Chile) 2005 POCAR Fausto (ed.), The External Competence of the European Union and Private International Law. The EC Court's Opinion on the Lugano Convention. Proceedings of the Round Table held at Milan University on 16 September 2006, Padova (CEDAM) 2007 Principles of Transnational Civil Procedure as Adopted and Promulgated by the American Law Institute and by UNIDROIT, Cambridge [etc.] (Cambridge University Press) Washington (ALI), Rome (UNIDROIT) 2006 PRUJINER Alain / COLAS Bernard (eds.), Treaties and international documents used in international trade law = Traités et documents internationaux usuels en droit du commerce international, 2nd ed., revised and updated, Montréal (Wilson & Lafleur) Paris (ICC) 2005 QUIÑONES ESCÁMEZ Anna / ORTUÑO MUÑOZ Pascual / CALVO BABÍO Flora (coord.), Crisis matrimoniales: protección del menor en el marco europeo (Jornadas de Cooperación Judicial Europea celebradas en Madrid los días 25, 26 y 27 de Octubre de 2004), Las Rozas Madrid (La Ley-Actualidad) 2005

450

Yearbook of Private International Law, Volume 8 (2006)

Books Received RAMÍREZ NECOCHEA Mario, Derecho internacional privado, Santiago (LexisNexis) 2005 RASMUSSEN-BONNE Eric [et al.] (Hrsg.), Balancing of Interests: Liber Amicorum Peter Hay zum 70. Geburtstag, Frankfurt a.M. (Verl. Recht und Wirtschaft) 2005 RAUSCHER Thomas (hrsg.), Europäisches Zivilprozessrecht: Kommentar, 2. Aufl., München (Sellier European Law Publ.) 2006 REVILLARD Mariel, Droit international privé et communautaire: pratique notariale, 6e éd., Paris (Defrénois) 2006 ROQUE VÍTOLO Daniel (dir.), Sociedades ante la I.G.J., Buenos Aires (La Ley) 2005 SALAME Georgette, Le devenir de la famille en droit international privé: une perspective postmoderne, Aix-en-Provence (P.U.A.M) 2006 SALERNO Francesco, Giurisdizione ed efficacia delle decisioni straniere nel regolamento (CE) n. 44/2001, La revisione della Convenzione di Bruxelles del 1968, 3 ed., Padova (CEDAM) 2006 SAN JUAN CRUCELAEGUI Javier, Contrato de compraventa internacional de mercaderías: Convención de Viena de 1980, y otros textos complementarios, Madrid (Thomson Civitas) 2005 SÁNCHEZ RODRÍGUEZ Luis Ignacio [et al.], Pacis artes: obra homenaje al profesor Julio D. González Campos, Madrid (Eurolex Editorial) 2005 SANDOVAL López Ricardo, Régimen jurídico del arbitraje comercial internacional: análisis de la Ley no 19.971, de 29 de septiembre de 2004, sobre arbitraje comerical internacional, Santiago (Editorial Jurídica de Chile) 2005 SANNINI Ilaria, L’applicazione della Convenzione di Vienna sulla vendita internazionale negli Stati Uniti, Padova (CEDAM) 2006 SCHACHERREITER Judith, Das Franchise-Paradox. Hybride Arrangements zwischen Markt und Hierarchie im materiellen und im Kollisionsrecht, Mohr Siebeck (Tübingen) 2006 SCHNYDER Anton K. / GROLIMUND Pascal, Tafeln zum internationalen Privat- und Zivilverfahrensrecht, 2. überarb. und erw. Aufl., Zürich (Schulthess) 2006 SCHÖMMER Hans-Peter / BÜRGI Urs, Internationales Erbrecht Schweiz, 2., neu bearb. Aufl., München (C.H. Beck) 2006 SCHÖMMER Hans-Peter / REISS Jürgen, Internationales Erbrecht Italiens, 2. , neu bearb. Aufl. München (C.H. Beck) 2005 SCHROETER Ulrich G., UN-Kaufrecht und Europäisches Gemeinschaftsrecht: Verhältnis und Wechselwirkungen, München (Sellier.European Law Publishers) 2005 SCHULTZ Thomas, Information technology and arbitration: a practitioner’s guide, Alphen aan den Rijn (Kluwer Law International) 2006 SCHULTZ Thomas, Réguler le commerce électronique par la résolution des litiges en ligne : une approche critique, Bruxelles (Bruylant) 2005 SCHÜTZE Rolf A., Ausgewählte Probleme des deutschen und internationalen Schiedsverfahrensrechts, Köln (C. Heymann) 2006 SENAEVE P. en SWENNEN F. (eds.), De hervorming van de interne en de internationale adoptie: commentaar op het de Wetten van 13 maart en 24 april 2003 en het Decreet van 15 juli 2005, Antwerpen (Intersentia) 2006

Yearbook of Private International Law, Volume 8 (2006)

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Books Received SIERRALTA RÍOS Aníbal, Contratos de comercio internacional, 4a ed., Lima (Pontificia Universidad Católica del Perú – Fondo Editorial) 2004 SILKENAT James R. / SCHMERLER Charles D. (eds.), The Law of International Insolvencies and Debt Restructurings, New York [Dobbs Ferry] (Oceana Publications) 2006 SÖHNGEN Martin, Das internationale Privatrecht von Peru: unter Einschluss der Anerkennung ausländischer Entscheidungen, Tübingen (Mohr Siebeck) 2006 SPAHLINGER Andreas / WEGEN Gerhard, Internationales Gesellschaftsrecht in der Praxis: Kollisions- und Sachrecht wesentlicher Fälle mit Auslandsberührung, Europäisches Unternehmensrecht, Wahl der Gesellschaftsform, Corporate Governance, wichtige ausländische Rechtsformen, München (C.H. Beck) 2005 STARK Barbara, International Family Law: an Introduction, Aldershot [etc.] (Ashgate) 2005 STATHOPOULOS Michael [et al.] (Hrsg.), Festschrift für Apostolos Georgiades zum 70. Geburtstag, München (C.H. Beck) – Bern (Stämpfli) 2006 SYMEONIDES Symeon C., The American Choice-of-Law Revolution: Past, Present and Future, Leiden (M. Nijhoff) 2006 TANG Shumei, Guoji Touzifa De Lilun Yu Shijian, Beijing (Zhongguo Shehui Kexue Chubanshe) 2004. THORN Bettina, Internationaler Kulturgüterschutz nach der UNIDROIT-Konvention, Berlin (W. de Gruyter Recht) 2005 Transnational corporations and the internationalization of R & D / United Nations Conference on Trade and Development, New York – Geneva (United Nations) 2005 TRIFKOVIĆ Miloš [et al.], Praktikum međunarodnog poslovnog prava, Sarajevo (Ekonomski fakultet Univerziteta u Sarajevu) 2003 TUNSTALL Ian, International Securities Regulation, Pyrmont Australia (Lawbook) 2005 UBERTAZZI Benedetta, La capacità delle persone fisiche nel diritto internazionale privato, Padova (CEDAM) 2006 VANHEUSDEN Koen, Leveringsvoorwaarden in internationale overeenkomsten: van Trade Terms en Incoterms, Antwerpen [etc.] (Maklu) 2005 VILLAROEL BARRIENTOS Carlos / VILLAROEL BARRIENTOS Gabriel, Curso de derecho internacional privado: parte general, Santiago (Editorial Jurídica de Chile) 2004 VIRGÓS SORIANO Miguel / RODRÍGUEZ PINEAU Elena, Espacio judicial europeo en materia civil y mercantil: jurisprudencia del Tribunal de Justicia de las Comunidades, Madrid (Civitas) 2005 Vrins Olivier [et al.] (ed.), Enforcement of Intellectual Property Rights Through Border Measures, Oxford (Oxford University Press) 2006 WAUTELET Patrick (coord.), Actualités du contentieux familial international, Bruxelles (Larcier) 2005 WILLEMER Charlotte, Vis attractiva concursus und die Europäische Insolvenzverordnung, Tübingen (Mohr Siebeck) 2006 YAN Weilong / YAO Han / CHUNFA Zhang, Jiyu Dianzi Shangwu De Maoyi Xinxihua Wenti Yanjiu, Beijing (Kexue Chubanshe) 2005 ZANOBETTI PAGNETTI Alessandra, Il diritto internazionale del lavoro: norme universali, regionali e comunitarie, 2a ed. Bologna (Pàtron Ed.) 2005

452

Yearbook of Private International Law, Volume 8 (2006)

Books Received ZHAO XIANGLIN, Guoji Shangshi Guanxi Falü Shiyonglun = Application law of international commercial relations, Beijing (Zhongguo Zhengfa Daxue Chubanshe) 2005 ZÜRCHER Raphaela, Kindesentführung und Kindesrechte: Verhältnis des Rückführungsrechts nach dem Haager Übereinkommen über die zivilrechtlichen Aspekte internationaler Kindesentführung vom 25. Oktober 1980 zur UNO-Kindesrechtskonvention vom 20. November 1989, Zürich [etc.] (Schulthess) 2005

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453

INDEX ________________

Accord procédural 216 Acquis communautaire 292 Act on Certain International Legal Conditions regarding Marriage and Guardianship (Sweden) 417 Adoption intercountry adoption 81 same-sex marriage 32 Advance directive 5-26 also see ‘Living will’ Advanced Micro Devices, Inc. v. Intel Corp. 72 Aérospatiale 59, 73 Africa and P.I.L. 189-212 Asian-African Legal Consultative Organization 196 membership in the Hague Conference 194-195 Recueil des Cours 197 UNCITRAL 196 Yearbook of Private International Law 197 African Economic Community 208 Age requirement (marriage) Swedish P.I.L. 420 Allocation-to-one-law method 13 also see ‘Bilateral rule’ Alsthom 393 Alternative Dispute Resolution (ADR) India 228 also see ‘Arbitration’ Antarctic Continent 159 Antikiesregel 218 Anti-suit injunction 283 Anti-trust proceedings 57, 65 also see ‘Competition’ Arbitration China 267-279 choice of law 246 enforcement of awards 243 India 231-248 Kompetenz-Kompetenz 238, 293

Latvia 290-293 public policy 337-350 third party 273 Arbitration (Protocol and Convention) Act, 1937 (India) 244 Arbitration clause, enforcement of China 269 Latvia 290 Art. 61 EC Treaty 40, 43 Art. 65 EC 40, 334, 376 Art. 220 EC Treaty see ‘Art. 293 EC Treaty’ Art. 293 EC Treaty 38, 376 Assessment of damages 321-332 Belgian P.I.L. 327 French P.I.L. 328 Rome Convention 330 Rome II Proposal 327 Swiss P.I.L. 328 U.K. P.I.L. 321-332 U.S. P.I.L. 328 Assignment of claims Japan’s PIL 165 mandatory rules 166 Baehr v. Lewin 171 Belgian P.I.L. assessment of damages 327 euthanasia 10, 13 same-sex marriage 33 Bilateral rule 13, 225, 257, 336, Bilateralism 336 Blocking statutes 55, 62 Boggiano Antonio 189 Boll case 76 Bonnes moeurs 261 also see ‘Ordre public’ Boukhalfa 384 Boys v. Chaplin 323, 326, 331 British Adoption (Intercountry Aspects) Act 1999 85 British American Tobacco 364 Brussels Convention on Jurisdiction, the Recognition and the Enforcement

Yearbook of Private International Law, Volume 8 (2006), pp. 455-464 © Sellier. European Law Publishers & Swiss Institute of Comparative Law

Printed in Germany

Index of Foreign Judgments in Civil and Commercial Matters 38, 281-288 and Denmark 39 and Latvia 292, 299 and Greece 281-288 Bustamante Code 200 Capacity 6, 262, 301, 415-422 ‘Cascade’ connecting factor 426-427 Cautio iudicatum solvi 379 Centre of main interests (COMI) 89-95 Centros 386 Characteristic performance 149 Characterization EC PIL 397-398 gender requirement 303 Qatari P.I.L. 259 Child abduction Africa 205 criminal law 134 habeas corpus 132-134 jurisdiction 132 Japan 125-143 recognition and enforcement of foreign return orders 136 Child custody 133 Child marriages 416 Children habitual residence 79 Hague Conference 75-86 nationality 84-85 protection against abduction 125143 registered partnership 33 same-sex marriage 32 Chinese P.I.L. arbitration 295-305 and Hong Kong 105-111 and Macao 105-111 Choice of forum 47, 190 Choice of law arbitration in India 246 Japanese P.I.L. 148 Swedish P.I.L. on marriage 418419 Tunisian P.I.L. on succession 427 also see ‘Party autonomy’ and ‘Contracts’

456

Citizenship Bolivia 84 Colombia 84 Costa Rica 84 India 84 Romania 84 South Korea 84 Civil unions 175, 182, 183, 184 also see ‘Domestic partnerships’ and ‘Same-sex marriage’ Closest connection principle 149, 426 Colombian P.I.L. citizenship 84 Comity 53-73 international law 62, 63 Letters Rogatory 57 U.S.C. Section 1782 63 Commission v. CEMR 116, 117 Common Market for Eastern and Southern Africa 208 Communitarisation of PIL 37-52, 4950, 375-413 Community of nations 11 Compensation judiciaire 119 Compensation légale 119, 120 Competition law arbitration 337-350 EC law 72 public policy 337-350 Composite legal system 108, 261 Conflict of judgments 286-287 Conflict of nationalities 83 also see ‘Nationality’ Conflit mobile 260 Consumer contracts Japan’s PIL 152 habitual residence 153 set-off 122 Contracts characteristic performance 149 formalities 151 immovables 150 Japan’s PIL 148 presumptions 151 jurisdiction 292 Qatari P.I.L. 265 set-off 114

Yearbook of Private International Law, Volume 8 (2006)

Index Convention on the law applicable to contractual obligations of 19 June 1980 assessment of damages 330 Japanese PIL 151 set-off 113-124 Costa Rican P.I.L. citizenship 84 Council Regulation (EC) No 1346/2000 of 29 May 2000 87-104 Council Regulation (EC) No 44/2001 of 22 December 2000 38, 292 Council Regulation (EC) No 2201/2003 of 27 November 2003 49 Counter-claim 124 also see ‘Set-off’ Court of Justice (ECJ) and the Lugano Convention 3752 and PIL 375-413 and set-off 116 and jurisdiction clauses 283 ‘Cumulation doctrine’ 117 Currency 124 Damages see ‘Assessment of damages’ Danish P.I.L. marriage 418 Council Regulation No 44/2001 of 22 December 2000 39 Defamation Japan’s PIL 156, 159 Defense of Marriage Acts 173, 174, 177, 180, 182, 183, 184 Delaware effect 387 Deng Xiaoping 106 Dépeçage 148 Dicey Albert Venn 54 Diritti personalissimi 11 Disclosure of information 53-73 ‘Disconnection clause’ 43 Divorce Qatari P.I.L. 260, 263 DOMA see ‘Defense of Marriage Acts’ Domestic partnerships in the U.S. 169-187 also see ‘Registered partnerships’ Double actionability Japan’s P.I.L. 163 U.K. P.I.L. 163

DRGN 301 Dual nationality 80 Duress 420-422 East African Community 208 EC and PIL Art. 293 EC Treaty 376 Art. 65 EC Treaty 376 Art. 68 EC Treaty 377 EC mandatory rules 400-406 characterization 397-399 unilateralism 333-374 ECJ 375-413 forum non conveniens 382 mandatory rules 390-393 non-discrimination 379 ordre public 394-395 ECJ see ‘Court of Justice’ Eco Swiss China Ltd 343 Economic Community of West African States 208 EFTA 38 Egyptian P.I.L. 252, 260 Ehrenzweig Albert A. 219 Eingetragene Lebenspartnerschaft 30 Employment contracts Japanese P.I.L. 155 Qatari P.I.L. 265 set-off 122 Enforcement of arbitration clauses see ‘Arbitration clause’ of awards in India 109, 243 of decisions under the Brussels Convention 286-287 of foreign return orders 136 Environmental torts Japan’s PIL 156 Equal Protection Clause 172 also see ‘U.S. P.I.L.’ Equal treatment and same-sex couples 32, 300, 306 also see ‘Non-discrimination’ Equitable estoppel 277 Equivalence, théorie de 217 ERTA effect 39 Eurofood 87-104 European Commission

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457

Index U.S.C. Section 1782 65 Anti-Cartel Leniency Programme 66 European Community and competence to conclude the Lugano Convention 37-52 and the Hague Convention on Choice of Court Agreements of 30 June 2005 40 European Convention on Human Rights same-sex marriage 12, 31 European Convention on the Adoption of Children, 24 April 1967 83 European Group of Private International Law 383 Euthanasia 9-17 Evidence in transnational litigation 5373 Evidence (Proceedings in Other Jurisdictions) Act 1975 58 Ex parte Kinney 185 Exclusive competence of the European Community 43 Exequatur proceedings foreign return orders in Japan 137-139 Greek P.I.L. 286-287 Extra-contractual obligations 266 see ‘Non-contractual obligations’ Extraterritorial jurisdiction 58, 60 Federal Rules of Civil Procedure (U.S.) 59, 61 Filiation Qatari P.I.L. 263 also see ‘Parent-child relationships’ and ‘Children’ Flexible connecting factor 16, 442 Forced marriages 416 Foreign Awards (Recognition and Enforcement) Act, 1961 244 Foreign law, proof of French P.I.L. 213-229 Foreign Tribunals Evidence Act 1856 63 Forms 6, 264, 265, 150 Forum non conveniens 202, 284, 330, 382 Forum regit processum 129 Forum shopping 92, 93, 99, 331, 419

458

Fraude à la loi 254 French P.I.L. Accord procédural 216 assessment of damages 328 théorie de l’équivalence 217 proof of foreign law 226 waivable v. non-waivable rights 228 Full Faith and Credit Clause 173 Garcia Avello 389 German PIL and registered partnerships 33 and set-off 115 Ghana Wills Act, 1971 196 Goodridge 172, 175 Gothot Pierre 368 Gran Canaria 339, 353 Greek P.I.L. 281-288 Greenbook on the transformation of the Convention of Rome of 1980 on the law applicable to contractual obligations into a Community instrument, as well as on its modernisation of 14 January 2003 120 Gründungstheorie 386 Guardianship 76, 263 Habeas corpus 132-134 Habitual residence 21, 75-86, 415, 420, 447 Hague Academy of International Law 38 Hague Conference of Private International Law child protection 75-86 P.I.L. in Africa 189-212 statute 193-194 Hague Convention of 12 June 1902 relating to the Settlement of Guardianship of Minors 417 Hague Convention of 5 October 1961 concerning the Powers of Authorities and the Law Applicable in Respect of the Protection of Minors 76, 78, 205 Hague Convention of 12 June 1902 relating to the Settlement of the

Yearbook of Private International Law, Volume 8 (2006)

Index Conflict of the Laws concerning Marriage 419 Hague Convention of 12 June 1902 relating to the Settlement of the Conflict of Laws and Jurisdictions as regards to Divorce and Separation 417 Hague Convention of 15 November 1965 on Jurisdiction, Applicable Law and Recognition of Decrees Relating to Adoptions 81 Hague Convention of 18 March 1978 on the Law Applicable to Agency 21 Hague Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation in respect of Parental Responsibility and Measures for the Protection of Children 77 Hague Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation in respect of Parental Responsibility and Measures for the Protetion of Children 79 Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction 124-143, 205 Hague Convention of 29 May 1993 on Protection of Children and Cooperation in Respect of Intercountry Adoption 81, 85-86 Hague Convention of 4 May 1971 on the Law Applicable to Traffic Accidents 328 Hague Convention of 12 April 1930 on Certain Questions Relating to the Conflict of Nationality Laws 83 Hague Convention of 30 June 2005 on Choice of Court Agreements 47 Hague Convention of 5 October 1961 on the Conflict of Laws relating to the Form of Testamentary Dispositions 196 Hague Convention of 5 July 2006 on the Law Applicable to Certain Rights

in Respect of Securities held by an Intermediary 208 Hague Convention of 13 January 2000 on the International Protection of Adults 20 Hague Convention of 1 June 1970 on the Recognition of Divorces and Judicial Separation 206 Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extra-judicial Documents in Civil and Commercial Matters 204 Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters 58, 59, 204 Harding v. Wealands 321-332 High-sea tort 159 Hilton v. Guyot 53 Hong Kong ‘Basic Law’ 105 its relationship to Mainland China 105-111 Hôrei see ‘Japan’s P.I.L.’ House of Lords 58, 321-332 Icelandic P.I.L. marriage 418 In re Application of Microsoft Corp. 72 Indian P.I.L. commercial arbitration 231-248 Indian Arbitration Act, 1940 232, 240 Indian Citizenship Act 1955 84 Indian Code of Civil Procedure of 1908 238 Indian Evidence Act of 1872 238 Informed consent principle 18, 22 also see ‘Euthanasia’ and ‘Living will’ Ingmar 335, 347, 354, 400 Inheritance Qatari P.I.L. 264 Tunisian P.I.L. 445-452 also see ‘Succession’ Inlandsbeziehung 395 Insolvency 87-104

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Index Inspire Art 387 Institute of International Law 2 Intel Corp. v. Advanced Micro Devices 63 Intellectual property Japan’s PIL 155 Intercountry adoption 81 Interim measures children protection 76 arbitration 293 International Society of Family Law 75 Interregional conflicts 109 Irish P.I.L. recognition of same-sex marriage 31 Irreconcilable judgments 286-287 Ius shopping 419 Japan P.I.L. and Swiss PIL 151 child abduction 125-143 consumer contracts 152 employment contracts 155 non-contractual obligations 155 assignment of claims 165 contractual obligations 148 Habeas Corpus Act 1948 132 public policy 132 party autonomy 148 reform of the Hôrei 145-167 validity of a choice of law 149 Rome Convention 151 John Pfeiffer v. Rogerson 324, 325, 326 Judicial assistance 53-73, 109 Jurisdiction child abduction cases 132 contracts 292 extraterritorial 58 in personam 60 insolvency proceedings 87 jurisdiction clause 281-283 Kompetenz-Kompetenz 238, 293 Krombach 408 Kuwaiti P.I.L. 259, 260 Lambert Edouard 252 Latvian P.I.L. 289-298 Arbitration clause 290-294 Service of process 294-297 EU P.I.L. 297

460

Letters Rogatory 57 Lex auctoritatis 17, 305 Lex domicilii v. lex patriae 418 Lex fori living wills 25 set-off 120, 123 assessment of damages 321-332 creation of a status 306 Lex fori concursus 91, 99 Lex fori profesional, 14, 16, 24 Lex fori v. lex causae assessment of damages 321-332 ‘Lex forism’ 219, 426 Lex loci actus 261, 263 Lex loci celebrationis 418, 422 Lex loci contractus 149, 151, 330 Lex loci delicti 155, 162, 261, 328 Japan’s PIL 155 Swiss PIL 155 Rome II Proposal 155 Qatari P.I.L. 266 Lex loci protectionis 155 Lex loci registrationis 291 Lex matrimonii 304, 305 Lex mercatoria 265 Lex patriae 76, 416 also see ‘Nationality’ Lex personalis 261 Lex rei sitae 150, 261, 264, 427 Lex societatis 386-387 Lex voluntatis 265 also see ‘Party autonomy’ Limping relationships 33, 297 Living wills 5-26 Lizardi 262 Locus regit actum 24, 151 Lois de police and unilateralism 357 and euthanasia 15 also see ‘Mandatory rules’ Lugano Convention on Jurisdiction and Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 37-52 and Latvia 292 Macao Basic Law 105

Yearbook of Private International Law, Volume 8 (2006)

Index its relationship to Mainland China 108 Mackinnon v. Donaldson 54 Maintenance Qatari P.I.L. 264 Mancini, Pasquale Stanislao 76 Mandat d’inaptitude 21 Mandatory rules and EC 343, 390 of community origin 400-402 consumer contracts in Japan 153 Qatari P.I.L. 265 Marital property Tunisian P.I.L. 424 Marriage mixed marriage 126 Qatari P.I.L. 263 recognition of 176 Restatement (Second) Conflict of Laws (1971) 176 same-sex in The Netherlands 173 same-sex in the U.S. 169-187 Spanish P.I.L. 300 Swedish P.I.L. 415-422 U.S. P.I.L. 176 Massachusetts and same-sex marriage 175 McKee v. McKee 205 Mercosur and P.I.L. 208 Micheletti 389 Miller-Jenkins 184, 185 Mixed marriages Japan 126 Sweden 416 Motor Accidents Compensation Act (New South Wales) 323 Multiple legal systems Qatari P.I.L. 261 Chinese P.I.L. 108 Nationality adoption 83 and Hague Children Conventions 75-86 conflict of nationalities 83 decline of 78 dual nationality 80 living wills 24 Qatar P.I.L. 258, 262

Tunisian P.I.L. 424 see ‘habitual residence’ New Jersey Constitution 172 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 244, 267-279, 339 Non-contractual obligations Antarctic Continent 159 assessment of damages 351 environmental torts 156 intellectual property 155 Japan’s PIL 155 party autonomy 161 (also see ‘Rome II Proposal’) predictability of harm 157 product liability 156 unfair competition 157 Non-discrimination 306 in EC PIL 379 Non-waivable rights French P.I.L. 215 Norwegian P.I.L. marriage 418 Offsetting see ‘Set off’ Open Skies 41, 48 Optio legis 385 also see ‘Party autonomy’ and ‘Choice of law’ Ordre public EC PIL 394-395 EC ordre public 406-411 Greek P.I.L. 284-286 Qatari P.I.L. 261 Swedish P.I.L. 419 also see ‘Public policy’ Outer space tort 159 Oviedo Convention of the Council of Europe of 4 April 1997 7 Owusu 44, 382 Pacte civil de solidarité 30 Parental Kidnaping Prevention Act (U.S.) 180 Parental responsibility and registered partnerships 35 Parent-child relationships Japan 129 Qatari P.I.L. 263

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Index Party autonomy Japan’s PIL 148 arbitration in India 246 in Latin American P.I.L. 194 living will 7, 8, 25 Personality rights 11 Persönlichkeitsrechte 11 Place of celebration 176 Poligamy 15 Pollock, Sir Frederick 54 Power of attorney 23 Power of representation 21 Presumption of paternity 32-33 Principle of equality and same-sex couples 32 and registered partnerships 34 between spouses 259 Principles of P.I.L. 255-256 Private International Law (Miscellaneous Provisions) Act 1995 322 Privileges and Immunities Clause 186 Procedural agreement see ‘Accord procédural’ Product liability Japan’s PIL 156 Proof of foreign law 226 Proper law arbitration in India 247 Protection of adults 17, 263 Proxy directive 5 also see ‘Advance directive’ Public policy same-sex marriage 302 euthanasia 15 arbitral awards 337-350 insolvency proceedings 102 Rome II Proposal 163 U.S. torts 328 Qatari P.I.L. 249-266 Constitution 250 Origins 252 sources 255 Shari’a 250, 256 Egyptian influence 252 Italian influence 252 Quadri Rolando 366, 374

462

Real rights Qatari P.I.L. 264 Recognition ‘recognition method’ 25 foreign marriages 300, 420 and enforcement of foreign return orders in Japan 136-137 illegitimate children 25 registered partnership 33 same-sex marriages 30, 31, 178179 Registered partnerships 29, 31-34 recognition abroad 33-34 children 34 Renault 394 Renvoi 16, 246 euthanasia 16 Qatari P.I.L. 259 U.A.E. P.I.L. 259 Tunisian P.I.L. 428 Res iudicata 287 Restatement (Second) Conflict of Laws (1971) 176 Restatement Third, Foreign Relations Law of the United States 56 Révision au fond 136 Roering v. Valiant Trawlers 324 Roman-Dutch law and forum non conveniens 202 Romanian P.I.L. citizenship 84 Rome Convention see ‘Convention on the law applicable to contractual obligations of 19 June 1980’ Rome I Proposal set-off 113, 122, 123 assignment of claims 165 Rome II Proposal and U.K. P.I.L. 329 assessment of damages 327 product liability 157 public policy 163 Same-sex marriage Dutch P.I.L. 27-35 Spanish P.I.L. 299-306 U.S. P.I.L. 169-187

Yearbook of Private International Law, Volume 8 (2006)

Index Sarcevic Petar 1-3, 27, 38, 75 Yearbook of Private International Law 38 International Society of Family Law 75 Savigny Friedrich Carl von 336, 371 Self-limited rules 15, 350 Separation Qatari P.I.L. 263 Service of documents 109 Service of process Latvian P.I.L. 294 Set off 113-124 compensation judiciaire 119 ‘equalization’ or ‘deduction’ 121 requirements 121 compensation légale 119 consequences 121 consumer contracts 122 employment contracts 122 procedural set-off 124 non-contractual obligations 118 Rome Convention 117 Characterisation 117 Rome I Proposal 113 Swiss PIL 119 Shari’a 250, 256, 257, 261 Sitztheorie 386 Société Itraco 224 South Africa and P.I.L. 192 Southern African Development Community 208 Spanish P.I.L. Constitution 299 same-sex marriage 299-306 Spatially-conditioned rules 15, 350 State of Minnesota v. Phillip Morris 57 Statut personnel 13, 15 Statutory offsetting see ‘Set off’ Step-parent adoption 32 Stevens v. Head 325 Substance v. procedure 321-332 Succession nationality 423-424 Qatari P.I.L. 264 Tunisian P.I.L. 423-428 Swedish P.I.L. 415-422 Swiss Institute of Comparative Law 1

Swiss P.I.L. arbitration 291, 339 assessment of damages 327 product liability 157 set-off 119 variation of the applicable law 151 Terra Armata 337-350 Terri Schiavo 6 The Netherlands and P.I.L. assessment of damages 327 Boll case 76 euthanasia 10, 13 same sex marriages 30-32 registered partnerships 28, 32-34 Third party arbitration 273 Torts see ‘Non-contractual obligations’ Tunisian P.I.L. succession 423-428 renvoi 428 Turner 284, 382 Tutorship Qatari P.I.L. 263 (also see ‘Guardianship’) U.K. P.I.L. extraterritorial jurisdiction 58 torts 321-332 double actionability rule 163 U.N. Convention of 1956 on the Recovery Abroad of Maintenance 78 U.N. Convention on the Rights of the Child (20 November 1989) 78, 81, 82, 83, 143, 255 U.N. Convention on Contracts for International Sale of Goods 207 U.S. P.I.L. assessment of damages 328 comity 53-73 Constitution 173 domestic partnerships 169-187 Full Faith and Credit Clause 173 living wills 18 Privileges and Immunities Clause 186 same-sex marriage 169-187 U.S. Federal Trade Commission 67

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Index U.S. Patent Act 163 U.S. Supreme Court comity 53-73 evidence abroad 73 and the European Commission 69 U.S.C. Section 1782 63 Überseering 386 UNCITRAL Model Law on Cross-Border Insolveny 98 on Arbitration 231 UNCITRAL Convention on Assignment of Receivables in International Trade 165 Uniform Child Custody Jurisdiction Act (U.S.) 180, 182 Uniform Child Custody Jurisdiction and Enforcement Act (U.S.) 180

464

Uniform Interstate Family Support Act (U.S.) 184 Unilateralism 258, 263, 333-374 Unjust enrichment Japan’s PIL 155 Vermont and civil unions 182, 183, 184 Waivable v. non-waivable rights 228 Wills Qatari P.I.L. 264 Witnesses 57, 60 Yearbook of Private International Law 1, 197 Zimbabwe Civil Matters (Mutual Assistance) Act 203 Zimbabwe Wills Act, 1987 196

Yearbook of Private International Law, Volume 8 (2006)