SPECIAL JURISDICTION IN EU PIL Giovanni Zarra Adjunct

SPECIAL JURISDICTION IN EU PIL Giovanni Zarra Adjunct Professor of Private International Law and International Litigation 28 March 2019, 9. 30

Last lecture • Introduced the idea of PIL. • Introduced the idea of jurisdiction, applicable law and enforcement of foreign decisions. • Introduced the difference between general and special jurisdiction. • Introduced the concept of domicile as source of general jurisdiction in the EU. • Explained what is to be understood as civil and commercial for the sake of regulation 1215/2012.

Today • We will focus on special jurisdiction. It applies only for certain claims when there is an appropriate connection between the claim (or one of the parties or the object of the dispute) and the State of the forum. • We will focus on contracts, torts and have a focus on defamation. • Other cases will be briefly mentioned.

Art. 7 of regulation 1215/2012 A person domiciled in a Member State may be sued in another Member State: (1) (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be: — in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered, — in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided; (c) if point (b) does not apply then point (a) applies; (2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.

Relationship between contracts and torts How do we understand if a matter falls within Art. 7. 1 or 7. 2? There are border line cases (e. g. tort arising from a contract) in which it is difficult to make a distinction, because Art. 7. 1 talks about “matters relating to a contract”. CJEU in Kalfelis v. Schröder: “all forms of civil liability that do not fall under Article 7. 1 are covered by Article 7. 2.

Brogsitter v. Fabrication de Montres Normandes (CJEU) • Plaintiff and Defendant entered into a contract for the fabrication of movements for luxury watches. • Claimant said that Respondent undertook to work exclusively for him and finally did not do so (and sold watch movements under its name). • Sued in Germany in both contract and tort for breach of business, unfair competition and breach of trust (all torts under German law). Was there jurisdiction on the basis of Art. 7. 1?

continued CJEU: - Recalled Kalfelis and clarified that EU autonomous - - concepts of contracts and torts should apply; Gave explanations to the criteria to be applied to distinguish; We shall look at whether disputes are contractual in nature; This will be the case where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of; If the interpretation of the contract is necessary to understand if there is liability in tort, we can establish jurisdiction according to Art. 7. 1.

Sub-purchasers and manufacturers: Handte v. TMCS (CJEU) • Handte Germany manufactured goods and sold them to Handte France. • The latter resold goods to another French company, TMCS. • Could TMCS sue Handte Germany in France according to Art. 7. 1? • There is no relationship between them… • English law would not allow a contractual claim but would allow a tort one. • French law would admit this claim considering it as an implied assignment.

continued CJEU: - The phrase ‘matters relating to a contract’ is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards the other. - Allow a claim in a similar situation would run against legal certainty because a normally well-informed defendant could not reasonably predict before which courts, other than those of the State in which he is domiciled, he may be sued. - No jurisdiction in contract.

Powell Duffryn v. Petereit (CJEU) • Claim of a company against a shareholder on the basis of the provisions of the constitutive document of the company. • The Defendant said that there was no jurisdiction according to Art. 7. 1 because the shareholder might not have consented to the provision (e. g. voted against it in the shareholders meeting). • CJEU said there was jurisdiction.

Sale of goods “in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered” What about a sale with several places of delivery within the same Member State? Color Drack v. LEXX International (CJEU): Art. 7. 1 gives jurisdiction to all the deliveries to the courts of the principal place of delivery to be determined on the basis of economic criteria. If there is no, one of the places of delivery at the Plaintiff’s choice.

Rehder v. Air Baltic Corporation (CJEU) • Rehder resided in Munich and booked a flight from Munich to Vilnius (Lithuania) • Air Baltic has its registered office in Riga (Latvia) [domicile] • The flight was cancelled and Rehder sought compensation • Did the court in Munich have jurisdiction according to Art. 7. 1(b) of the Regulation? • What is the place where the service was to be provided?

continued CJEU: - Where there are several places at which services are provided in different Member States, it is also necessary to identify the place with the closest linking factor between the contract in question and the court having jurisdiction, in particular the place where, pursuant to the contract, the main provision of services is to be carried out. - In those circumstances both the place of arrival and the place of departure of the aircraft must be considered in the same respect. - This criterion satisfies both proximity and predictability. It is also consistent with legal certainty, because both the parties know what will happen in cases of disputes.

Car Trim v. Key. Safety Systems (CJEU) • Key. Safety (Italian) supplied Italian car manufacturers with airbag systems. It obtained components from Car Trim, a German company, subjects to specifications provided by the Plaintiff. • Claim in the place where the component where manufactured, Germany. Two questions: 1) Was this a sale of goods or a provision of services? 2) If it was a sale of goods, was the place of delivery the one where the goods are given to the first carrier [Germany] or the place where the goods are actually delivered to the buyer [Italy]?

continued CJEU Question 1 There is no definition of sale of goods and provision of services in the regulation. What happens where the seller manufactures (or produces) the goods in compliance with the buyer’s instructions? Is this a service? What is the obligation which characterises the contract at issue?

continued • Various EU or international instruments gave guidance to the Court. • Directive 1999/44: contracts for the supply for goods to be manufactured or produced are also to be considered as sales. • Vienna Convention on the International Sale of Goods: such contracts are sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for the production. If the buyer supplies materials, we can talk about a provision of services. This did not happen in the present case. • The nature of the contract, is therefore the nature of a sale.

continued Question 2 - Parties enjoy freedom in deciding in their contract the place of delivery. Party autonomy is the principal source. - What if there is no indication in the contract? - We need an autonomous EU concept for the regulation. - The place where the goods were physically transferred or should have been physically transferred to the purchaser at their final destination is the most consistent with the origins, objectives and scheme of the regulation. This usually coincide with the place where buyers have their own place of business. - This gives advantage to buyers…

What is a service? Falco Privatstiftung and Rabitsch v. Weller-Lindhorst - Intellectual property licensing agreement; - Claim for payment of royalties related to the licenses; - Can this kind of contract be equated to a service? - CJEU: NO. A service is not a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration, because the party providing services shall carry out a particular activity and this is not the present case in which there are mere omissions and no positive acts.

Distribution agreements Corman Collings v. La Maison du Whisky (CJEU) - Grantor domiciled in france (Maison du Whisky) and - - distributor domiciled in Belgium (Corman). After termination by the grantor, claim in Belgium according to Art. 7. 1. The CJEU said that usually distribution agreements are framework agreements in which the terms of all future distributions are set forth. In distribution agreements the distributor carries out positive acts and the grantor pays for this. This is a contract for supply of services.

Tort “in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur” Is this the place where the damage is suffered or the place where the event giving rise to the damage occurred?

Bier v. Mines de Potasse d’Alsace (CJEU) - Dutch nurseryman sued in The Netherlands a French mining company in the Netherlands for damages related to the pollution on the river Rhine. - The pollution took place in France (event) but the damage was suffered in The Netherlands. - Proceedings for recovering the costs of purification. CJEU: - It is not appropriate to opt for one of the two places. Each of them can be relevant for evidence and the conduct of proceedings. This would also create confusion. - Jurisdiction can therefore be established in both places.

Limitations of the Bier rule Dumez v. Hessische Landesbank German bank caused harm to German subsidiary of a French company. Final damage was suffered in France. Did French court have jurisdiction? No: jurisdiction is limited to direct damage. Marinari v. Lloyd’s Bank Marinari (Italian) walked into a bank in Manchester with a promissory note of $752 millions made by a provincial government in the Philippines. The bank called the police, he was arrested and the promissory notes seized. Marinari sued the bank in Italy where he allegedly suffered final damages (also to his reputation).

CJEU in Marinari • Article 7. 2 cannot be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually arising elsewhere. • Article 7. 2 only refers to the initial damage, which in this case was obviously suffered in England.

Declarations of non-liability • Do the regulation rules apply in the cases where a party sues another in order to be declared non-liable for a certain action? Folien Fischer v. Ritrama (CJEU) - Plaintiff was Swiss and marketed products in Germany. - Ritrama was Italian and claimed that Folien Fischer acted against competition law and was liable in tort. - Folien Fischer started a claim in Germany in order to say that its acts were not illegal. - Did Art. 7. 2 apply?

CJEU in Folien Fischer • Art. 7. 2 regards in general terms matters relating to tort, delict or quasi delict. Given this formulation, an action for a negative declaration might fall within the scope of that provision. • Such an action entails a reversal of the normal roles in which the plaintiff is usually the party who suffered the party who was adversely affected by the tort. • In both cases, however, the examination undertaken by the court seised essentially related to the same matters of law and fact. • This action is therefore within the scope of application of art. 7. 2. • This is aimed at avoiding duplications of jurisdiction.

Internet torts Copyright infringements. CJEU in Pinckney v. Mediatech. Pinckney was domiciled in France and registered songs to be recorded on a vinyl. Without his consent, Mediatech – an Austrian company – put them on a CD. The CD was marketed in the UK by a UK company through various internet sites accessible in France. Mediatech was sued in France for breach of copyright. Did the French courts have jurisdiction? Pinckney said YES because the CD was marketed in France.

CJEU in Pinckney • France is allegedly the place where the damage was suffered. • Copyrights must be protected in all Member States. • The regulation does not require that the activity of the defendant is directed to a certain country in order to give jurisdiction to a certain country (no-targeting requirement). • If there is an event in a country and such a country protects copyright, jurisdiction can be established. • However the courts of that country only have jurisdiction with regard to the damages suffered within that Member State.

Defamation through newspapers England attracts claims for defamation (libel tourism) • Substantive reasons • High damages and strict liability • Although more difficult to recover damages in a invasion of privacy action • Procedural reasons (which are a consequence of substantive policies) • Every publication = separate tort: Duke of Brunswick v Harmer (1849). • Every separate tort allows for separate action. • Although claimant may recover damages suffered in the place where he brings the claim. • However, England reviewed its defamation laws (see below).

EU • C-68/93, Shevill v Presse Alliance • Publication and main circulation in France- limited circulation in England • ECJ: claim under 7(2) may be brought either in France or in England • But the claimant can recover the whole damage only in the place of domicile of the defendant (the ‘mosaic principle’) • Fragmentation of the same dispute: different courts have jurisdiction on the same dispute • Forum shopping?

US • The rule of single publication and tort • Restatement of Torts 2 d (1977) § 577 A: Any one edition of a book or newspaper, or any one radio or television broadcast is a single publication. As to any single publication: Only one action for damages can be maintained; All damages suffered in all jurisdictions can be recovered in the one action. Why? US protect freedom of speech instead of privacy. Cf Keeton v. Hustler Magazine 465 U. S. 770 (1984); and Calder v Jones, 465 U. S. 783 (1984)

Defamation through internet • Challenging (? ) the rule of: • Separate distribution = separate tort = jurisdiction • What is at stake here? The interests of the publishers? • Should publishers be exposed in unlimited number of jurisdictions? The interests of the potential victims? • Are the victims reputation/privacy prejudiced more? • Should defamation victims have the right to choose the forum to bring an action?

Australia • Gutnick v Dow Jones [2001] • Publication of Wall St Journal and Barron’s in a server based in the US • Accessible to Australia via internet with subscription • Defamatory article for Mr Gutnick (money laundering) • Gutnick brought a claim before Australian courts against the publisher • Were the materials published in Australia? Does Australia have jurisdiction on this claim?

High court of Australia Defendant argued that • Materials were published in NJ, USA – the place of the server • Distinction between publication through newspaper (active publication) and Internet (passive publication) • Distinction between publication through radio/TV & internet Court upheld the Duke of Brunswick: • “Defamation is a bilateral act, where harm to reputation occurs where the publisher makes it available and a third party has it available for his or her comprehension. So every communication and comprehension of defamatory matter founds a separate cause of action”

continued And rejected defendant’s argument • “The World Wide Web is no more or less ubiquitous than some television services. ” • “However broad may be the reach of any particular means of communication, those who post information on the internet do so knowing that the information [. . . ] is available to all without any geographical restriction” • “If a publisher publishes in a multiplicity of jurisdictions it should understand must accept that it runs the risk of liability in those jurisdictions in which the publication is not lawful and inflicts damage”

England: King v. Lewis • King brought a claim in England against Lewis, on a publication posted in a California website. • Defendant argued forum non conveniens and challenged the Duke of Brunswick. • CA upheld again the Duke of Brunswick: • “The relevant acts took place in England [. . . ] the act is completed when the words are downloaded to computers in England”– referred also to Gutnick v Dow Jones (in Australia) • Same in Berezovsky v Michaels, HL [2000] “Defamatory publications were available in US, Canada, England Russia both in hard copies and the Internet”.

Ehrenfeld v. Bin Mahfouz • Rachel Ehrenfeld (Israeli) published a book in USA saying that rich Saudi businessman Bin Mahfouz was financing terrorism • Claim in England even if only few copies were sold there • English courts upheld jurisdiction • Ehrenfeld did not defend because she had not money to do so in England was then condemned. • Strong American reaction: SPEECH act. No enforcement in the US of judgements from countries which did not protect freedom of speech as the USA.

English Defamation Act 2013 Art. 9 Action against a person not domiciled in the UK or a Member State etc: (2) A court does not have jurisdiction to hear and determine an action to which this section applies unless the court is satisfied that, of all the places in which the statement complained of has been published, England Wales is clearly the most appropriate place in which to bring an action in respect of the statement. If this rule applied in King v. Lewis, USA courts should have had jurisdiction.

EU – still behind • C-509/09, e. Date Advertising Gmb. H v X • C-161/10, Martinez v MGN Ltd: French actor Martinez sued in France the Sunday Mirror (UK newspaper) for having published online his photos with Kylie Minogue for violation of privacy. Where French courts competent? Again the question is the same: • Should alleged victims of defamation be able to bring an action in every single court where information was available through the web, or • Should they only be allowed to bring an action before one court, which has a clear and strong connection with the publication?

Advocate General conclusions The internet era has challenged the holding in Shevill Suggested to add a heading that: • “the courts of centre of gravity of conflict should have jurisdiction for the whole dispute” Relevant factors: • the courts where the person is most well known (or has the centre of his life); • The language of the publication; • whether the publisher targets a specific market or predicts the impact of the information (excluded by the AG)

CJEU decision Distinguished internet distribution • Para 45: The placing online of content on a website is to be distinguished from the regional distribution of media such as printed matter in that it is intended to ensure the ubiquity of that content. • That content may be consulted instantly by an unlimited number of internet users throughout the world, irrespective of any intention of the person who placed it

continued Accepted the proposal of the Advocate General for one point of jurisdiction for all damage • Para 48: A person who has suffered an infringement of a personality right by means of the internet may bring an action in one forum in respect of all of the damage caused • This is the place where the victim has his centre of interests (generally equal to habitual residence): this courts are better placed to know the dispute. • But courts in other places where the publication was accessible will also have jurisdiction, but in relation to the damage incurred there (see para 51). The mosaic principle is still there.

Conclusion (under Regulation 44/01) Pro-plaintiff approach (as if he is a weaker party). He now can sue: - Where the defendant has domicile; - Where the defendant is established; - Where the plaintiff has his centre of interests; - Where the material is or has been accessible (only for damages suffered there). Published can be sued almost everywhere. Chilling effect on freedom of speech: better not to publish than incurring in the risk to defend yourself everywhere. Substantial effects of jurisdiction. Targeting was maybe a better solution (often used in the US).

Regulation 1215/2012 Allegedly reinforces the idea that targeting is better. It does not add a new jurisdictional ground for defamation/ violation of private rights. It only mentions in the preamble as follows: “(16) In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close connection between the court and the action or in order to facilitate the sound administration of justice. The existence of a close connection should ensure legal certainty and avoid the possibility of the defendant being sued in a court of a Member State which he could not reasonably have foreseen. This is important, particularly in disputes concerning non-contractual obligations arising out of violations of privacy and rights relating to personality, including defamation”. Seems to give more importance to the judge’s activity and he should ascertain the closest connection and the predictability of the claim… Targeting!!!

Bolagsupplysningen OÜ, Ingrid Ilsjan v. Svensk Handel AB • 17 October 2017 • Bolagsupplysningen, a company incorporated under Estonian law, and Ms Ilsjan, an employee of that company, brought an action against Svensk Handel, a company incorporated under Swedish law which is a trade association, before the Harju Maakohus (Harju Court of First Instance, Estonia). • The applicants in the main proceedings asked that court to require Svensk Handel to rectify incorrect information, published on its website, pertaining to Bolagsupplysningen and to delete the comments appearing there, to pay to Bolagsupplysningen the amount of EUR 56 634. 99 as compensation for harm sustained and to pay to Ms Ilsjan fair compensation for non-material damage, as assessed by the court

continued • According to the application, Svensk Handel had included Bolagsupplysningen in a ‘blacklist’ on its website, stating that the company carries out acts of fraud and deceit. The application states that on the discussion forum on that site there approximately 1 000 comments, a number of which are direct calls for acts of violence against Bolagsupplysningen and its employees, including Ms Ilsjan. Svensk Handel refused to remove Bolagsupplysningen from the list and to delete the comments, allegedly paralysing Bolagsupplysningen’s business activities in Sweden with the result that the company suffers material damage on a daily basis. • By its order of 1 October 2015, the Harju Maakohus (Harju Court of First Instance) held that the action was inadmissible. According to that court, it was not possible to apply Article 7(2) of Regulation No 1215/2012, since it did not appear from the application that the damage had occurred in Estonia. The court found that the information and comments at issue were published in Swedish and, without a translation, they were incomprehensible to persons residing in Estonia. Comprehension of the information at issue was language dependent. The occurrence of damage in Estonia had not been proved and the reference to turnover in Swedish kronor suggested that the damage had been caused in Sweden. The fact that the website at issue was accessible in Estonia could not automatically justify an obligation to bring a civil case before an Estonian court.

Reasoning of the referring Court • The applicants in the main proceedings requested that the referring court (Estonian Supreme Court) set aside the order of the Tallinna Ringkonnakohus (Tallinn Court of Appeal) and rule on the action. Svensk Handel opposed these requests. • Concerning the application lodged by Bolagsupplysningen, the referring court takes the view that it falls within the jurisdiction of the Estonian courts, at least with regard to the claim for compensation for damage that occurred in Estonia.

continued • The referring court adds that, unlike an intellectual and industrial property right, whose protection is limited to the territory of the Member State in which that right is registered, the rights that have allegedly been infringed in the present case are not, by their nature, rights that can only be protected within the territory of certain Member States (Pinckney). • Bolagsupplysningen claims, in essence, that the publication of the incorrect information has harmed its good name and reputation. In that regard, the Court of Justice has previously held that injury caused by a defamatory publication to the reputation and good name of a legal person occurs in the places where the publication is distributed and in which the victim claims to have suffered injury to its reputation (Shevill).

Continued In those circumstances, the Riigikohus (Supreme Court, Estonia) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: ‘(1) Is Article 7(2) of [Regulation No 1215/2012] to be interpreted as meaning that a person who alleges that his rights have been infringed by the publication of incorrect information concerning him on the internet and by the failure to remove comments relating to him can bring an action for rectification of the incorrect information and removal of the harmful comments before the courts of any Member State in which the information on the internet is or was accessible, in respect of the harm sustained in that Member State ? (2) Is Article 7(2) of [Regulation No 1215/2012] to be interpreted as meaning that a legal person which alleges that its rights have been infringed by the publication of incorrect information concerning it on the internet and by the failure to remove comments relating to that person can, in respect of the entire harm that it has sustained, bring proceedings for rectification of the information, for an injunction for removal of the comments and for damages for the pecuniary loss caused by publication of the incorrect information on the internet before the courts of the State in which that legal person has its centre of interests ? (3) If the second question is answered in the affirmative: is Article 7(2) of [Regulation No 1215/2012] to be interpreted as meaning that: – it is to be assumed that a legal person has its centre of interests in the Member State in which it has its seat, and accordingly that the place where the harmful event occurred is in that Member State, or – in ascertaining a legal person’s centre of interests, and accordingly the place where the harmful event occurred, regard must be had to all of the circumstances, such as its seat and fixed place of business, the location of its customers and the way and means in which its transactions are concluded?

CJEU • The answer to the second and third questions therefore is that Article 7(2) of Regulation No 1215/2012 must be interpreted as meaning that a legal person claiming that its personality rights have been infringed by the publication of incorrect information concerning it on the internet and by a failure to remove comments relating to that person can bring an action for rectification of that information, removal of those comments and compensation in respect of all the damage sustained before the courts of the Member State in which its centre of interests is located. • When the relevant legal person carries out the main part of its activities in a different Member State from the one in which its registered office is located, that person may sue the alleged perpetrator of the injury in that other Member State by virtue of it being where the damage occurred.

continued It is true that in e. Date the Court held that the person who considers that his rights have been infringed may also, instead of an action for damages in respect of all the harm caused, bring his action before the courts of each Member State in whose territory content placed online is or has been accessible, which have jurisdiction only in respect of the harm caused in the territory of the Member State of the court seised. However, in the light of the ubiquitous nature of the information and content placed online on a website and the fact that the scope of their distribution is, in principle, universal, an application for the rectification of the information and the removal of the content is a single and indivisible application and can, consequently, only be made before a court with jurisdiction to rule on the entirety of an application for compensation for damage pursuant to the case-law resulting from the judgments Shevill and e. Date, and not before a court that does not have jurisdiction to do so.

continued • In the light of the above, the answer to the first question is that Article 7(2) of Regulation No 1215/2012 must be interpreted as meaning that a person who alleges that his personality rights have been infringed by the publication of incorrect information concerning him on the internet and by the failure to remove comments relating to him cannot bring an action for rectification of that information and removal of those comments before the courts of each Member State in which the information published on the internet is or was accessible.

US Courts and targeting. Revell v. Lidov • Publication onto the Columbia website • Revell brought an action against Lidov before Texan courts • Court reiterated the rule of a single jurisdiction Jurisdiction only if there is minimum contact, i. e. : • Eithere is continuous and systematic contact with a State • Or contact is directly related to the cause of action Neither applied here • Doing business with Texas vs doing business in Texas • Publication was not targeting Texan readers in particular • See also Zippo Manufacturing Co. v. Zippo Dot Com, Inc

Branches, agencies and establishments Art. 7. 5 A person domiciled in a Member State may be sued in another Member State (…) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated

CJEU Somafer v. Saar-Ferngas A branch, agency or establishment is a place of business which has the appearance of permanency, such as the extension of a partent body, has a management and is materially equipped to negotiate business with third parties and to bind the parent body. Blanckaert and Willems v. Troest An independent representative free to represent competitors, which is not an employee and arranges his work without instructions from the head office is not to be considered as an agent.

What disputes are covered by Art. 7. 5? Only activities of the branch, agency etc. Shall these activities be carried out in the country of the forum? Not necessarily: if the branch carries out its activities abroad, it can nevertheless be sued in the place where the same branch is established. (CJEU in Lloyd’s Register of Shipping v. Campenon Bernard).

Final provisions Multiple parties and counterclaims (Art. 8) A person domiciled in a Member State may also be sued: • (1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; • (2) as a third party in an action on a warranty or guarantee or in any other third-party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case; • (3) on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending. Consider also that there are special provisions for weaker parties, such as employees (Art. 21) and consumers (Art. 17).

Summary and Questions

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