Insights into the 2007 Lugano Convention

Insights into the 2007 Lugano Convention, 2005 Hague Convention, and Common Law Principles Date: 16 December 2020 Presented by: Professor Yvonne Baatz The Position On Jurisdiction Clauses Currently - Article 25 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the Recast Regulation). It applies to legal proceedings instituted on or after 10 January 2015 (Article 66), but will not apply to proceedings commenced after 11pm on 31 December 2020 ie when the transition period ends. - Article 23 of the 2007 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the 2007 Lugano Convention) which is in the same terms as Article 23 of Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the EC Jurisdiction Regulation) which applied to proceedings commenced before 10 January 2015. On 8 April 2020 the UK deposited its application to accede to the 2007 Lugano Convention in its own right at the end of the transition period. Iceland, Norway and Switzerland have stated that they will support a request for accession from the UK. The consent of the EU and Denmark will be required. The Private International Law (Implementation of Agreements) Bill was introduced in Parliament on 27 February 2020. The Bill enables the UK to implement international agreements in Private International Law in domestic law in future via secondary legislation including the 2007 Lugano Convention. - Article 5 of the 2005 Hague Convention on Choice of Court Agreements (the 2005 Hague Convention). The Convention does not apply to all maritime contracts. The UK acceded to the convention in its own right on 28 September 2020. The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018/1124 as amended by the Private International Law (Implementation of Agreements) Bill, are not yet in force. - The common law rules which could apply e.g. where the 2005 Hague Convention does not apply e.g. because the type of contract falls outside the scope of that Convention or Article 23(3) of the 2007 Lugano Convention applies (if neither party is domiciled in a Lugano Contracting State). The 2007 Lugano Convention - The English courts would hold that the Lugano Convention applies to an asymmetric jurisdiction clause in a ship finance agreement which confers exclusive jurisdiction, a jurisdiction agreement in a bill of lading and a marine insurance contract. - In the 2007 Lugano Convention there is no exception to the list pendens provision where the court second seized is the chosen court. That court must stay its proceedings until the court first seized has established whether it has jurisdiction. • Case C-116/02 Erich Gasser GmbH v MISAT SRL (Article 17 of the EC Jurisdiction Convention) • Master melt Ltd v Siegfried Evionnaz SA [2020] EWHC 927 (Article 23 of the Revised Lugano Convention). The English court was first seized and the Swiss court was second seized as a result of an alleged exclusive Swiss court jurisdiction clause. Waksman J rejected an argument that Article 27 of the Revised Lugano Convention must now be read in the light of and to the same effect as Article 31(2) of the Recast Regulation. As he held that there was a good arguable case that there was an exclusive Swiss jurisdiction agreement, he stayed the English proceedings. Common Law - The common law rules will enforce a jurisdiction agreement in • A ship finance agreement. Asymmetric jurisdiction agreements are valid and enforceable  Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 All ER 237, p.249G- 250A  Bank of New York Mellon v GV Films [2009] EWHC 2338, [14];  Mauritius Commercial Bank Ltd v. Hestia Holdings Ltd [2013] EWHC 1328 (Comm); [2013] 2 Lloyds Rep 121, [37], per Popplewell J • A bill of lading • A marine insurance contracts The 2005 Hague Convention - So far the Convention is only in force in thirty one States, twenty seven of those the EU Member States of the European Union. It continues to apply to the United Kingdom of Great Britain and Northern Ireland (the UK) during the transition period after the withdrawal of the UK from the EU as retained legislation until 11pm on 31 December 2020 (see the European Union (Withdrawal Agreement) Act 2020 which amends the European Union (Withdrawal) Act 2018). - The 2005 Hague Convention entered into force on 1 October 2015 in Mexico and the European Union, thus binding twenty seven of the EU Member States but not Denmark; on 1 October 2016 in Singapore; on 1 August 2018 in Montenegro; and on 1 September 2018 in Denmark. China signed the Convention on 12 September 2017 but has not yet ratified it. - The UK acceded to the 2005 Hague Convention in its own right on 28 September 2020. The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018/1124 as amended by the Private International Law (Implementation of Agreements) Bill, are not yet in force. - Contrast the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 ("the New York Convention") which has been ratified by about 160 States including China and the UK. Party autonomy is at the heart of the 2005 Hague Convention - Party autonomy is at the heart of the 2005 Hague Convention, as it is in the New York Convention, and results in three basic principles: • If parties to a contract choose an exclusive court jurisdiction agreement that choice shall be given effect to unless the agreement is null and void under the law of that State - Choice of Court Convention, Article 5(1); • No other court should take jurisdiction - Choice of Court Convention, Article 6; and • Any court judgment resulting from such choice should be recognized and enforced - Choice of Court Convention, Article 8. • Each of these principles is subject to exceptions. Scope of the 2005 Hague Convention - Asymmetric jurisdiction clauses in ship finance contracts. It is controversial whether the 2005 Hague Convention applies (see the Explanatory Report by Professor Trevor Hartley and Masato Dogauchi at para 32 which states that it does not but see the contrary view obiter dicta of Jacob J in Etihad at [215] – [217]). - Bills of lading. The 2005 Hague Convention does not apply to the carriage of goods (Article 2(2)(f)) and therefore will not apply to a bill of lading or a voyage charterparty, but probably will apply to a time charterparty. Charterparties often provide for arbitration. - Marine insurance contracts. The 2005 Hague Convention does apply to contracts of insurance and reinsurance that relate to maritime matters (Article 17). Although both the European Union and Denmark have made declarations dated 11 June 2015 and 30 May 2018 respectively that the Convention does not apply to some insurance contracts (Articles 19-21 of the 2005 Hague Convention on declarations), it does apply to reinsurance contracts, insurance contracts where the jurisdiction agreement is entered into after the dispute arises (Article 2(b)), and insurance of "large risks" including marine risks. This declaration reflects the special rules on jurisdiction "in matters relating to insurance" in Section 3 of Chapter II of the Recast Regulation. The United Kingdom made a similar declaration when it acceded to the 2005 Hague Convention in its own right on 28 September 2020. - The 2005 Hague Convention does apply to other maritime contracts such as • Ship mortgages and liens, • Ship building contracts, • Ship sale and purchase contracts No Provisions On Subrogation Or Direct Action - There are no provisions in the 2005 Hague Convention which provide for whether a jurisdiction agreement in a marine insurance contract will bind a cargo claimant or its subrogated insurer where either or both of them bring a direct action against a liability insurer such as a P & I Club which has covered the carrier's liability in relation to carriage of cargo. There may, for example, be a right to sue the liability insurer of the carrier where the bill of lading holder or its subrogated insurer has a right of direct action against the liability insurer, usually pursuant to statute, and sometimes where the carrier has become insolvent. This question is left to be decided by national law, and the national law of different States may vary significantly. If the UK can ratify the 2007 Lugano Convention - If the UK ratifies the 2007 Lugano Convention this applies to ship finance contracts (the English courts take the view that an asymmetric jurisdiction agreement would be valid), bills of lading and marine insurance contracts. - The other Lugano Contracting States will have due regard to the case law of the Court of Justice of the European Union. - There is no equivalent of Article 31(2) of the Recast Regulation in the 2007 Lugano Convention. This is a major drawback as the English court if second seized would be obliged to stay its proceedings even it was the court chosen. - Could the English court grant an anti-suit injunction if the 2007 Lugano Convention applies? No. It could award damages for breach of the jurisdiction clause. Conclusion - If the EU agrees to the ratification of the 2007 Lugano Convention by the UK that Convention will apply to all three types of maritime contract but there are significant drawbacks with that Convention.