PIBL - Weeks 1-7

Directors’ Liability: Applicable Law > Introduction

Today Gruma B.V . will consider:

Scenario 1: Can Stephan be held liable?

• Stephan, a director and shareholder of Gruma B.V ., authorised IT-services (EUR 30,000) without the consent of Frits, also a director and shareholder

• Articles of Association state that each director requires the consent of the shareholders for all contractual dealings exceeding EUR 10,000

Scenario 2: Embezzlement

• Stephan discovers that Frits, who is domiciled in Germany, embezzled funds from the company

Scenario 3: Insolvency

• Gruma B.V . is forced to enter into insolvency

• However, Frits and Stephan continue to carry on the business as usual

Directors’ Liability: Applicable Law > Internal vs External Liability

Key questions:

• Which duties are breached?

• Is there a contract between the parties? (NB: Does not always need to be a contract)

• Which party is initiating the claim?

Directors’ Liability: Applicable Law > Which law applies? (Assuming Dutch courts have jurisdiction)

Re-cap: Questions of applicable law are largely answered by Rome I Regulation (contractual issues) and Rome II Regulation (non-contractual issues)

■ However, majority of cases won’t apply to directors’ liability => no specific

category for directors’ liability

Directors’ Liability: Applicable Law > Which law applies? (Assuming Dutch courts have jurisdiction) > answering questions regarding directors’ liability (internal)

Majority of cases: law that governs internal structure of company => lex societatis (internal structure of the company), also governs relationship between company and its organs

• Exception: tort cases => applicable law may also be established on the basis of Rome II Regulation but also refers to relationship of company

Directors’ Liability: Applicable Law > Which law applies? (Assuming Dutch courts have jurisdiction) > answering questions regarding directors’ liability (external)

• In most cases with external liability => no direct relationship between director themselves and third party

• Sometimes, if the third party is initiating the claim on mismanagement – (i.e. shareholder) the claim itself is so closely linked to duties that someone has as a director, law that governs the company will prevail

• In other situations, where there’s no direct tie to company law and the duty that someone has as a director => instead classified as tort

Directors’ Liability: Applicable Law > Which law applies? (Assuming Dutch courts have jurisdiction) > Rome I Regulation

Scope

• Temporal scope: contracts concluded from 17 December 2009 (Article 28)

• Substantive scope: Article 1

• Formal scope: Article 2 (universal)

Exclusion (Article 1(2)(f))

• Establishes that it doesn't apply to questions governed by the law of companies

• Personal liability of officers and members of the company => issues of directors’ liability is fully excluded from Rome I Regulation

Directors’ Liability: Applicable Law > Which law applies? (Assuming Dutch courts have jurisdiction) > Law of Companies

No uniform/harmonised private international law

Therefore: a need to revert to national private international law

Directors’ Liability: Applicable Law > Incorporation Theory vs Real Seat Theory

• Idea: to have a law closely connected to company itself, governing that company's internal structure

• When determining applicable law to the internal structure of the company => does it apply the incorporation theory or real seat theory?

Directors’ Liability: Applicable Law > Incorporation Theory vs Real Seat Theory > Incorporation theory

E.g. Scandinavia, the Netherlands, Belgium, Switzerland, UK, US

The law of where the business is incorporated / has its statutory seat

• Real location of business is irrelevant

• NB: Risk of pseudo-foreign companies => not a genuine connection to the law governing the company

Much party autonomy => allows parties to choose where to set up their business, knowing that the law of their statutory seat is going to govern the internal structure

How it is applied: Gruma B.V . => “B.V .” refers to the statutory seats for a

private limited company

Directors’ Liability: Applicable Law > Incorporation Theory vs Real Seat Theory > Real Seat theory

E.g. France, Luxembourg, Portugal, Spain, Greece, Italy

The law of the place of central administration/ operational headquarters

• Place where you operate your business => the law of that place should govern the internal structure of the business

• Genuine connection between the applicable law and the location of the business

Limited party autonomy

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 1 > Corporate law liability

What type of liability are we trying to establish?

• Internal liability => the business is seeking to hold Stephan liable

This is a duty that stems from Articles of Association, what sort of liability is

this?

• Articles of association => company law

Corporate law liability => lex societatis

• Which court has jurisdiction?

  • determines applicabel law

• Which doctrine do they adhere to?

  • Incorporation theory or real seat theory

• Where is Gruma incorporated?

  • both located in the Netherlands

• Where is Gruma’s real seat?

  • both located in the Netherlands

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 2 > Tort (scope)

Temporal scope: 11 January 2009

Formal scope: Article 3

Material scope: Articles 1 and 2

• NB: Exclusion of directors’ liability (Article 1(2)(d))

Exclusion of “(...) the personal liability of officers

and members of such”

• However, embezzling funds of business is not part of day to day tasks directors are performing => Article only excludes obligations of the company or body

• Independent torts under internal liability are covered by Rome II regulation => exclusion only applies to liability for obligations that are part of company law / part of the everyday tasks (e.g. mismanaging a company)

What does this mean

• Internal liability => Only independent torts

• External liability => mostly covered by Rome II Regulation

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 2 > Tort (choice of law)

under Rome II Regulation, first looks at Article 14 => allows parties to agree to a choice of law

• Could be that the contract between Gruma B.V . and director says that Dutch law will govern the relationship between the parties whether contractual relationship or not => then on the basis of Article 14 this choice of law will prevail

• If no choice of law: move onto general rule of Article 4 (general

  rule)

  • Article 4(1) => the place where direct damage arises will provide the applicable law

  • Lex loci damni

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 2 > Tort (choice of law) > exceptions

Article 4(2): common habitual residence => not

relevant in this scenario; Frits lives in Germany

Article 4(3): manifestly closer connection

• Might exist in a pre-existing relationship between the parties (e.g. a contract) => in such a situation, Article 4(3) refers back to the company law relationship that exists between the parties

• Thus, on the basis of Article 4(3), the law that governs the internal structure of a company will also govern a tort

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 2 > Tort (choice of law) > Overview

Internal liability: law that governs company will prevail (lex societatis)

External liability: sometimes law that governs the company will prevail => sometimes in cases of external iability there's a clear case of mismanagement which is so closely related to company law situation that internal law that governs company will prevail

The Netherlands: Article 10:119(e) DCC => liability in addition to the company

Directors’ Liability: Applicable Law > Application to Scenarios > Scenario 3 > Insolvency

Gruma B.V . almost on the verge of bankruptcy, but still enters into large

contracts knowingly

• Directors acted maliciously and to the detriment of general body of creditors => creditors that business already had will most likely not get paid

• Liquidator may state that directors mismanaged the company leading to bankruptcy => will initiate the claim on behalf of creditors

  • Such claims considered so closely related to insolvency proceedings that the courts with jurisdiction over insolvency proceedings and also have jurisdiction over insolvency claims

Article 7(1) Insolvency Regulation

• Lex concursus => law where insolvency proceedings are opened

• Insolvency proceedings and their effects are subject to the law of the country in whose territory the insolvency proceedings are opened

• Does this apply to the liability of directors?

• In most cases insolvency claims considered so closely related to insolvency itself, rules of Insolvency Regulation prevail

Exam question 1:
Frits, domiciled in Kleef, Germany is one of three board members of Gruma B.V . (a Dutch private limited company with headquarters in Utrecht, the Netherlands). As chief financial officer (CFO) Frits is responsible for the financial actions of the company. His main duties include tracking cash flow, financial planning and analysing the company’s financial strengths and weaknesses. While discussing the outsourcing of IT-services, Frits argued in favour of a company called Bright IT GmbH (a German private limited company, situated in Düsseldorf, Germany). A contract amounting to €

325.000 per annum in IT-services was subsequently concluded with Bright IT (in May 2018).

In December 2020, Stefan, board member and CEO of Gruma, discovers that Bright IT is primarily owned by Frits’ son and that Frits holds 25% of the shares in Bright IT. Frits failed to mention these facts during the discussion about the outsourcing of IT-services. Moreover, it turns out thatthe services provided by Bright IT are up to 40% more expensive than similar services offered by other IT companies. After his discovery, Stefan comes to you– as legal counsel- and states that he (as Gruma’s legal representative) wants to sue Frits for mismanagement and failure to act in the company’s best interest. Both Germany andthe Netherlands apply the incorporation theory. What type of liability is Gruma seeking to establish?

Key points:

• NB: In the decision-making process, conflicts of interest must be declared and means you cannot vote as a board member

• What sort of liability is Gruma B.V . seeking to establish?

  • Issue within the company

  • Gruma B.V . is initiating the claim

  • Thus => Concerns internal liability

• What type of internal liability?

  • Corporate law liability => these are the duties director has towards the company based upon company law, which were breached

  • Managing the company is one of his duties that stem from company law (can also be contract law, depending on what the contract says)

Exam question 2:
In researching a proper response to Stefan’s wishes, you come across Article 2:9 Dutch Civil Code, which states that each director is responsible for the general conduct of affairs and liable for the full consequences of an improper performance of duties, unless he is not gravely to blame for such improper performance. Will Gruma be able to rely on article 2:9 of the Dutch Civil Code? In other words: does Dutch law govern the claim for liability?

Key points:

• Which court has jurisdiction?

  • Frits can be sued in Germany (Article 4 Brussels Ibis Regulation)

  • Frits can be sued in the Netherlands (Article 7(1) Brussels Ibis Regulation)

  • Both in Germany and the Netherlands => law of incorporation theory governs internal structure of company => connection to lex societatis

  • Lex societatis: law where statutory seat of Gruma B.V . is located

• Statutory seat is located in the Netherlands => Dutch law applies

Thus, Gruma B.V . can indeed rely on Article 2:9 Dutch Civil Code => Dutch law governs the claim

Recognition and Enforcement of Foreign Judgements

Practice Scenario: Gruma has obtained a judgment from the Dutch court condemning a French company (with headquarters in France) to pay Gruma EUR 25.000 in damages for copyright infringement

Recognition and Enforcement of Foreign Judgements > Are there international instruments facilitating recognition and enforcement? > Brussels

Brussels Ibis Regulation

• Aims to establish free circulation of judgements => as straightforward to enforce a Dutch judgement in the Netherlands as it is to enforce a Spanish judgement in the Netherlands

• Before: Declaration of enforcement (obtained by the court) needed => exequatur

Currently: Prior approval by court not necessary with Brussels Ibis Regulation

Recognition and Enforcement of Foreign Judgements > Are there international instruments facilitating recognition and enforcement?

• Brussels Ibis Regulation

• Lugano Convention 2007

• HccH Choice of Court Convention 2005

• HccH Judgments Convention 2019

Recognition and Enforcement of Foreign Judgements > Are there international instruments facilitating recognition and enforcement? > Lugano Convention 2007

Exequator procedure still exists for enforcement of judgements

Mostly mimics Brussels Ibis Regulation for other issues (e.g. reasons for

not enforcing judgements, etc.)

Recognition and Enforcement of Foreign Judgements > Are there international instruments facilitating recognition and enforcement? > HccH

HccH Choice of Court Convention 2005

• Albania, Bahrain, Denmark, EU, Mexico, Moldova, Montenegro, North Macedonia, Singapore, Switzerland, UK

HccH Judgments Convention 2019

• Albania, Andorra, EU, Ukraine, Uruguay, UK

Recognition and Enforcement of Foreign Judgements > Recognition and Enforcement of Foreign Judgements (Brussels Ibis Regulation)

NB: Issues of jurisdiction and enforcement have different foreign scopes than issues of jurisdiction

Formal scope: Article 2(a) Brussels Ibis Regulation => Applies to a judgment stemming from a Member State of the EU and doesn't matter whether that judgement was rendered on Brussels Ibis Regulation or where that defendant is located

• Recognition (Article 36) (no special procedure)

• Enforcement (Article 39) (enforceable if enforceable in Member State of origin)

• Refusal

• No substantive review (Article 52)

Recognition and Enforcement of Foreign Judgements > Recognition and Enforcement of Foreign Judgements (Brussels Ibis Regulation) > Recognition

(Article 36) (no special procedure)

Recognition occurs immediately

• Prevent recognition => by initiating claim before the courts saying that this judgement should not be recognised and list grounds in Article 45 of Brussels Ibis Regulation (grounds for refusal)

Recognition and Enforcement of Foreign Judgements > Recognition and Enforcement of Foreign Judgements (Brussels Ibis Regulation) > Enforcement

Article 39 (enforceable if enforceable in Member State of origin)

• Judgement in a Member State will be enforced in another Member State without any declaration

• What is needed: judgement must be enforceable in Member State of origin — if not, then not enforceable elsewhere

Recognition and Enforcement of Foreign Judgements > Recognition and Enforcement of Foreign Judgements (Brussels Ibis Regulation) > Refusal

Recognition (Article 45)

1. Contrary to public policy;

2. Default of appearance (not served properly);

3. Similar judgment between same parties in Member State addressed;

4. Irreconcilable with earlier judgment;

5. Conflict with rules for consumers, insured parties and employees

Enforcement (Article 46) => reference to Article 45

Recognition and Enforcement of Foreign Judgements > Practice Scenario

Gruma is negotiating a contract with a Spanish company, with headquarters

in Barcelona, Spain. The Spanish company wants to subject any and all disputes arising from the contract to the exclusive jurisdiction of the Mexican courts. Will we agree to this?

Recognition and Enforcement of Foreign Judgements > Practice Scenario > HccH Choice of Court Convention

General rules

• Exclusive choice of court agreement in civil and commercial matters (Article 1)

• Does not apply to consumer or employment contracts (Article 2)

Enforcement regime (Article 8)

• Similar to that of the Brussels Ibis Regulation

Grounds for Refusal (Article 9)

• Choice of forum null and void

• Procedural fraud

• Contrary to public policy

• Irreconcilable judgments (same State, other State)

Recognition and Enforcement of Foreign Judgements > Practice Scenario > choosing the Court

Will a judgment of this court be recognised and enforced where I need it to be

Under the HccH Choice of Court Convention:

• Have not abolished equator procedure => necessary to ask courts to enforce such a judgement

• More advantageous to go to the Spanish court than Mexican court, at least regarding recognition and enforcement => because under the Brussels Ibis Regulation, recognition is easier

• However, HccH allows judgements to be recognised, especially with parties outside EU => much easier to engage in business with them and having the judgment recognised and enforced when needed to be

Recognition and Enforcement of Foreign Judgements > Exam question 1
In December 2022, Gruma B.V . enters into a contract with an English

company that will design limited edition ‘vault shoe boxes’ for Gruma.

Contrary to the contract, the design is not completed by June 2023.

Grumatherefore decides to commence legal action against this company before the Dutch courts. In February 2024, the Dutch court ruled that the English company is in breach of contract. In accordance with the judgment of the Dutch court, the English company, with headquarters in London, UK has to pay Gruma € 7.000,- in damages. Will Grumabe able to enforce the Dutch judgment in the UK?

Key points:

• Consider the instruments: Brussels Ibis Regulation

  • The UK is not part of the EU, therefore Brussels Ibis Regulation does not apply => So, cannot enforce this judgement under the Brussels Ibis Regulation

• Alternative instruments

  • HccH Choice of Court Convention has exclusive choice of forum => no exclusive choice of forum for Dutch courts so cannot rely on this instrument

  • HccH Judgements Convention => Does not apply to UK for now

Conclusion

• No international instrument in place to facilitate recognition and enforcement of judgement

• Does not mean judgement cannot be enforced at all => it will be subjected to national (UK) rules

Recognition and Enforcement of Foreign Judgements > Exam question 2

You –as legal counsel of Gruma-discover that the English company also has assets in Ireland. Would that change your enforcement strategy? Why?

Key points:

• Ireland is part of the EU and will therefore apply the Brussels Ibis Regulation => so enforcement of the judgment will become easier

Chapter 8 > Recognition and Enforcement of Foreign Judgements > How are foreign judgments recognized and enforced under EU private international law?

• Within the EU: Governed by the Brussels Ibis Regulation.

• From non-EU states: May depend on treaties (e.g. Lugano Convention, Hague Conventions).

• If no treaty applies: National law of the enforcing Member State governs.

• Recognition/enforcement affects both post-judgment execution and forum choice.

Chapter 8 > Brussels Ibis Regulation > How does the Brussels Ibis Regulation handle recognition and enforcement of judgments?

• Dual function: Regulates jurisdiction & recognition/enforcement.

• Article 36(1): Judgments from Member States are automatically recognized without special procedure.

• Applies to civil and commercial matters (Art. 1).

• Recognition is possible even if based on national rules (not Brussels Ibis jurisdiction rules).

• Only applies to EU judgments — not third-country judgments.

Chapter 8 > Recognition > How is recognition of judgments handled under the Brussels Ibis Regulation?

• Automatic recognition (ipso iure) of judgments from Member States — Art. 36(1).

• Based on mutual trust between EU courts.

• Not treated as domestic judgments — subject to limited review.

• Art. 45: Recognition may be refused on specific grounds.

• Art. 36(2): Parties may seek a declaration of non-refusal (negative declaratory relief).

Chapter 8 > Effects > What are the effects of recognition under the Brussels Ibis Regulation?

• A recognised judgment has the same effect in other Member States as in the state of origin (not as a domestic judgment).

• Formalities: Art. 37 requires compliance with document/form standards.

• Art. 38: Courts may suspend proceedings if a related foreign judgment is invoked.

Chapter 8 > Grounds for refusal > When can a judgment be refused recognition under Art. 45(1)(b) Brussels Ibis?

Refusal applies if:

1. Judgment was in default of appearance;

2. Defendant was not properly served in time to defend;

3. Defendant did not challenge the judgment when they could have.

→ Ensures the defendant’s right to be heard. Applies regardless of defendant’s domicile.

Chapter 8 > Enforcement > How does the Brussels Ibis Regulation handle enforcement of Member State judgments?

• Art. 39(1): A judgment enforceable in one Member State is automatically enforceable in others — no declaration of enforceability needed.

• Goal: Facilitate EU-wide enforcement.

• The defendant may apply to oppose enforcement based on grounds for refusal (e.g., Art. 45).

Chapter 8 > Lugano Convention > What does the Lugano Convention regulate, and how does it compare to Brussels Ibis?

• Multilateral treaty between EU, Norway, Iceland, Switzerland.

• Covers jurisdiction, recognition, and enforcement in civil/commercial matters.

• Mirrors the Brussels I Regulation (predecessor of Brussels Ibis).

• Recognition: automatic, no special procedure.

• Enforcement: requires a declaration of enforceability (exequatur) before measures can be taken.

Chapter 8 > 2005 HccC > What is the 2005 Hague Choice of Court Convention and how does it apply?

• Multilateral treaty in force in the EU (except Denmark), UK, Singapore, Mexico, Montenegro.

• Applies to exclusive choice of court agreements in civil/commercial international cases.

• Excludes consumer and employment contracts (Art. 2).

• Art. 8: Judgements by chosen court must be recognized/enforced in other Contracting States.

• Refusal only on limited grounds (e.g. invalid agreement).

• Brussels Ibis prevails within the EU — Hague Convention applies mainly to third-state judgments.

Chapter 8 > 2019 HccH Judgements Convention > What is the 2019 Hague Judgements Convention and what does it cover?

• Multilateral treaty (Hague Conference on Private Int’l Law).

• Entered into force for EU Member States (except Denmark & Ukraine) on 1 Sept 2023.

• Covers recognition/enforcement of civil and commercial judgements, incl. consumer & employment cases.

• A judgement is not eligible if it doesn’t meet any jurisdictional filters listed in the Convention.

Recurring scenario: the private limited company Gruma B.V .

The objectives of Gruma B.V ., a sports apparel company located in the Netherlands:

• Open webshop: expand business across borders

• Open pop-up shop in Belgium

• See if production is cheaper in China

• Order packaging from Poland

What is Private International Law (PIL)?

• Stems from legal diversity

• Recognition and enforcement of judgments

Legal diversity

• Laws are different in different countries

• We want to solve conflicts between legal regimes

• May affect which law governs a contract

Recognition and enforcement of judgements: Example

We enter into a contract with a party from Germany and have a dispute => the Dutch court agrees with us and renders a judgement.

German counterpart has to pay us 10,000 euros, how do we enforce this judgement?

• Private international business law needed to solve the issue

NB: For this course’s purposes, it’s not relevant to know which party is liable

→ substantively solve disputes

Substantively solve disputes

Ask

• Which court has jurisdiction?

• Which law applies?

• Will the judgement be enforced and recognised where it needs to be?

Term = private international law

• It’s neither fully private nor international law

• It solves legal situations involving private parties; parties acting outside of public authority

• In the EU, the rules of PIL are harmonized

3 main elements

1) Jurisdiction

2) Applicable law

3) Recognition and enforcement of foreign judgements

Main element = Jurisdiction

Which court has jurisdiction over a given legal dispute? Are they competent to hear the case?

Main element = Applicable law

Which law applies to a given legal relationship?

• NB: National courts can apply foreign law

  • Ius curia novit => The court is all-knowing and is always equipped to handle the case

    • In reality, courts may have access to expert evidence or institutes addressing how to apply certain laws

Main element = Recognition and enforcement of foreign judgements

Will a foreign judgement be recognized?

• Judgement needs to be from a country that renders a judgement that can be recognized and enforced in the relevant country for the parties involved

• Sometimes multiple courts have jurisdiction

Do we need private international law?

Simple answer: yes

• Legal diversity => laws of all countries are different

• Cross-border judicial matters => citizens of different countries move through borders

• Solves conflict

• Lack of a universal basis

• Private international law is national law

When Facing an International Dispute, What is the Proper Course of Action?

• Relevant steps

• First task of legal counsel of Gruma B.V

Relevant steps to take action

1) Identify competent court => which court has jurisdiction?

2) Make the choice of law analysis on the basis of the PIL of the forum => Which law applies to the particular situation?

• NB: the forum has jurisdiction in a given situation

• If you bring your claim to the Netherlands, Dutch courts will assess which law applies based on Dutch law of PIL => the Dutch may say Dutch law will apply

3) See whether the judgement rendered by such court would be recognized and enforced where you need it to be

First task of legal counsel of Gruma B.V .

Draft the general terms and conditions

• They contain choice of law and choice of forum clause

• Choice of law clause => If something goes wrong with the contract, where do we sue you and where will you sue us?

Steps to solve dispute

1: Jurisdiction

2: Will a judgement of this court be recognized and enforced where I need it to be?

3: What type of choice of forum clause do I want to use?

4: Drafting the choice of forum clause

5: Applicable law => Determine which law applies/you want to apply to the terms and conditions

6: Jurisdiction => Determine where you will be sued/want to be sued

7: Which law should govern the contract?

8: Drafting the choice of law clause

Step 1: Jurisdiction

• Determine where you will be sued or where you want to sue or be sued

• Brussels Ibis Regulation: General rule, Article 4: ‘Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.’

• Can we choose where to be sued/to sue? → choice of forum clause

  • Brussels Ibis Regulation: Article 25

  • unless the contract clause menations that specific court has jurisdiction

  • other deciding factors

Factors that might decide where to be sued/to sue

• Where the company is incorporated

• Where the company has its headquarters

• Where the company’ s assets are located

• Where litigation is the cheapest

• Which legal system are the parties the most familiar with?

• Will it take a long time for the court to render its judgement?

Step 2: Will a judgement of this court be recognized and enforced where I need it to be?

Within EU

Outside EU

Step 2 = Within Eu

• If dealing with a judgement from another EU Member State => Brussels bis Regulation applies.

• Relatively easy

• Mutual trust in each others’ legal system; judgements from other Member States are recognized

Step 2 = Outside EU

Subject to national PIL of the forum; other requirements may need to be

fulfilled

Step 3: What type of choice of forum clause do I want to use?

Party autonomy (commercial contracts)

• Choice of forum clauses: essential part of any international business contract => creates foreseeability

a) Exclusive: limited to one jurisdiction

b) Non-exclusive: nominates one or more jurisdictions but leaves parties the right to commence proceedings elsewhere

c) Asymmetric: exclusive for one party, non-exclusive for the other (not

common in traditional business contracts)

Exclusive

limited to one jurisdiction

• Uses phrases/terms like: “exclusive”, “any and all disputes”, etc.

• Example: ‘The parties agree that any and all disputes arising

  from or relating to this Agreement, including its formation and

  validity, shall be subject to the exclusive jurisdiction of the Dutch

  courts’

Non-exclusive

nominates one or more jurisdictions but leaves parties the right to commence proceedings elsewhere

• Uses phrases/terms like: “may”

• Example:

  ‘1. The parties may subject any dispute arising from this

  agreement to the jurisdiction of the courts in France.

  2. The choice of court mentioned in paragraph 1 does not

  and is not to be construed to limit the right of a party to

  initiate proceedings against the other party in another

  court of competent jurisdiction.’

Asymmetric

exclusive for one party, non-exclusive for the other (not

common in traditional business contracts)

• The party entering into a contract with Tripadvisor LLC can only sue in the court of Massachusetts, while Tripadvisor LLC can sue wherever they want as long as the chosen court has jurisdiction

Step 4: Drafting the choice of forum clause

Gruma B.V . would likely choose Dutch courts:

• Its headquarters are in the Netherlands

• Probably knows Dutch law

• Access to Dutch courts is convenient

• Exclusive jurisdiction is advisable => foreseeability

Step 5: Applicable law

Determine which law applies/you want to apply to the terms

and conditions

Court that has jurisdiction determines the applicable law in accordance with its own rule of PIL

Step 6: Jurisdiction

=> Determine where you will be sued/want to be sue

Because the Netherlands is part of the EU, it will apply the Rome I Regulation

• Deals with conflicting laws in civil and commercial matters where it concerns contractual obligations

• Does not apply to soft law instruments unless specifically specified in the contract

• General rule, Article 3 assumes that parties will agree on the applicable law

• Rome I Regulation, Article 4 holds rules for when parties have not made a choice of law

Can I choose the law that governs the terms and conditions?

• General rule: party autonomy => At any stage the parties can change the law, as long as they both agree

• Express

• Demonstrated from the contract

• Dépeçage => Different parts of the contract can be governed by different rules

Step 7: Which law should govern the contract?

Questions to ask: Should the law where the company is located be used? Which law is the most accessible? Which law can the parties understand?

Example of choice of law clause: The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of Spain’

Step 8: Drafting the choice of law clause

Example: ‘The terms and conditions are governed by and construed in

accordance with the laws of the Netherlands with the exception of the CISG.’

CISG => the Convention on the International Sale of Goods (also known as the Vienna Convention)

• Holds substantive rules (harmonised rules) when it comes to the sale of goods in international situations – not every topic is covered so sometimes national rules are needed

Step 1 > jurisdiction

• General Rule

• Choice of Forum

• Practical Considerations

General rule

Article: Article 4 Brussels Ibis – "Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State."
Example: If Gruma (NL) is sued by a German company → the case can be brought in NL (Gruma’s domicile).
Definition: Domicile = place where a person or company has its habitual residence.
Important to note: Article 4 is the default rule unless a special or exclusive jurisdiction rule applies.

Choice of forum

Article: Article 25 Brussels Ibis – parties can choose which Member State’s courts will have jurisdiction.
Important: Valid even if one party is not domiciled in an EU Member State.
Definition: Choice of forum clause = contractual clause that pre-selects the court for dispute resolution.
Important to note: The agreed court’s jurisdiction is exclusive, unless the clause states otherwise.
Extra: Formal validity requires written agreement or practice established between parties.

Practical consideration

Definition: Forum shopping = choosing the most favorable court.
Extra: Consider:

• Where the company is incorporated

• Where HQ or assets are located

• Legal familiarity and litigation cost

• Speed of proceedings

Important to note: Jurisdiction can impact enforceability, procedural costs, and language barriers.

Chapter 1 – Introduction to PIL

• Purpose of PIL

• Main Elements of PIL

• Sources of PIL

• Methods of Connecting Cross-Border Cases

• Legal Certainty & Forum Shopping

Reading > Purpose of PIL

Definition: Private International Law governs which legal system and jurisdiction apply to private cross-border legal disputes.
Extra: Needed due to legal diversity between national legal systems.
Important to note: PIL ensures fairness and predictability in international disputes.

Sub-topic: Main Elements of PIL

Definition: The three pillars of PIL are:

1. Jurisdiction – Which court can hear the case?

2. Applicable law – Which country’s law applies?

3. Recognition & Enforcement – Will a foreign judgment be enforced?

Important to note: All three must be considered in any cross-border dispute strategy.

Sub-topic: Sources of PIL

Articles/Treaties:

• Brussels Ibis Regulation – Jurisdiction & enforcement in civil/commercial matters within the EU.

• Rome I Regulation – Applicable law in contractual obligations.

• Rome II Regulation – Applicable law in non-contractual obligations.

Important to note: EU regulations unify PIL rules between Member States.

Sub-topic: Methods of Connecting Cross-Border Cases

Definitions:

• Connecting factor = link between the dispute and a legal system (e.g. domicile, place of damage).

• Conflict rule = rule that identifies the applicable legal system.

Important to note: Choice of law clauses and jurisdiction clauses are examples of party autonomy.

Sub-topic: Legal Certainty & Forum Shopping

Definition: Legal certainty = predictability in legal outcomes.
Definition: Forum shopping = choosing the most favorable court/jurisdiction.
Important to note: PIL seeks to reduce forum shopping by standardizing rules and prioritizing connections.
Extra: Overlaps between jurisdictions may still allow strategic behavior by parties.

Jurisdiction: Pop-up Shop Scenario

Introduction

Which court has jurisdiction

Scope of Brussels Ibis Regulation

Jurisdiction

Jurisdiction: Pop-up Shop Scenario > Introduction

Consumers generally do not have much bargaining power

Not in a position in order to negotiate the contract as much as professional parties are => also applies to jurisdiction and applicable law

Today Gruma B.V . will

• Scenario 1: Opening up a pop up shop in Belgium

  • Olivia purchases some running shoes from Gruma B.V at the Belgian pop-up shop, but they become ruined and she sues Gruma B.V .

• Scenario 2: Setting up an EU-wide webshop

  • Manuel in Portugal orders a pair of shoes from the webshop, but gets the wrong colour; Gruma B.V . tells him he needs to pay the return fees => he sues them

Jurisdiction: Pop-up Shop Scenario > Which court has jurisdiction?

Europe:

• Brussels Ibis Regulation

• Lugano Convention (Iceland, Switzerland, Norway)

Dual instrument:

• Jurisdiction

• Recognition and enforcement

NB: Both Belgium and the Netherlands are in the EU, so EU instruments (Brussels Ibis Regulation) will be used to determine jurisdiction

Jurisdiction: Pop-up Shop Scenario > Scope of Brussels Ibis

Substantive : Article 1

Formal : Article 4

Temporal : Article 66 and 81

Jurisdiction: Pop-up Shop Scenario > Scope of Brussels Ibis > Substantive

Substantive: Article 1: civil and commercial matter

• Determined autonomously

• In this scenario: dealing with two private parties and no one is exercising state authority => private dispute so it falls within the scope

Jurisdiction: Pop-up Shop Scenario > Scope of Brussels Ibis > Formal

Formal: Article 4: domicile in a Member State

NB: Only the defendant’ s location is relevant (Gruma B.V ., if Olivia sues them)

Exceptions

• Consumer (Article 18(1))

• Employee (Article 21 (2))

• Exclusive jurisdiction (Article 24)

• Choice of forum (Article 25 and 26)

Gruma is a legal person => Article 63 Brussels Ibis Regulation

Gruma B.V . => domiciled in the Netherlands, which is an EU Member State

which, satisfies the formal scope of the Regulation

Jurisdiction: Pop-up Shop Scenario > Scope of Brussels Ibis > Temporal

Temporal: Article 66 and 81: on or after 10 January 2015

■ Olivia sues Gruma B.V . today; fulfills the temporal scope

Jurisdiction: Pop-up Shop Scenario > Jurisdiction

Overview

General rule

Consumer contract

• Is this a consumer matter? Requirements

Which court has jurisdiction?

Choice of forums clause

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Overview

Exclusive jurisdiction (Article 24)

• Insurance, consumer and employment matters (Articles 10-16; 17-19; and 20-23)

• Choice of forum (Articles 25 and 26)

• General rule (Article 4)

• Alternative fora (Article 7)

When it comes to weaker parties, such as consumers/employees they need rules on urisdiction that offer them more protection than the general rule

When it comes to establishing jurisdiction over the general rules => Articles 17-19

Brussels Ibis Regulation (consumer matters)

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > General rule

Domicile of defendant (Article 4(1))

Unless:

• Exclusive jurisdiction (Article 24)

• Choice of forum (Article 25-26)

• Insurance, consumer, or employment matter (Article 10-23)

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Consumer contract

(Article 17-19)

• Definition: autonomous/independent

• Contract concluded ‘for a purpose which can be regarded as being outside hisvtrade or profession’

• Consumer can also initiate a claim in their own country of domicile

• Limited choice of forum

NB: Article 17 does not establish jurisdiction; establishes whether it’s a

consumer matter => Once determined, run through rules that apply; Articles 18 and 19

• Article 17

Mainly deal with Article 17(1)(c) => “in all other cases if the

contract is concluded by a professional party in the Member State

of a consumer, and contract falls within the scope of those

activities”

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Consumer contract > Requirements

1) Professional party pursues or directs commercial or

professional activities;

• Yes: Gruma B.V . opened their pop-up shop in Belgium and sold their products there => pursuing a commercial activity there

2) Consumer acts outside trade or profession;

• If we assume that Olivia bought the shoes for her own personal use, and not as a professional athlete, then we have satisfied this criteria

3) And contract falls within the scope of such activities

• Yes: Olivia bought Gruma B.V .’ s sports apparel and that was also what the contract concerned

Conclusion: Yes, this is a consumer matter

Because we have established that this is a consumer matter, we move on to Articles 18 and 19

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Which court has jurisdiction?

Article 18(1): The court that has jurisdiction is the court of the

defendant’ s (Gruma B.V .) domicile, or where the person bringing

the claim (Olivia) is domiciled

• Concept of consumer protection => can sue where you're domiciled + law of your home State applies as well, even if you're abroad => Ensures that consumers do not always encounter an unfavourable choice of law

• Forum actoris: a person who is suing can sue and bring a claim at court of their own domicile

• Actor sequitur forum rei = claimant follows domicile of defendant and courts of defendant’s domicile has jurisdiction

Article 18(2): Gruma B.V . can bring a counterclaim

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Choice of forum

May be included in the terms and conditions (e.g. in receipt)

Article 19: deals with exceptions to the general consumer

protection rules found in Articles 17-18

• A business and a consumer can agree to use a different court, but only in specific situations

• These exceptions are meant to prevent unfair agreements that would disadvantage consumers

1) After a dispute has already started

• If both sides are already in a dispute, they can then agree to go to a different court

2) If the agreement gives the consumer more

options (benefits the consumer)

• The agreement is allowed if it allows the consumer to go to courts in addition to the ones normally allowed – not instead of them

3) If both the consumer and the business live in the same country when they make the contract

• If both parties are living or based in the same EU country when they sign the contract, they can agree to use courts in that country

Jurisdiction: Pop-up Shop Scenario > Jurisdiction > Choice of forum > this case

Can we rely on this clause? => “Any dispute arising out of or in

connection with these terms and conditions shall be subject to the

exclusive jurisdiction of the Dutch courts” => No, we cannot

1) Gruma B.V . entered into the choice of forum before the dispute

2) It doesn’t grant the consumer an additional forum =>

Olivia could already sue Gruma B.V . in the Netherlands on

the basis of Article 18

3) Olivia and Gruma B.V . do not have a common habitual residence

Applicable law: Pop-up Shop Scenario

Which law should be used?

Doe the Rome I Regulation apply?

Is there a choice of law clause?

Applicable law: Pop-up Shop Scenario > Which law should be used?

Europe

• Rome I Regulation

• Vienna Sales Convention 1980 (CISG): not applicable because we are dealing with a consumer matter (a natural person)

Applicable law: Pop-up Shop Scenario > Does the Rome I Regulation apply? => Yes, it applies (temporal & substantive)

Temporal scope: contracts concluded as from 17 December 2009 (Article 28)

• Contracts of a prior date: Rome Convention

• Contract was established after 17 December 2009

Substantive scope: Article 1

• We have established above that we are dealing with a civil/commercial matter

Applicable law: Pop-up Shop Scenario > Does the Rome I Regulation apply? => Yes, it applies (formal)

Article 2 (universal)

Usually general rule applies, party autonomy so decide which law governs the contract, however => special rules for special types of contracts such as a consumer contract

• General rule: Article 3 – freedom of choice

• Article 4: applicable law in the absence of choice

• Article 5-8: special contracts

Consumer Contracts

• Article 6

• Autonomous/independent concept

• Contract concluded ‘for a purpose which can be regarded as being outside his trade or profession’

• Parallel Article 17 Brussels I bis Regulation

• Requirements