PRIVATE INTERNATIONAL LAW Introduction

PRIVATE INTERNATIONAL LAW Introduction
Conflicts of Laws in Contractual and Non-Contractual Obligations Professor Volker Behr University of Augsburg

Objectives of PIL The “international” situation = situation having contacts to more than one jurisdiction Rome I Article 1 Material scope 1. This Regulation shall apply, in situations involving a conflict of laws, to contractual obligations in civil and co Article 1 Rome II Article 1 Scope 1. This Regulation shall apply, in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters. ….

Name Private International Law (not: International Private Law – that would be a terrible Germanism) Conflict of Laws Choice of Law

Sources 1. (within the EU) Regulations E.g. REGULATION (EC) No 864/2007 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) 2. International treaties (conventions) E.g. (Hague) Convention on…. 3. Domestic statutory law E.g. Introductory Law to the German Civil Code La. Civ. Codde Ann. Art (1) 4. Domestic case law E.g. Babcock v. Jackson, 191 N.E.2d 279 (N.Y. 1963)

PIL and Unified Substantive Law (e.g. CISG) United Nations Convention on Contracts for the International Sale of Goods (1980) Article 1 CISG (1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State.

EU-Legislation on PIL (previous) 1. Legal base for EU legislation on PIL in general E.g. REGULATION (EC) No 593/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 June 2008 on the law applicable to contractual obligations (Rome I) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 61(c) and the second indent of Article 67(5) thereof, …

EU-Legislation on PIL (actual) 1. Legal base for EU legislation on PIL in general Article 81 TFEU (ex Article 65 TEC) 1. The Union shall develop judicial cooperation in civil matters having cross-border implications, based on the principle of mutual recognition of judgments and of decisions in extrajudicial cases. Such cooperation may include the adoption of measures for the approximation of the laws and regulations of the Member States. 2. For the purposes of paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures, particularly when necessary for the proper functioning of the internal market, aimed at ensuring: (a) the mutual recognition and enforcement between Member States of judgments and of decisions in extrajudicial cases; (b) the cross-border service of judicial and extrajudicial documents; (c) the compatibility of the rules applicable in the Member States concerning conflict of laws and of jurisdiction; (d) cooperation in the taking of evidence; ….

EU-Legislation on PIL (actual) 1. Legal base for EU legislation on PIL in general (enhanced cooperation) = (Regulations covering only some of the Member States, but which are open for accession) COUNCIL REGULATION (EU) No 1259/2010 of 20 December 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation (1) Having regard to the Treaty on the Functioning of the European Union, and in particular Article 81(3) thereof, (2) Having regard to Council Decision 2010/405/EU of 12 July 2010 authorising enhanced cooperation in the area of the law applicable to divorce and legal separation ( 1 ),

The „International“ Lawsuit - a three step approach International Civil Procedure – Private International Law – Applicable Law It all starts with jurisdiction (Because the court will apply its own PIL, which leads to the applicable law)

The if – then mechanism of a legal norm If… (A and B and C) requirements Then… (legal consequence) If A somebody kills somebody and B he acts intentionally and C there is no justification Then he will be punished The PIL norm If it is about the applicable law to an international contract Then the applicable law will be determined as follows:

The „if – then“ mechanism of a legal norm (example) Rome I Regulation Article 3 Freedom of choice (If) A contract (then) shall be governed by the law chosen by the parties. …

PRIVATE INTERNATIONAL LAW Rome I
It all starts with jurisdiction! COUNCIL REGULATION (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation)

What is a EU Regulation? Article 288 TFEU (ex Article 249 TEC) To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods. … However:

PROTOCOL (No 21) ON THE POSITION OF THE UNITED KINGDOM AND IRELAND IN RESPECT OF THE AREA OF FREEDOM, SECURITY AND JUSTICE Article 1 Subject to Article 3, the United Kingdom and Ireland shall not take part in the adoption by the Council of proposed measures pursuant to Title V of Part Three of the Treaty on the Functioning of the European Union (i.e. Area of Freedom, Security and Justice). ….

PROTOCOL (No 22) ON THE POSITION OF DENMARK Article 1 Denmark shall not take part in the adoption by the Council of proposed measures pursuant to Title V of Part Three of the Treaty on the Functioning of the European Union (i.e. Area of Freedom, Security and Justice). The unanimity of the members of the Council, with the exception of the representative of the government of Denmark, shall be necessary for the decisions of the Council which must be adopted unanimously.

COUNCIL REGULATION (EC) No 44/2001 Article 1 1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

COUNCIL REGULATION (EC) No 44/2001 Article 2 1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. 2. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

COUNCIL REGULATION (EC) No 44/2001 Article 3 1. Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter. 2. In particular the rules of national jurisdiction set out in Annex I shall not be applicable as against them.

COUNCIL REGULATION (EC) No 44/2001 Section 2 Special jurisdiction Article 5 A person domiciled in a Member State may, in another Member State, be sued: 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,…..

COUNCIL REGULATION (EC) No 44/2001 Section 7 Prorogation of jurisdiction Article 23 1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; or (b) in a form which accords with practices

COUNCIL REGULATION (EC) No 44/2001 Article 24 Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.

COUNCIL REGULATION (EC) No 44/2001 Exclusive jurisdiction Article 22 The following courts shall have exclusive jurisdiction, regardless of domicile: 1. in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated. However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the Member State in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same Member State;

REGULATION (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations (Rome I Regulation)

Appicability Article 1 1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters …

Applicability Article 29 Entry into force and application This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union. It shall apply from 17 December 2009 except for Article 26 which shall apply from 17 June 2009.

Applicability Art. 29 This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaty establishing the European Community. Art. 1 4. In this Regulation, the term ‘Member State’ shall mean Member States to which this Regulation applies. However, in Article 3(4) and Article 7 the term shall mean all the Member States.

Applicability Accession of the U.K. Brussels, 24 July 2008 from : Mr Kim Darroch, Permanent Representative of the United Kingdom dated 24 July 2008 to : Mme Rachida Dati, President of the Council of the European Union Subject : Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) - Opt-in United Kingdom I refer to Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I). The Regulation was made on the basis of Article 61(c) and the second indent of Article 67(5) of the Treaty establishing the European Community. Under Article 4 of the Protocol to that Treaty governing the position of the United Kingdom and Ireland in relation to measures under Title IV of the Treaty, the United Kingdom may, at any time after the adoption of such a measure by the Council, notify its intention to the Council and to the Commission that it wishes to accept that measure. The purpose of this letter is to communicate the United Kingdom’s formal notification that it wishes to accept and therefore to participate in the Rome I Regulation. I am copying this letter to Jonathan Faull at the Commission and Ivan Bizjak in the Council Secretariat. (signed) Kim Darroch

Applicability Article 2 Universal application Any law specified by this Regulation shall be applied whether or not it is the law of a Member State.

Law chosen by the parties, Art. 3 1. A contract shall be governed by the law chosen by the parties. … 2. The parties may at any time agree to subject the contract to a law other than that which previously governed it, whether as a result of an earlier choice made under this Article or of other provisions of this Regulation. Any change in the law to be applied that is made after the conclusion of the contract shall not prejudice its formal validity under Article 11 or adversely affect the rights of third parties.

Law chosen by the parties, Art. 3 When to chose? What to chose? What for to chose?

How to draft a sensible choice of law clause Pittco and Intermed have agreed upon the following choice of law clause: The substantive law of Germany shall be applicable to all arbitration/litigation. CISG is excluded. The substantive law of Pennsylvania shall be applicable to all arbitration/litigation. CISG is excluded. The substantive law of Switzerland shall be applicable to all arbitration/litigation. CISG is excluded. Applicable law is the international law. Applicable law is the lex mercatoria. The law between the parties is the contract itself. (Law of country X shall be used for the interpretation and the implementation of this Agreement only accessorily and only in the case where the Agreement would leave a problem unsolved.)

Rules of Arbitration of the International Chamber of Commerce (in force as from 1 January 1998) Article 17 - Applicable Rules of Law 1. The parties shall be free to agree upon the rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate. 2. In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages. 3. The Arbitral Tribunal shall assume the powers of an amiable compositeur or decide ex aequo et bono only if the parties have agreed to give it such powers.

Choice of Law and CISG The substantive law of Germany shall be applicable to all arbitration/litigation. CISG is excluded. The substantive law of Pennsylvania shall be applicable to all arbitration/litigation. CISG is excluded. The substantive law of Germany shall be applicable to all arbitration/litigation. The substantive law of Pennsylvania shall be applicable to all arbitration/litigation.

Choice of Law and the Battle of Forms Forms of Party A: German law applies Forms of Party B: French law applies Execution of the Contract Dispute about applicable law

Implied Choice of Law Rome I, Recital 12 (12) An agreement between the parties to confer on one or more courts or tribunals of a Member State exclusive jurisdiction to determine disputes under the contract should be one of the factors to be taken into account in determining whether a choice of law has been clearly demonstrated.

Applicable Law in the Absence of Choice of Law Restatement 2d § 188. Law Governing In Absence Of Effective Choice By The Parties (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6. (2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties. These contacts are to be evaluated according to their relative importance with respect to the particular issue. (3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in §§ and 203.

Applicable Law in the Absence of Choice of Law Rome I Regulation Article 4 Applicable law in the absence of choice 1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows: (a) a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; (b) a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; (c) a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; (d) notwithstanding point (c), a tenancy of immovable property concluded for temporary private use for a period of no more than six consecutive months shall be governed by the law of the country where the landlord has his habitual residence, provided that the tenant is a natural person and has his habitual residence in the same country; (e) a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence; (f) a distribution contract shall be governed by the law of the country where the distributor has his habitual residence; (g) a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined; (h) a contract concluded within a multilateral system which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments, as defined by Article 4(1), point (17) of Directive 2004/39/EC, in accordance with non-discretionary rules and governed by a single law, shall be governed by that law. 2. Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. 3. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. 4. Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.

Hypo Pittco., Inc. (Pittco), a corporation under Delaware law and headquartered in Pittsburgh, PA, has invented a new drug which helps in reducing blood sugar levels. Pittco has applied for patent protection in the US but not yet elsewhere. The new drug is to be sold worldwide under the uniform name of OPTISUGAR. In Europe it shall be marketed by Intermed GmbH, a German corporation headquartered in Augsburg, Germany. a) Intermed is supplied by Pittco from Pittco’s facilities in Pittsburgh. b) Pittco and Intermed enter into a franchise agreement which provides for supply of OPTISUGAR by Pittco and an exclusive dealership of Intermed. Parties did not reach an agreement on the applicable law.

Balancing Predictability and Individual Justice Compare §§ 6, 188, 189 Restatement of Conflict of Laws 2d and Rome I Articles 3 and 4

Contracts not covered by Art. 4 (1) Article 4 Applicable law in the absence of choice 2. Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.

The Escape Clause Article 4 3. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply.

Protection and Favor of “Weaker” Parties Contracts of carriage, Art. 5 Consumer contracts, Art. 6 Insurance contracts, Art. 7 Individual employment contracts, Art. 8

Protection and Favor of “Weaker” Parties – Contracs of carriage, Art. 5 Carriage of goods Choice of law under Art. 3 Absent choice: law of the carrier when additional requirements are met Carriage of persons Choice of law restricted to specific countries Absent choice law of the passenger when additional requirements are met

Protection and Favor of “Weaker” Parties – Consumers, Art. 6 Art. 5 and 7 excluded even when passengers or insured persons are consumers Consumer legally defined Law of the habitual residence of the consumer in case of special activities of the professional Chosen law superimposed by indispensable consumer protection law applicable absent a valid choice

Protection and Favor of “Weaker” Parties – insurance contracts, Art. 7 Differentiation based on type of insurance business-type of insurence – mostly the general system udner Art. 3 and 4 Restricted choice of law in „everybodys“ type of insurance In everybodys type of insurance: Absent a valid choice law of the country where the risk is is situated

Protection and Favor of “Weaker” Parties – individual employment, Art. 8 Choice of law superimposed by indispensable labor protection law applicable absent a valid choice of law Absent choice of law: law of the country where the employee habitually carries out his/her work; absent a habitual place of work:place of employing business Escape clause

Overriding Domestic or Foreign Interests Intermed GmbH, the German corporation headquartered in Augsburg, Germany, distributes OPTISUGAR in Germany and all over Europe, in part by directly negotiating with and selling to other distributors and in part by commercial agents acting in the name and on behalf of Intermed, and in part directly to consumers. Contracts between Intermed and the other distributors as well as between Intermed and the agents and Intermed and consumers are based on Intermed’s standard forms which read: All contracts are exclusively governed by the law of Pennsylvania, CISG being excluded. The law of which country/countries is applicable in the respective contractual relationships? Take into consideration, that German law and the law of some European countries contents mandatory provisions protecting consumers and commercial agents beyond what is available under Pennsylvania law.

Overriding Domestic or Foreign Interests Choice of law superimposed by indispensable law applicable absent a valid choice in case of a „purely domestic“ case, Art. 3 Choice of law superimposed by indispensable law applicable absent a valid choice in case of a „purely European“ case, Art. 3 Application of „mandatory“ provisions of the law of the forum, Art. 9 Eventual application of „mandatory“ provisions of a third country, Art. 9 Public policy of the forum state, Art. 21

Consent and material validity, Art. 10 In general: law which would be applicable in case if a valid contract Lack of consent possibly according to the law of the habitual residence of a party

Formal validity, Art. 11 Wide range of possibilities Favor of formal validity

Scope of applicable law, Art. 12 Internpretation Performance Consequences of non-performance End of obligations Consequences of nullity of the contract

Incapacity, Art. 13 Capacity in general not covered by Rome I, Art. 1 (2) (a) Specifically: Incapacity according to domestic law of a party may be invoked

Voluntary assignment and legal subrogation, Art. 14, 15

Habitual residence, Art. 19 Only defined as to companies

Renvoi, Art. 20 In general excluded

PRIVATE INTERNATIONAL LAW Rome II
PRIVATE INTERNATIONAL LAW PART II NON-CONTRACTUAL RELATIONSHIPS

Jurisdiction In general: see at Rome I Special jurisdiction Article 5 A person domiciled in a Member State may, in another Member State, be sued: … 3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

Jurisdiction Bier v. Mines de Potasse (ECJ , NJW 1977, 493 = RIW/AWD 1977, 356 mit Anm. Linke - Firma Handels-Kwekerij G. J. Bier ./. Firma Mines de Potasse d’Alsace S. A.) In Alsace Mines de Potasse d’Alsace pollutes the river Rhein by discharging potasse into the river. By consequent the river rhine in the Netherlands contains amounts of potsasse dangerous to crops in the Netherlands. Netherland farmers, who traditionall use water from the river to irrigate their plants are afraid that their crops are endangered. They want to sue in the Hague/Netherlands for omission of such pollution.

Jurisdiction Bier v. Mines de Potasse Order On those grounds THE COURT, in answer to the question referred to it by the Gerechtshof, The Hague, by judgment of 27 February 1976, HEREBY RULES: Where the place of the happening of the event which may give rise to liability in tort, delict or quasi-delict and the place where that event results in damage are not identical, the expression "place where the harmful event occurred", in Article 5 (3) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it.

Non-contractual Relationships Legal base: Regulation (EC) no. 864/2007 of the Parliament and the Council of 11. July 2007 On the applicable law to non-contractual relationships („Rome II“)

Non-contractual Relationships Torts Unjust enrichment Acting on behalf of others without contract (Negotiorum gestio) Fault in negotiating (Culpa in contrahendo)

Law applicable to torts – theoretical options Place of the tort A) place of wrongful action, or B) place of damages, or C) either place not: place of preparatory actions not: place of subsequent damages

Torts: in general (1) Article 4 General rule 1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs 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 occur. 2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply. 3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a preexisting relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

Torts general rule (2) Place of the Tort Article 4 General rule 1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs 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 occur.

Torts general rule (3) Shared habitual residence of the parties, article 4 (2) (1) … 2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

Torts in general (4) Escape clause, article 4 (3) 3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a preexisting relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

Torts in general (5) Article 14 Freedom of choice 1. The parties may agree to submit non-contractual obligations to the law of their choice: (a) by an agreement entered into after the event giving rise to the damage occurred; or (b) where all the parties are pursuing a commercial activity, also by an agreement freely negotiated before the event giving rise to the damage occurred. The choice shall be expressed or demonstrated with reasonable certainty by the circumstances of the case and shall not prejudice the rights of third parties. 2. Where all the elements relevant to the situation at the time when the event giving rise to the damage occurs are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement. 3. Where all the elements relevant to the situation at the time when the event giving rise to the damage occurs are located in one or more of the Member States, the parties’ choice of the law applicable other than that of a Member State shall not prejudice the application of provisions of Community law, where appropriate as implemented in the Member State of the forum, which cannot be derogated from by agreement.

Torts in general (6) Hypo Two Russian students from Omsk an Moscow respectively travel to England. Each of the rents a car and travels the country. In driving Tatyana takes the right lane as she is used to do. Olga coming from the opposite direction uses the left lane. Hence there is a collision of the cars. Both students are hurt and their cars are damaged.

Torts in general (6) Article 17 Rules of safety and conduct In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.

COUNCIL DIRECTIVE of 25July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (85/374/EEC), O.J L 0374 Article 2 For the purpose of this Directive, ‘product' means all movables even if incorporated into another movable or into an immovable. ‘Product‚ includes electricity.

Torts: Product liability (2) Donaghue v. Stevenson [1932] AC 562 (HL) (modified) Mr. Donaghue, an Englishman whose habitual residence is London, travels to Spain. Preferring English Ale he orders a bottle of English ale. He nearl empties the bottle finding at the bottom of the bottle the famous nearly decomposed Donaghue snail. He vomits and gets sick. Applicable law?

Torts: Product liability (3) Article 5 Product liability 1. Without prejudice to Article 4(2), the law applicable to a non-contractual obligation arising out of damage caused by a product shall be: (a) the law of the country in which the person sustaining the damage had his or her habitual residence when the damage occurred, if the product was marketed in that country; or, failing that, (b) the law of the country in which the product was acquired, if the product was marketed in that country; or, failing that, (c) the law of the country in which the damage occurred, if the product was marketed in that country. However, the law applicable shall be the law of the country in which the person claimed to be liable is habitually resident if he or she could not reasonably foresee the marketing of the product, or a product of the same type, in the country the law of which is applicable under (a), (b) or (c). 2. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraph 1, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

Torts: Unfair Competition (1) Article 6 Unfair competition and acts restricting free competition 1. The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected. 2. Where an act of unfair competition affects exclusively the interests of a specific competitor, Article 4 shall apply.(3) … 4. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14. Recital (21) The special rule in Article 6 is not an exception to the general rule in Article 4(1) but rather a clarification of it. In matters of unfair competition, the conflict-of-law rule should protect competitors, consumers and the general public and ensure that the market economy functions properly. The connection to the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected generally satisfies these objectives.

Torts: Unfair Competition (2) German Federal Court, BGHZ 122 Defendant copies mens clothes of a competitor. Part of the cloths are trademark protected others are not. Plaintiff claims damages and omission of further infringments based on violation of his trademark protection and based on unfair competition law. Asume: Plaintiff is from Moscow, defendant is from Augsburg and cloths are sold in France.

Torts: Unfair competition (3) German steel producer competing with another German steel producer in the Russian market lures away from his competitor specialists, who have special experience in the Russian market. He then writes a letter to potential Russion clients that from now on his company alone has the special know-how as far as the Russian market is concerned.

Torts: Restriction of competition (1) Recital (23) For the purposes of this Regulation, the concept of restriction of competition should cover prohibitions on agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition within a Member State or within the internal market, as well as prohibitions on the abuse of a dominant position within a Member State or within the internal market, where such agreements, decisions, concerted practices or abuses are prohibited by Articles 81 and 82 of the Treaty or by the law of a Member State.

Torts: Restriction of competition (2) Article 6 Unfair competition and acts restricting free competition … 3. (a) The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be, affected. (b) When the market is, or is likely to be, affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seised, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises; where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her claim on the law of that court if the restriction of competition on which the claim against each of these defendants relies directly and substantially affects also the market in the Member State of that court. 4. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14.

Tort: Unfair Competition (3) IN ECJ case T-201/04 Microsoft Corp., a US company sues the European Union beccause the EU Commission has fined Microsoft about 500 million €. Reason for the fine was that Microsoft as a market dominating company had withhold from their competitors – notably Sun Microsystems, another US company – information necessary to communicate with the Microsoft systems. The ECJ (Court of firt instance) considered the decision to be justified. Asume: Sun Microsystems now sues Microsoft for damages.

Torts: Environmental damages (1) Article 7 Environmental damage The law applicable to a non-contractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be the law determined pursuant to Article 4(1), unless the person seeking compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred. Recital (25) Regarding environmental damage, Article 174 of the Treaty, which provides that there should be a high levelof protection based on the precautionary principle and the principle that preventive action should be taken, the principle of priority for corrective action at source and the principle that the polluter pays, fully justifies the use of the principle of discriminating in favour of the person sustaining the damage. The question of when the person seeking compensation can make the choice of the law applicable should be determined in accordance with the law of the Member State in which the court is seised.

Torts: Environmental damages (2) Recital (24) ‘Environmental damage’ should be understood as meaning adverse change in a natural resource, such as water, land or air, impairment of a function performed by that resource for the benefit of another natural resource or the public, or impairment of the variability among living organisms.

Torts: Environmental damages (3) (Again: Bier ./. Mines de Potasse) (ECJ , NJW 1977, 493 = RIW/AWD 1977, 356 mit Anm. Linke - Firma Handels-Kwekerij G. J. Bier ./. Firma Mines de Potasse d’Alsace S. A.) In Alsace Mines de Potasse d’Alsace pollutes the river Rhein by discharging potasse into the river. By consequent the river Rhein in the Netherlands contains amounts of potsasse dangerous to crops in the Netherlands. Netherland farmers, who traditionall use water from the river to irrigate their plants are afraid that their crops are endangered. They want to sue in the Hague/Netherlands for omission of such pollution.

Torts: Intellectual property (1) Recital (26) Regarding infringements of intellectual property rights, the universally acknowledged principle of the lex loci protectionis should be preserved. For the purposes of this Regulation, the term ‘intellectual property rights’ should be interpreted as meaning, for instance, copyright, related rights, the sui generis right for the protection of databases and industrial property rights.

Torts: Intellectual property (2) Article 8 Infringement of intellectual property rights 1. The law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. 2. In the case of a non-contractual obligation arising from an infringement of a unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the relevant Community instrument, be the law of the country in which the act of infringement was committed. 3. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14.

Intellectual Property (3) Hypo Mike, a company from Omsk manufactures sports goods and sportswear. Products are labeled by a red arrow. This design is protected in Germany. However, it is not protected in France. Pike, a Chines company copies Mike‘s products marketing them in Germany and France. Mike sues Pike in Germany and France asking for damages and omission of further design violation.

Industrial action Article 9 Without prejudice to Article 4(2), the law applicable to a noncontractual obligation in respect of the liability of a person in the capacity of a worker or an employer or the organisations representing their professional interests for damages caused by an industrial action, pending or carried out, shall be the law of the country where the action is to be, or has been, taken. Recital (27) The exact concept of industrial action, such as strike action or lock-out, varies from one Member State to another and is governed by each Member State’s internal rules. Therefore, this Regulation assumes as a general principle that the law of the country where the industrial action was taken should apply, with the aim of protecting the rights and obligations of workers and employers.

Torts: Unjust enrichment (1) - within preexisting relationships Article 10 Unjust enrichment 1. If a non-contractual obligation arising out of unjust enrichment, including payment of amounts wrongly received, concerns a relationship existing between the parties, such as one arising out of a contract or a tort/delict, that is closely connected with that unjust enrichment, it shall be governed by the law that governs that relationship. … 4. Where it is clear from all the circumstances of the case that the non-contractual obligation arising out of unjust enrichment is manifestly more closely connected with a country other than that indicated in paragraphs 1, 2 and 3, the law of that other country shall apply.

Torts: Unjust enrichment (2) Article 10 Unjust enrichment … 2. Where the law applicable cannot be determined on the basis of paragraph 1 and the parties have their habitual residence in the same country when the event giving rise to unjust enrichment occurs, the law of that country shall apply. 3. Where the law applicable cannot be determined on the basis of paragraphs 1 or 2, it shall be the law of the country in which the unjust enrichment took place. 4. Where it is clear from all the circumstances of the case that the non-contractual obligation arising out of unjust enrichment is manifestly more closely connected with a country other than that indicated in paragraphs 1, 2 and 3, the law of that other country shall apply.

Article 11 Negotiorum gestio 1. If a non-contractual obligation arising out of an act performed without due authority in connection with the affairs of another person concerns a relationship existing between the parties, such as one arising out of a contract or a tort/delict, that is closely connected with that non-contractual obligation, it shall be governed by the law that governs that relationship. 2. Where the law applicable cannot be determined on the basis of paragraph 1, and the parties have their habitual residence in the same country when the event giving rise to the damage occurs, the law of that country shall apply. 3. Where the law applicable cannot be determined on the basis of paragraphs 1 or 2, it shall be the law of the country in which the act was performed. 4. Where it is clear from all the circumstances of the case that the non-contractual obligation arising out of an act performed without due authority in connection with the affairs of another person is manifestly more closely connected with a country other than that indicated in paragraphs 1, 2 and 3, the law of that other country shall apply.

(not just a) Hypo German owner‘s ship is stolen in Spain. Investigator finds the ship and returns it to owner. Investigator asks for an award.

Article 12 Culpa in contrahendo 1. The law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract, regardless of whether the contract was actually concluded or not, shall be the law that applies to the contract or that would have been applicable to it had it been entered into. 2. Where the law applicable cannot be determined on the basis of paragraph 1, it shall be: (a) the law of the country in which the damage occurs, 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 occurred; or (b) where the parties have their habitual residence in the same country at the time when the event giving rise to the damage occurs, the law of that country; or (c) where it is clear from all the circumstances of the case that the non-contractual obligation arising out of dealings prior to the conclusion of a contract is manifestly more closely connected with a country other than that indicated in points (a) and (b), the law of that other country.

PRIVATE INTERNATIONAL LAW Introduction

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