EU Law Blog

Recognition of US Judgments in Europe: Baumgartner's Article

Professor Samuel Baumgartner of the University of Akron Law School has written an interesting - and useful - article on whether and how US judgments are recognized and enforced in Europe.

US litigation has several distinctive features that somehow shock lawyers and policy makers in Europe and there is some resistance to enforcing US judgments there. Added to which there is competition between London and New York to become the courtroom of the world. So what really happens ? Professor Baumgartner's article helps to provide an answer.

Here's what the abstract states:

Transnational cases have become a prominent part of the litigation landscape in the United States. Class actions against foreign defendants are widespread, the Alien Tort Claims Act has emerged as a mainstay of proceedings to enforce international human rights law in U.S. courts, and the globalization of the economy has led to an increase in transnational regulatory litigation. In all these cases, however, the parties need to ask themselves whether an ensuing judgment or settlement can be recognized or enforced abroad. For quite some time, the perception in the United States has been that U.S. judgments do not fare very well when the time comes to recognize or enforce them abroad. If so, the resolution of a considerable number of transnational cases in this country would have no effect abroad, not exactly the result that lofty talk about ?transnational adjudication? would seem to entail.
In this paper, I intend to provide some answers to the question how well U.S. judgments really fare in Europe, where many of the important trading partners of the United States are located. I conclude that, on average, the recognition and enforcement of U.S. judgments does indeed face more obstacle in Europe than do European judgments in the United States. However, much depends on the country, the subject matter involved, the person of the defendant, and the connection of the dispute to the recognition state, among other things. Thus, a multilateral judgments convention, such as the one initiated by the United States in 1992, could indeed bring similar improvements as have resulted from various conventions and EC regulations adopted by the Europeans regarding their own judgments. The same goes for the federal recognition statute recently proposed by the American Law Institute.

You can download the article here.

Cacophonic outpouring on globalization

Deepak Lal (when does he get a Nobel Prize ?) complains in his wonderful recent book "Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century" of:

the cacophony of outpourings on globalization by sundry sociologists, philosophers, and political scientists as well as some economists" (p. xi)

And here's a prime specimen of such an outpouring from the Commission in its Communication entitled "The European Interest: Succeeding in the age of globalisaton" which is a "contribution to the October Meeting of Heads of State and Government". Here's an extract (reproduced exactly, with no attempt to sort out the grammar and style):

The EU must be in a position to present to citizens with a compelling vision of how a global Europe is adapting to new needs while protecting their interests, reforming its economic and social governance to ensure continuing prosperity, solidarity and security for the next generation as well as today's citizens. Meeting challenges of this scale can only be done effectively by making the most of the partnership between Member States and the EU level. Active involvement and a sense of stronger ownership by all actors are prerequisites for a successful Lisbon strategy. It will require a concerted commitment to engage in a capable and responsive communication strategy with EU citizens.

That surely makes you want to read the rest, doesn't it ?

Measures against terrorists, transfer of property and references to national law: Case C-117/06

In its judgment in Case C-117/06 Mölendorf the Court of Justice adopted a strict interpretation of Council Regulation (EC) No 881/2002 of 27 May 2002 imposing certain specific restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban.

What happened was this. The Mölendorfs owned buildings and land in Berlin. In December 2000, they agreed by notarially authorised instrument to sell that property to a group of three buyers. The agreement also provided that the sale price had to be paid to the sellers before final registration of the transfer of ownership in the Land Register. But then, final registration of the transfer of ownership was refused by the competent authority in Germany because one of the three buyers was on the list of persons subject to freezing of funds in accordance with Regulation 881/2002 because of their association with Usama bin Laden, the Al-Qaida network or the Taliban.

The question was posed whether Regulation No 881/2002 and in particular its Article 2 §3 prohibits registration of the transfer of ownership to a buyer who, after conclusion of the contract of sale, has been placed on the list set out in the Annex to that regulation.

The Court of Justice held that the Regulation does indeed prohibit the registration of the transfer of the land.

The Court referred to German property law which was applicable to the transaction in question. It found that under that law ownership of real property cannot be acquired directly as a result of a contract recorded by a notary of sale between the seller and the purchaser. The two parties must conclude an agreement that ownership is to be transferred and for that transfer to be registered in the Land Register for title to the property to pass to the purchaser. Without that registration title does not pass.

The Court of Justice held that real property is an economic resource which, under Regulation 881/2002, must not be made available to persons on the list. Final registration in the Land Register means, under German law, that the property is made available to the buyer, since, according to the applicable law, it is only after final registration that the buyer acquires title to the property and can mortgage it.

The practical consequence is that the sellers, who have received the purchase price, must reimburse the purchasers in accordance with German law. The Court held that the reimbursement in those circumstances was not caught by Regulation 881/2002.

Finally, the Court pointed out any issue of fundamental rights concerned the indirect effect of Regulation 881/2002 and the reimbursement under national law of the purchase price. Thus, as regards the application of Regulation No 881/2002, in accordance with settled case-law, the requirements flowing from the protection of fundamental rights within the EC legal order are also binding on member States when they implement EC rules. Consequently they are bound, as far as possible, to apply the rules in accordance with those requirements (see, Joined Cases C‑20/00 and C‑64/00, Booker Aquaculture and Hydro Seafood, paragraph 88).

TRIPs Agreement, Direct Effect and Patents: Case C-431/05

The Court of Justice handed down a neat judgment on the direct effect in national law of Article 33 of the TRIPs Agreement.

The Court held in Case C-431/05 Merck Genéricos Produtos Farmacêuticos that it is not contrary to EC law for Article 33 of the TRIPs Agreementto be given direct effect in national law and be applied directly by a national court. The Court also held that it had jurisdiction to interpret Article 33 of the TRIPS Agreement to ascertain whether it is contrary to EC law for that provision to be given direct effect.

Article 33 of the TRIPs Agreement, as everyone surely knows, is in the section on patents and stipulates :

"The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date."

Hands up all those who did not know that.

The Court held that the WTO Agreement, of which the TRIPs Agreement forms part, was signed by the Community and subsequently approved by Decision 94/800. Therefore, according to settled case-law, the provisions of that convention form an integral part of the Community legal order (see, inter alia, Case C-344/04 IATA and ELFAA, paragraph 36, and Case C-459/03 Commission v Ireland, paragraph 82). Within the framework of that legal order the Court has jurisdiction to give preliminary rulings concerning the interpretation of that agreement (see, Case 12/86 Demirel, paragraph 7).

Because the TRIPs agreement was concluded by the EC and its member States by virtue of joint competence without any allocation between them of their respective obligations towards the other contracting parties, what is decisive in deciding whether the Court of Justice has jurisdiction to interpret the particular stipulation of the TRIPs Agreement is whether the EC has legislated in the field covered by it.

When the field is one in which the EC has not yet legislated and which consequently falls within the competence of the member States, the protection of intellectual property rights and measures taken for that purpose by the judicial authorities do not fall within the scope of EC law, so that the latter neither requires nor forbids the legal order of a member State to accord to individuals the right to rely directly on a rule laid down in the TRIPs Agreement or to oblige the courts to apply that rule of their own motion (Joined Cases C-300/98 and C-392/98 Dior and Others, paragraph 48).

On the other hand, if the EC has enacted rules in the sphere in question, EC law will apply. That means that it is necessary, as far as may be possible, to supply an interpretation in keeping with the TRIPs Agreement (see, Dior and Others, paragraph 47), although no direct effect may be given to the provision of that agreement at issue (Dior and Others, paragraph 44).

In order to answer the question whether there is or there is not any EC legislation covering the subject matter of the TRIPs Agreement, the Court held that a uniform answer at the EC level is required thus justifying giving the Court of Justice exclusive jurisdiction to answer it.

In this case, the Court held that there are no rules on the EC level specifically covering the subject matter of Article 33 of the TRIPs Agreement. Accordingly, the member States remain competent and they can decide whether or not Article 33 has direct effect. It is not contrary to EC law to give that provision direct effect in national law but of course, EC law does not require it to have direct effect.

This judgment will surely be remembered also for containing one of the best and inadvertently funny one line paragraphs:

"As Community law now stands, there is none."

New EU/USA PNR agreement published

The new agreement between the USA and the EU about the transfer of Passenger Name Record data by air carriers to the US Department of Homeland Security has been published.

You can find the agreement itself here. Council Decision 2007/551/CFSP/JHA on the signing of the agreement is available here.

This new agreement - that applies provisionally from the date of signing (July 26th 2007) - replaces the agreement concluded on October 19th 2006 which expired on July 31st 2007 at the latest. (See also Council Decision 2006/729/CFSP/JHA). It is intended to be a long-term arrangement between the two parties that should set this matter to rest.

For previous posts on the matter, see here, here, here and here (there may have been others too, but that is enough for now).

SWIFT, the US Department of the Treasury, the Terrorist Finance Tracking Program and Privacy

As a follow-up to our post of February 5th, 2007 on the SWIFT issue, the US Department of the Treasury and the European Union have exchanged letters about the practical safeguard and controls on the use of personal data under the Treasury Departments's Terrorist Finance Tracking Program.

The Treasury Department letter is available here. It makes clear that the Treasury Department will allow an "eminent European" to oversee that EU-originating data is properly protected.

The working of the Terrorist Finance Tracking Program and the actual safeguards and controls of data are described in this document here.

The EU response is available here.

Interestingly, the French Government issued a statement on the matter authorizing the Council Presidency to sign the draft response above.

The Council issued a handy press release on the matter, available here.

Federal Constitutionalism / European Constitutionalism in Comparative Perspective

Just came across this very interesting article entitled "Federal Constitutionalism / European Constitutionalism in Comparative Perspective" by Dr. Nicholas Aroney of TC Beirne School of Law, University of Queensland. It has been out since 2005 but so glad to have found it now.

You can download it here.

This is what the abstract says :

There has been a long-standing debate over the question whether the European Community is best understood as an international organisation founded upon a series of international treaties, a supranational organisation that is essentially constitutional in nature, or some kind of sui generis entity that partakes of both sets of characteristics. In connection with this debate, the European Community has often been compared to a variety of established federal-states, such as the United States, Canada, Germany and Switzerland.
In these comparisons, while a number of similarities between federations and the institutions of the European Community have been observed, a sharp distinction has almost always been drawn between the supposed foundations of federal constitutions in the will of ?the people' and the establishment of the European Community upon the founding treaties. Further, in many of the comparisons, it has been assumed that it is the nature of the European Community that is in question, whereas the nature of the federal-state is straightforward and uncontroversial. For this reason, it is generally supposed that the established federal-states will shed light on the problematic nature of the European Community, and not vice versa.
However, this paper argues that the constitutional foundations of federal-states are far from uncontroversial and in fact display a number of features that are uncomfortably similar to the institutional foundations of the European Community. Given that the problematic and ambiguous relationship between treaty and constitution has been highlighted by the debate over the European Community, it is argued that comparisons between the European Community and the modern federal-state can shed significant light not only upon the former but also upon the latter.

In reality, the article is very well written, insightful and carefully researched. Above all, the author's style permits him to convey ideas without abstruse wordiness. Excellent.

The Air Transport Agreement between the US and the EU

The air transport agreement concluded between the US and the EU has been published. You can access it here. That new agreement will be applied from March 30th 2008 pending proper entry into force after an exchange of diplomatic notes at some future date.

That agreement aims to replace existing bilateral agreements concluded by the US and individual member States after the Court of Justice handed down its judgments in Cases C-466/98 Commission v. United Kingdom, Case C-467/98 Commission v. Denmark, Case C-468/98 Commission v. Sweden, C-469/98 Commission v. Finland, C-472/98 Commission v. Luxembourg, C-475/98 Commission v. Austria and C-476/98 Commission v. Germany. The Court held that the bilateral agreements in question were contrary to EC law because their subject matter fell within the competence of the EC.

Rather disappointingly, the new agreement does not really aim to liberalize the provision of air transport services across the Atlantic and so will disappoint many travelers. It does not provide for the right to provide cabotage (a transport service between two points in the same country). The aim is more to provide for regulatory convergence on both sides of the Atlantic. There is a glimmer of hope that things will improve because the present agreement is a first stage and there is a commitment to a second round of negotiations.

The Commission has issued an "information note" giving some background to the agreement and summarizing its salient points. Real air transport boffins will enjoy reading this study of the economic impact of the agreement.

And while we are at it, here's the Council Decision on the signature and provisional application on the Agreement.

Leniency, Comity, Commission Proceedings and US Discovery (Rule 26 of Federal Rules of Procedure)

The US District Court for Northern California decided recently that communications made between a person and the European Commission made pursuant to the latter's leniency notice (now replaced by this 2006 Notice) cannot be produced on discovery in the US.

What happened was this. In 2002, attorneys representing Flexsys N.V. met with officials of the European Commission. Flexsys N.V. disclosed the existence of anti-competitive practices in the rubber chemicals industry and requested immunity from fines for Flexsys N.V. pursuant to the Commission’s leniency program. The Commission then investigated the matter and ultimately adopted a decision finding that there was indeed a cartel (see also Commission's press release) and containing highly detailed findings of fact based on specific evidence, including evidence that was submitted by Flexsys N.V. Then in 2006 Korea Kumho Petrochemical Co., Ltd. filed a complaint against defendant Flexsys America L.P., its affiliate Flexsys N.V., and others, alleging that defendants engaged in unlawful conduct to exclude Kumho from the U.S. rubber chemicals market. Kumho then served Flexsys, but not Flexsys N.V., with requests under Rule 26 of the Federal Rules of Procedure for documents related to investigations of suspected antitrust violations in the rubber chemicals industry that were conducted by the governments of the United States, Canada, and the European Union. Flexsys objected.

The US District Court for Northern California handed down an order denying Kumho's motion to compel discovery.

In essence, the District Court had regard to international comity and relied on Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). It applied those general principles to the particular facts of the case in order to justify its refusal to order discovery.

See also the European Commission's Directrate general for Competition submission to the Antitrust Modernization Commission on US discovery and its leniency program.

EU International Treaty Database

Here's something pretty neat (for once) on the Europa web site.

It is a database and list of all the international agreements and treaties that the EU has concluded. You can access it here. Don't confuse that with the web page of the founding treaties of the EU.

The different agreements are listed according to whether they are multilateral, bilateral, according to the country with which they are concluded, by international organization and by activity.

What is particularly interesting is the rubric called "Ready Inventories" that contains lists of agreements containing different types of clauses. So, for example, if you wanted to see what agreements contain a "human rights clause", all you need do is click here.

Generally, it is a useful research tool.