Shipping Law and ‘that referendum’. Part Two. Regulations.

With the repeal of the European Communities Act 1972, EU Regulations will cease to be part of UK law. There are three important Regulations of concern to shipping practitioners.

  1. The Brussels Recast Judgment Regulation 1215/2012
  2. The Rome I Regulation on choice of law for contracts
  3. The Rome II Regulation on choice of law i in non contractual matters.

If these are not re-implemented into domestic law, then this we are back to the common law as regards jurisdiction.  When suing a defendant domiciled in the UK it would once again become possible to seek to stay proceedings on grounds of forum non conveniens.

As regards choice of law, we would be back  to the Contracts (Applicable Law) Act 1990 whose provisions are quite similar to those in Rome I. For tort it would be back to the Private International Law (Miscellaneous Provisions Act) 1995 whose provisions contain significant differences from Rome II.

If losing the three Regulations is regarded as non conveniens then Parliament needs to re-enact them into domestic law. Rome I and Rome II could be re-enacted without the need for any action from the remaining 27 EU Member States, although Parliament may choose to amend parts of the Regulations. Possible candidates for amendment of Rome II would be:(a) clarification that it does not apply to torts on the High Seas and; (b)  providing that the applicable  law  where limitation proceedings are brought before the courts of the UK is that of the UK.  Some thought would have to be given as to whether the ECJ should be treated as having any authority as regards interpretation of the domestic legislation which re-enacts the two Regulations.

With the Brussels Recast Judgment Regulation the position is more complex if it is thought to be desirable to maintain a common jurisdiction framework with the remaining EU  Member States. They would need to amend the Regulation to include the UK, perhaps with a simple definition clause ‘Member state includes the United Kingdom’ and similar amendment, mutatis mutandis, with references to a ‘non-Member State’. The UK would also  have to agree to  the authority of the ECJ as regards the domestic legislation reimplementing the Regulation.

An alternative would be for the UK to ratify the 2007 Lugano Convention which tracks the provisions of the 2001 Brussels Regulation  (the ‘unrecast’ version). However, this would require the UK first to become a member of the European Free Trade Associaton, or to obtain the agreement of all the Contracting Parties, the European Community and Denmark, Iceland, Norway and Switzerland.

The UK could also ratify the  Hague Convention on Choice of Court Agreements 2005 (Hague Convention), which came into force as between the Member States and Mexico on 1 October 2015 ( for intra EU matters the Recast Regulation prevails).  The Convention deals with exclusive jurisdiction clauses in favour of a Contracting State and for recognising and enforcing judgments within Contracting States in respect of contracts with such clauses.

In our next blog I shall address some of the shipping related Directives that will cease to have effect following repeal of the European Communities Act 1972.

Good news for judgment creditors (at least in part)

Getting judgment in a commercial case is one thing. Extracting hard cash from a seriously bloody-minded defendant is another. But for judgment creditors there was at least some good news today from Teare J in the Commercial Court.

Mukhtar Ablyazov, the defendant in JSC BTA Bank v Ablyazov & Anor [2016] EWHC 230 (Comm), is a colourful Kazakh politician, dissident and businessman who used to run the biggest bank in Kazakhstan. A little time ago the bank got judgment against him in the English courts in the modest sum of US$4.6 billion, together with the usual paraphernalia of worldwide freezing orders. But for some little time Mr Ablyazov, like Macavity, hasn’t been there. In 2012 he fled England (where he had been granted asylum) with the prospect of imprisonment for contempt hanging over him. Since then he has been elusive, save for a brief time last year being entertained for free courtesy of the French police, and allegedly busy moving assets around where they can’t be found.

Not having extracted much worthwhile from Mr Ablyazov, the bank then turned to a pal of his, Ilyas Khrapunov, who had allegedly helped him hide, move and spirit away assets subject to the worldwide freezing order. They sued him in tort, alleging that the above acts amounted to unlawful means and could thus engender civil liability for the economic tort of causing loss by unlawful means. Mr Khrapunov applied to strike, arguing that if (as is clear) contempt of court cannot give rise to damages, the bank shouldn’t be allowed to get a similar remedy by the back door.

Teare J held that the bank had at least an arguable cause of action. This is significant. Big-time debtors need people to help them evade judgment creditors: this salutary judgment not only gives creditors someone else to sue, but more importantly will give anyone contemplating helping a fugitive tycoons something to worry about.

Why only partly good news? The answer is Euro-law on jurisdiction. The assets were abroad, and neither Mr Ablyazov nor Mr Khrapunov was resident here (Mr Ablyazov seemed to be in Switzerland). Moreover, the damage alleged was held to have occurred abroad, even though it related to the frustration of an English judgment. It followed that the only head of jurisdiction under the Lugano Convention was such loss as might be proved to have been caused by acts, if any, committed by Mr Khrapunov in England before Mr Ablyazov left in haste.

Oh well, you can’t have it all. After all, what’s a billion or so between friends? In any case one suspects we haven’t heard the last of this.