Case study on Licence contract, environmental damage, unfair competition and defamation Conflict of laws Project Using EU Civil Justice Instruments: Development of training materials and organisation of test seminars (Agreement No. JUST/2013/JCIV/AG/4686) This publication has been produced with the financial support of the Civil Justice Programme of the European Union. The contents of this publication are the sole responsibility of ERA and can in no way be taken to reflect the views of the European Commission.
Topic 3 Conflict of laws Case study on Licence contract, environmental damage, unfair competition and defamation 1 Case study Beverly Hills Laboratory is an American company with seat in Delaware. After years of intense and very expensive research they discover a product, which they call Wild Mane that is supposed to be tremendously effective against baldness. They know what their invention is worth and therefore immediately protect it by requesting patents in many areas of the world, among them in Europe, where they obtain European patents for the Benelux and France. Beverly Hills starts negotiations with GROWIX, a Belgian company, in order to conclude a license contract that would permit GROWIX to exploit Wild Mane commercially, against remuneration in the form of royalties that have to be paid annually. In the course of these negotiations GROWIX does not disclose to Beverly Hills that it has had many prior conflicts with Consumer Associations in Belgium that have caused serious harm to its reputation. Beverly Hills and GROWIX conclude a license agreement that allows GROWIX to commercially exploit Wild Mane in the Benelux and France. The contract is not drafted by a lawyer and contains no jurisdiction or choice of law clause. The commercialisation of Wild Mane in the Benelux and France is not going well- nobody trusts GROWIX products anymore- and GROWIX is thinking about how to increase profits. It decides to take three actions that all fail: -By chance GROWIX discovers that Wild Mane also works as a fertilizer and therefore decides to sell it to farmers in France. GROWIX is confident that Beverly Hills will not find out, but unfortunately Wild Mane affects the drinking quality of the water in Switzerland. The media give ample coverage. GROWIX faces law suits from Beverly Hills. The French farmers that acquired Wild Mane as a fertilizer are sued by Swiss agencies for the protection of the environment. These farmers argue that they cannot be held responsible because the use of Wild Mane as a fertilizer would be permissible according to French law. - GROWIX tries to get rid of its main competitor on the Dutch Market, Longhair, by sending e-mails to Dutch hairdressers with negative information about the quality of Longhair s products. Longhair finds out and decides to sue Growix. - GROWIX tries to increase its sales through an aggressive PR campaign. It concludes a contract with the French PR company Starlight. Starlight strongly recommends hiring the services of the Indian actor Perrukan. Perrukan praises the benefits of Wild Mane at the Cannes Film festival, where he is given an award. This would have worked well had 1 Developed by Prof. Cristina González Beilfuss, Head of External and Institutional Relations of the Spanish Judicial School, Barcelona; Professor of Private International Law at the University of Barcelona 1
not the British tabloid The Moon published a photo of Perrukan which revealed that his head looks like a billiard ball. Perrukan is furious and decides to sue The Moon, which has the perverse side-effect of giving even more publicity to his baldness. GROWIX decides to sue Starlight for compensation since nobody is buying Wild Mane anymore. The Wild Mane saga causes multiple law suits: a) a claim by Beverly Hills against GROWIX for not disclosing relevant information in the course of the negotiations of the contract b) a claim by Beverly Hills against GROWIX for commercialising Wild Mane as a fertilizer requesting: - that Growix stop this kind of commercialisation activities - that Growix pay damages for having carried out these activities c) a claim of Swiss environmental protection agencies against French farmers for polluting drinking water in Switzerland. Please consider as well the weight that should be given to the French farmer s argument that using Wild Mane as a fertilizer was in conformity to French law. d) a claim of Longhair against GROWIX for sending e-mails to Longhair s customers with negative information about the quality of Longhair s products. e) a claim of Growix against Starlight for compensation because the PR campaign ended up harming Growix s reputation. f) a claim of Perrukan against The Moon for publishing an unauthorized photograph of Perrukan I. Introduction The Wild Mane saga requires participants to determine the law applicable to various claims falling under the scope of application of Rome I and Rome II. For this sake they have to be told to assume that the cases are heard by a court in an EU Member State in accordance with the jurisdiction rules laid down in Regulation 1215/2012. The issue of jurisdiction will be briefly dealt with for each claim. Characterizing the claim, that is deciding whether it is a claim in contract or tort and which kind of contract or tort it is, is part of the exercise. The ECJ has clarified that only a legal obligation freely consented by a person towards another and on which the claimant s action is based qualifies as a matter relating to contract. All actions which seek to establish the liability of a defendant, which are not related to a contract, qualify as matters pertaining to tort 2 2 Cases 359/14 and C-475/14, Ergo insurance [2016], unpublished. 2
II. Claim a) 1. Relevant Facts Beverly Hills entered into negotiations with Growix in view of concluding a contract. During the course of these negotiations Growix withheld relevant information. It omitted to mention that it had been involved in several disputes with consumer associations that had seriously damaged its reputation in the market. Beverly Hills claims that it would not have entered a contract with Growix had this information been known. 2. Jurisdiction Jurisdiction is to be determined according to Regulation 1215/2012 (Brussels Ia). Since there is no prorogation agreement and the matter does not pertain to exclusive jurisdiction the relevant provisions would be article 4 (domicile of the defendant) or 7.2 (special rule in tort). In the first case Belgian courts would have jurisdiction, in the second we would need to investigate where the harmful event (not disclosure of relevant information) and the damage (harm to the product s reputation ) took place. If either of those were in an EU Member State different than Belgium the plaintiff would actually have a choice. This is, however, not relevant as regards the determination of the applicable law because the aim of any unification of choice of law provisions is precisely to guarantee that the same law applies regardless of where the case is heard. 3. Applicable law: Which is the EU instrument that applies to the claim? The claim is based on culpa in contrahendo, a concept known in some EU legal systems and not in others. Recital (30) of the Preamble of Rome II gives further guidance as to the meaning of the concept. It starts by saying that for the purposes of the Regulation, culpa in contrahendo is an autonomous concept which includes the violation of the duty of disclosure. Whether such a duty exists or not is a matter that has to be decided according to the relevant applicable law. It is therefore necessary to identify it. The first step is to determine whether Rome I or Rome II applies to the issue. It could happen that participants characterize the claim as pertaining to tort or contract law according to their national legal background. This is not the correct approach- legal concepts used in EU instruments should preferably be given an autonomous interpretation. In order to do so they should investigate the substantive scope of application of Rome I and Rome II. The material scope of application of Rome I is defined in art. 1. Obligations arising out of dealings prior to the conclusion of a contract are expressly excluded by virtue of letter (i) of paragraph 2 of article 1. By contrast Rome II expressly includes culpa in contrahendo (see art. 2.1) and contains a provision on the matter see art. 12 in Chapter III. 3.1 The law applicable to culpa in contrahendo Art. 12 of Rome II provides that non-contractual obligations arising out of dealings prior to the conclusion of the contract are governed by the law that applies to the contract. If the law applicable cannot be determined according to this rule the second paragraph of the provision provides rules that come close to those of art. 4 of the Rome II (general rule in tort). The relationship between paragraph 1 and 2 of article 12 is not completely clear since there are quite a number of rules in order to determine the law that applies to a contract 3
in Regulation Rome I. It is however doubtful if these rules can be applied if the contract was not concluded. Paragraph 2 of article 12 would allow to determine the law applicable to culpa in contrahendo in such a situation. Since in our cases a contract was concluded our task is to determine the law that applies to the contract concluded between GROWIX and Beverly Hills. 3.2 The law applicable to the contract between GROWIX and Beverly Hills It is now necessary to resort to Rome I and to verify whether the contract at hand falls under one of the special rules or under the general rule. The latter is the case- the contract is clearly not a contract of carriage, a consumer contract, an insurance contract or an employment contract. We are told that the parties did not include a choice of law clause in their contract and to our knowledge there is nothing in the contract suggesting that the parties implicitly chose the applicable law. We cannot apply art. 3 Rome I. The relevant provision is art. 4 Rome I. We need to determine first whether the contract falls under one of the types of contracts referred to in paragraph 1 of art. 4. In order to do so we need to focus on what we know from the contract. We have been told that the contract is a contract according to which a company that is the owner of European patents for the Benelux and France allows another company to exploit the invention protected by these rights in return for remuneration. The contract looks like a license contract and is actually labelled as such (although this is not decisive). License contracts are not included in the list of art. 4.1 Rome I, but since the different types of contracts on the list need to be defined autonomously one could argue in favour of a broad interpretation of one of the listed categories. We should start by looking at the case-law of the CJEU. Recital (17) of the Preamble of Rome I indicates that the concept of provision of services and sale of goods should be interpreted in the same way as when applying Article 5 of Regulation 44/2001. It also adds that franchise and distribution contracts are contracts for the provision of services subject to specific rules. The Falco case, a case on jurisdiction, in which the CJEU examined whether a contract under which the owner of an intellectual property right grants its contractual partner the right to use the right in return for remuneration, was a contract for the provision of services within the meaning of the second indent of Article 5(1)(b) of Regulation No 44/2001 (the predecessor of Regulation 1215/2012), is of particular interest for solving the present case. The Court decided that this contract was not a contract for the provision of services and argued that the concept of service implies that the party performing the service carries out an activity in return for remuneration 3. Under a license contract, the court said, the only obligation which the owner of the right granted undertakes with regard to its contractual partner is not to challenge the use of that right by the latter. In the same decision the court also implicitly excluded that the license contract was a contract for the sale of goods, which mutatis mutandis implies the delivery of a good in return for remuneration 4. None of the other categories seems to fit either. 3 See CJEU, case C-533/07, Falco, 2009, ECR I-3327. 4 See also CJEU, case C-381/08 Car Trim, 2010, ECR I-1255. 4
If participants are not in agreement about this they should be reminded about the preliminary ruling procedure. Since the contract in issue is not covered by the list included in paragraph 1 there is a need to fall back on the second paragraph of article 4 which stipulates that 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 key concept of the characteristic performance is not defined in the text of the Regulation nor in its Preamble. The Giuliano-Lagarde Report on the Rome Convention, the predecessor of Rome I, gives some guidance. It states that in bilateral (reciprocal) contracts whereby the parties undertake mutual reciprocal performance, the counter-performance by one of the parties in a modern economy usually takes the form of money. This is not, of course, the characteristic performance of the contract. It is the performance for which the payment is due, i.e. depending on the type of contract, the delivery of goods, the granting of the right to make use of an item of property, the provision of a service, transport, insurance, banking operations, security, etc., which usually constitutes the centre of gravity and the socio-economic function of the contractual transaction (see Giuliano-Lagarde Report under art. 4). What is the characteristic performance in a license contract? This is a highly disputed matter that would also depend on the exact content of the individual contract. In our case we do not have much detail, but it seems to be a simple license contract where the object is simply the temporary use of the protected invention. One possibility would be to follow the line of argumentation of the CJEU in the Falco case. The CJEU said in Falco that in IP license agreements, the only obligation which the owner of the right granted undertakes with regard to its contractual partner is not to challenge the use of that right by the latter. In our case this would mean that Beverly Hills undertakes the obligation not to challenge the exploitation of the European patents it holds over Wild Mane in the Benelux and France if this exploitation were carried out by GROWIX within the terms of the agreement. This would mean that the contract is subject to the law of the country where Beverly Hills has its habitual residence, ergo according to art. 19 its central place of administration. The law applicable to culpa in contrahendo needs, however, to be further specified since Beverly Hills has its central place of administration in the United States of America and the US is a multi-unit state comprising different territorial units, each of which has its own rules of law in respect of contractual obligations. In order to identify the law applicable to our contract we would need to rely on the rule included in art. 22.1 Rome I. Each territorial unit is to be treated as a state for the purposes of identifying the law applicable. This would lead to the law of Delaware because Beverly Hills has its place of central administration in that American state. III. Claim b) 1. Relevant Facts Wild Mane also works as a fertilizer. GROWIX decides to sell it to farmers in France in spite of the fact that this kind of exploitation is not covered by the license agreement. Beverly Hills sues GROWIX. It seeks: a) to obtain an order to the purpose that GROWIX cease to commercialise Wild Mane as a fertilizer b) to obtain compensation for damages. 5
2. Characterisation of the claims Before dealing briefly with the issue of jurisdiction and then determining the applicable law we need to characterize the two claims made by Beverly Hills. An injunction preventing somebody from any further use or sale of the infringing device is a typical remedy in patent infringement cases, whereas damages can be obtained both for breach of contract and patent infringement. Patent infringement is a tort. 3. Jurisdiction The relevant provisions as regards the injunction to prevent further infringement of the protected invention are article 4 (the defendant s domicile) or 7.2 ( forum loci delicti). This would mean that Beverly Hills has the choice of either suing in Belgium (place of central administration of GROWIX) or in France (place where the tort took place). In relation to the claim for damages if its basis is patent infringement the aforementioned applies as well. If the claim is based on breach of contract the relevant provisions would be again art. 4 (Belgium as the defendant s domicile) and 7.1 (place of performance of the obligation in question). The latter would presumably also be located in France since the contractual obligation that has been allegedly infringed is the obligation to sell Wild Mane only as a hair-restorer in each of the countries covered by the license agreement. 4. The law applicable to patent infringement The commercialisation of Wild Mane as a fertilizer is not only a breach of contract but also amounts to the infringement of the IP right. Patents grant their holders a right to exploit an invention to the exclusion of others which can be the object of a contract. In so far as the exploitation is not covered by the contract it would amount to a patent infringement. According to paragraph 1 of article 8 Rome II the law applicable to the infringement of an intellectual property right shall be the law of the country for which protection is claimed (lex loci protectionis). This would lead to French law insofar as we have been told that the sale of GROWIX as a fertilizer only took place in France. If Wild Mane had been commercialized as a fertilizer also in Belgium, Luxemburg and the Netherlands we would face a multi-state tort where the infringement in each country would be subject to a different law. Paragraph 2 cannot be used in the case at hand because European patents are not a unitary community intellectual property right. The procedure for granting European patents has been unified, but the patents can be granted as in our case, for only a part of the EU, and then fall into a bundle of strictly territorial rights. Para. 3 is worth mentioning. In practice IP license agreements very often contain a choice of law clause. According to article 14 Rome II choice of law is also allowed in connection to non-contractual obligations, provided that the agreement was entered into after the event giving rise to the damage occurred. Letter (b) allows such agreements before the harmful event occurs if all the parties are pursuing a commercial activity which would be 6
the case here. Paragraph 3 of article 8, however, stipulates that the law applicable to the infringement of an intellectual property right may not be derogated by an agreement. 5. The law applicable to breach of contract We have already determined that the contract between GROWIX and Beverly Hills is governed by the law of Delaware (see under II). IV. Claim c) 1. Relevant Facts Wild Mane was sold to French farmers as a fertilizer. It negatively affected the drinking quality of water in Switzerland. The French farmers that acquired the product are held responsible and sued for environmental damage by Swiss environmental protection agencies. They claim that using Wild Mane as a fertilizer is not unlawful according to French law. 2. Jurisdiction French farmers can always be sued at their domicile, that is, before French courts according to the general forum of the defendant s domicile. Alternatively Swiss environmental protection agencies can as well sue at the place where the harmful action took place under art. 7.2 Brussels I a). If they would wish to sue at the place where the damage was sustained, that is in Switzerland, the relevant provision would be art. 5.3 of the Lugano Convention (OJ L 339 of 21.12.2007). In the latter case Swiss courts would not be bound to apply the Rome II Regulation but would instead resort to the application of their national choice of law provisions. We will assume that the claim is introduced in France. 3. The law applicable 3. 1. Characterization of the claim The first thing that needs to be checked is whether the harmful event qualifies as an event giving rise to environmental damage that falls under the scope of art.7 Rome II or is just an ordinary tort subject to the general rules. Recital (24) of the Preamble comes at hand here. It defines environmental damage as meaning adverse change in a natural resource, such as water, land or air, etc. The present case clearly meets the requirements of the definition. The wording of the provision further specifies that it covers the damage sustained by the environment or by persons or property as a result of such damage. This means that the provision covers not only direct but also indirect damage. 3. 2. The law applicable According to article 7 the law applicable to environmental damage is to be determined according to the general rule laid down in art. 4.1 Rome II (law of the country in which the damage occurs) unless the person seeking compensation for the damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred. According to the general rule established in article 14 the parties can as well choose the applicable law if they reach an agreement to this effect after the event giving rise to the damage occurred. 7
The most salient feature of article 7 is that it contains a privilege in favour of the victim of environmental damage that is justified in Recital (25) of the Preamble by reference to EU environmental policy. It presupposes that the country where the event giving rise to the damage occurred and the country where the damage was sustained differ as happens in our case where the farmers used Wild Mane as a fertilizer in France but the drinking water was polluted in Switzerland. The environmental agencies that sue the French farmers would therefore have the choice between French or Swiss law. If the country where the event giving rise to the damage and the country where the damage was sustained did not differ the victim would have no choice. We should, however, bear in mind that the provision covers not only direct environmental damage but also damage sustained by persons or property as a result of such damage. The person seeking compensation would therefore also have the choice, if the harmful event and the environmental damage happened in one country but personal damage or damage to the property happened in another country. The provision only provides that the person who claims to have sustained the damage has the right to base his or her claim on the law of the country where the event giving rise to the damage occurred. Contrary to what occurs in weaker party contracts where it is the competent authority s task to compare ex officio the mandatory rules of the law that would apply in the absence of choice and the mandatory rules of the law chosen in order to determine which law is more favourable to the weaker party, here the burden of comparing the two relevant legal systems is on the victim, who in most cases will be the plaintiff. The judge merely has to follow the victim s choice. How and when the victim should base its claim on the law of the country in which the event giving rise to the damage in order for such choice to be binding in procedural terms depends on the lex fori, as is made clear in Recital (25) of the Preamble. It is likely that this aspect will particularly interest participants. If the training materials are used in a national training event it might be interesting to develop this aspect more in detail. If participants come from different countries it might also be interesting to ask each participant about this procedural issue according to his or her national law. We do not know what will finally happen in our case. The competent authority should check in this order: (i) Whether the parties have chosen the applicable law in accordance to art. 14. 1 Rome II (any law, even that of a Third State, can be chosen) (ii) Failing that, whether the person sustaining the damage has validly chosen the law of the country in which the harmful event occurred in accordance to art. 7( French law could be chosen) (iii) Failing that, the law of the place where the damage occurred would apply in accordance to the reference of art. 7 to art. 4.1 Rome II (Swiss law would apply). 4. Rules of safety and conduct We know from the facts of the case that the French farmers who allegedly caused the environmental damage argue that using Wild Mane as a fertilizer was not unlawful under French law. If this holds true they might be entitled to expect that this factor will 8
be relevant when assessing their conduct since they in fact would have acted in conformity to the law of the place where the action took place. Article 17 Rome II deals with rules of safety and conduct. These rules are defined in Recital (34) of the Preamble as referring to all regulations having any relation to safety and conduct, including, for example, road safety rules in the case of an accident. These rules could be relevant in assessing the conduct of the person claimed to be liable. The difficulty with these rules arises if the law applicable to the non-contractual obligation is not the law of the place where the damage occurred. The alleged tort-feasor might argue that he or she has followed the rules of safety of the country where he carried out the action. If this is so the competent authority should take account of such rules even though they pertain to a law that is not the applicable law. The language of the provision, however, shows that the competent authority is given discretion- the rules of safety and conduct should merely be taken into account as a matter of fact and in so far as appropriate. In our case this would mean that if Swiss law were to apply, the competent authority would merely be under the obligation of taking into consideration the rules of safety and conduct which were in force in France when the French farmers used the fertilizer. What legal consequences have to be drawn from such rules is not prescribed by the provision. Art. 17 is a general rule that applies to all kinds of non-contractual obligations. In connection to environmental damage the provision should, however, probably be used restrictively since there is a clear legislative intention of applying the law that is more favourable to the victim s interests, which is also the law more protective of the environment. This is justified by reference to EU environmental policy (see Recital (25) of the Preamble). 5. Direct Action against the insurer We are not told that the Swiss environmental protection agencies have the intention of directly suing the insurers of the French farmers that allegedly caused the environmental damage and it is therefore not very likely that participants have considered this aspect. Since the connection of tort law and insurance law is an important one it is nevertheless worthwhile that the trainer briefly refers to article 18 Rome II when discussing the outcomes of the Working Groups. Article 18 provides that the person who suffered the damage may bring his or her claim directly against the insurer of the person liable to provide compensation if either the law applicable to the non-contractual obligation or the law governing the insurance contract so provides. We would therefore have to determine: (i) Which is the law applicable to the non-contractual obligation in accordance to Rome II and check whether this law provides a direct action against the insurer; (ii) Which is the law applicable to the insurance contract in accordance to Rome I (see art.7) and check whether it provides a direct action against the insurer; (iii) Allow the direct action in the terms of the law that contemplates it. Art. 18 is silent about how to solve the case in which both the laws under (i) and (ii) provide a direct action against the insurer. Probably we should allow the direct action according to the law that is more favourable to the victim since the whole purpose of article 18 is to favour the victim s interests. It is as well doubtful whether an environmental protection agency qualifies as a person suffering the damage, although one might argue that this would be in line with the Pro- Environmental Protection 9
approach of Rome II. As always national courts may refer questions to the CJEU under the preliminary ruling procedure. V. Claim d) 1. Relevant Facts GROWIX tries to get rid of its main competitor on the Dutch Market, Longhair, by sending e-mails to Dutch hairdressers with negative information about the quality of Longhair s products. Longhair finds out and decides to sue GROWIX. 2. Jurisdiction Brussels I a allows the plaintiff (Longhair) to choose between filing a law suit at the defendant s domicile (that is, in Belgium) or at the place where the harmful event took place (that is, in The Netherlands). What is finally the plaintiff s choice is, however, not relevant as regards the determination of the applicable law because the aim of any unification of choice of law provisions is precisely to guarantee that the same law applies regardless of where the case is heard. 3. Characterisation of the claim Longhair s claim against GROWIX arises out of a non-contractual obligation that falls under the substantive scope of application of Rome II. It seems to be an act of unfair competition that is dealt with in art. 6. 4. The law applicable to unfair competition Article 6 is divided into 4 paragraphs. The fourth contains a provision common to the three preceding paragraphs stipulating that parties are not allowed to enter into choice of law agreements in matters related to unfair competition. This is an exception to art. 14 in line with that established for intellectual property rights infringement in art. 8 (both matters have in common that the interests of the economy are at stake).the provision is not of any particular relevance in our case because we have not been told that the parties have made any agreement about the applicable law. The third paragraph does not seem relevant either; it deals with restrictions to competition established under national or community competition law that are further defined under Recital (23) of the Preamble. Paragraph 2 deals with acts of unfair competition that affect exclusively the interests of a competitor, whereas paragraph 1 refers to all other acts affecting competitive relations as a whole and the collective interests of consumers. We therefore need to decide whether the claim at hand falls under one or the other provision. The distinction is not easy because the concept of an act of unfair competition against only one competitor is somehow contradictory since any act that qualifies as an act of unfair competition always has a public or collective dimension. But even so the actions undertaken by GROWIX clearly seem to be acts of sabotage- the intention is to damage one competitor only by directly addressing an important sector of its customers with information on the quality of Longhair s products. According to article 6.2 the law that applies is the law determined according to the general rule of article 4. Dutch law is thus applicable under the lex loci damni rule (art. 4.1) since there is no reason to maintain that there is another law manifestly more closely related to the claim (art. 4.3). 10
VI. Claim e) 1. Relevant Facts GROWIX, a company with its central place of administration in Belgium, decides to hire a PR company called Starlight which has its seat in France in order to promote Wild Mane. The PR campaign becomes a disaster because Starlight recommended hiring Perrukan, who is discovered to be bald, to promote Wild Mane at diverse social events. GROWIX sues Starlight for compensation. 2. Tort, contract or both? We need to characterize the claim. The claim is most likely based on breach of contract because Starlight did not adequately perform its obligation of promoting the use of Wild Mane. The claim could however also be based on tort on the grounds that Starlight recommended Perrukan. We will assume that both is the case and analyse these two related claims. 3. Jurisdiction The relevant provisions would be art. 4 (defendant s domicile) and 7.1 (forum contractus) or 7.2 (forum delicti). 4. Applicable law: Claim in contract The applicable instrument is Rome I and the rules that have to be applied should be well known by now. (i) Participants should first determine whether the claim falls under the special choice of law rules (ii) This not being the case they should check whether the parties have implicitly or explicitly chosen the applicable law in accordance to art.3. (iii) If that is not the case they should examine whether the contract is one of the contracts listed under 4.1 Rome I The contract can easily be characterised as a contract for the provision of services. According to article 4.1 (b) Rome I it is governed by the law of the country where the service provider has his habitual residence or in the case of a company its place of central administration. This means that the law applying to the contract is French law. 5. Claim in tort The applicable instrument would be Rome II. Participants already know many of the rules of that instrument too. (i) They need to check whether the parties have chosen the applicable law in accordance to art. 14 Rome I (ii) This not being the case the next step is to determine whether the tort falls under one of the categories subject to special rules (arts. 5-9) (iii) This not being the case article 4.1 applies. 11
A non-contractual obligation arising out of a tort or delict is governed by the law of the country in which the damage occurs. In the case at hand the damage seems to be a patrimonial damage since GROWIX s position in the market decreases. Where is such damage located? It would seem that it is located in the country in which the person sustaining the damage is habitually resident or in the case of a company has its central administration. Belgian law would thus govern. 6. Related actions Articles 4.2 and 4.3 of Rome II should as well be examined. As participants should already know, article 4.3 contains an escape clause, which would allow applying a law more closely connected to the claim where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with a country other than that where the damage occurred. The second sentence of article 4.3 gives an example of such a manifestly closer connection: it might consist of a pre-existing relationship such as a contract. This is precisely the situation in the case at hand. Starlight and GROWIX were bound by a previous PR contract when Starlight s activity caused the damage. This would allow the competent authority to decide for the application of French law as well to the tort. It is, however, worth highlighting that an escape clause always involves the exercise of discretion- it pertains to the competent authority to carry out an evaluation of all the circumstances of the case. VI. The claim of Perrukan against The Moon 1. Relevant Facts Perrukan is an Indian actor. He is known for winning an award at the Cannes festival. The British tabloid The Moon publishes an unauthorized photograph of him that reveals that he is completely bald. He sues the tabloid. 2. Jurisdiction Perrukan can sue the moon under art. 4 of Regulation Brussels I or under art. 7.2. If as in our case the place where the harmful action (in our case the publication in the UK) and the place where the damage was sustained differ, then the plaintiff has a further choice to sue at either of these two places. In defamation cases there is however case-law by the ECJ that must be taken into account 5. 3. Characterisation of the claim Perrukan requests that the Moon be held liable for violating his privacy and rights relating to his personality. This is clearly a claim based on tort or delict that should be covered by Rome II. It is, however, excluded by virtue of letter (g) of article 1 because no consensus could be found among Member States about which should be the choice-of-law rules (the balance between privacy and personality rights and the freedom of press or freedom of 5 Case C-68/93 Fiona Shevill, ECR I-415 and Case C-509/09 and C-161/10 (joined cases, e Date, ECR I-10269. 12
expression is struck differently in different countries). The situation is clearly deficient and libel tourism is booming. This means that the competent authority will need to resort to its internal choice of law rules.in a purely national training event participants should be encouraged to find a solution according to these rules; in an international one each participant could be asked to report on his or her national system. This would be a nice way of closing the seminarwith a wish for more European choice of law rules! 13