Commercial Issues in Private International Law

A Common Law Perspective

Michael Douglas, Vivienne Bath, Mary Keyes, Andrew Dickinson, Michael Douglas, Vivienne Bath, Mary Keyes, Andrew Dickinson

• Publisher: Hart Publishing
• Year: 2019
• ISBN:
  9781509922888
• Edition: 1
• Topic: Diritto
• Subtopic: Conflitto di leggi

As people, business, and information cross borders, so too do legal disputes. Globalisation means that courts need to apply principles of private international law with increasing frequency. Thus, as the Law Society of New South Wales recognised in its 2017 report The Future of Law and Innovation in the Profession, knowledge of private international law is increasingly important to legal practice. In particular, it is essential to the modern practice of commercial law. This book considers key issues at the intersection of commercial law and private international law. The authors include judges, academics and practising lawyers, from Australia, New Zealand, Singapore and the United Kingdom. They bring a common law perspective to contemporary problems concerning the key issues in private international law: jurisdiction, choice of law, and recognition and enforcement of foreign judgments. The book also addresses issues of evidence and procedure in cross-border litigation, and the impact of recent developments at the Hague Conference on Private International Law, including the Convention on Choice of Court Agreements on common law principles of private international law.

1

Commercial Issues in Private International Law

JUSTICE STEVEN RARES^*

Private international law, as a field of legal discourse, is concerned with identifying predictable legal rules that the courts of a forum must apply in resolving disputes that involve at least the laws of two nations. Many text books carry the expression ‘conflict of laws’ in their titles as a neat encapsulation of what is often involved. And the theme of this book, or at least its title, harkens back to what is likely to have been the origin of private international law, namely commercial disputes that arose out of trading relationships between nationals of different states in the ancient world. That means today, as Lord Sumption JSC, speaking for the Supreme Court of the United Kingdom said, ‘Litigation between residents of different states is a routine incident of modern commercial life’.¹

The panoply of distinguished persons who contribute to this volume cover an array of significant topics. I do not propose to trespass, consciously, on what any of them will say. But I did want to use this opportunity to discuss, briefly, the enduring relevance of the central theme of this book in the day-to-day work of the superior courts in Australia.

The principles of private international law affect the resolution of commercial issues in many areas of discourse. These include not only the impact of electronic communication on our daily lives but also the recognition and enforcement in the forum of rights arising under another polity’s laws in relation to commercial contracts, maritime liens, the administration or reconstruction of insolvent estates, long-arm service or service out of the jurisdiction of process and, arbitration agreements and awards. In addition, the courts of the forum must consider the degree to which they should afford comity to the laws of another jurisdiction in deciding whether or not to stay or enjoin the bringing of litigation.

I.The Leges Maritima and Mercatoria

Disputes arising out of breaches of contracts for the sale of goods are quintessentially commercial as well as being inevitable. Vendors want to be paid and purchasers want to be able to enforce their contractual rights to obtain that for which they paid or agreed to pay. The legal systems of the different states in which a vendor and a purchaser are located in a cross-border transaction ordinarily recognise the importance of trade to the forum and the need to give the commercial community, both domestic and foreign, confidence that will support the future willingness of traders in both their own and other jurisdictions to do business with those in the forum.

Maritime law was one of the earliest scenarios for the development of private international law principles. Ships needed to be supplied and repaired, freight needed to be paid. All of this occurred in ports both foreign and domestic for the ship’s owners. Creditors needed to be able to recover debts owed by peripatetic ships’ owners. The ship became a mobile security carrying a maritime lien.

English law has grappled differently over the centuries with whether and how to recognise a maritime lien that arises outside the forum. A maritime lien is a remedy traceable at least to Roman law. Such a lien is a claim or privilege on the res that is carried into effect by a legal process. In Anglo-Australian law, that process is now a proceeding in rem. However, that form of action came late to the common law as it did not previously have a procedure that allowed proceedings in rem. In The Ship ‘Sam Hawk’ v Reiter Petroleum Inc,² the five members of the Full Court of the Federal Court of Australia discussed the history of English law’s treatment of maritime liens, which were creatures of the civil law administered by the civilian lawyers in Doctors’ Commons who constituted the Court of Admiralty before the Judicature Acts of 1873 and 1875 (UK).

Around the late seventeenth century, Lord Holt CJ gave a number of decisions, for the Court of King’s Bench, that upheld the right of maritime creditors to proceed in the Court of Admiralty to enforce maritime liens that arose out of the jurisdiction because the lien holder had no remedy at common law that enabled the ship to be sold to answer for the liability.³ In Johnson v Shippen,⁴ giving the judgment of the Court, Lord Holt CJ emphasised the impact that a contrary approach would have on trade. He said:

When an hypothecation is made either for money to buy necessaries, or for necessaries for the ship, in a voyage, the Court of Admiralty have a jurisdiction, for the party has no other remedy; we cannot give him any remedy against the ship; and if the suit there should not be allowed, the master will have no credit to take up necessaries for the use of the ship.

…

No master of a ship can have credit abroad but upon the security by hypothecation, and shall we hinder the Court of Admiralty from giving remedy, when we can give none ourselves? It will be the greatest prejudice to trade that can be, to grant a prohibition in this case. Indeed if a ship be hypothecated here in England before the voyage begin, that is not a matter within the jurisdiction of the Court of Admiralty, for it is a contract made here, and the owners can give security to perform the contract.⁵ (emphasis added; footnotes omitted)

In essence, much of the underlying, perhaps often silent, judicial reasoning forming the basis of rules in private international law cases is a recognition of first, the potential impact on trade and, secondly, the perceived need for comity between or among other legal systems in order, again, to support trade. Maritime law has been a rich source of rules of private international law because, as Lord Mansfield CJ said in 1759, ‘the maritime law is not the law of a particular country, but the general law of nations’.⁶

Nonetheless, as the decisions in Sam Hawk⁷ and The Halcyon Isle⁸ show, the issues that recognition, in one legal system, of a right given by another legal system, involves several policy issues: first, the categorisation in the forum of the foreign right to ascertain whether it is a right that is the same as, or closely analogous to, one given by the forum, secondly, the assessment of whether the foreign right is substantive or procedural and, thirdly, the nature of the remedy that, if it were recognised and enforceable in the forum, the local court would grant.

Of course, there can be no universally agreed solution as to which system of law a domestic court will apply to resolve a dispute where the relationship of the parties has more than one legal system in its background or, by the time of litigation, foreground.

II.Long-arm Service

Recently, the Council of Chief Justices of Australia and New Zealand agreed to adopt uniform rules for service out of the jurisdiction.⁹ The new rules re-work, but do not change substantively, the legal bases on which our two nations’ superior courts exercise jurisdiction over a foreigner, and compel, at least in legal theory, him, her or it to appear in the forum, if the foreigner is not already present within the jurisdiction when the action is brought.

The selection of the criteria that the now, or soon to be, uniform rules prescribe to justify service out of the forum must reflect generally accepted bases on which national courts exercise jurisdiction over foreigners. That is, the principles of private international law that most national legal systems recognise must underpin the basis on which, in any particular dispute, the forum claims jurisdiction to make orders that will be enforced against a foreigner in his, her or its home jurisdiction in default of appearance in the forum.

If the foreigner is a party to a contract that has an express jurisdiction, or perhaps choice of law, clause, it is likely that the decision of the nominated forum will be recognised in the foreigner’s home and so will provide a sufficient spur for the foreigner to appear. But, the long-arm rules allow service on wider grounds than that and have done so for over a century. Lord Porter recognised in Tyne Improvement Commissioners v Armement Anverssois S/A (The Brabo) (No 2)¹⁰ that, ‘the right to add the foreigner should be sparingly used’.

However, the Supreme Court of the United Kingdom has recently said that it is no longer realistic to characterise the exercise of long-arm jurisdiction as ‘exorbitant’ or as an assertion of the local court’s power over the foreign defendant. In Abela, Lord Sumption JSC¹¹ said that the adoption of the doctrine of forum non conveniens and the United Kingdom’s accession to a number of conventions that regulate the international jurisdiction of national courts:

means that in the overwhelming majority of cases where service out is authorised there will have been either a contractual submission to the jurisdiction of the English Court or else a substantial connection between the dispute and this country … litigation between residents of different states is a routine incident of modern commercial life.¹²

He concluded saying ‘[t]he decision is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum’.¹³

Recently in BY Winddown Inc v Vautin,¹⁴ Besanko, Middleton and Griffiths JJ dismissed an application for leave to appeal the making of an order for service of proceedings in the United States on a yacht manufacturer, pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965. In that case, the purchaser of a yacht had sued the manufacturer’s Australian exclusive dealer arising from alleged breaches of contract concerning the purchase of the yacht and the dealer was likely to claim that the defects in the yacht were the fault of the manufacturer. Also, the purchaser was concerned that the dealer may not have been able to pay all the damages. Item 20 in the table to r 10.42 of the Federal Court Rules 2011 provided that a person could be served outside Australia who was a proper and necessary party to a proceedings.

Importantly, the present rule was based on one of the reforms introduced in the Judicature Act 1873 (UK) being the power to grant all remedies to which any party is entitled in respect of a claim properly brought forward by that party, so far as possible, in order to avoid multiplicity of proceedings.¹⁵ That position is reflected in the statutes governing Australia’s superior courts.¹⁶ Besanko, Middleton and Griffiths JJ said:

the concept of comity, which the [manufacturer] contended was relevant to the task of construction, has limited relevance in construing subordinate legislation in the form of rules of Court. As Gummow and Hayne JJ observed in Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331 at [90], comit...