Environmental divergence starts now. EU gold plates the Basel Convention 2019 amendments.

The fourteenth meeting of the Conference of the Parties to the Basel Convention (COP-14, 29 April–10 May 2019) adopted amendments to Annexes II, VIII and IX to the Convention with the objectives of enhancing the control of the transboundary movements of plastic waste and clarifying the scope of the Convention as it applies to such waste. New entries relating to plastic waste were included.

The amendment to Annex VIII, with the insertion of a new entry A3210, clarifies the scope of plastic wastes presumed to be hazardous and therefore subject to the Prior informed consent procedure. The amendments came into force on 1 January 2021.

On 22 December the EU Commission decided to ban the export of plastic waste from the EU to non-OECD countries, except for clean plastic waste sent for recycling. By contrast UK exports of plastic waste will now be made under a new system of PIC, under which the importer has to agree to accept the waste, and has the opportunity to refuse it.

All the UK wants for Christmas is….Lugano

As 2020 draws to its end, two bits of good news in December. The first roll out of COVID-19 vaccines in the UK, and yesterday’s announcement of a free trade deal between the UK and the EU. However, commercial lawyers will be scanning the news for any announcement that the EU will now consent to the UK’s application to join the Lugano Convention 2007. However, even if that were granted today there would still be a three month delay before the UK joined the Lugano Club.

Article 72 of the Convention provides

3.   Without prejudice to paragraph 4, the Depositary shall invite the State concerned to accede only if it has obtained the unanimous agreement of the Contracting Parties. The Contracting Parties shall endeavour to give their consent at the latest within one year after the invitation by the Depositary.

4.   The Convention shall enter into force only in relations between the acceding State and the Contracting Parties which have not made any objections to the accession before the first day of the third month following the deposit of the instrument of accession.

So in the interim, the UK on 1 Jan 2021 would revert to common law on civil jurisdiction and enforcement of judgments as between itself and the Lugano parties, subject to application of the Hague Convention 2005 which comes into force with the UK as an independent signatory, rather than by virtue of the EU’s accession, on 1 January 2021.

However in November the UK and Norway agreed to extend and update their 1961 Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters, so that it will apply to the extent that, and during any period that, the 2007 Lugano Convention does not apply to the UK.

The agreement between the two countries 

Hague Convention 2005. After the transition period.

As expected the UK government has made a fresh declaration agreeing to be bound by the Hague Convention on Choice of Law 2005 in its own right from the end of the transition period at 11pm, UK time, on 31 December  2020. It states “With the intention of ensuring continuity of application of the 2005 Hague Convention, the United Kingdom has submitted the Instrument of Accession in accordance with Article 27(4) of the 2005 Hague Convention. Whilst acknowledging that the Instrument of Accession takes effect at 00:00 CET on 1 January 2021, the United Kingdom considers that the 2005 Hague Convention entered into force for the United Kingdom on 1 October 2015 and that the United Kingdom is a Contracting State without interruption from that date.”

It has also made a reservation under art 21 of the Convention that it will not apply the Convention to insurance contracts except as stated below.

(a) where the contract is a reinsurance contract;

(b) where the choice of court agreement is entered into after the dispute has arisen;

(c) where, without prejudice to Article 1 (2) of the Convention, the choice of court agreement is concluded between a policyholder and an insurer, both of whom are, at the time of the conclusion of the contract of insurance, domiciled or habitually resident in the same Contracting State, and that agreement has the effect of conferring jurisdiction on the courts of that State, even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State;

(d) where the choice of court agreement relates to a contract of insurance which covers one or more of the following risks considered to be large risks:

(i) any loss or damage arising from perils which relate to their use for commercial purposes, of, or to:

          (a) seagoing ships, installations situated offshore or on the high seas or river, canal and lake vessels;

          (b) aircraft;

          (c) railway rolling stock;

(ii) any loss of or damage to goods in transit or baggage other than passengers’ baggage, irrespective of the form of transport;

(iii) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, arising out of the use or operation of:

         (a) ships, installations or vessels as referred to in point (i)(a);

         (b) aircraft, in so far as the law of the Contracting State in which such aircraft are registered does not prohibit choice of court agreements regarding the insurance of such risks;

         (c) railway rolling stock;

(iv) any liability, other than for bodily injury to passengers or loss of or damage to their baggage, for loss or damage caused by goods in transit or baggage as referred to in point (ii);

(v) any financial loss connected with the use or operation of ships, installations, vessels, aircraft or railway rolling stock as referred to in point (i), in particular loss of freight or charter-hire;

(vi) any risk or interest connected with any of the risks referred to in points (i) to (v);

(vii) any credit risk or suretyship risk where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risk relates to such activity;

(viii) any other risks where the policy holder carries on a business of a size which exceeds the limits of at least two of the following criteria:

          (a) a balance-sheet total of EUR 6,2 million;

          (b) a net turnover of EUR 12,8 million;

          (c) an average number of 250 employees during the financial year.

2. The United Kingdom of Great Britain and Northern Ireland declares that it may, at a later stage in the light of the experience acquired in the application of the Convention, reassess the need to maintain its declaration under Article 21 of the Convention.”

Careful who you sell that ship to!

Safety in ship recycling has been a priority of the EU for more than seven years. Under EU Regulation 1257/2013, in force since 2018, there is a complex system of EU approval of ship recycling facilities, it being illegal to send an EU-registered ship for recycling to an unapproved facility (meaning as often as not a not-very-deserted beach in India or Bangladesh, where she is broken up essentially by hand). This Regulation is to be retained EU law post-Brexit, though from the end of this year it will be significantly narrowed, in that it will only apply to UK-registered vessels (i.e. pretty few).

But quite a lot of ship recycling is outside the regulation. A case in point was the Maran Centaurus, a vessel previously in the news as the victim of a high-profile Somali hijacking in 2009 that led to payment of a then-record ransom of about $7 million. Owned by Greek interests, at the end of her life she was reflagged to Palau and sold to a buyer for demolition, who in turn resold her to a beachside Bangladeshi concern. During demolition a worker operating in very dangerous conditions was killed. His widow rightly concluded that the demolishers were not worth powder and shot. She instead sued the owner’s managing agents, a UK company who acting under the owners’ instructions had arranged the sale, alleging that it should have been foreseeable that unless they took steps to ensure that the vessel ended up in the hands of responsible breakers she would be broken up — as she was — without any serious regard for worker safety. The agents denied fault and applied for a strikeout, on the basis that a seller of a ship owed no duty in respect of dangerous practices that might later occur in relation to her. This was not, they said, a case of damage caused by hazardous materials aboard the vessel injuring a worker: there was nothing more here than a sale indirectly to a person likely to have a less than satisfactory attitude to industrial safety.

This writer has quite a lot of sympathy for this view. But in Begum v Maran (UK) Ltd [2020] EWHC 1846 (QB) Jay J declined a strikeout, regarding it as highly arguable that, despite the vessel herself not being unusually hazardous, this was a case where the defendants had created a foreseeable risk of harm and as such potentially owed a duty of care to the worker concerned.

Note that this is not a holding that there was a duty of care: merely that the argument that there was one wasn’t a non-starter. Nevertheless, it should worry shipowners everywhere (and cause them to check on their insurance coverage). It might even extend further: for example, what of a shipowner who sells (or bareboat charters) a vessel to an operator known to have a dodgy safety record: the logic of the Maran case seems to apply here too, and if it is followed we cannot rule out liability in the seller or owner.

Admittedly the if might be a biggish one. We said that we had sympathy for the defendant’s argument. The chances are that this case will now settle so we won’t ever get a final answer here. But the defendants’ case is strong. The case for making owners responsible for policing the safety records of disponees is by no means obvious, any mote than it is obvious that in selling my car I should have to take care lest the buyer is a known drink driver. It may well be worth fighting this issue again if, as seems highly likely, it comes back to the English courts in another case.

Brexit and civil jurisdiction. EU unlikely to consent to UK joining the 2007 Lugano Convention in time for the end of the implementation period.

 

Once the news was all “Brexit, Brexit, Brexit”. Halcyon days. Now it is nothing but the public health emergency. Except, there are still a few pieces of news about Brexit. One of which concerns the arrangements for civil jurisdiction and enforcement of judgments between the UK and the EU Member States after 1 January 2021.

Absent an agreement with the EU on jurisdiction, the UK will revert to its common law rules on jurisdiction on 1 January 2021. This assumes that the UK does not avail itself of the opportunity under the EU Withdrawal Agreement to seek an extension to the implementation period by the end of June, something Mr Johnson has repeatedly stated he will not do, and something which has been specifically ruled out in the statute implementing the Withdrawal Agreement. But there are two other civil jurisdiction regimes to which the UK can become a party, and that is certainly the government’s intention.

The first is the 2005 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. The Convention does not apply to contracts for the carriage of goods ( bills of lading and voyage charters) or passengers, although it would apply to time charters and demise charters. The EU has exclusive competence over anything jurisdictional, and agreements with third party states must be made by the EU acting on behalf of the Member States – hence it was the EU that ratified the 2005 Hague Convention and not the Member States. The UK government previously submitted its accession to this back in December 2018, to come into effect on ‘exit day’, but this has, for the time being, been withdrawn. Doubtless it will re-accede in September to allow for the UK to join the Convention in its own right as of 1 January 2021.

The second is the 2007 Lugano Convention between the EU and three third states, Norway, Iceland and Switzerland. This is basically the original 2001 Brussels Regulation, an inferior regime to the 2012 Recast version, but better than nothing. On 8 April the UK applied to join the Lugano Convention. For this to happen the consent of all the existing contracting parties must be forthcoming. The three third states seem quite happy about this but what about the EU? The signs are that it is not going to consent to the UK’s application.

An article in today’s FT states “EU diplomats said the European Commission had advised the bloc’s member states earlier this month that a quick decision was “not in the EU’s interest”. The diplomats said the commission raised the issue during a meeting with EU member-state officials on April 17, saying that granting the request would be a boon for Britain’s legal sector. A commission official told the meeting there were other international rules that Britain could use as a fallback, and that current signatory countries were all part of the EU’s single market, the diplomats said. With the UK determined to leave the single market after the transition expires, the commission “will surely not make a positive recommendation,” said one national official who took part in the meeting.”

A Brussels I glitch for underwriters, but perhaps no great harm

The sequel to the Atlantik Confidence debacle hit the Supreme Court this week. That court determined that UK courts won’t be doing any more deciding on the affair.

To recap, the Atlantik Confidence, a medium bulk carrier, was scuttled by her owners just over seven years ago in an insurance scam. Her hull underwriters, who had paid out some $22 million in all innocence to Credit Europe, the bank assignee of the policy, understandably asked for their money back. Unfortunately the bank was Dutch, and stood on its right to be sued in the Netherlands under Art.4 of Brussels I Recast, and also under Art.14, which says that insurers can only sue a policyholder or beneficiary in his own jurisdiction. Teare J held (as we noted here) that in so far as the underwriters could prove misrepresentation by the bank (which they had a chance of doing) they could sue in tort in England, since the effects of the misrepresentation had been felt here. Art.14 was no bar, since although this was a matter relating to insurance that provision was predicated on the person sued by the insurer being a weaker party (see Recital 18 to the Regulation), and no sensible person could think Credit Europe needed to be protected from the foul machinations of overbearing insurers. The Court of Appeal agreed (see Aspen Underwriting Ltd & Ors v Credit Europe Bank NV [2018] EWCA Civ 2590), citing the Advogate-general’s view in Kabeg v Mutuelles Du Mans Assurances (Case C-340/16) [2017] I.L. Pr. 31 that Art.14 could be disapplied to a subrogee “regularly involved in the commercial or otherwise professional settlement of insurance-related claims who voluntarily assumed the realisation of the claim as party of its commercial or otherwise professional activity”.

The Supreme Court was having none of it: see Aspen Underwriting Ltd & Ors v Credit Europe Bank NV [2020] UKSC 11. It was brief and to the point. This was a matter related to insurance; there was no agreement binding on the bank to submit to English jurisdiction; and Art.14, as so often in the case of Euro-law, should be interpreted as seeking bureaucratic certainty rather than nuanced determination. Any reference to relative weakness was merely background, there to explain why the EU has a bright line rule that insurers can’t ever be allowed to sue except in the defendant’s domicile.

Where from here? On present indications our final Brexit disentanglement from the EU will be no escape, since the present intention is for the UK to jump sideways from Brussels I to Lugano, which also has identical provisions about insurers (for Art.14 read Art.12).

But remember that in the case of marine insurance Art.14 can be ousted; and the sting of this decision might well be able to be drawn by some nifty drafting. Obviously every policy must have a provision under which the policyholder submits expressly to the jurisdiction of the English courts. There needs to be added to this a provision that no assignee can enforce payment except against the giving of an express undertaking to submit to English jurisdiction in the event of any dispute; and a cast-iron practice of never making payment to any assignee except against receipt of such an undertaking by the underwriter.

Of course we don’t know what the ECJ would say about this (though it’s difficult to see how it could object). But that may not matter. By the time the issue comes to be tested, we are likely to be outside the clutches of that court anyway.

UK withdraws accession to 2005 Hague Convention on Choice of Court.

As expected, 31 Jan 2020 saw the following

 

31-01-2020
With reference to depositary notification Choice of Court No. 01/2019, dated 2 January 2019, regarding the accession to the Convention by the United Kingdom, and with reference to depositary notifications Choice of Court No. 03/2019, dated 29 March 2019, Choice of Court No. 04/2019, dated 12 April 2019, and Choice of Court No. 07/2019, dated 31 October 2019, regarding the suspended accession of the United Kingdom to the Convention, the depositary communicates that the Instrument of Accession, Note Verbale and Declarations were withdrawn by the United Kingdom on 31 January 2020.

 

In the meantime the UK keeps riding along in the Convention due to the EU’s accession.

Don’t worry, another UK accession will probably be along later in the year as the UK approaches ‘third party state’ day (TPS day) on 31 December 2020 – possibly to be followed by another ‘withdrawal’ in the event that the UK and the EU conclude an agreement on judgments and jurisdiction before the end of the implementation period.

Going, going, gone (but no Bong!). UK leaves EU at 11 tonight.

 

Tonight at midnight Brussels time, 11 pm for us Brits, the UK ceases to be a member of the european union. So what will change? Very little. The UK now enters the implementation period which will see it subject to EU law, the customs union and the internal market. It will not participate in the institutions of the European Union so today our MEPs will be packing their bags and coming home.

The implementation period will cease at 11 pm our time on 31 December. In the meantime the UK government is now free to start official negotiations with the EU and with the US and other states for free trade agreements.  These cannot be implemented, though until the implementation period comes to an end.

The Brussels Regime on Jurisdiction and Judgments would cease to be part of UK domestic law on ‘exit day’ pursuant to  2019 No. 479 Exiting the European Union Private International Law. The Civil Jurisdiction and Judgment (Amendment) (EU Exit) Regulations 2019. This has not been repealed, but under ss 1and 2 of the European Union (Withdrawal Agreement) Act 2020 the whole corpus of EU law will remain effective in the UK during the implementation period, including the Brussels Regime.

The UK acceded to The Hague Convention on choice of court agreements on 28 December 2018, followed by a series of suspensions until exit day which come to an end on 1 February 2020. Cometh the exit day cometh the Convention. Previously the UK was a party to the Convention via its EU membership. That will cease at 11pm tonight. At 00.01 tomorrow it will now be a party in its own right. However, in its declaration of 30.10.2019 the UK Government stated

“In the event that a Withdrawal Agreement is signed, ratified and approved by the United Kingdom and the European Union and enters into force prior to or on 1 February 2020, the United Kingdom will withdraw the Instrument of Accession which it deposited on 28 December 2018.”

This does not appear to have happened yet.

Brexit. Here’s the new deal – same as the old deal?

 

Mr Johnson yesterday concluded a new withdrawal agreement with the EU which will be put before Parliament on Saturday, after the rugby.

 

The main changes from Mrs May’s withdrawal agreement are that under the new backstop, that would come into effect on 1.1.2021 if a new agreement with the EU has not been concluded by then, there would be customs border between Eire and Northern Ireland but in practice customs checks on goods going into the island of Ireland, would take place on the UK mainland – not, as has been suggested, in the Irish Sea. Northern Ireland would also be subject to the rules of the internal market as regards goods and agriculture. Stormont will be able to vote on the continuance of this backstop four years after the end of the transition period and should it vote against them these provisions would lose force two years later during which time the “joint committee” would make recommendations to the UK and EU on “necessary measures”. In the absence of a sitting Northern Ireland Assembly at that time the UK would make alternative arrangements to provide for the necessary vote.

If the Northern Irish Assembly votes against the provisions, they would lose force two years later during which time the “joint committee” would make recommendations to the UK and EU on “necessary measures”.

 

There are changes to the political declaration, too. The parties are committed to concluding a free trade agreement which provides for regulatory autonomy in para 18 as follows.

“The Parties will retain their autonomy and the ability to regulate economic activity according to the levels of protection each deems appropriate in order to achieve legitimate public policy objectives such as public health, animal health and welfare, social services, public education, safety, the environment including climate change, public morals, social or consumer protection, privacy and data protection, and promotion and protection of cultural diversity. The economic partnership will recognise that sustainable development is an overarching objective of the Parties. The economic partnership will also provide for appropriate general exceptions, including in relation to security.”

Para 21 contemplates “free trade area, combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition, as set out in Section XIV of this Part.”

Shortly afterwards there follows one of those exceptions.

 

  1. While preserving regulatory autonomy, the Parties will put in place provisions to promote regulatory approaches that are transparent, efficient, promote avoidance of unnecessary barriers to trade in goods and are compatible to the extent possible. Disciplines on technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS) should build on and go beyond the respective WTO agreements. Specifically, the TBT disciplines should set out common principles in the fields of standardisation, technical regulations, conformity assessment, accreditation, market surveillance, metrology and labelling. The Parties should treat one another as single entities as regards SPS measures, including for certification purposes, and recognise regionalisation on the basis of appropriate epidemiological information provided by the exporting party.

And another is to be found in section XIV

“To that end, the Parties should uphold the common high standards applicable in the Union and the United Kingdom at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change, and relevant tax matters….”

The parties commit to “maintain environmental, social and employment standards at the current high levels provided by the existing common standards…. [and] should rely on appropriate and relevant Union and international standards, and include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement. The future relationship should also promote adherence to and effective implementation of relevant internationally agreed principles and rules in these domains, including the Paris Agreement.”

 

But it is not all about goods. Paragraph 25 provides “The Parties should conclude ambitious, comprehensive and balanced arrangements on trade in services and investment in services and non-services sectors, respecting each Party’s right to regulate. The Parties should aim to deliver a level of liberalisation in trade in services well beyond the Parties’ World Trade Organization (WTO) commitments and building on recent Union Free Trade Agreements (FTAs).” This will aim for substantial sectoral coverage in line with GATT article 5.

Maritime transport is mentioned at para which provides “The future relationship should facilitate cooperation on maritime safety and security, including exchange of information between the European Maritime Safety Agency (EMSA) and the United Kingdom Maritime and Coastguard Agency (MCA), consistent with the United Kingdom’s status as a third country.” There is no mention of the Rotterdam Rules.

There would be an independent arbitration process to deal with disputes under the new agreement but: “[131] The Parties indicate that should a dispute raise a question of interpretation of provisions or concepts of Union law, which may also be indicated by either Party, the arbitration panel should refer the question to the Court of Justice of the European Union (CJEU) as the sole arbiter of Union law, for a binding ruling as regards the interpretation of Union law. Conversely, there should be no reference to the CJEU where a dispute does not raise such a question.”

The new WA will have to obtain the approval of Parliament on Saturday, otherwise Mr Johnson will be required by law to seek an extension to 31 January under art.50.  If the necessary letter is not sent, the Scottish Court of Session will reconvene on October 21 to decide whether it will sign a letter to the EU on Mr Johnson’s behalf.

In the meantime, expect a lot of phone calls by Mr Johnson to ‘our friends in the North’. Labour votes, or abstentions, are likely to be critical to getting the new deal through.