INTERNATIONAL BRIEFINGS
International Briefings
The Cour de cassation1 re-focused its stance on asymmetrical
jurisdiction clauses in two decisions in 2015.
For the record, the Cour de cassation handed down its controversial
Rothschild decision in 2012 in which it ruled that an asymmetrical
jurisdiction clause, which restricted the bank’s customer to the
exclusive jurisdiction of the designated court while the bank had the
option to bring proceedings in any other competent jurisdiction,
was subject to the French contract law concept of potestativity
(potestativité), and was null and void. The potestativité condition is one
which makes the fulfillment of a contract dependent upon an act which
is in the control of only one party. That condition is void. The decision
also held that the asymmetrical jurisdiction clause undermined Art
23 of the European Regulation no 44/2001 (Brussels I Regulation).2
Article 23 enables the parties to a contract to select which Member
State’s courts will have jurisdiction over any dispute. The Rothschild
decision was criticised because the bank’s jurisdiction was not a purely
discretionary condition of the contract and the French concept of
potestativity should not have been used to construe the Brussels I
Regulation. In fact, the courts of Luxembourg and England have held
asymmetrical clauses valid and enforceable on the basis of the same
Art 23 of the Brussels Regulation.3
Nevertheless, the Rothschild decision altered market practice. In
particular, in a communiqué dated 24 January 2013, the Loan Market
Association made recommendations to address invalid jurisdiction
clauses in financing agreements involving parties domiciled in France.
In the first of the two decisions, Danne Holding v Credit Suisse
dated 25 March 2015, the Cour de cassation reviewed a jurisdiction
clause between a French company and the Swiss bank Credit Suisse
that provided for disputes to be heard in the courts of Zurich, but
gave only the bank the option to commence proceedings in any
other jurisdiction.4 The issue was governed by Art 23 of the Lugano
Convention on Jurisdiction and the Recognition and Enforcement of
Judgments in Civil and Commercial Matters of 2007, drafted in the
same way as Art 23 of the Brussels I Regulation. The appeal court of
Angers denied jurisdiction in favour of the Zurich court on the basis
of the asymmetry in the clause. The Cour de cassation quashed the
appeal court’s decision on the grounds that the jurisdiction clause was
asymmetrical. In its ruling, the Cour de cassation impliedly dismissed
the concept of potestativity and based its decision on the principles
laid down by the Court of Justice of the European Union (CJEU)
case law instead, in particular in the Coreck case.5 The latter decision
has required that the competent jurisdictions can be objectively
determined through factors that must be sufficiently precise to enable
the court seized to ascertain whether it has jurisdiction, whether
those factors are referred to in the clause or, where appropriate, can be
determined by the particular circumstances of the case. The Cour de
cassation has referred the case to another appeal court which will retry
it on the jurisdiction issue having regard to the above principles.
In the second decision handed down on 7 October 2015, the Cour
de cassation upheld a judgment of the appeal court of Paris that had
endorsed an asymmetrical jurisdiction clause agreed between the
French company eBizcuss (reseller) and Apple Sales International
(supplier).6 The clause provided for a unilateral prorogation of
jurisdiction but framed the choice of alternative courts as follows:
whilst the reseller could only sue the supplier before the Irish courts,
the supplier was entitled to bring proceedings before the Irish courts,
or the courts of the State where the reseller is incorporated, or the
courts of the States where the supplier has suffered a loss. The Cour
de cassation ruled that the clause provided for the objective factors on
the basis of which the supplier could chose other courts and hence
‘responded to the requirement of foreseeability that must be satisfied
by choice of forum clauses’. However, it noted that the appeal court
wrongly based its decision on Art 5(3) of the Brussels I Regulation,
construing the jurisdiction clause as an anti-competitive practice,
despite a lack of express reference in the clause as such. The Cour de
cassation based its decision on Art 23 which has no application to anticompetitive practices.
Several consequences may be drawn from the above two cases:
French case law now simply applies the predictability principle set
––
forth by the CJEU to determine whether the clause providing for
January 2016
Butterworths Journal of International Banking and Financial Law
which must contain certain prescribed minimum terms.
The FMA’s main attempt at investor education in this area has
been to require that warning statements be prominently displayed
on the website of any licensed crowd funding service provider,
and on every equity investment application form. As a condition
of its licence, the crowd funding service provider is required to
obtain written confirmation from every investor that he or she
understands the risks associated with the investment.
HOW HAS THE MARKET REACTED TO THE NEW RULES?
The first issuer to use a crowd funding platform was craft brewery
Renaissance Brewing, which raised NZ$700,000 in 13 days in
August 2014 through the platform provided by Snowball Effect.
Figures for the 12 months following the issue of the first crowd
funding licence show that 26 offers were launched, 20 of which
were successful and raised NZ$12m in total. Each successful offer
attracted 151 investors on average, although the average investment
per person was relatively modest – NZ$3,900. The average offer
lasted four to five weeks, however the range was very broad (one day
to three months). Half of the companies offering their shares did
not report any revenue in their previous year. n
France
Authors Jean-François Adelle, partner and Hélène Payen,
lawyer, Jeantet, Finance
In 2015, the French Cour de cassation retreated from a
prohibition of asymmetrical jurisdiction clauses based on
potestativité
62
an unilateral option granted to one party to choose other courts
is valid.
Consequently, parties are encouraged to draft very carefully
––
the jurisdiction clause to set forth criteria that are sufficiently
detailed and objective to render the exercise of the one sided
option predictable. The parties must avoid simply providing
that one of the parties is able to bring claims before “any other
competent courts”.
Although the first 2015 Cour de cassation’s decision was handed
––
down under the Brussels I Regulation which was replaced by
the European Regulation No 1215/2012 (Brussels I Recast
Regulation) on 10 January 2015, its findings remain valid since
Art 25 of the Brussels I Recast Regulation has substantially the
same content as the former Art 23 of the Brussels I Regulation.
Both the Brussels I Regulation and the Brussels I Recast Reg––
ulation expressly exclude arbitration from their scope. Thus,
it may be argued that an asymmetrical jurisdiction clause
providing for arbitration but granting one of the parties only
the right to initiate proceedings before state courts, or vice
versa, may be held valid whether or not the predictability tests
discussed above are passed. However, this is to be stated with
care, as both the Brussels I Recast Regulation and the 2007
Lugano Convention apply with respect to clauses designating
state courts. If the option relates to arbitration, it will necessarily meet the objective and predictability test. If the option
relates to state courts, it is advisable that it complies with the
above criteria.
The LMA will perhaps adjust its 2013 recommendations
––
concerning asymmetrical jurisdiction clauses in financing
contracts involving a French party. In its 24 January 2013
communiqué, without making recommendations as to jurisdiction clauses for any particular transaction, the LMA set
forth three alternative options for clauses giving jurisdiction
to French courts:
a one sided clause with a fall back provision;
––
single jurisdiction clause only; and
––
a multiple jurisdiction clause giving lenders and obligors the
––
right to take proceedings in specified or other courts.
Whilst all these options remain relevant, it would seem that the
first option is no longer a good choice.
n
1 The Cour de cassation is the higher civil court in France.
2 Civil Division, 1, 26 September 2012, Case no 11-26022.
3 See eg, Mauritius Commercial Bank Ltd. v. Hestia Holdings Ltd.
And Sujana Universal Industries Ltd. [2013] EWHC 1328 (Comm);
District court of Luxembourg, 15th Chamber, 29 January 2014.
4 Civil Division, 1, Case no 13-27264.
5 Case C-387-98 of 9 November 2000, Coreck Maritime GmbH v
Handelsveem BV and Others.
6 Civil Division, 1, Case no 14-16898.
Butterworths Journal of International Banking and Financial Law
Finland
INTERNATIONAL BRIEFINGS
International Briefings
Authors Helena Viita and Annina Henttonen
The current Finnish feed-in tariff scheme available for wind
power plants is all but fully booked
The feed-in tariff provided for wind power in Finland has been very
attractive for developers and financiers. What the feed-in tariff offers
is a secured revenue stream in the form of a guaranteed price for
the electricity production of the wind power plant for twelve years.
However, with power prices on the Nordic market being at quite low
levels, the relatively lucrative government budget backed scheme was
one of the targets of the austerity measures adopted by the newly
elected government.
At first the newly elected government announced in the spring of
2015 that it would cut the subsidy so that only 2,000 MVA of wind
power capacity would be accepted instead of the original 2,500 MVA.
It was no wonder that such an announcement created uncertainty
regarding new wind power projects in Finland and lead to a stampede
where project developers endeavored to secure their place in the feed-in
tariff scheme before the announced cuts would take effect. In the end
the government withdrew its original announcement of cutting the
subsidy and instead decided to set a long stop date when applications
for entry would no longer be accepted – this being in effect a way of
closing the feed-in tariff system for new entries once the total capacity
quota had been filled up.
On 23 October 2015 the latest amendment to the relevant
legislation entered into force. It sets out how the feed-in tariff is wound
down. The amendment will not affect projects already approved into
the feed-in tariff system or which have received a quota decision prior
to the enactment of the amendment.
After the amendment, the approval of a wind power plant into
the total capacity quota (2,500 MVA) of the feed-in tariff system
requires a quota decision (a previously optional step) which is in force
for two years or until 1 November 2017, whichever is earlier. The final
application for inclusion into the feed-in tariff system must be made
during the validity of the quota decision.
In early January 2016 the nominal output of wind power capacity
approved into the feed-in tariff scheme amounts to nearly 1,100
MVA, in addition to which quota decisions have been granted for
over 1,000 MVA. Further, there are pending quota and acceptance
applications for about 970 MVA, meaning that less than half of the
pending applications have a possibility to be accepted into the current
feed-in tariff, and that no new quota applications can be made. The
large amount of quota applications submitted immediately after the
announcement of the subsidy being cut indicates that the volume of
projects in development was higher than perhaps expected, and in fact
higher than even the initially planned total capacity of 2,500 MVA.
January 2016
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