The Court of Justice of the European Union has been busy this week, determining issues in two long running cases; first, a case on recognition and enforcement of judgments, and then another on the use and disclosure of passenger data. Although these cases are not, strictly speaking, binding on the courts of England and Wales following Brexit, they are persuasive and of considerable interest to practitioners in the fields of cross border and data protection.
The Relative Prestige of Judgments and Arbitral Awards
As legal and political debate in the United Kingdom continues to rage over sovereignty, dualism and State obligations on the international plane, the long tail of cases with issues remaining determinable under EU law continues to wag.
One caudal reference from the UK courts relating to the interpretation of the Brussels regime on recognition and enforcement of judgments in a particularly longstanding matter was answered just last week by the CJEU (Case C-700/20 – London Steam-Ship Owners’ Mutual Insurance Association).
The case concerned the sinking of the oil tanker Prestige in November 2002. The disaster caused significant environmental damage to the coastlines of both France and Spain. Criminal proceedings were brought in Spain against the master of the vessel in June 2003 and civil proceedings were attached, brought by inter alia the Spanish State against both the owners of the tanker and against the relevant insurers (the London P&I Club) (as many readers will know, Spanish law allows a direct right against an insurer).
In part because of delays occasioned by the criminal aspect of the proceedings, judgment in the Spanish civil claims was not delivered until January 2016. In that judgment, the London P&I Club were found to be liable, and quantum was determined separately on 1st March 2019.
In the meantime, however, the insurer had started arbitration proceedings in London in January 2012. The arbitration was brought pursuant to an arbitration clause in the contract between the insurer and the insured vessel owners. London P&I Club argued (1) that the operation of the clause meant the Spanish State could only pursue its claims against the insurer within those arbitration proceedings; (2) the insurer had no liability to the Spanish State until damages were paid by the vessel owners pursuant to a ‘pay to be paid’ clause.
The arbitral tribunal found that the Spanish State’s claims against the insurance company were founded on an insurance contract to which English law applied (under normal English conflict of laws principles); Since the Spanish State was seeking to rely on the vessel owner’s contractual rights against the insurance company, the State must respect the contract’s clauses – that is, the arbitration clause and the ‘pay to be paid’ clause. The arbitral Tribunal found for the insurance company on both issues.
Pursuant to section 66 of the Arbitration Act 1996, London P&I Club then applied in the usual way to the High Court for enforcement and judgment to be entered in the terms of the arbitral award. This was granted following a trial in February 2013. An appeal by the Spanish State was dismissed by the Court of Appeal in April 2015.
The result was therefore that the London P&I Club had a judgment of the High Court of England and Wales in their favour, while the Spanish State had a judgment from their courts going the other way – the two judgments clearly irreconcilable. The Spanish State applied to enforce their judgment in England and Wales and an enforcement order was granted by the High Court. On appeal, the reference to the CJEU was made; the central concern was Article 34 of Regulation 44/2001 (the case was so old that the courts were looking at the original Brussels Regulation before it was ‘recast’).
Article 34 provides:
“A judgment shall not be recognised:
- If such recognition is manifestly contrary to public policy in the Member State in which recognition is sought;
- if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought;”
On the face of it, Article 34(3) appears to bite: the dispute is between the same parties, and the Spanish judgment looking to be enforced is irreconcilable with the judgment of the English courts. However, Article 1(2)(d) of the Regulation provides that it does not apply to ‘arbitration’. Consequently the English court sought to ask the CJEU whether a judgment granted pursuant to section 66 of the Arbitration Act 1996 counted as a judgment within the meaning of Article 34(3), and assuming that it did not, whether the court could nonetheless apply Article 34(1) and find that it would be contrary to public policy – in particular the doctrine of res judicata – to enforce the imported judgment.
The CJEU, in remarkable deference to the Mayist brand of linguistic relativity, determined that a judgment was a judgment. In principle, although arbitration was outside the scope of the Regulation, a judgment granted pursuant to an application following an arbitral award was capable of engaging Article 34(3). However, on the particular facts of this case it would offend against the purpose of the Regulation to apply the paragraph. This was because the decision made by the arbitral tribunal could not have been made by a judge in legal proceedings without infringing two fundamental requirements of the Regulation:
- First, EU law does not allow the parties to an insurance contract to invoke a jurisdiction clause against the ‘victim’ of insured damage, where that injured person wishes to make use of the jurisdictional provisions of the Regulation in his/her favour.
- Second, under the principle of lis pendens, if the English matter was before the court, it would have had to stay its proceedings until the Spanish court (first seised of the issues) had accepted or declined jurisdiction.
The CJEU chastised both the High Court and the Court of Appeal for not checking in 2013 and 2015 respectively when converting the arbitral award to a judgment that the terms of the award complied with the provisions and fundamental objectives of the Regulation. Had such been done, or a reference made at that point, a judgment would not have been allowed to be made or to persist. On that basis, Article 34(3) of the Regulation did not allow the English courts to refuse to recognise the Spanish judgment.
Following that conclusion, the question concerning Article 34(1) was quickly dismissed. Since it offended against the Regulation to use Article 34(3) so as not to recognise the Spanish judgment, it would not be appropriate to argue public policy as an alternative reason.
In effect, the prestige of the English judgment was sunk beneath that of the Spanish.
About the Author
Tom Yarrow was called in 2018. Before joining chambers Tom was a civil servant working in various government departments, including as a policy advisor on the UK-EU Withdrawal Agreement at the Department for Exiting the European Union. During pupillage he worked with the Government Legal Department, practising in public law in the fields of public international law, justice and security, human rights and immigration. He has regularly appeared in judicial review proceedings for the Secretary of State for the Home Department, and as a member of the Attorney General’s ‘junior junior’ scheme, he is able to take instructions directly from government clients. He now practises in all of chambers’ practice areas and is an enthusiastic and valued member of the travel team.
Using Passenger Name Record data: the Decision of the Grand Chamber of the CJEU in Ligue des Droits Humains, Case C-817/19
In a magisterial judgment, on 21st June the Grand Chamber of the CJEU interpreted Directive (EU) 681/2016 on the use of passenger name record (‘PNR’) data for the prevention, detection, investigation and prosecution of terrorist offences and serious crime (‘the Directive’). In a nutshell, the Court decided that respect for fundamental rights requires that the powers provided for by the Directive be limited to what is strictly necessary; in the absence of a genuine and present or foreseeable terrorist threat to a Member State, EU law precludes national legislation from providing for the transfer and processing of PNR data of intra-EU flights and transport operations carried out by other means within the European Union.
The Directive requires the systematic processing of a significant amount of PNR data relating to air passengers on extra-EU flights entering and leaving the European Union, for the purpose of combating terrorist offences and serious crime. In addition, it allows Member States to apply the directive to intra-EU flights if they so choose. Belgium duly legislated to bring the Directive into force by way of a Law intriguingly dated 25th December 2016 (do the Belgians not celebrate Christmas? Or was it only cancelled that year for lawyers?). The Ligue des Droits Humains, a not-for-profit association, then filed an action with the Constitutional Court of Belgium for annulment of that law. LDR argued that the law infringed the right to respect for private life and the right to the protection of personal data guaranteed under Belgian and EU law. It criticised, first, the very broad nature of the PNR data captured and, secondly, the general nature of the collection, transfer and processing of those data. It also submitted that the law also infringed the free movement of persons in that it indirectly re-established border controls by extending the PNR system to intra-EU flights, as well as to transport by other means within the European Union. In October 2019, the Belgian Constitutional Court referred ten questions to the CJEU for a preliminary ruling on, among other things, the validity of the Directive and the compatibility of the Law of 25th December 2016 with EU law.
The Court accepted that the Directive does provide for serious interferences with the rights guaranteed in Articles 7 and 8 of the Charter, in so far as it seeks to introduce a surveillance regime that is continuous, untargeted and systematic, including the automated assessment of the personal data of everyone using air transport services. It noted that the question whether the Member States may justify that interference must be assessed by measuring the seriousness of that interference and by verifying that the importance of the objective of general interest pursued is proportionate to that seriousness.
The Court concluded that the transfer, processing and retention of PNR data provided for by the Directive may be regarded as being limited to what is strictly necessary for the purposes of combating terrorist offences and serious crime, provided that the powers allowed are interpreted restrictively. The Court found that:
- The system established by the Directive must cover only clearly identifiable and circumscribed information relating to the flight operated and to the passenger concerned.
- The application of the system established by the PNR Directive must be limited to terrorist offences and serious crime having an objective link, even if only an indirect one, with the carriage of passengers by air.
- The possible extension of the application of the PNR Directive to selected or all intra-EU flights should be limited to what is strictly necessary. To that end, it must be open to effective review, either by a court or by an independent administrative body whose decision is binding.
- In that regard, the Court stated that:
- in the sole situation where the Member State establishes that there are sufficiently solid grounds for considering that it is confronted with a terrorist threat which is shown to be genuine and present or foreseeable, the application of the Directive to all intra-EU flights from or to the Member State, for a period which is limited to what is strictly necessary but may be extended, does not go beyond what is strictly necessary;
- in the absence of such a terrorist threat, the application of the Directive cannot be extended to all intra-EU flights, but must be limited to intra-EU flights relating, inter alia, to certain routes or travel patterns or to certain airports for which there are, at the discretion of the Member State concerned, indications that would justify that application. The strictly necessary nature of that application to the selected intra-EU flights must be regularly reviewed in accordance with changes in the circumstances that justified their selection.
- For the purposes of the advance assessment of PNR data, the objective of which is to identify persons who require further examination before their arrival or departure and which is initially carried out by means of automated processing, the passenger information unit (PIU) may compare those data only against the databases on persons or objects sought or under alert. The system should target individuals who might be reasonably suspected of involvement in terrorist offences or serious crime and should take into consideration both ‘incriminating’ as well as ‘exonerating’ evidence, and, in so doing, must not give rise to direct or indirect discrimination.
- Member States must ensure that the PIU establishes objective review criteria enabling its agents to verify, on the one hand, whether and to what extent a positive match (‘hit’) concerns effectively an individual who may be involved in the terrorist offences or serious crime, as well as, on the other hand, the non-discriminatory nature of its automated processing operations.
- The subsequent disclosure and assessment of PNR data after the arrival or departure of the person concerned may be carried out only on the basis of new circumstances and objective evidence capable of giving rise to a reasonable suspicion of that person’s involvement in serious crime having an objective link, even if only an indirect one, with the carriage of passengers by air, or from which it can be inferred that those data could, in a given case, contribute effectively to combating terrorist offences with such a link.
- The Directive, read in the light of the Charter, precludes national legislation which authorises the processing of PNR data collected in accordance with the directive to be processed for purposes other than those expressly referred to in Article 1(2).
- Article 12 of the Directive, read in the light of Articles 7 and 8 as well as Article 52(1) of the Charter, precludes national legislation which provides for a general retention period of five years for such data, applicable indiscriminately to all air passengers.
- EU law precludes national legislation which, in the absence of a genuine and present or foreseeable terrorist threat to which the Member State concerned is confronted, provides for a system for the transfer, by air carriers and tour operators, as well as for the processing, by the competent authorities, of the PNR data of all intra-EU flights and transport operations carried out by other means within the European Union and departing from, going to or transiting through that Member State, for the purposes of combating terrorist offences and serious crime. In such a situation, the application of the system established by the Directive must be limited to the transfer and processing of PNR data of flights and/or transport operations relating to certain routes or travel patterns or to certain airports, stations or seaports for which there are indications that would justify that application. In particular, EU law precludes national legislation providing for such a system for the transfer and processing of those data for the purposes of improving border controls or combating illegal immigration.
So there you have it; a full precis of the rules relating to the gathering and retention of PNR data, which Member States, the UK and airlines should all be considering in reviewing their practices and procedures.
About the Author
Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she was a member of the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists, and is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.
In sad news, the world’s biggest passenger ship is set to be scrapped without ever setting sail. The Global Dream II has 20 decks, a capacity for 9,000 passengers, and attractions including an outdoor waterpark and cinema. The ship was practically completed when the shipbuilder went bust, leaving them with a giant white elephant on their hands. Attempts to sell the vessel in what must be acknowledged to be a difficult market have been unsuccessful, and so the engines and parts will be sold separately and the lower hull scrapped. Her sister ship, Global Dream, is also without a buyer. All of this leaves Royal Caribbean as the owner of the ship with the greatest passenger capacity in the world, with the Wonder of the Seas accommodating just under 7,000 passengers.