Finance litigation update - July 2022

FINANCE LITIGATION UPDATE – JULY 2022 12 country, and the contract falls within the scope of such activities." This provision can be disapplied in certain circumstances: • Article 6(2) provides that, notwithstanding Article 6(1), the parties to a consumer contract may expressly or impliedly choose which law applies to the contract (providing that such choice does not deprive the consumer of the protection of nonderogable provisions of the law of the country in which the consumer habitually resides); and • Article 6(4)(a) excludes from Article 6(1) any contracts for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which the consumer habitually resides. Mr Khalifeh argued that English law governed the terms of the personal USD account pursuant to Article 6(1). However, given the judge's conclusion that the parties had impliedly chosen Lebanese law, it was clear that, even if Mr Khalifeh could bring himself within Article 6(1), Lebanese law would nevertheless apply as a result of Article 6(2)1. The Bank argued that Article 6(1) did not in any event apply because: • It did not pursue its commercial activities in, or direct such activities to, England and Wales, and the personal USD account did not fall within the scope of such activities; • Mr Khalifeh was not habitually resident in England and Wales at the relevant time (being the date of the original contract and not the date of any subsequent variation); and • The contract in question was one for the supply of services exclusively outside England and Wales, and that Article 6 did not apply by virtue of Article 6(4)(a). Were the Bank's activities "directed" to the jurisdiction? The test under Article 6 of Rome I is materially the same as the test which applies when determining questions of jurisdiction under the consumer contracts provisions of the Recast Brussels 1 In these circumstances, Mr Khalifeh would have benefited from the protection of any provisions of English law that cannot be derogated from by agreement, but nothing appears to have turned on this, and Foxton J merely stated that Mr Khalifeh's attempt to bring himself within Article 6(1) failed at the first hurdle given the conclusion that the parties impliedly chose Lebanese law to apply. Regulation (and now s.15B of the Civil Jurisdiction and Judgments Act 1982). Foxton J referred to the leading authority on the application of this test, Pammer2, which established that directing activities to a particular member state requires something more than simply having a website accessible from that member state; instead, the trader must have "manifested its intention" to trade in the consumer's state of domicile. Foxton J also approved the academic analysis in Plender and Wilderspin3 that: "it is important for courts not to conclude on the basis of one or two weak indicators, such as an international dialling code, that a directed activity exists". However, he rejected the suggestion that there must be a "direct and substantial causal link" between the directed activities and the conclusion of the contract. Provided there is evidence of "directed activities", there is no requirement for a causal connection. On the facts, Foxton J determined that the only evidence of the Bank directing activities to England and Wales was information contained on the Bank's website. Whilst noting that it was a "finely balanced issue", taking the evidence as a whole Foxton J concluded (following Pammer and Plender and Wilderspin) that the content of the website (including the availability of the international dialling code) were insufficient to establish that the Bank had directed relevant activities to the UK. In particular, whilst the Bank's website referred to the Bank as serving "the niche market of Lebanese and Arab expatriates and businesspeople in Europe", Foxton J did not accept that a reader of this material would regard it as an attempt by the Bank to persuade Lebanese expatriates in the UK to open accounts in Lebanon. Any activities that the Bank did direct to the UK were purely to promote services provided by its London branch, and the personal USD account did not fall within the scope of such services. Foxton J distinguished the decision in Bitar v Banque Libano-Francaise SAL (see our earlier article here), highlighting that, in that case, the website material relied upon referred specifically to encouraging investments by expatriates in their Lebanese "homeland", and confirming that the decision in this case was not made on a summary basis (as to which see footnote 3 above) but rather after a full analysis 2 Pammer v Reederei Karl Schluter & Co KG, Hotel Alpenhof GesmbH v Heller (Cases C-585/08 and C-144/09) 3 Sir Richard Plender QC and Michael Wilderspin: The European Private International Law of Obligations (5th) ("Plender and Wilderspin")