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Automatic exchange of information (AEOI) - First exchange in Autumn 2018

Automatic exchange of information (AEOI)

 Since January 1st, 2007, Switzerland has introduced the AEOI legal foundations. The exchanges will take place under the OECD’s Common Reporting Standards (CRS), which provide for the automatic exchange information automatically. For the first time, data will be exchanged in Autumn 2018, between  37 State members and Switzerland. For swiss citizens who have assets in one of the signatory Member States, the swiss financial institutions will also receive those tax related information. From 2019 onwards, swiss financial institutions will also apply the same reporting duties with the other 41 partner states.

The delegation of Switzerland to the OECD believes that the cross- border tax evasion will be prevented with the help of the global standard, and will allow Switzerland to enhance its strong financial place.

https://www.efd.admin.ch/efd/en/home/themen/wirtschaft--waehrung--finanzplatz/finanzmarktpolitik/automatic-exchange-of-information--aeoi-.html

Important case of the CJEU concerning the prohibition of entry into the territory of a non-EU citizen and family reunification

In a decision of May 8, 2018 (CJEU May 8, 2018, aff C-82/16) the Court of Justice of the European Union ruled that applications for family reunification must be examined even if the non-European citizen, member of the family of an EU citizen, received a "ban on entry into the territory”

In the facts

Several non-European citizens residing in Belgium had received a decision to return to their country, accompanied by a ban on entry into Belgium. This ban was issued for reasons of danger to public order.

Subsequently, they had applied for a residence permit from the Belgian Government in their capacity, for some, as descendants of a Belgian national, for others as parents of a Belgian child, and for and finally, legal cohabiting partner engaged in a stable relationship with a Belgian national. These qualities generate a relationship of dependency that can allow the grant of family reunification. But the Belgian authorities have not taken their request into consideration, prioritizing the entry ban, which can only be removed if a cancellation request is made from abroad.

However, the Aliens Litigation Council found that these people were well established in Belgium. Thus, it asked the Court of Justice of the European Union what it should do with these contentious cases.

The decision of the Court

The Court states that it is a special situation. The persons in question would have to leave the territory of the Union to request an application for the annulment of the entry ban in Belgium.

In addition, the family dependency of the non-EU citizen with an EU citizen would force this EU citizen to leave the EU territory for an indefinite period. This fact could "compromise the useful effect of Union citizenship".

In conclusion, the reasons of public policy which justified a referral decision cannot lead to an automatic refusal to grant family reunification. The services must examine if the person presents "a real, current and sufficiently serious threat to public order" and take into consideration all the circumstances, the best interests of the child and the fundamental rights.

 

 

GLOBAL JUSTICE NETWORK – Athens 2018 CONFERENCE

The Global Justice Network (GJN), a group of international lawyers, of which Maître Kokkinos is an active member, meets this summer in Athens at a major conference to discuss current international legal issues.

This "network" was initiated in 2007 by the firm Lieff Cabrazer Heimann and Bernstein, LLP (LCHB) and gathers together lawyers from around the world with the aim of sharing values and ideas on cross-border legal questions.

This meeting begins with a moment of sharing on Thursday, May 24th, 2018 at a cocktail party at the cafe Benaki Museum in Athens. The Friday morning is devoted to a series of interventions on recent and varied topics such as:

1. Environmental litigation and more particularly "disputes over climate change", discussion moderated by Mr. Vicki Maniati and Melissa J. Simms;

2. Aerotoxis syndrome related to exposure to toxic fumes in airplanes, presented by Bert Luyten (Antwerp, Belgium) & BCV Lex (Bordeaux, France);

3. The opioid crisis and the resulting litigation, by Nigel Taylor and Vicki Maniatis.

After lunch will be discussed other topics and more particularly the various disputes across Europe, animated by Melissa Ferrari. Panel members are Tom Goodhead (England & Wales), David (Czech Republic), Antoinette Chin (Netherlands), Carlos VILLA.

After, a "Round table discussion" is planned to discuss the ongoing legal actions of the GJN (migrant workers and human rights, "Norman Atlantic", Pharmaceutical, litigation financier, vaccines, Victims of terrorism attacks...) The main speakers are Marco Bona and Constantin Kokkinos.

At the end of the day, Stefano Bertone and Melissa Ferraris will talk about the "Truck Cartel Follow-on" and the damage related to it, as well as the involvement of the GJN in this case.

The documentary "Pakistan Factory Fire" will be presented by Forensic Architecture, followed by discussion and possible opportunities for project financing.

The productive day will conclude with a cocktail and dinner at the Acropolis Museum Restaurant.

The members of the GNJ Executive Committee will regroup for a final meeting on Saturday morning. This final exchange will make it possible to establish the assessment of the various progress already made and the next steps to be taken.

Although the collaboration between the various lawyers is daily and ongoing, this conference is an additional way for them to meet and discuss the pending and forthcoming litigations.

For more information: http://globaljusticenetwork.com/

Important judgment of the Court of Justice of the European Union on the compensation of passengers in case of flight delay

The judgment delivered by the Court of Justice of the European Union (“The Court”) on 7 March 2018 handled numerous complex cases (Cases C-274/16, c-447/16 and C-448/16) dealing with the same subject: the compensation of passengers for the delay of a flight and the competent jurisdiction in the case of a dispute appears between the passenger and the airline responsible for the delay.

In all three judgments, the Court pronounces the same decision: The airline which has carried out the first segment of a connecting flight, in a Member State, may be attacked before the courts of the final destination in another Member State. This is the case when the individual flights have been booked for the entire flight and the significant delay on arrival is due to an incident that took place on the first of the flights.

One of the cases concerns passengers who booked connecting flights from Spain to Germany with a German airline (Air Berlin). These reservations covered all entire plane ride. In that judgment, the Court reiterates that Article 5 of the Brussels 1 Regulation does not require the conclusion of a contract between two persons, but it presupposes the existence of a legal obligation freely granted by one person to another and on which the plaintiff's action is based. (CJEU 28 January 2015, Case C-375/13, paragraph 39). Article 3 (5) of Regulation No 261/2004 states that “where an effective air carrier has not entered into a contract with the passenger and he is fulfilling obligations under the regulations, he shall be deemed to act on behalf of the person who entered into the contract with the passenger concerned”.

The first domestic flights in Spain were made by the Spanish airline Air Nostrum which works for Air Berlin. During these flights, a delay occurred and the passengers missed their second flight to Germany and arrived at the final destination 4 hours late.The German courts have been seized by passengers to claim compensation from Air Nostrum under the Air Passenger Rights Regulation[1]. The German judges asked, to the CJEU, to clarify the ambiguous situation and indicate if the provisions of ‘’the Brussels I Regulation”[2] should be apply and if German Courts are competent to rule the dispute.Those provisions indicated that a defendant domiciled in another Member State may be summoned, in a contractual matter and more particularly in the case of supply of services, to the Court of the place where the services were or should have been provided.

In this case, Air Nostrum company must be considered as fulfilling voluntary obligations to passengers; these obligations are based on the air transport contract concluded between Air Berlin and the passengers. The passengers will be able to attack the Spanish company before the German jurisdiction.In another case, it is a Chinese airline which had concluded a contract of carriage including a Berlin-Beijing flight with correspondence in Brussels. The flight to Brussels could not be realized because of a refusal (not justified) of the company. The passenger made a claim for compensation before the German judge.The question is: Does the German Court have jurisdiction to deal with the dispute between the Chinese airline and the passenger?

According to the Brussels 1 Regulation: A person / company domiciled in a Member State may be summoned to another Member State, more specifically to the Member State in which the services were or should have been provided. In this case, the company had its headquarters in China and did not have any branches in the European Union. In this respect, the Court recalls that, if the defendant (in this case, Hainan Airlines) is not domiciled in the territory of a Member State, international jurisdiction is governed by the law of that Member State and not by the law of the Brussels I Regulation. That is to say, it is necessary to look what the national law of each country recommend in order to find the jurisdiction competent to resolve the dispute.

In conclusion, the Court of Justice of the European Union once again clarifies its case law in the area of "air" disputes. In the light of the Brussels 1 Regulation and this new case-law, the rules established are favorable to passengers and may be unfavorable to airlines. These companies will have to be attentive when they deal with so-called "correspondence" flights. If the companies make a mistake, they might have to defend themselves before a Court in another Member State and that would make their defence more complicated.

 


[1]Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or delay important of a flight.

[2]Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

 

The New Adoption Act in Switzerland

In Switzerland, the first recast of the law of adoption took place in the 1970s.

Today, 40 years later, Switzerland decides to adopt new rules and adapt its right to the new social patterns. On 28 November 2017, the Federal Council accepted the review of the law of adoption. On July 5, this new entitlement on the 1st January 2018 came into force.

The review of the aforesaid Law enshrines the desire to put the welfare of the child at the center of the adoption decision. This review takes into account the requirements of article 21 of the United Nations Convention on the rights of the Child.

As a result, the provisions of the Civil Code have changed. The conditions of adoption and the rules on the secrecy of adoption are relaxed.

The change of this Act gives the possibility for people living in a registered partnership or concubinage, to adopt the child of their partner (Article 264c CC). This facility is accentuated by the easing of legal provisions. More specifically, the minimum age of adopters is now less restrictive, from 35 to 28 years.

Furthermore, the joint adoption (article 264a of the CC) is possible for the married couples, that they have been in a common household for at least 3 years (5 years according to the former legislation). It is important to note that the joint adoption of a third party is forbidden to same-sex couples as well as to cohabiting partners. The only adoption of a child that is allowed, is the one in case a couple has been living together for at least three years. Thus, the paradoxical situation persists for homosexuals, since they have the right to adopt a child as long as they are single, but they lose it once they enter into a registered partnership.

The second amendment concerns the secrecy of adoption. The question of the individual needs of the person concerned, whether it’s about the adopted person, the biological parents or the adoptive parents, still remains.

The interests of these protagonists are opposed. It is necessary to decide what is the most important between the interest of maintaining secrecy or the interest of obtaining information. While other countries have been practicing for several years the open adoption, a system that allows biological and adoptive parents to have information about each other, in Switzerland, only confidential adoption was authorized.

According to the previous article 268c CC, only the adopted person could obtain information on the identity of the biological parents. This right was based on another right: the right to know its origins, deducted from art. 10 Al 2 Cst.

The previous article 268c CC gave the unconditional right to the adopted child, to obtain the data relating to his biological parents, even if they (biological parents) are opposed to any personal contact.

The Civil Code only required that the biological parents were informed before communicating the requested data to the child (art 268c Al 2 CC).  The deduction from the previous art. 268 (c) CC, was that Swiss law reserved to the adopted child an absolute right to obtain information about his origins.

Now the biological parents will also be able to obtain information about their child, if he consents to it once he is an adult (new art. 268b al. 3). If the child is a minor, the consent of the adoptive parents will also be required (new art. 268B 2).

Consequently, it is interesting to note that the number of children adopted in Switzerland has been steadily declining in recent years. According to the figures of the federal statistical Office the number is four times lower than in 1980. For some specialists this decrease would be linked to an "improvement of child protection systems, family planning and the prevention of abandonment".  Moreover, international adoption becomes more complicated due to the ratification of Switzerland in 2003 of The Hague adoption Convention. Thus, the new provisions on adoption are likely to facilitate adoption procedures and increase the number of adopted in Switzerland.

Switzerland : end of bank secrecy in tax matters for foreigners since January 1st, 2018

Since January 1st, 2018, Automatic Exchange of Information (AEOI) is effectively applicable, so that it is now possible for the Swiss Tax Administration to provide to its partner countries banking and financial information about foreign tax payers who have an account in Switzerland.

This progress in terms of transparency aims to reduce tax evasion through a mutual exchange of information between tax administrations. OECD is at the origin of this initiative and approved the implementation of Common Reporting Standard in order to define responsible authorities for the information processing and to describe how this information will be shared.

The principle is simple: each year, financial and banking institutions based in AEOI’s partner states must transmit to their tax administration information regarding their foreign clients. For instance, they have to communicate the tax number, the bank account number, the amount balance at the end of the year or the gross investment income. It is then to the Tax Authorities to inform jurisdictions where foreign tax-payers come from of the data in their possession. Nevertheless, this mechanism is only possible if a bilateral agreement has been signed between the two involved states, that is to say the tax payer’s home country and the one where the account has been opened. Finally, the obligation of using exchanged information solely for tax purposes must be strictly respected. The State in question will otherwise have to deal with its partner jurisdictions’ refusal to transmit collected data.

In Switzerland, after approval of the legal framework of AEOI by the Federal Assembly in December 2015, financial institutions started to collect information in January 2017 in view to transmit it to the Swiss Federal Tax Administration (SFTA). Since January 1st 2018, SFTA is now able to exchange information with its partner countries, such as Australia, Canada, UE member States, Japan or Norway. In addition, the communication of such data is based on the principle of reciprocity which implies not only that Switzerland must provide information but also that partner countries must be able to do so if a Swiss citizen has an account abroad. 

Nevertheless, Switzerland’s position must be qualified, particularly regarding strictness with which it interprets the principle of specificity. Indeed, various bilateral agreements in which it took part can only operate in respect of a genuine use of the collected data, in others words for the sole purpose to collect taxes and not to tackle corruption or money laundering. Shared between banking secrecy and transparency, Switzerland will closely observe that this principle is respected and will not hesitate to suspend data exchange with its partners in the opposite case. 

Finally, by meeting standards of Common Reporting Standard and of Automatic Exchange of Information, Switzerland safeguards its interests and asserts itself as a new place of financial transparency. 

Our office participating in the September 2017 London GJN conference

The 40+ attorneys members of the Global Justice Network meet once per year overseas (usually in the Americas) and once in Europe to discuss and coordinate cross border litigation issues and files from all over the world. In September 7 and 8, 2017 this important judicial event took place in London at the prestigious Honorable Society of the Inner temple whereas the opening the day before (Sep,6) was held at the Barristers Chambers and at SkyGarden Walk.
Constantin Kokkinos a founding partner of the GJN and member of its steering committee was on the financial litigation panel and presented  the forthcoming attorney’s liability for unlawful behavior  of their clients which is to become effective in the E.U. in 2019 as per the contents of Directive 2011/16.EU.
Several other issues pertaining to international collaboration amongst the GJN members were discussed, notably: A joint European action over the VW consumer litigation which is to take place in the Netherlands , the environmental disaster at the Samarco dam collapse in Brazil and the compensation of its victims, the artificial intelligence and Robotics in law practice in the U.S. , the new Consumer protection law in South Africa etc.  
A new issue of cross border collaboration between GJN members has emerged on concerted practices  in between the four major European truck and bus manufacturers heavily fined by the European Commission for an industry cartel keeping end prices artificially high. A fifth manufacturer from Scandinavia was also fined later (on Sep,27th ) on the same grounds. GJN member attorneys are already active on their jurisdictions to assist bus and truck owners affected by these practices that lasted 14 years (from 1997 up until 2011) and should now be entitled by a decent compensation.
The 2017 London venue was a remarkable success. Inspired by the very first conference of the Global Justice Forum 15 years ago organized also in London by our San Francisco partners Lieff Cabraser Heinmann and Bernstein (repeatedly ranked as the #1 law firm in the whole United States) and of the Global Justice Forum seat at the prestigious Columbia Law school in N.Y., the GJN gathered this time some of the world’s most prestigious law firms across the continents in an effort to collaborate for the benefit of a better and efficient justice around the world.     
 
   

 

Our partner firm in the U.S. obtains record deal for data breach

After two years of intensive litigation, our U.S. partner firm LCHB has helped to conclude a deal valued at $115 million to end litigation over a massive 2015 data breach.
In 2015, the company Anthem, life and health insurance Company was victim of the biggest personal data breach ever.
LCHB has created a pool of funds to provide credit protection and reimbursement for customers. He also paid up to $38 million in attorneys’ fees.
Anthem, the nation’s second-largest health insurer in USA will provide the nearly 80 million victims of the data breach with two years of credit monitoring, cover customers' out-of-pocket expenses stemming from the breach, and pay cash compensation to customers who already got their own credit monitoring.
The settlement also calls for Anthem to guarantee a certain amount of funding for information security and to make certain changes to its data security systems.
This case shows us that cyber-attacks are becoming more common, sophisticated and determined. It is therefore essential that companies have an adapted security program in order to protect the personal data that the clients entrust to them.
Just like our partner, we are dedicated to defending our customers against the violation of personal data.

Our participation in the GJN conference of Prague

On 25th, 26th and 27th of May the GJN (Global Justice Network) spring conference took place in Prague. As a founding member of the GJN our firm has participated at this legal decisive event.

Established in 2007 the GJN gathers law firms from more than 40 different countries all over the world so as to coordinate and promote justice on every continent.

Since its foundation by Lieff Cabraser Heimann and Bernstein, LLP/LCHB (a repeatedly ranked No 1 litigation Law firm in the U.S), the GJN has always succeed to develop and deepen its activities. It provides now the possibility to pursue collective legal actions in order to achieve a more efficient defense of our clients.

The Prague conference provided an opportunity to discuss key issues or current challenges in the field of human rights, medical issues, financial litigation and more particularly at the collective claim against Volkswagen in Europe.

Regarding the Volkswagen case, some of GJN law firms have established a foundation under the name CLEAN (''Consumers Lead Emissions Accountability Network'') to enable European claimants to obtain damages, like Americans owners, through a class action.

Lastly, as a pioneering international organization, the GJN appears to be a necessity in that time of globalization. The trans-border cooperation is a new work method which has great advantages. In particular, it permits our firm to benefit from a large network of partners and associates and to maintain a prestigious presence in many different places. This is a truly innovative scheme by any standards: it enables a combination of in depth knowledge of local legal systems with the strength and quality level of international standards.

 

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

CISG:  TO INCLUDE OR EXCLUDE?  THAT IS THE QUESTION

                              By Karen A. Monroe and Olga Larionova,  Wilk Auslander LLP , Geneva, Switzerland

 The Convention on the International Sale of Goods (CISG) plays an important role in the globalization of contract and trade law by increasing predictability.  As of May 2016, 85 states[1] have adopted the CISG and more than 4,500[2] cases worldwide have addressed its application. 

The top 6 countries for decisions relating to the CISG are Germany (534), China (432), The Russian Federation (305), The Netherlands (268), Switzerland (212) and the United States (183)[3].

Many European countries are signatories as are the U.S., Switzerland, and the Russian Federation.  Notably, the UK is not.[4]

Some basics

In general, the CISG applies only to the sale of goods.  If the counterparties to an agreement for the sale of goods decide to apply the law of the country of one of the parties, in general, that is the law that will apply.  However, if the parties agree to apply the law of the country of one of the parties and both parties' respective "home" country is a signatory to the CISG, the CISG and not the national "chosen" law will likely apply.  For example, in the U.S., which is a signatory, the CISG qualifies as American federal law, therefore pre-empting or superseding state law, including the Uniform Commercial Code.  Often overlooked is that a purely domestic transaction; for example, a contract for the sale of goods between two Swiss counterparties with Swiss law governing or between two U.S. counterparties with New York law governing, may in fact, be subject to the CISG if the Seller's goods will be delivered from a non-Swiss store or warehouse or are manufactured outside of Switzerland, in a CISG signatory country, same result for the U.S. 

Although some may state that "it is international sales 101" to exclude the CISG from contracts for the sales of goods, many times this is not done either  unintentionally or intentionally.   

 Pros and Cons

"Pros", or reasons for selecting the CISG, range from unfavorable local law to undeveloped local law where there are, then, advantages with the more developed and perhaps more favorable CISG.  The "cons", or reasons for not selecting the CISG, include that it is perhaps less known or lawyers have less experience with the CISG or known issues with the CISG.  For example, under U.S. law and other countries' laws one of the greatest issues for litigation is the "battle of the forms" issue occurring when a buyer submits a purchase order with its standard terms and conditions and the seller responds with its acceptance and its own standard terms and conditions.  The CISG follows the "mirror image" rule and the "last shot" rule.  Any difference between the offer and acceptance will convert the acceptance into a counter-offer which, typically, will be accepted by performance of the contract (this is the common law in the U.S.)  As a result, under the CISG the "last shot" rule applies—it will be the terms of the acceptance of the counteroffer that control[5]

CISG may apply without a written contract

For unwritten contracts:  If parties to a contract of sale do not "put it in writing" the CISG will apply; however, under the CISG a contract may fail for indefiniteness if the price is not stated or cannot be determined

Email:  With today's global marketplace and cross-border email exchanges, parties should make sure that those exchanges will not be deemed a contract because under the CISG a formal written contract is not required in order for it to apply.    

Different Languages

The provisions of the CISG were drafted to try to avoid using common law or civil law terms because such terms may not exist or be interpreted differently in different languages, in different jurisdictions. [6]  As those of us with cross-border practices know, especially when parties' "mother tongues" are in languages other than English, but the language of the contract is English, that the same word, business or legal concept, in English, may have different meanings in translation.  Indeed, there are many differences in meanings between legal and business terms in the American language and English language.   Of note is that there are six  "official" language versions of the CISG.[7]

 

Conclusions

Even if it is common practice to exclude the CISG, the number of cases involving interpretation of the CISG is increasing.  Globalization continues as does the internationalization of contract law and trade law.  Although I agree with the many commentators on the CISG that the CISG is beneficial because it increases the predictability of outcomes in international trade, I almost always exclude the CISG. 

To answer the question of whether to include or exclude the CISG, the answer remains, it depends.  However, and most importantly, is to be aware of the CISG's  potential application and then to analyze whether or not it should apply to the contract to avoid having the CISG  apply by default because the issue was not addressed in a written contract.  Typically the CISG exclusion clause is included in the governing law clause as follows:   "The provisions of the United Nations Convention on the International Sale of Goods shall not apply to this Agreement. "

Acknowledgment:

Wilk Auslander LLP is an international law firm with offices in Geneva, Switzerland and New York City. Karen A. Monroe and Olga Liarinova are partners on their Geneva office. (article reprinted with permission)

 


[1] UNICTRAL, Digest of Case Law on the United Nations Convention non Contracts for the International Sale of Goods, 2016 edition, Notes by the Secretariat, page xi, Note 2. http://www.checkpointmarketing.net/newsletter/linkShimRadar.cfm?key=67589776G3419J8082086&l=17348

[2] Id.  

[3] CISG Database/Institute of International Commercial Law, country case schedule:  http://www.cisg.law.pace.edu/cisg/text/casecit.html

[4] CISG database/table of contracting states including commentary regarding UK's absence as signatory: http://www.cisg.law.pace.edu/cisg/countries/cntries.html

 [5] Under the Uniform Commercial Code in the U.S. the "knock out" rule applies meaning the terms are only those to which both parties have agreed and not the common law or CISG law of "mirror image" and "last shot." 

[6]UNICTRAL, Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, 2016 edition, Notes by the Secretariat, page xi, Note 5. http://www.uncitral.org/pdf/english/clout/CISG_Digest_2016.pdf 

[7] UNICTRAL, Digest of Case Law on the United Nations Convention non Contracts for the International Sale of Goods, 2016 edition, Authentic Text and Witness Clause, page 437:  http://www.uncitral.org/pdf/english/clout/CISG_Digest_2016.pdf:  "Textual discrepancies among the six different language versions in which the Convention was approved (Arabic, Chinese, English, French, Russian and Spanish), each of which is declared "equally authentic" by the clause quoted above, are possible; differences in shades of meaning among the different language versions are, given the nature of language, perhaps inevitable