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FINALLY A TRUST IN SWITZERLAND![1]

The Federal Council is proposing, on behalf of Parliament, to introduce this new legal instrument into the Code of Obligations. At its meeting on 12 January 2022, it sent its draft for consultation.

The trust is an ancient legal institution under Anglo-Saxon law. Although not provided for in our legal system, it has been recognised in Switzerland since the entry into force, on 1 July 2007, of the Hague Convention on the Law Applicable to Trusts and their Recognition of 1 July 1985.

According to Art. 11 para. 1 of the Convention, a trust validly constituted under the applicable foreign law is recognised in the other States parties to the Convention.

Given the complexity and flexibility of this institution, which may take several forms and pursue different purposes, there is no single definition of a trust. At the international level, the Convention has proposed the following definition in Art. 2(1): "[...] the term "trust" refers to the legal relationships created - inter vivos or on death - by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.".

The trust is therefore an institution with three parties:

- the settlor, who may be a natural or legal person, is the one who transfers his property to the trustee

- the trustee is the person who formally holds the assets, who becomes the "legal owner" of them

- the beneficiaries, who for the sake of simplicity can be indicated as the economic owners of the trust property.

The trust may be constituted by inter vivos trust or by testamentary trust. It should be noted that the deed of trust is a unilateral act of the settlor, not subject to the acceptance of the trustee, and that the trust does not have legal personality, which distinguishes it from the institution of the foundation.

In Switzerland, trusts are an important asset planning instrument, particularly in the area of inheritance, to enable the transmission of assets over several generations.

In order to prevent Swiss clients from having to turn to foreign countries to set up trusts, Parliament has instructed the Federal Council, through motion 18.3383, to create the legal basis for the introduction of this institution in Swiss law.

If the trust were to be introduced in our country, it would be necessary to adapt the Code of Obligations and other federal laws, in particular tax laws, which would explicitly specify the rules to which the trust would be subject.

The consultation procedure opened by the Federal Council on 12 January 2022 will last until 30 April 2022.

For further information, please visit

https://www.admin.ch/gov/fr/accueil/documentation/communiques.msg-id-86746.html

 


[1] Inspired by the article of Stefano Rizzi: https://ambrosioecommodo.it/approfondimenti/finalmente-il-trust-svizzero-2/

Execution only contract and investment advice contract

In the banking relationship between the client and the service provider, three types of legal relationship can be identified under Swiss and European law: i) execution only, ii) investment advice, iii) management mandate.

What distinguishes them is the degree of involvement of the service provider on the one hand, and the degree of protection given to the client on the other.

An execution-only contract, which, as its name suggests, consists of the provider's sole execution of client orders, will not confer any particular protection on the client. Indeed, the Swiss legislator and, to a lesser extent, the European legislator consider that in order to keep this type of relationship simple, cheap and fast, it is up to the client himself to safeguard his interests.

On the other hand, in more complex legal relationships such as investment advice and management mandates, it can be observed that the greater the activity of the service provider, the greater the degree of client protection.

In the investment advice contract, the decision whether or not to carry out a transaction is taken by the client, but the provider can make suggestions and thus influence the client.

In the management mandate, by delegation from the client, the service provider replaces the client in the decision-making process and in the conclusion of transactions.

While the distinction between the management mandate and other types of banking relationships is clear, the differences between the execution-only contract and the investment advisory contract may be more subtle.

In both cases, the decision on which operations to carry out rests with the client. If an operation goes wrong, the question arises as to who is responsible for the consequences.

In the execution only contract, at least from the point of view of Swiss case law, the service provider is not obliged to ensure the general safeguarding of the client's interests (BGer 4A_369/2015 of 25, recital 2.3), nor is he obliged to assume a general duty to provide information, either about the orders given by the client, or about the likely development of the chosen investments and the measures to be taken to limit the risks (BGE 133 III 97 recital 7.1.1; BGer 4A_336/2014, recital 4.2). Nor does he have to verify the appropriateness of the transaction requested by the client, or its suitability in relation to the client's portfolio as a whole.

Exceptionally, the Swiss Federal Supreme Court has accepted the existence of a duty to warn on the part of the service provider, in particular when the service provider realises or should have realised that the client has not identified the risk associated with the investment he is considering, or in the case of a special relationship of trust developed in the context of a long-term business relationship between the client and the financial services provider (BGer 4A_369/2015, recital 2.3).

In the investment advice contract, Swiss case law notes that the service provider's duties to inform, advise and warn are not set out in general terms, but depend on the type of contract concluded and the circumstances of the specific case, in particular the client's knowledge and experience (BGer 4A_336/2014, recital 4.2.; BGer 4A_364/2013, recital 6.2). In particular, when the provider makes a recommendation about a particular security, he must be aware of several factors, including the client's personal financial situation, the degree of risk the client is prepared to take and whether the advice he gives also relates to the suitability of the investment envisaged (BGE 133 III 97, para. 7.2; BGer 4A_444/2012, para. 3.2).

In conclusion, in an execution-only contract the service provider's duty to inform is the weakest and, as a rule, the client himself is liable for his transactions. In contrast, the investment advice contract entails more obligations for the service provider and the latter may, under certain conditions, be liable for the damage suffered by the client.

From a public law perspective, the European and Swiss legislators have adopted the MiFID II Directive and the Financial Services Act (FinSA), respectively, in order to ensure greater transparency in the markets and enhanced consumer protection. These laws, which detail the information obligations of financial service providers, will be the subject of a future article.

In addition to our many years of expertise in financial matters, our firm also succeeded in obtaining the highest compensation in the world for claims against a major US financial institution following the collapse of Lehman Brothers.

Euroferry Olympia: 8 yars after the Norman Atlantic

When our firm undertook the legal defense of a large number of passengers on board the NORMAN ATLANTIC that caught fire on 28 December 2014, despite the satisfactory compensation we subsequently obtained for our clients, we said never again but unfortunately, history repeats itself.

Another Italian ship on the Adriatic line the Euroferry Olympia again caught fire on 18 February 2022 and at this moment at least 11 people are already missing while the ship is being towed on fire.  Responsibilities have not yet been assigned but it is certain that they are many and scattered in many directions.

The damage is enormous and multiple and the legal treatment of responsibility requires special attention, as in the case of the Norman Atlantic. Our office, in coordination with our associates, maritime lawyers in Greece and Italy, within the framework of our international organization Global Justice Network, with whom we have jointly handled the Norman Atlantic case, is at the disposal of those involved in this tragic accident for any assistance or information without any obligation or commitment on their part.  

International child abduction

Since the 1970s, the phenomenon of child abduction has grown. Globalization and developments in family law, in particular the generalized attribution of joint parental authority in the event of separation or divorce, have meant that this phenomenon has continued to grow in recent decades.

The Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction (hereinafter referred to as the HC80) is the main legal instrument in this field since it is currently binding on 100 States.

A study conducted by Prof. Nigel Lowe (Cardiff University) and Victoria Stephens found that under the HC80, 2,270 applications for return were made in 2015. The study went on to establish that: 73% of abductions were by the mother; proceedings ended with the return of the child in 45% of cases, of which 17% were voluntary returns and 28% were court-ordered returns; 14% of applications were subsequently withdrawn.

The recent increase in bi-national couples is unfortunately also a cause of the increase in the number of abduction cases.

Among the most common abduction situations are those where the custodial parent decides to move abroad (mostly to return to his or her country of origin) without the agreement of the other parent holding parental rights; or where the parent holding access rights decides to keep the children abroad at the end of the holidays. In these cases it is important to understand what legal means are available to enforce one's own rights.

The main purpose of the HC80 is to restore the status quo ante, i.e. to ensure the return of the child who has been wrongfully removed or retained, and to ensure that existing rights of custody and access in one Contracting State are respected in all Contracting States (Art. 1 HC80).

The procedure

The HC80 applies in cases of wrongful removal or retention of a child up to the age of 16 (Art. 4 HC80). The removal or retention is considered wrongful if it violates a person's right of custody under the law of the State of the child's habitual residence immediately before the removal or retention and that right was being effectively exercised at the time of the removal or retention (Art. 3 HC80).

The parent whose custody rights have been violated by the removal of the child may apply for return either to the Central Authority of the country of the child's habitual residence (immediately before the removal) or to the Central Authority of any other Contracting State, including the country where the child is located after the abduction (Art. 8 HC80).

The Federal Central Authority of Switzerland is the Federal Office of Justice. The Greek Central Authority is the Department for International Judicial Co-operation in Civil and Criminal Matters of the Ministry of Justice.

It is also possible to bring legal proceedings directly before the competent court without going through the central authority.

If the conditions (Art. 3(1), Art. 4 and Art. 12 HC80) of the Convention are fulfilled and if no exception (Art. 13 HC80) is applicable, the competent judicial authority must order the immediate return of the child (Art. 12(1) HC80). It should be noted that the judge will not rule on the merits of the custody right but exclusively on the return of the child.

Our firm, specializing in family law, is at your disposal for any questions or requests for assistance in this matter. Thanks to our network of lawyers in Switzerland, Greece, but also elsewhere in Europe and worldwide, we will be able to find a solution to your problems.

 

Road traffic accidents: awarding damages for homicide, personal injury and compensation for moral damages in Switzerland

In the event of a road traffic accident causing death and serious injury to others, in addition to criminal proceedings, victims or their relatives may also take civil action for various types of damages.

  1. Economic damages in the event of the death of a close relative

Article 45 of the Swiss Code of Obligations provides that in the event of homicide, compensation must cover the funeral costs (para. 1). If the death did not occur immediately, the compensation must include the costs of medical treatment, as well as the loss resulting from the inability to work (para. 2). Finally, if, as a result of the homicide, other persons have been deprived of their support, they must also be compensated for that loss (para. 3).

A supporter is defined as a person who, through regular and free services in cash or in kind, provides or would have provided all or part of the maintenance of another person. A distinction is made between two types of support: actual support and hypothetical support (4C.195/2001). In order to determine the amount of the latter compensation, i.e. the loss of support (Art. 45 para. 3 CO), it is necessary to estimate the hypothetical income that the deceased would have earned without the accident. The calculation of the damage resulting from the loss of support is different depending on whether the person was providing support in cash or in kind. The decisive moment for this calculation is the day of death (FCR 101 II 346). When the deceased's relative provides support in cash, the calculation is made considering several criteria: the probable income of the support, the proportion of this income devoted to the person supported, possible reductions and the duration of the support. If the same relative of the deceased provided support, not in money but in the form of work, the value of this support must be estimated. This is particularly the case for household work performed by the supporter. The calculation principles for household damage resulting from personal injury apply by analogy. The amount of compensation will be determined based on the individual case, which will be assessed by the judges on a case-by-case basis.

  1. Damages for personal injury

Article 46 of the Swiss Code of Obligations covers the costs of personal injury, the damage resulting from the inability to work, and the damage resulting from the loss of future earnings (paragraph 1). Personal injury means any damage to the victim's physical integrity (paralysis, amputation, muscular ailments, etc.) or mental health (neurosis, loss of memory, intellectual impairment, etc.). The concept therefore also includes somatic and psychological damage. Paragraph 2 of Article 46 CO provides for an exception to the principle that the decisive moment for calculating the damage is that of the judgment and allows the judge to reserve a review of the judgment.

Only the person directly affected by the perpetrator's conduct may claim compensation based on this article. The bodily injury must be of a certain gravity. Generally speaking, this is accepted when the injury is permanent (FCR 112 II 131). The case law accepts that this is also the case of a relative of the injured party who suffers a nervous shock that can be assimilated to a bodily injury.

The costs are the expenses that the injured party must incur because of the injury. They include the costs of treatment (ambulance, hospital, doctor, etc.), the costs of defending oneself through a lawyer and the costs of home care by relatives.

  1. Compensation for moral damages

Article 47 of the Swiss Code of Obligations allows the court to award the victim of personal injury or, in the case of homicide, the dependants of the deceased, an appropriate sum for moral harm. The relatives of the deceased have their own claim to compensation for the mental suffering they suffer because of the death. In this third and final part, we will focus on the case of the loss of a child in the event of an accident.

In principle, compensation for non-material damage in the event of the loss of a child gives rise to compensation for non-material damage, even if the victim had reached the age of majority and had already set up his or her own household. While the age of the victim does not in principle play a role, the case law sometimes holds that the parents' pain is greater when they lose their only child. According to FCR 112 II 118 (Hunter judgment), the law only allows damages to be awarded to the person directly affected by the unlawful act. Third parties injured indirectly and by ricochet do not have such a right. In particular, the Federal Court has stated that in the event of death, the list in Articles 45 and 47 of the Swiss Code of Obligations is exhaustive and that survivors cannot claim damages for the loss caused indirectly by the accident to the deceased's property (FCR 54 II 224). The judge must take account of the circumstances when deciding whether to award compensation for pain and suffering following a death. The death alone is not sufficient to award compensation for non-material damage to the relatives, nor is bodily injury alone. It is also necessary that the death causes them particularly severe suffering. Moreover, according to the Federal Court in its decision FCR 93 I 586, the moral damage is all the greater if the rightful claimant witnessed the death, if the deceased suffered, if the latter left his family in a precarious financial situation or if the perpetrator acted in a lowly or careless manner. In this context, the compensation must be assessed on a case-by-case basis, but we have found that it is generally around CHF 40,000.

In conclusion, victims of road accidents can invoke these provisions of the CO in order to obtain compensation for loss of support, bodily injury and moral damage, depending on the circumstances of the case. The amount of compensation will be determined by the judges on their own discretion. Victims also benefit from compensatory interest of 5% for each of these damages. In any case, the loss of a spouse is generally considered the most serious suffering, followed by the death of a child and the death of a father or mother.

By Jessica Baujard and Cécile Ledez, legal interns

The taxation of multinationals: towards harmonization after a global agreement

I- Presentation of the new tax

A novelty in the world of taxation: on July,2021, an agreement was reached at the Organization for Economic Cooperation and Development (OECD) concerning the harmonization of a global corporate tax. This was also confirmed by the end of October 2021 at the G20 summit  After negotiations nearly 130 states have agreed to reform the taxation of multinationals based on two pillars: on the one hand a new distribution of rights to tax that would no longer tax exclusively according to the location of the headquarters of the company. On the other hand, a minimum tax rate of 15% on profits would be introduced. This would affect companies with a turnover of at least 750 million euros, this reform is mainly aimed at GAFAM companies (Google, Apple, Facebook, Amazon and Microsoft).

Even if several countries considered as tax havens have approved the agreement, some countries do not hide their reluctance. This is the case of Ireland and Hungary, which have not signed the declaration and find the minimum rate too high compared to their applied rate.

As for Switzerland, the Federal Department of Finance has announced that it will join under certain conditions and is asking for recognition of the "interests of small innovative countries".

The consequence for these countries, including Switzerland, would obviously be economic.

This tax harmonization would be applicable to all multinationals, which would be taxed in the same way from now on, but this would not have the same economic repercussions for the countries that apply it. This agreement is also denounced, notably by the NGO Oxfam, because it would only benefit rich countries.

On the other hand, this agreement is welcomed by several countries, the French Minister of Economy, Bruno Le Maire, and the German Minister of Economy, Olaf Scholz, recognize the importance of this global agreement for a better tax justice. Indeed, it allows a better distribution of profits between the countries where these large companies make them and those where they are located.

II- Consequences of the new tax

The entry into force of such a measure is expected for 2023. In practice, the introduction of a minimum tax of 15% would allow the home country of the company to collect the tax in the case where the company is taxed at less than 15% in another country. For example, a German company taxed at 9% in Hungary would be required to pay 6% to the German state.

At the European level, this reform will prevent tax evasion, which would have cost European countries 80 billion in lost tax revenue by 2020.

In this sense, this agreement has repercussions for the states that have not signed it. As a result of the standardized tax rate, countries with lower taxes could suffer a strong relocation of companies that have no more tax interest in locating precisely in these countries.

Our firm specialized in tax matters is at your disposal for

any questions or requests for assistance on this subject.

Qualified Immunity and Civil Rights Claim in the U.S.

By Erwin Chemerinsky: Dean and professor of law at the UC Berkeley Law School

Qualified immunity is a type of legal immunity. The defense of qualified immunity protects "government officials from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." [Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)].

Qualified immunity only applies to suits against government officials as individuals, not suits against the government for damages caused by the officials’ actions. Although qualified immunity frequently appears in cases involving police officers, it also applies to most other executive branch officials. This article presents the analysis of Professor Erwin Chemerinsky, dean of the UC Berkeley School of Law, from his August 2021 webinar about the legal framework of qualified immunity as interpreted by the U.S. Supreme Court.

I. Historical and background and context

42, United States, Code section 1983 “Lawsuits against those acting under color of State law violate the constitution and laws of the United States”. This law was adopted in 1871 as part of the Civil Rights Acts but is rarely used between 1871 and 1961. In 1961 this changed when the Supreme Court decided Monroe v. Pape. There the Supreme Court said that a state or local official could be sued for violating the Constitution, whether the person was following state or local law or violating state or local law. Before that, many courts have assumed that in order to say that a state official was under color of law, they had to show they were acting pursuant to government policy. Monroe v. Pape says whether it’s an authorized or unauthorized act, if the person is a state actor, working with a state or local government, their constitutional violations give rise to a lawsuit.

In 1971, in Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, the Supreme Court said that federal government officers could be sued for money damages directly under the fourth Amendment. Subsequently, the Supreme Court expanded that to actions against federal officers violating the fifth Amendment and also for violating the eighth Amendment. Lower courts extended this in other areas.

1983 is written in seemingly absolute language. It seems to be a strict liability statute. It says anyone acting under color of state law who violates the constitution of the United States is liable. There are no immunities that were mentioned in 1983 when it was adopted. There is one immunity now mentioned in 1983 for judges but that did not come until much later. Nor is there any other federal statute that creates immunity in such suits.

It’s important as we begin this discussion today to recognize that the law of immunity is entirely created by the Supreme Court. All governments officers who were sued for money damages had some kind of immunity. For some officials it’s absolute immunity. The court has said that for prosecutors performing prosecutorial tasks, legislators performing legislative tasks, judges performing judicial tasks, law enforcement testifying as witnesses, the president for presidential tasks. All have absolute immunity. They can’t be sued for money damages at all for the actions within the scope of these duties.

Apart from these officers that have absolute immunity, all other government officials when sued for money damages have qualified immunity. The Supreme Court is increasingly treated qualified immunity as a very substantial obstacle to civil suits for money damages.

II. The basic test.

I alluded to it coming from a 1982 case, Harlow v. Fitzgerald. Now the Supreme Court began formulating qualified immunity before this. Through a couple of decisions for example in the 1970s, the Supreme Court said that an officer would be liable if he either acted in an objectively unreasonable manner or if he acted subjectively in bad faith.

Harlow v. Fitzgerald, 457 U.S. 731 (1982).

This case changes that by saying qualified immunity is entirely an objective test. Officers performing discretionary functions, are liable if they violate clearly established law that a reasonable officer should know.

Bryce Harlow was a counselor to President Richard Nixon. Ernie Fitzgerald was an analyst at the Defense department who testified about costs overruns in building a transport plane. Nixon ordered Fitzgerald fired. Harlow did the firing, Fitzgerald sued saying it violated the First Amendment rights. The Supreme Court said in a companion case, Nixon v. Fitzgerald, that the president has absolute immunity. But the Court said, the high-level executive official who carried out the firing only had qualified immunity. The court articulated the test for qualified immunity. The Court said, if subjective bad faith was enough for liability, it would be too easy for suits to be brought and ultimately go to trial.

Ashcroft v. Al-Kidd, 563 U.S. 731 (2011).

“A Government official's conduct violates clearly established law when, at the time of the challenged conduct, ‘[t]he contours of [a] right [are] sufficiently clear’ that every ‘reasonable official would have understood that what he is doing violates that right.’ We do not require a case directly on point, but existing precedent must have placed the statutory or constitutional question beyond debate.” In this case, the Supreme Court reformulated the test of qualified immunity. This case involves a man Abdul Al-Kidd who is apprehended at Chicago O’Hare Airport as a material witness warrant. Turns out the government never intended to use it as material witness. He sued among others, the Attorney General saying that authorizing the use of material witness warrant violated his rights. The Supreme Court in anonymously ordered the case dismissed in the base of qualified immunity. The Court said that the officers performing a discretionary function were liable only if they violate clearly established law that every reasonable officer knows. The Court said that it has to be a right that is established “beyond debate”.

District of Columbia v. Wesby, 138 S.Ct. 577 (2018).

This case is one of the most recent formulations of qualified immunity by the Court. It was a Fourth Amendment case and the Court concluded there was no violation of it. You can see how the Supreme Court was taking a very robust expansive view of the scope of qualified immunity:

“Under our precedents, officers are entitled to qualified immunity under § 1983 unless (1) they violated a federal statutory or constitutional right, and (2) the unlawfulness of their conduct was ‘clearly established at the time.’ ‘Clearly established’ means that, at the time of the officer's conduct, the law was ‘sufficiently clear’ that every ‘reasonable official would understand that what he is doing’ is unlawfulIn other words, existing law must have placed the constitutionality of the officer's conduct ‘beyond debate.’ This demanding standard protects ‘all but the plainly incompetent or those who knowingly violate the law.’ To be clearly established, a legal principle must have a sufficiently clear foundation in then-existing precedent. The rule must be ‘settled law,’ which means it is dictated by ‘controlling authority or ‘a robust consensus of cases of persuasive authority.’ It is not enough that the rule is suggested by then-existing precedent. The precedent must be clear enough that every reasonable official would interpret it to establish the particular rule the plaintiff seeks to apply. Otherwise, the rule is not one that ‘every reasonable official’ would know. The ‘clearly established’ standard also requires that the legal principle clearly prohibit the officer's conduct in the particular circumstances before him. The rule's contours must be so well defined that it is ‘clear to a reasonable officer that his conduct was unlawful in the situation he confronted.’ This requires a high ‘degree of specificity.’ We have repeatedly stressed that courts must not ‘define clearly established law at a high level of generality, since doing so avoids the crucial question whether the official acted reasonably in the particular circumstances that he or she faced.’ A rule is too general if the unlawfulness of the officer's conduct ‘does not follow immediately from the conclusion that [the rule] was firmly established.”

 III. Immunity as an affirmative test.

Gomez v. Toledo, 446 U.S. 635 (1980). In that case the Supreme Court expressly held that qualified immunity is an affirmative defense. Now there’s many things that are important that flow from it being an affirmative defense. An affirmative defense has to be raised by the defense and its answer, or there has to be an effort by the defense later to file an amended answer.

This question of the burden of proof is one where there is disagreement among the lower courts. Some courts have held that the burden shifts to the plaintiff to show that the right allegedly violated was clearly established. See, e.g., Corbitt v. Vickers, 929 F.3d 1304 (11th Cir. 2019).

Other courts place a burden on the defendant. See, e.g., Slater v. Deasey, 789 Fed.Appx. 17 (9th Cir. 2019).

IV. The sequence of analysis.

In Saucier v. Katz 2001 case, the Supreme Court prescribed that when there’s a question of qualified immunity, first the court taking the facts should decide if there’s a constitutional violation. And second, if so, they should decide whether it’s a violation of clearly established law that every reasonable officer should know. There’s a virtue to this approach. Even if the Court in that case, on the latter finds qualified immunity, at least it would decide if there’s a constitutional violation, to guide future cases.

Eight years after Saucier v. Katz, in Pearson v. Callahan, 129 S.Ct. 808 (2009). The Supreme Court unanimously said that the two-step approach is not required. When a court is considering qualified immunity, it does not have to first determine if there is a constitutional violation before deciding whether there is clearly established law that the reasonable officer should know. So if a court wants to find qualified immunity without analyzing if there is a constitutional violation, it’s able to do so.

But there is a cost to doing this: if the courts don’t decide whether there is a constitutional violation, always decide based on qualified immunity, there is no constitutional violation for the future.

The case Sims v. City of Madisonville, 894 F.3d 692 (5th Cir. 2018). This is the fourth time in three years that an appeal has presented the question whether someone who is not a final decisionmaker can be liable for First Amendment retaliation. Addressing the first-step liability question is ‘especially valuable with respect to questions that do not frequently arise in cases in which a qualified immunity defense is unavailable.’ That is the case here. First Amendment retaliation claims do not arise in criminal litigation (as, for example, a Fourth Amendment claim often would), and this issue of individual liability would not arise in other civil suits, such as those against a municipality, in which qualified immunity does not apply. Because this is a question unique to section 1983 First Amendment claims brought against individual defendants, we conclude that clarifying the liability question is important to provide guidance to public employees who may find themselves on either side of the ‘v’ in these lawsuits that can raise important issues of whether employees who challenge corrupt governmental practices are protected in exercising First Amendment rights.” was very instructive. It pointed out how in several occasions an issue would come before the court in everyone they dismiss based on the latter question. But first we need to decide whether there is a constitutional violation, give guidance for the future.

V.  Application of the Harlow test.

 A. What law?

In Wilson v. Layne, 526 U.S. 603 (1999), the Supreme Court answers this question. This case involves the FBI and other federal law enforcement officials, taking reporters with them on private property while the government officials were executing search warrants. And the Supreme Court said that this violated the Fourth Amendment but then found that the federal officers were protected by qualified immunity. Indicates that clearly established law can be based on decisions of Supreme Court, controlling authority from that jurisdiction: Court of Appeals/highest court of state, law of other jurisdictions: consensus of persuasive authority.

District of Columbia v. Wesby, 138 S.Ct. 577 (2018). “We have not yet decided what precedents--other than our own-- qualify as controlling authority for purposes of qualified immunity.” There are dozens of instances where the Supreme Court has said that. This had led defendants to try to argue that only a Supreme Court decision can create clearly established law and overcome qualified immunity. So far, the circuits have consistently rejected that.

Irish v. Fowler, 979 F.3d 65 (1st Cir. 2020). In that case the first circuit says that precedents from other circuits can create clearly established law. It’s not just the decisions of the Supreme Court.

Cahoo v. SAS Analytics, 912 F.3d 887 (6th Cir. 2019). “To determine whether a constitutional right is clearly established, we must look first to decisions of the Supreme Court, then to decisions of this [C]ourt and other courts within our circuit, and finally to decisions of other circuits.”. That reflects an accurate statement of the law.

B. Does there have to be a case on point?

No: Hope v. Pelzer, 536 U.S. 730 (2002). Police guards are not protected by qualified immunity even if there is no case on point. In this case the police guards tied a prisoner in Alabama to a hitching post, left him in hot sun for many hours and without giving water. The prisoner got injured and sued the guards for a violation of the 8th Amendment. The Court of Appeals for the 11th Circuit said that it was cruel and unusual punishment but no case on point was identified so the guards got protected by the qualified immunity.

The Supreme Court held that a case on point is not necessary in order to overcome qualified immunity. Officers should have been on notice that this conduct was unconstitutional, even there though there are not cases on point finding it to be unconstitutional.

Taylor v. Riojas, 141 S.Ct. 52 (2020). The Supreme Court employed the same argumentation in this case for correctional officer despite the lack of case on point. In this case a prisoner in Texas sued the officers based on a violation of the 8th Amendment for unsanitary living conditions in a cell. The Court of Appeals for the 5th Circuit said that it was cruel and unusual punishment but no case on point was identified so the officers got protected by the qualified immunity. The Supreme Court overturned this decision reaffirming that a case on point is not necessary. As a matter of fact, any reasonable correctional officer should have realized that Trent Taylor’s conditions of confinement offended the Eighth Amendment, the U.S. Court of Appeals for the 5th Circuit erred in granting the officers qualified immunity.

Yes: City of Escondido, California, 139 S.Ct. 500 (2019). “[W]e have stressed the need to identify a case where an officer acting under similar circumstances was held to have violated the Fourth Amendment.... While there does not have to be a case directly on point, existing precedent must place the lawfulness of the particular [action] beyond debate.... Of course, there can be the rare obvious case, where the unlawfulness of the officer's conduct is sufficiently clear even though existing precedent does not address similar circumstances.... But a body of relevant case law is usually necessary to clearly establish the answer....” (quoting District of Columbia v. Wesby) Brosseau v. Haugen, 125 S.Ct. 496 (2004). Shooting a fleeing suspect who’s flight may harm others is not a clearly established use of excessive force. The Court held that because this case was on the “hazy border between excessive and acceptable force”

Brosseau did not violate the clearly established rightof freedom from excessive force.

Safford Unified School Dist. v. Redding, 129 S.Ct. 2633 (2009). School officials violated the Fourth Amendment in strip searching a seventh-grade girl on suspicion that she has prescription strength ibuprofen. However, school officials were protected by qualified immunity because there was not clearly established law at the time this occurred.

Ashcroft v. Al-Kidd, 131 S.Ct. 2074 (2011). The Attorney General is protected by qualified immunity when sued for money damages for improperly detaining an individual under the material witness statute.

Wood v. Moss, 134 S.Ct. 2056 (2014). Secret service agents were protected by qualified immunity when they moved anti-Bush demonstrators further and allowed pro-Bush demonstrators to be closer to the President.

Lane v. Franks, 134 S.Ct. 2369 (2014). A government employee’s First Amendment rights are violated when he is fired for truthful testimony given pursuant to a subpoena, but the defendant is protected by qualified immunity.

C.   The need for the right to be established a specific level of abstraction

Kisela v. Hughes, 138 S.Ct. 1148 (2018). Police officer Andrew Kisela is entitled to qualified immunity because his actions did not violate clearly established statutory or constitutional rights of which a reasonable person would have known.

City & Cnty. of San Francisco, Calif. v. Sheehan, 135 S. Ct. 1765 (2015). “The real question is whether, despite these dangerous circumstances, the officers violated the Fourth Amendment when they decided to reopen Sheehan’s door rather than attempting to accommodate her disability. Rather, we simply decide whether the officers’ failure to accommodate Sheehan’s illness violated clearly established law. It did not. To begin, nothing in our cases suggests the constitutional rule applied by the Ninth Circuit. The Ninth Circuit focused on Graham v. Connor, but Graham holds only that the ‘objective reasonableness’ test applies to excessive-force claims under the Fourth Amendment. . . That is far too general a proposition to control this case. ‘We have repeatedly told courts -and the Ninth Circuit in particular- not to define clearly established law at a high level of generality.’ Qualified immunity is no immunity at all if ‘clearly established’ law can simply be defined as the right to be free from unreasonable searches and seizures.” “[E]ven if ‘a controlling circuit precedent could constitute clearly established federal law in these circumstances,’ it does not do so here.”)

White v. Pauly, 137 S.Ct. 548 (2017). “Today, it is again necessary to reiterate the longstanding principle that ‘clearly established law’ should not be defined ‘at a high level of generality.’ As this Court explained decades ago, the clearly established law must be “particularized” to the facts of the case. Otherwise, ‘[p]laintiffs would be able to convert the rule of qualified immunity into a rule of virtually unqualified liability simply by alleging violation of extremely abstract rights.’”

Therefore, the more the Court wants law to be established in a very specific level of abstraction, the more qualified immunity functionally becomes absolute immunity.

 D.   Excessive force

Saucier v. Katz, 533 U.S. 194 (2001). In a civil rights case alleging constitutionally excessive force, the tests for qualified immunity and reasonableness are distinct; a finding of excessive force does not preclude a finding of qualified immunity.

Therefore, the Supreme Court reversed the Court of Appeals for the 9th Circuit and held that qualified immunity analysis must proceed in two steps. A court must first ask whether "the facts alleged show the officer’s conduct violated a constitutional right. Then, if a constitutional right was violated, the court would go on to determine whether the constitutional right was “clearly established”.

 VI.   Private actors

Wyatt v. Cole, 504 U.S. 158, 165 (1992). Private actors do not get qualified immunity defense.

Richardson v. McKnight, 521 U.S. 399 (1997). Private prison guards who are sued under Section §1983 may not assert the defense of qualified immunity.

They cannot be protected by the qualified immunity because it only covers the exercise of discretion by government officials.

Filarsky v. Delia, 132 S.Ct. 1657 (2012). A private contractor operating under a contract with the government may claim qualified immunity when sued under §1983.

Estate of Jensen by Jensen v. Clyde, 2021 WL 787451 (10th Cir. March 2, 2021). Private doctor who was employed by county on part-time basis, in providing medical services to inmates at county jail where he worked alongside the jail's officers and full-time staff, had ability to raise qualified immunity defense.

VII.  Changing qualified immunity?

Qualified immunity became a popular vocabulary especially because of the police cases. The question of abolishing qualified immunity has been raised and this would imply strict liability for officials. This discontinuance would increase the compensation for casualties. It would also enhance deterrence. However, this solution shows some skepticism and does not seem politically possible.

The main issue would indeed be a change that would mitigate the absolute nature of qualified immunity. It is important to remind that this qualified immunity does not come from the Constitution but from the Supreme Court interpretation of Section 1983. Therefore, the Congress could revise the immunity statute and change it by law enforcement.

In cases involving access to force by police officers, their liability could be imposed based on proofs of subjective bad faith or objective manners and thus to ensure that immunity does not apply to officials in some cases.

To conclude the case Marbury v. Madison reminds us that rights are meaningless without remedies. Fortunately, the Court has some remedies to counter the qualified immunity of officials through money damages to the victims.

Published with permission granted to us by author Prof. Erwin Chemerinsky Dean and Professor of Law at UC Berkeley Law school 

Framework Agreement: Switzerland and the EU break off negotiations

Swiss President Guy Parmelin announced on 26 May 2021 the end of negotiations with the European Union. This followed a summit in Brussels on 23 May 2021, where Parmelin and the President of the European Commission, Ms Von der Leyen, met. None of the discussions were able to bring satisfactory results to the points of disagreement.

At present, there are five bilateral agreements between Switzerland and the European Union, notably concerning the free movement of persons, land and air transport, and agriculture.

The framework agreement between Switzerland and the European Union, which has been discussed since 2002, is the solution for keeping the bilateral path up to date and harmoniously applied. Discussions had been underway since 2014 on a potential institutional agreement bringing the Swiss and European legal frameworks closer together. This would have made it possible to homogenise the regulations concerning Switzerland's participation in the European single market, but also concerning questions of salaries or the free movement of persons.

This text also provided for a dispute settlement procedure in the event of disagreement between Switzerland and the EU. Today, if a problem arises between the two parties, no external entity can intervene to move the negotiations forward.

Switzerland has been cautious because such a framework agreement with the EU would undoubtedly have led to legal changes through the adoption of EU law. However, it was mainly due to profound disagreements that it was not able to sign the agreement, as the EU and Switzerland do not have the same interpretation of the free movement of persons, which is more liberal for the EU. With this text, Switzerland should have transposed the directive on citizenship of the European Union. If so, Europeans settling in Switzerland would have had easier access to the Swiss social system than they do today.

In these negotiations, Switzerland also wanted to protect its wages through the accompanying measures. Today, if a European company wants to send a posted worker to Switzerland, it has to notify the administration eight days in advance. With the framework agreement, this period would be reduced to four days. Switzerland considers that this period is too short to allow time for labour inspectors to check that there is no wage dumping. This change could have led to a weakening of the level of protection for workers in Switzerland.

One of the repercussions of the end of these negotiations concerns the medical technology industry. Having lost its free access to the EU internal market and as a result of the new EU regulation on medical devices, this branch of Swiss industry is now a third country.

This means that stricter requirements for the export of medical devices by Swiss companies will be introduced. As a third country, the administrative burden on companies is greater and they have to incur additional costs or appoint representatives in each member state. The lack of access to the European market makes exporting more costly and procedural.

Other sectors would be affected, such as agriculture, food safety and electricity trading.

The abandonment of this draft agreement risks damaging relations between Switzerland and the EU, as the EU had made any other bilateral market access agreement conditional on the signing of this framework agreement. The latter was intended to govern aspects of the single market in Switzerland, which from a trade perspective is necessary. As the European Union is Switzerland's main economic partner, import and export relations with Switzerland, if not facilitated, risk being weakened in the long term.

The entire team of European Legal Consultancy is at your disposal for any questions or requests for assistance on this subject.

 

Get Ready for Brexit A GJN PUBLIC DEBATE on 24 June 2021 - 5pm

Global Justice Network (GJN) is organizing a debate on the practical implications of Brexit and the current state of the law on June 24, 2021. This debate will be presented by: Professor Duncan Fairgrieve, Senior Fellow in Comparative Law, British Institute of International and Comparative Law, and Professor of Comparative Law, Université Paris Dauphine PSL as well as Professor Gilles Cuniberti from the Faculty of Law, Economics and Finance of the University of Luxembourg.

The moderator of this debate will be Carlos Villacorta of BCV Lex (Madrid, Bordeaux), member of the GJIN committee.

Two positions will be defended during this debate: a pro-Brexit side on one side and a counter-Brexit side on the other.

The withdrawal of the United Kingdom from the European Union has economic, commercial, and of course legal consequences. Indeed, long negotiations between the United Kingdom and the European Union were necessary to reach a withdrawal agreement, to get out of all European regulations but also to find new agreements with this recent third country to the European Union

A member state of the European Union can withdraw from the Union under Article 50 of the Treaty on European Union (TEU). The United Kingdom is the first country to activate this article, through a notification to the European Council on March 29, 2017. The date of the Brexit was postponed due to the difficulty of the negotiations, until the Brexit was finally realized on January 31, 2020, leading then to a transition period for the next eleven months: until January 1, 2021.

The negotiations and new agreements between the United Kingdom and the European Union (and its member states) are mostly resolved, yet changes are to come as the Brexit inevitably impacts the legal sector.

 This is an open invitation to participate on this debate

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THE APPLICABLE LAW TO MATRIMONIAL PROPERTY REGIMES UNDER REGULATION (EU) 2016/1103

ELC was interested in the European Regulation 2016/1103 implementing enhanced cooperation in the area of jurisdiction, applicable law, recognition, and enforcement of judgments in matrimonial matters. This study allowed us to be prepared to answer your questions on the subject to provide you with a quality service.

This regulation, adopted on June 24, 2016, is the result of many years of discussions. It applies to the area of matrimonial property regimes of couples with foreign elements and this, following the mechanism of enhanced cooperation. As a result, the applicability of the Regulation will be limited to those Member States which have expressly so wished.

The Regulation establishes harmonized connecting factors for determining the applicable law to the matrimonial property regime and the competent court. The Regulation also simplifies the recognition and enforcement of judgments and the acceptance and enforcement of authentic instruments relating to matrimonial property regimes.

In this article, we will deal only with the part of the Regulation concerning the applicable law to the matrimonial property regime.

1.       The scope of application

The Regulation applies to matrimonial property regimes with a foreign element.

The spouses concerned

For spouses of the same nationality:

     With habitual residences in different States at the time of the celebration of the marriage or the drafting of the agreement organizing or modifying their regime, or

 

    With the property of either spouse in a State different from that of nationality or residence, or

    Having celebrated their marriage in a State different from that of their nationality or residence.

Spouses of different nationalities, regardless of their place of habitual residence, the situation of their property, or the celebration of the marriage.

Enhanced cooperation (art. 70)

The Regulation is only applicable in the Member States participating in enhanced cooperation. The non-participating Member States are to be considered as third States in the application of the Regulation.

Exclusions (provided for in Article 1)

Excluded from the scope of application are fiscal, customs, or administrative matters, the legal capacity of spouses, the existence, validity, or recognition of a marriage, maintenance obligations, succession, jurisdiction, and applicable law in matters of divorce, legal separation, or marriage annulment, social security, the right to transfer or adapt between spouses, the nature of rights in rem, etc.

Application in time (art. 69, 70)

The regulation entered into force on July 28, 2016.

2.       Applicable law in the absence of a choice by the spouses (art. 26)

If no law is designated, a hierarchy of connecting factors is used to determine the applicable law:

  1. The first common habitual residence of the spouses after the celebration of the marriage.
  2. Failing that, the common nationality at the time of the marriage. This criterion cannot be used when the spouses have several common nationalities.
  3. Failing that, the law of the State with which the spouses have the closest connection at the time of the celebration of the marriage.

Exceptionally, the competent judicial authority may decide that the law of a State other than that of the first common habitual residence after the celebration of the marriage shall apply, provided that the following circumstances are met:

      That one of the spouses so requests;

      That the spouses had their last common habitual residence in that other State for a period significantly longer than their first common habitual residence;

      That both spouses have relied on the law of that other State to organize or plan their property relations;

      That the spouses did not conclude an agreement before the date of their last common habitual residence in that other State.

3.       Choice of law

The Regulation offers the possibility of choosing the law of one of the States of which at least one of the spouses has the nationality or the law of his or her habitual residence at the time of the choice (art. 22). This choice of law applicable to the matrimonial regime may be express or implicit.

For the choice to be valid, it must meet certain conditions, in particular

      Formal conditions: the choice agreement must be in writing, dated, and signed by both spouses. Certain conditions are added for particular cases (art. 23), for example in case of residence in different Member States.

      Material conditions: the existence and validity of the substance of the agreement are subject to the law chosen by the spouses as applicable to the matrimonial property regime (art. 24)

4.       Characteristics of the applicable law

The Regulation distinguishes various principles concerning the applicable law to the matrimonial property regimes of couples with foreign elements.

First of all, the principle of universality of the applicable law according to Art. 20 provides that the designated law applies even if that law is not that of a Member State.

Second, there is the principle of unity of applicable law. This principle provides that the law will be applied to all of the couple's assets, regardless of their location (art. 21) or their nature.

There is also the principle of immutability of the applicable law. It is defined by the fact that the matrimonial regime is fixed by the applicable law from the initial moment of the celebration of the marriage and is not modified thereafter.

Finally, as provided for in art. 27 of the present regulation, the applicable law to the matrimonial property regime governs different areas: this is the scope of the applicable law.

One should not forget the exceptions to the applicable law, such as public policy (art. 31) and mandatory law (art. 30).